Thames Water, the UK's largest water and sewerage company, has described its latest annual figures as reflecting its “best-ever operational performance and solid financial results”. The company said it had met all its regulatory targets, kept down running costs and delivered the industry's largest investment programme - despite a challenging economic climate.

Capital investment of £982m during the year represented the largest investment programme in the UK water industry. Turnover was up by £70.6m (4.7%) on the previous year to £1.56bn while  pre-tax profit increased by £15.9m (3.8%) to £435.1m. Thames said that  for every £1 profit, £2.26 had been invested in the capital programme

Key operational highlights for the company included meeting all its regulatory targets for the third consecutive year,  beating its annual leakage target for the third consecutive year and delivery of its best-ever drinking water quality at 99.99% compliant. Over 260 miles of London's leaking Victorian water mains had also been replaced, bringing total to 1,060 miles, while the risk of sewer flooding had been reduced at a further 2,500 homes.

The company said that  bills remained at the lowest in the industry at 81p per day on average,  and that even with price increases needed to fund its record upcoming £5.5bn investment programme, bills would still remain well below industry average by 2015 at less than £1 per day.

Thames Water Chief Executive, David Owens, said:

"This year's results show a continued improvement in both the operational and financial performance of Thames Water. We have improved on last year's best-ever operational performance while increasing our pre-tax profit by 3.8 per cent to £435.1million and delivering around £1billion of investment.

"This has been achieved by continuing with our 'back to basics' approach - focusing on strong financial management and improving productivity. This takes us a step closer to achieving our vision:"If customers had a choice, they would choose Thames Water".

"Through tightly controlling our operating costs we have been able to deliver value for money for our customers by ensuring every penny spent has been put to the best possible use. This has also helped us to reduce the impact of rising power costs and the increased cost of borrowing.

"The prolonged period of instability in the financial markets means we are now operating in a very different climate to last year. The increased cost of borrowing, combined with rising levels of customer bad debt and a sharp decline in commercial and metered demand for water is having a direct impact on the business. As a result, we, like our customers, face a challenging year ahead. "We are confident that we can meet these challenges, and build on our achievements to date over the next five years. In producing our Business Plan for 2010 to 2015, which is currently with Ofwat for consideration, we have struck a careful balance between maintaining our best ever levels of service through essential investment, and ensuring our customers are willing and able to pay for it. This follows two years of intensive research where we have spoken with thousands of customers". However, Mr. Owens warned that if Ofwat failed to approve Thames’ business plan, the delay would only keep bills artificially low in the short term and that customers would pay more in the long term to maintain deteriorating assets.