Water UK

Water companies report financial results for 2007-08

02/06/08

The year saw water resources recovering from the drought of 2004-06 in Southern England and there was unprecedented rainfall leading to serious flooding in parts of the English Midlands and North.

All companies published for consultation plans showing how they will secure water supplies in the face of climate change in the medium- and long-term.

Sales and profit figures will be presented with reviews of companies' investment and other activities on behalf of the communities they serve.

Sharing success

Water companies are required to meet service and environmental standards as efficiently as possible. If they succeed in keeping costs below the level assumed by Ofwat the savings are shared between their customers and shareholders.

Sharing success in this way is the essence of incentive-based water regulation.

Today's average water bill would be £100 higher without the efficiency savings made by the companies (Ofwat).

Working for a sustainable economy and healthy environment

Well-performing water companies contribute to a sustainable economy by supplying near-perfect drinking water and keeping prices low relative to the scale of their capital investment.

Well-managed investment by water companies is also the main reason why rivers, streams and beaches are cleaner than ever, and water wildlife continues to recover after years of decline.

Profits

Water company profits can look high when compared with other sectors - this is because their capital investment is high compared with other sectors

It is meaningless to quote or compare profits without quoting the investment they allow and the rate of return to investors.

Investment

All water bill-payers, consumers and investors benefit from well-performing companies.

The scale of capital investment by water companies sets them apart from other sectors - the industry regularly invests at the level of half its annual turnover.

A large share of the investment is required by government to enable the country to comply with environmental directives.

Prices

Ofwat sets price limits for water companies to ensure that water services are delivered as efficiently as possible.

In setting limits the regulator takes into account investments required by government and consults environmental and drinking water regulators and water customers.

More background

Good financial performance is important for cost effective water investment

Background briefing

Ends

For more information please contact:

Barrie Clarke, Director of Communication
020 7344 1804