Bristol Water Plc – Half-year Report

Bristol Water plc (the “Company”) announces its interim unaudited financial statements for the six months ending 30 September 2021.

The Company's interim financial results are set out below and can also be accessed via the Company's website

FINANCIAL HIGHLIGHTS

Summary

• Bristol Water Chairman, Keith Ludeman, states 'It has been   a real pleasure to chair Bristol Water during a period that has seen the business flourish, with robust operational performance and excellent financial discipline.'
• Strong financial performance with EBITDA improvement of 28.0% to £30.6m, as a result of higher revenues and lower operating costs.
• Revenues increased as a result of higher regulatory allowances coupled with recovery in the non-household market post COVID-19 lockdowns.
• Underlying operating costs decreased by 7.5%, reflecting the successful delivery of the Company's transformation programme, despite significant upward inflationary pressures on power, chemicals and supply chain.
• £17.6m investment in the capital programme focussing on improving and renewing the company's asset base.
• Profit before taxation improved by £6.3m to £10.6m.  However, the adjustment to the deferred tax charge of £21.0m, resultant from the future increase in the corporation tax rate to 25%, has led to a loss after tax of £12.6m.
• The increase in net debt principally consists of drawdowns from committed facilities of £2.0m and indexation applied to index linked debt of £3.2m offset by an increase in cash of £3.7m. Available undrawn committed facilities amount to £42.0m.

CHAIRMAN'S STATEMENT 

It has been a real pleasure to chair Bristol Water during a period that has seen the business flourish, with robust operational performance and excellent financial discipline. The past 18 months have not been easy, but it is rewarding to see our business move forward. The period has seen the benefits from delivering our transformation programme as well as our staff working hard to overcome the challenges brought about by COVID-19.

Our financial performance in this period has been encouraging, with EBITDA increasing by 28% in the period, reflecting both lower operating costs and higher revenue. The reduction in operational expenditure reflects a step change in our cost base, benefitting from the many initiatives instigated as part of our transformation programme last year. These initiatives have put us in a good position to minimise the many inflationary cost pressures we are now experiencing, most notably in respect of chemical and power prices.

Operationally, the business has also performed strongly; we have met or exceeded our targets across a range of measures, including customer service, leakage and supply interruptions.  As an industry, these are critical performance indicators, and I am delighted to see the focus on achieving our targets really paying off, to the benefit of our customers,

I am particularly proud of our performance on supply interruption, where our performance year on year has improved markedly and currently stands at 1.57 minutes lost per customer property. Our year end target of 6.13 customer minutes lost is hugely challenging, and it is a testament to efforts across the business to put our customers first that we have seen such a strong performance in this area in the year to date. This cross business focus was particularly apparent in July, when a 1200mm diameter main, supplying water to around 50,000 properties, burst, during a hot and dry summer period.  A focus on diverting water via alternative routes around our network to maintain customers in water supply, whilst carefully balancing levels in different service reservoirs, resulted in only a small customer impact despite the scale and complexities the burst posed operationally. 

Our leakage performance also continues to be industry leading, and we continue to strive to improve despite the efforts needed to make incremental gains at this level. Using analytics and data to help identify leaks, as well as focussing on productivity and speed in fixing them, the business continues to ensure that this critical measure is delivered and improved upon each year.

Finally, our C-Mex (customer experience measure) scores have put us in 4th place across the industry in the year to date. We are proud of this outcome, which we achieve in partnership with our joint venture billing company Pelican. Both operational and billing scores have seen marked improvements, and we continue to drive a focus on putting the customer first in everything we do.

It is fundamental to our performance that our employees go home safe at the end of each working day.  Our performance in this area has been challenging, with our accident frequency rate higher than we targeted.  We continue to focus on this area and to ensure the culture and actions we take, every day, encourage an open culture and a focus on continued improvemen

Finally, the acquisition of the Bristol Water group of companies by Pennon Group plc on 3 June 2021 has led to a review by the Competitions and Market Authority (CMA) to ensure interests of customers are protected. This brings a new period of uncertainty for our employees, albeit with the promise of fresh opportunities at the end. We look forward to the conclusion of this process and thank all of our employees for their patience whilst this review is undertaken.

Keith Ludeman

Chairman

29 November 2021