Thames Water has reported its best leakage performance for more than 30 years, exceeding its regulatory target after a 95 million litres per day year-on-year reduction, according to its annual results for the full year ending 31st March 2020 published today.

The final year of AMP6 saw Thames Water make a capital investment of £1.2 billion in its network and other assets (Mar 19: £1.2 billion) – the utility has invested around £16 billion in total over the last 16 years.

Thames made £513.4 million underlying operating profit (Mar 19: £474.1 million restated) and £244.6 million total profit after tax (Mar 19: £103.3 million restated). For the third year in a row (Mar 19: £ nil), no dividend payments distributions have been made to external shareholders. The water company paid £56.5 million to its immediate parent company to service group interest obligations and working capital requirements (Mar 19: £60.0 million). It also paid over £196 million in business rates, national insurance contributions, PAYE and other taxes.

Total revenue for the year ended 31 March 2020 increased by £88.4 million to £2,172.8 million (2019: £2,084.4 million).

In terms of operational efficiencies, Thames has restructured the business, increasing collaboration and alignment around the delivery of business priorities. It has also insourced core capabilities including capital delivery, IT project delivery, engineering design and logistics management, including tankering.

During the past two years, the water company has built a “Smart Water” data platform, allowing it to develop data products very rapidly and built products in the last 18 months to see real-time supply and demand. Thames is also collecting far more intelligent network data – it now has 449,000 smart meters and 27,000 acoustic loggers in place. During the 2020 to 2025 regulatory period the water company intends to expand this capability to deliver its performance commitments.

Highlights in operational performance during the year included:

• Best leakage performance for more than 30 years, exceeding its regulatory target after a 95 million litres per day year-on-year reduction
• Achieved 99.97% drinking water quality compliance (Mar 19: 99.96%) to remain among the best in the industry
• Reduced water supply interruptions to 7.2 minutes per property served (2019 15.6mins)
• Best performance of the regulatory period for sewage treatment works compliance at 99.71% (2019 98.85%)
• Major upgrade of Deephams sewage treatment works completed

Priorities for 2020/21 include:

• Trial the implementation of a digital wastewater network
• Reduce supply interruptions by 50% and leakage to less than 570Ml/d
• Reduce blockages and pollutions by 10%
• Commence a two-year programme to overhaul how Thames manages its water network
• Launch strategies to replumb the region and to increase North East London resilience
• Replace over 10,000 lead pipes with a focus on primary school communication pipes

Chairman on PR19 - "It was a finely balanced decision as to whether we should go to the Competition Markets Authority"

Commenting on the results, Ian Marchant, interim executive chairman of Thames Water Utilities Limited, said:

“I’m very proud of the way our key workers have risen to the challenge during these unprecedented and rapidly evolving times, when water service resilience is more critical than ever. We’ve also stepped up our financial support for customers who find themselves in increasingly vulnerable circumstances, especially those affected by the virus.

“As always, reducing leakage was one of our top priorities last year. Given the age and location of much of our water network, we all knew it would be incredibly challenging, so it was really encouraging to exceed our target and drive leakage down to its lowest level since privatisation.  

“After a period of unprecedented change and refocus to get Thames Water on track, culminating in the appointment of our new CEO, we’re well positioned to address the significant challenges ahead. There’s still lots to do, but we’ve taken a good step closer to where we want to be and remain committed to building our reputation as a company that provides a resilient service in a way our customers, stakeholders and employees can be proud of.”

Describing 2019/20 as a pivotal year for the business, Ian Marchant continued;

“There’s no doubt that delivering our plan for 2020 to 2025 will be very challenging, as some risks will remain unmitigated, and it will require overspend in some areas, particularly on our water network. It was a finely balanced decision as to whether we should go to the Competition Markets Authority, however, we decided not to risk jeopardising the good progress we’ve made by being distracted this year.”

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