Sutton & East Surrey Water has said that a long-term approach is the key to sustained success with the publication this week of its Annual Report for 2018/19.
Commenting on the company’s results, Chairman Jeremy Pelczer said that financial performance remained healthy this year. Key figures included:
Revenue increased to £66.8 million (2018: £65.0 million)
- Operating costs increased to £48.4 million (2018: £45.1 million)
- Operating profits increased by £0.2 million to £20.1 million (2018: £19.9 million)
- Interest charges decreased by 9% to £11.0 million (2018: £12.1 million) driven by the conversion of preference shares to ordinary shares and paying off a £30 million loan, both part of the utility’s de- gearing strategy
- Profit before tax fell by £0.8 million to £9.7 million (2018: £10.5 million) - 2018 benefitted from a one-off gain on the sale of the non-household customer accounts
The company’s Business Plan submission in September 2018, which achieved ‘slow track’ status under Ofwat’s initial assessment, included a commitment to lowered its regulatory gearing level.
Jeremy Pelzer commented:
“Given the importance the regulator attached to all water companies’ financial structures we decided not to wait until 2020 to do this either – in August 2018 we converted £12.4 million of preference shares into ordinary shares and in October 2018 we paid back a £30 million bank loan following an issue of ordinary shares”.
As a result SES Water has now reduced its regulatory gearing to c61%, down from c77% in March 2018.
The report says that by 2025 every single customer will be connected to more than one water treatment works, meaning that the risk of interrupted supplies, even if there are issues like power cuts or drought, are significantly reduced.
In June 2018, the company also took a major step forward in drastically reducing its carbon footprint by switching to renewable electricity for all its treatment works, pumping stations and offices.
Jeremy Pelzer continued:
“Meeting our targets for the consistently high level of service we expect to provide when customers need to contact us has again been a challenge at times this year but we are taking a long-term approach by significantly investing in new technology and this is beginning to bear fruit.”
“The coming year will see us completely overhaul our digital-based offering to include a brand new billing system and website, giving our customers more tailored information about their water use and management of their own online account in a way that suits them. “
SES Water was one of four companies ( the others were Anglian Water, Thames Water, and Yorkshire Water) Ofwat wrote to on 3rd July to give them early notice that it has “substantial concerns about their proposed costs for maintaining business as usual service (base expenditure) for the 2020-25 period. All companies will have until 30 August 2019 to respond to the regulator’s draft determinations.
Tomorrow Ofwat will announce draft determinations for fourteen water companies, with the final determinations coming in December.
Click here to download SES Water Annual Report 2018-19