Photo source: Ofwat
The annual report by Ofwat on the financial performance and expenditure of the water companies in England and Wales shows they performed strongly in 2009-10. The companies operating profits rose to £3.5 billion an increase of 7% on the back of higher revenues. The companies overall return on capital was up at 7.2%.
Investment was £4 billion higher than assumed in the 2004 price limits but down 14.9 % from the peak in 2008-09.
The strong performance and figures so close to predictions underlines why the sector is so popular with infrastructure investment funds and pension companies. However in the current harsh economic performance customers may start to question whether they are getting value.
The 2010-2015 final determination means that sound, predictable performance will continue. Harold Macmillan, the former UK Prime Minister when asked about “his greatest worries” famously replied, “events , dear boy, events”. Its extreme weather events that are most likely to cause an upset in the industry and put it back under the spotlight.
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