Strong operational and environmental performance
o accelerated investment to deliver early operational benefit; £799m invested in 2015/16 and TCQi3 at 90%
o £2.5m net reward achieved for 2015/16 on outcome delivery incentives
o benefitting from 'systems thinking' operational approach and improved resilience of network
o retained Dow Jones Sustainability Index 'World Class' rating and sector leading status
Further improvements in customer satisfaction
o service incentive mechanism score improved compared with last year
o customers continue to rate us very highly on wastewater services
Implementing efficiency plans to eliminate totex gap
o business plan initiatives in place to meet totex allowance
o good progress achieved in first year of the five-year regulatory period
'Water Plus' Business Retail JV with Severn Trent approved by the CMA
o first mover advantage and economies of scale, ahead of full market opening in 2017
Good financials
o underlying operating profit down 9% at £604m, as expected
o lower underlying net finance expense: benefit of lower cost fixed debt and lower RPI inflation
o robust capital structure with RCV gearing at 61%, comfortably within our target range of 55% to 65%
o final dividend of 25.64 pence per share (total for the year 38.45p), an increase of 2% in line with policy
Steve Mogford, Chief Executive Officer, said:
"We are encouraged to see further improvement in customer satisfaction, particularly in light of the unprecedented flooding events. We placed customers at the heart of our response and we benefitted from our recently opened integrated control centre and improved network resilience.
"We accelerated our investment programme to deliver early operational benefit and exceeded our expectations by achieving a small reward across our outcome delivery incentives, against a tough set of targets. In addition, we have now identified and are implementing a range of efficiency initiatives to meet our total expenditure allowance. We plan to invest over £100 million across the 2015-20 period in renewable energy projects.
"We received CMA approval for our joint venture with Severn Trent to merge our business retail operations, providing us with first mover advantage and economies of scale ahead of full market opening in 2017. The joint venture, named Water Plus, combines the complementary skills of both companies to deliver a fresh, competitive operation providing a very attractive retail proposition for business customers.
"Our progress over this first year of the new regulatory period shows we are well placed to deliver further value for customers, shareholders and the environment, underpinned by a robust capital structure and good credit ratings."
