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Welsh Water has announced solid operational and financial results for the half-year ending 30 September 2008, despite significant increases in power costs and bad debt charges.
Despite the challenging economic environment, the financial position of the company has continued to strengthen, with gearing having been further reduced to 71% at the end of the period (2007: 73%). The business also has a strong liquidity position with funding in place for at least the remainder of the current five year regulatory investment period to 2010.
Welsh Water is owned by Glas Cymru, which is unique amongst UK utility companies in that it has no shareholders and it reinvests all its financial surpluses for the benefit of Welsh Water’s customers. This year, the company has paid a ‘customer dividend’ of £21 per customer, at a total cost of £27 million. This brings to over £120 million the total value of ‘customer dividends’ returned by Welsh Water to its customers since it was acquired by Glas Cymru seven years ago.
Welsh Water’s strong financial position means that it has been able to maintain its substantial capital expenditure programme, with investment during the six months at a record level, delivering a wide range of projects to improve customer service, environmental performance and drinking water quality.
Highlights for the half-year include:
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Customer dividend’ for 2008-09 is £21 for customers receiving both water and sewerage services (2007: £20 per customer)
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Capital investment of £168 million (2007: £131 million) – a record level which will benefit customer service, environmental performance and drinking water quality
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Further good progress in reducing leakage, on course to hit the Ofwat leakage target for the eleventh year in a row
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Robust financial position, with gearing reduced to 71% (2007: 73%) - as against 93% when Welsh Water was acquired by Glas Cymru in May 2001
Glas Cymru Chairman Lord Burns said,
"Over the past six months, Welsh Water has seen significant increases in its costs, notably higher power costs and provisions for bad debts. Despite this challenging economic environment, the company has continued to strengthen its financial position, leaving us well placed to deal with the impact of the expected difficult times ahead. Customers can be confident that they will continue to see the benefits of our unique business model - receiving a ‘customer dividend’ which has steadily risen to reach £21 this year.
We will also be able to maintain the delivery of our largest ever capital investment programme, with nearly £1 billion invested since April 2005, resulting in major and sustained improvements to customer service, drinking water quality and the environment."
Total capital investment over the AMP4 period (2005 to 2010) is forecast to be £1,400 million (equivalent to over £1,000 of investment for every customer served), with total capital investment since April 2005 of £976 million (70% of the expected AMP4 total).
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