TIDMBA18 TIDMTTM TIDMIRSH
RNS Number : 4397R
Thames Water Utilities Limited
06 July 2022
Thames Water Utilities Limited Annual Results
Results for the year to March 2022
Promising early signs of progress in the first year of our
turnaround
-- Laid foundations to deliver a turnaround in performance for
the benefit of customers, communities and the environment - new
Executive team, operating model and programme to reconnect with our
values
-- Improved service for customers with significant reduction in
complaints and GBP46 million of support for customers in vulnerable
circumstances
-- Delivered improvements in key operational performance metrics, including leakage and supply interruptions, with 60%(1) of our annual performance commitments met this year
-- Significant increase in capital expenditure, with a record
GBP1.3 billion invested to increase asset resilience
-- EBITDA unchanged despite challenging inflationary conditions,
driven by growth in allowed tariffs and a partial recovery of
non-household consumption
-- Higher reported losses reflecting increases in deferred tax
and non-cash losses on financial instruments
-- Revised business plan unanimously approved by shareholders,
including an additional GBP2 billion of expenditure, supported by
new equity to accelerate delivery of our Turnaround Plan
Sarah Bentley, Chief Executive Officer, Thames Water, said:
"Just over a year into our eight-year turnaround plan, we've
achieved some major milestones. We have a new Executive team in
place, reconnected with our values and behaviours, and created two
regional teams to become more local in the way we deliver for our
customers. In addition, we've started to bring the maintenance of
our water network in house and announced that we will bring all our
customer-facing telephone teams onshore in the UK.
Most recently, we've announced a revised business plan,
unanimously supported by shareholders, which underpins our
commitment to delivering improved performance for our customers,
communities and the environment. This additional investment,
supported by new equity, will go towards improvements to our sewage
treatment works for river health, increase resilience in our water
network and drive ongoing improvements in customer service.
We know our performance isn't yet where it needs to be, and we
are only at the beginning of our turnaround journey. However, there
are early signs we're on the right path with complaints down
significantly, a 39% reduction in supply interruptions in the last
two years and a 10% reduction in leakage, meaning we've hit our
target for the third year in row. We've also invested a record
GBP1.3 billion in our assets this year to improve our resilience
and delivered solid financial results in challenging inflationary
conditions.
We still have a long way to go to turn Thames around. The
success of our plan requires determination, collaboration and
sustained investment, and I want to say a big thank you to
colleagues, customers and stakeholders for your continued support
as we build a better Thames Water. We look forward to working with
you in the coming year as we progress our plan."
-- Laid foundations for delivery of eight-year turnaround
o New Executive team in place, with strong turnaround
expertise
o Revised GBP11.5 billion business plan approved unanimously by
shareholders
o Shareholders have committed GBP500 million in new equity in
2022/23 to support delivery of the revised business plan; working
with shareholders on plans to provide a further GBP1.0 billion of
equity funding (which will be subject to certain conditions) over
the rest of the current regulatory period
o Implementing a new operational model to drive regional focus
and improve performance for customers and the environment
o Launched new work management system to replace 30-year-old
legacy systems
o On track to insource management of repair and maintenance of
water network by end of October 2022, and for all customer-facing
telephone service teams to be based in the UK by end of 2023
o Rolling out programme to reconnect colleagues with values and
behaviours, and support increased engagement
o Developing improved engagement plans, recognising the need to
deliver a significant change agenda in a challenging economic
environment
-- Early signs of improving trends in operational performance
o Met over 60%(1) of our annual performance commitments this
year
o Improving trends in majority of customer and operational
KPIs
o 43% less household complaints(2) , but much further to go on
C-MeX as we remain 17(th) out of 17 companies
o 39% reduction in supply interruptions in two years
o 10% reduction in leakage, meeting target for the third year in
a row
o 20% reduction in sewage discharges
o Major flash flooding in London affected waste metrics,
including sewer flooding
-- Delivered solid underlying results in challenging inflationary conditions
o Revenue up 3% to GBP2.2 billion, driven by growth in allowed tariffs and a partial recovery in non-household consumption as UK Government Covid -19 restrictions eased
o Invested a record GBP1.3 billion, a 22% increase as we ramp up
capital delivery programme to improve resilience
o EBITDA unchanged at GBP1.1 billion, reflecting high ongoing
supply chain inflation
o Reported loss after tax of GBP973 million, primarily driven by
a non-cash loss on financial instruments and a one-off deferred tax
charge due to the increase in corporation tax rate to 25%
o Strong growth in operating cash flow, benefitting from
improved cash collection rates, and decreases in working capital
and pension contributions
o No dividends paid to external shareholders for fifth year
running ; GBP37 million distribution to service group debt
-- Taking action on river health, in line with our progressive and transparent stance
o Commitment to reduce the annual duration of sewage discharges
into rivers by 50% across the Thames Valley by 2030, and by 80% in
sensitive catchments
o GBP38 million invested in upgrading our sewage treatment works
at Beckton
o Working with our partners on a pilot project in Oxford area
results in Port Meadow becoming only the second UK river to be
given designated bathing water status
o Live spills alerts from 468 permitted locations on track for
the end of 2022
o Cooperating fully with both Ofwat's and the EA's ongoing
investigations into sewage discharges
-- Making a positive difference so our customers, communities and the environment can thrive
o Increased support for customers as they deal with the
lingering impacts of Covid-19, and rising energy prices and
household costs - over GBP46 million of support through social
tariffs and 5% of households now helped through priority services
register
o Pioneering smarter water catchments plans underway for the
Rivers Crane, Chess and Evenlode, and facilitating increased
investment to improve river quality and biodiversity
o Self-generating 24% of our energy needs
o Progress on road to net zero by 2030 with first direct
gas-to-grid project from Deephams sewage treatment works and
trialling first electric vehicles
o Further progress on our journey to become a more diverse and
inclusive organisation, with recognition as one of Stonewall's Top
100 Employers for LGBTQ+ commitments in the workplace and 'gold'
status from the Armed Forces Covenant employer recognition scheme
for our ex-military recruitment strategy
Financial performance
Financial performance
Year ended 31 31 March
March 2021
2022
--------------------- ------------ -------- ------------ -------------- -------- ---------
Underlying BTL(1) Total Underlying BTL(1) Total
--------------------- ------------ -------- ---------------- ---------- -------- ---------
Revenue (GBPm) 2,092.0 84.9 2,176.9 2,032.9 73.8 2,106.7
--------------------- ------------ -------- ---------------- ---------- -------- ---------
Operating expenses
(GBPm) (1,843.3) (0.1) (1,843.4) (1,739.5) (0.2) (1,739.7)
--------------------- ------------ -------- ---------------- ---------- -------- ---------
Operating profit
(GBPm)(2) 344.4 84.8 429.2 415.2 73.6 488.8
--------------------- ------------ -------- ---------------- ---------- -------- ---------
EBITDA (GBPm) 1,029.4 84.8 1,114.2 1034.4 73.6 1,108.0
--------------------- ------------ -------- ---------------- ---------- -------- ---------
Net finance expense
(GBPm) (384.5) - (384.5) (208.1) - (208.1)
--------------------- ------------ -------- ---------------- ---------- -------- ---------
Net (loss) on
financial
instruments (GBPm) (895.5) - (895.5) (522.2) - (522.2)
--------------------- ------------ -------- ---------------- ---------- -------- ---------
(Loss)/Profit before
tax (GBPm) (935.6) 84.8 (850.8) (315.1) 73.6 (241.5)
--------------------- ------------ -------- ---------------- ---------- -------- ---------
(Loss)/Profit after
tax (GBPm) (1,042.0) 68.7 (973.3) (258.1) 59.6 (198.5)
--------------------- ------------ -------- ---------------- ---------- -------- ---------
Capital expenditure
including
intangibles
(GBPm) 1,344.0 - 1,344.0 1,105.0 - 1,105.0
--------------------- ------------ -------- ---------------- ---------- -------- ---------
Operating cash flow
(GBPm) 1,191.4 1.6 1,193.0 931.2 1 932.2
--------------------- ------------ -------- ---------------- ---------- -------- ---------
Net debt (statutory)
(GBPm) 12,935.0 - 12,935.0 12,334.1 - 12,334.1
--------------------- ------------ -------- ---------------- ---------- -------- ---------
Dividends paid to
immediate
parent company
(GBPm) 37.1 - 37.1 32.9 - 32.9
--------------------- ------------ -------- ---------------- ---------- -------- ---------
Distributions paid to - - - - - -
external shareholders
(GBPm)
--------------------- ------------ -------- ---------------- ---------- -------- ---------
Gearing (%)(3) 80.6 - - 83.2 - -
--------------------- ------------ -------- ---------------- ---------- -------- ---------
Credit Rating - - Baa2 stable - - Baa2
/BBB+ watch stable/
negative BBB+
negative
outlook
--------------------- ------------ -------- ---------------- ---------- -------- ---------
(1) 29 of our 47 annual performance commitments (5 of our
performance commitments do not have a target for this year)
(2) Last year in January 2021 the CCW methodology by which
complaints are reported changed to align the industry, removing the
automatic categorisation of repeat contacts as complaints.
Therefore, comparisons cannot be fully drawn between our full year
2020/21 and 2021/22 performance outturn.
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