Thames Water made a £246.5 million total loss before tax in the first six months of 2020/21, according to the publication of its interim results for the period 1st April to 30 September 2020.
The company said this was down to lower water use from business customers forced to close during lockdown and ‘non-cash’ loss on financial instruments driven by external market factors.
Thames, which had total revenues of £1.03 billion during the period, has attributed the loss as arising principally from the £355.8 million fair value loss on financial instruments (30 September 2019 £161.5 million), which are used to reduce risk and manage its borrowing costs.
Overall operating profit position also decreased by £118.7 million to £222.9 million, due to decreases in revenue and other operating income, as well as increases in operating expenditure. Investment during the six-month period totalled £498.8million compared to £599.1 million for the same period last year. Thames Water said the fall in investment was due to delays driven by Covid-19.
Capital expenditure projects during the period included:
- £76.4 million on improving and replacing the water network;
- £16.7 million on water metering programme
- £12.0 million connecting the waste network to the Thames Tideway Tunnel
During the six-month period ended 30 September 2020, no dividends were paid to Thames Water Utilities Holdings Ltd, the utility’s immediate parent company and no distributions were made to external shareholders of the group. The external shareholders own shares in Thames’ ultimate parent company, Kemble Water Holdings Ltd.
Total operating expenses increased by £41.9 million (5.2%) to £840.6 million - up from £798.7 million at 30 September 2019. However, the company has also reported a decrease of £14.9 million in other operating expenses as more of the delivery of its AMP7 capital programme is insourced, leading to more of its costs being capitalised.
Commenting on the impact of the Covid-19 pandemic on its operational performance, the utility said:
“As a Board we’ve been working together with the Executive team and our regulators to understand and adapt to the impact of Covid-19 on our operations and the delivery of our 2020/21 performance targets.
“As with all companies, the pandemic has been affecting many of our risks. We’re continuing to monitor and adjust to increasing pressures on our financial position, our people, our supply chain community and our cyber security measures, with so many of our people working from home.”
Thames has been working with the Government to create an early warning system to detect local coronavirus outbreaks before they spread after scientists established fragments of the virus’ genetic material could be identified in human waste.
Leakage - still on track to meet target
Commenting on leakage, Thames said that the impact of Covid-19 pandemic had made it more difficult to fix leaks at customer properties. However, it has been fixing an average of 1,141 leaks a week despite the impact of Covid-19 on the ability to complete repairs at customers’ properties and in communities. The utility has reported a positive start to the year achieving a 36.75 Ml/d reduction in average leakage, meaning it is still on track to meet its end of year leakage target.
As part of its work to improve its wastewater network to prevent sewer flooding and pollutions, Thames cleaned over 600km of sewers and cleared over 35,000 blockages.
On digital transformation, the utility said it using technology to improve data collection to better understand its network and make more informed decisions. Key highlights include:
- Installation of over 1,600 extra sewer monitors
- Acoustic loggers have helped detect 31Ml/d of leakage
- Data from 400,000-plus smart meters now installed across the region, has detected 9Ml/d of leakage since 1 April
- Launched two new apps to help leakage technicians find leaks in hotspot areas
- Started to create advanced maps or ‘digital footprints’ of network areas of in order to understand how weather and operational conditions affect areas differently
- New IT infrastructure helping to improve stability, collaboration and stakeholder engagement
- Overhaul of IT infrastructure in the last few years gave over 5,500 employees the capability to work from home during the Covid-19 lockdown and is improving engagement across the business
Electricity generation down due to impacts of Covid-19
On its goal of moving closer to net zero, the water company produced less of its own energy than planned during the first six months of the year due to the impact of Covid-19.
Thames saw a 30% reduction in the amount of sewage sludge arriving at Beckton, its largest sewage treatment works, due to less tourism and people working in offices. Despite an increase in sewage flowing through smaller sewage treatment works, they do not have the capacity to generate the electricity usually produced at Beckton.
However despite the impacts of Covid-19, Thames reduced its net operational emissions by almost 11% to 116.8ktCO2e during the period, helping it to move closer towards its goal of net zero carbon emissions from operations by 2030.
Customer service: “we are still significantly behind where we want and need to be”
The company has reported a difficult 6 months on what it describes as “our challenging complaints performance.”
The impact of the pandemic worsened Thames Water’s existing customer service issues as training on its brand-new customer relationship management and billing system was delayed and resourcing was affected by restrictions in South Africa, where some of its customer service teams are based.
The company said:
“We’re working hard to get back on track with the next stage of our plans to maximise the potential of our new CRMB system. We have recruited over 180 new customer service agents in our Swindon and Reading offices between April and October 2020, to increase customer support, with all those new starters now trained on our new CRMB system.”
“After a difficult five months, we saw an improving trend in September, although we are still significantly behind where we want and need to be.”
Commenting on its customer service performance, Thames Water CEO Sarah Bentley, who joined the company in September said:
“Earlier this year, we achieved an important milestone having successfully transferred all our household customers onto our new customer relationship management and billing (CRMB) platform.
This will support us in making the improvements we’re striving for. That said, we didn’t come from a strong position in customer service and the pandemic hasn’t helped. Restrictions had an impact on our resources, as well as our ability to carry out some of the training we had planned.
In summary, the quality of our service is not where it needs to be, and we’ve struggled to respond to customers as quickly as we should. This is not acceptable, and our top priority is to put this right as quickly as we can.”