Wa­ter firm’s prof­its dive as weather takes its toll

Western Daily Press - - Business - HOLLY WIL­LIAMS [email protected]­erndai­ly­press.co.uk

THAMES Wa­ter has blamed the ‘Beast from the East’ and the sum­mer heat­wave for a surge in wa­ter leaks and sup­ply dis­rup­tion as it re­ported a plunge in half-year prof­its.

The wa­ter gi­ant, which sup­plies most of Wilt­shire and parts of Glouces­ter­shire, said around 75,000 cus­tomers saw their sup­ply hit dur­ing the freez­ing cold weather in March as pipes burst, while the pro­longed hot sum­mer weather com­pounded woes.

The group said the ex­treme weather had an “en­dur­ing” im­pact on its abil­ity to meet leak­age tar­gets, while it re­vealed that the sup­ply prob­lems sent cus­tomer com­plaints soar­ing to 11,083 in the half-year to Septem­ber 30, from 8,242 a year ear­lier.

In­terim pre-tax prof­its crashed 69 per cent to £67.7 mil­lion from £218.5 mil­lion a year ago after it brought for­ward reg­u­la­tory penal­ties.

Thames Wa­ter was or­dered to pay £55 mil­lion ear­lier this year as a penalty for miss­ing the com­mit­ment it made to cus­tomers to cut leaks and agreed to a fur­ther £65 mil­lion in cus­tomer com­pen­sa­tion.

Un­der­ly­ing half-year pre-tax prof­its, ex­clud­ing the prior year’s boost from the sale of its non-house­hold re­tail busi­ness to Cas­tle Wa­ter, tum­bled 48 per cent to £67.7 mil­lion.

The group added that prof­its were also af­fected by a move to hire more staff to help with leaks.

Chief ex­ec­u­tive Steve Robert­son said: “Dur­ing the in­tense sum­mer heat­wave we worked tire­lessly to pro­tect our cus­tomers from sup­ply re­stric­tions.

“How­ever, along with the im­pact of the Beast from the East, it has de­layed our progress on leak­age and other per­for­mance mea­sures.”

The group said its sup­ply is­sues were sparked dur­ing the heat­wave when it was forced to pump more wa­ter into the net­work, which in­creased the pres­sure in its pipes and caused more bursts.

“Along­side that, the weather con­di­tions caused the soil around the pipes to dry out, lead­ing to un­sta­ble ground around our pipes,” it said.

It added that the group was still suf­fer­ing the ef­fects of the heat­wave, with vis­i­ble leaks spring­ing up, high­light­ing the “last­ing im­pact of ex­treme weather on our net­work”.

Ear­lier this year, Mr Robert­son agreed to forgo bonuses for the next two years after the com­pany forked out £120 mil­lion in com­pen­sa­tion to cus­tomers and penal­ties for miss­ing tar­gets to cut leaks.

But un­der over­hauled pay plans un­veiled in the group’s an­nual re­port, Thames Wa­ter re­vealed it will pay out a max­i­mum £3.75 mil­lion to Mr Robert­son in 2020 if all tar­gets on leaks and pol­lu­tion are met.

None of the 2020 bonus will be linked to fi­nan­cial per­for­mance, in a shift away from tra­di­tional cor­po­rate pay deals.

Thames Wa­ter also an­nounced at the time that it would not pay a div­i­dend to share­hold­ers – who are mainly pen­sion funds – this year as it fo­cuses on im­prov­ing its ser­vice to cus­tomers.

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