Annual results 2016

Overall performance

Last year was the first of the new five-year price control period. It brought the introduction of a more risk-based framework with a focus on the outcomes that our customers and local communities want.

We have performed well against our performance commitments which are explained in more detail in the Performance at a glance section of this document, and in the separate Annual performance report document on our website.  We have achieved industry leading customer service and environmental performance.

Average bills reduced by 5% from April 2015 and through our assistance programme, tap, we continued to support customers who are financially vulnerable and have difficulty in paying. We are now helping more than 21,000 customers to pay ongoing charges and repay debt, as well as offering additional practical help to reduce water and energy bills.

This year, with the guidance of our expert affordability advisory group, we have introduced a discount of around 20% for pensioners on the lowest incomes who often suffer hardship in silence instead of asking for help.

We are committed to providing the highest quality drinking water to our customers and overall compliance in 2015 was 99.96%. The number of customer contacts we received about acceptability of water reduced significantly, largely because of the beneficial effect of the major mains rehabilitation work we completed in Taunton last year.

Our water supply grid project is making excellent progress and once complete will ensure future demand is met and improve the resilience of supplies to our customers.

Customer excellence

We are a customer centred organisation and believe in putting customers and the communities we serve at the heart of everything we do – our aim is always to achieve the best outcome for them.

We focus on understanding customers’ changing needs and responding to the pressures that many continue to be under in these challenging economic times.

We are committed to providing help when and where it’s needed most because anyone can find themselves vulnerable at any time through illness, unemployment or simply a change in circumstances like a bereavement or divorce.

When we have problems on our network, such as a burst water main, we are using proactive phone calls and text messages to let customers know what the problem is, what we’re doing to resolve it and by when, and this is helping improve satisfaction levels.

Our staff need the right skills, confidence and awareness to deal with often quite complex situations, so we make sure we provide specialist training so they can offer the very best support to customers they talk to or meet in their work.

Investing in the community

As a community business and the largest infrastructure investor in the region, we create more than 1,000 jobs directly in constructing new assets and in the regional supply chain.  We continue to invest in greater resilience to climate change and supporting economic growth across our region.

We have made good progress on a £39m programme of work to improve bathing water quality at Burnham-on-Sea and we are investing in a number of very innovative projects, some of which are industry firsts. In the Poole Harbour catchment we are working with farmers to reduce nitrate runoff and leaching into the River Frome in the first nitrogen offsetting trial in the UK.

And our management of nearly 300 hectares of land designated as SSSIs means that the condition of these vital habitats exceeded government targets – 99.5% of our SSSIs were assessed as being in favourable or recovering status.

Innovation and resilience

We must adopt new ways of working and technologies that help improve the services we provide, reduce costs and manage risk. Our employee suggestion scheme, Eureka, rewards ideas that have been put into practice and is also a way of identifying improvements that can be scaled up.

We run a joint research programme with the University of Bath with whom we’ve launched a water innovation and research centre based at the university. We have continued to push improvements in efficiency and resource use with more than 95% of the waste we generate diverted from landfill, and are increasing the value recovery from waste.

We are tackling the reduction of our carbon footprint. In 2015-16 we completed installation of advanced anaerobic digestion and electricity generation at Trowbridge sewage treatment works and installed a large solar photovoltaic array on the roof of our operations centre in Bath.

The responsibility for flooding of land is often complex and we are encouraging partnership working including three partnership schemes to reduce flooding in Somerset at Cannington, Brent Knoll and Wrington.

Working in partnership

This year we have established a new format for our stakeholder liaison through the Wessex Water Partnership, independently chaired by former water minister Dan Rogerson.

The Partnership will ensure we deliver the commitments in our current five-year plan and provide advice on customer engagement, customer service, affordability and tariffs in preparation for the next business plan.

Our partnerships with debt advice organisations continue to thrive and we remain convinced that holistic advice is needed to help customers to get back on track and into sustainable payment. In 2013 we set up an affordability action plan and this year the take-up of our schemes and low rate tariffs has increased by 19%.

A focus of the past year has been our work in partnership with our supply chain to remove the very variable investment programme that results from a five-year regulatory cycle. This was assisted by Ofwat’s ‘early start’ programme. As a result, the first year of the current AMP (asset management plan) cycle has achieved a stable capital programme with expenditure for the year at £200.8m compared to £198.4m for the last year of the previous AMP cycle.

A responsible employer

We can only deliver excellent service to our customers and communities and value to our investors, through the knowledge and skills of our employees and the quality of the assets that we manage and operate.

We are focused on retaining existing and attracting new skills into the business with a commitment to develop staff to their full potential – through leadership and management development, apprenticeship programmes and promotion of diversity and inclusion.

This year we continued to develop our apprenticeship programmes to provide young people with career and skill development opportunities, and to build a strong and skilled workforce for the future – we now have some 51 apprentices and trainees within the business.

We have a strong health, safety and welfare culture embedded in our day-to-day activities that targets zero accidents and supports our aim to be a great place to work in which all employees can work safely and reach their full potential.

Financial results

Turnover for 2015-16 decreased to £520.8m and profit after tax was £164.2m. Operating costs decreased by £5.3m to £286.6m and we achieved all our key financial targets in the year.

Dividends were declared in accordance with board policy which at all times is to preserve our investment grade credit ratings and access to new capital.

We continue to maintain a straightforward corporate structure, pay the expected level of corporation and other taxes and are classed by the Inland Revenue as low risk.

Planning for the future

The water industry is approaching fundamental change with moves to greater competition and more use of markets.  We support these changes and are at the forefront of helping shape their delivery. The key to their success will be what they deliver for customers.

Our customer service vision is very simple – we aim to deliver the highest levels of customer satisfaction, make it easy for customers to deal with us and to build trust and loyalty.We are always looking for improvements and have launched a customer excellence programme which includes improved customer systems, community projects, improved communication and shortened response times.

We take pride in being the best company in the water sector, but that is not enough – we aim to be seen by our customers as the best service provider that they deal with and we are committed to driving the investment, skills and culture that enable us to achieve this ambitious aim.

Colin Skellett, Chief executive