52IP Aviva 23

RNS Number:2360E
Welsh Water Utilities Finance PLC
08 June 2006


                             NEWS FROM WELSH WATER

                Financial Results for the year to 31 March 2006

                           EMBARGO 07.00 8 June 2006

                      Welsh Water meets expectations and
                     'customer dividend' increased to #19


Glas Cymru has today published its results for the year to 31 March 2006,
highlighting Welsh Water's strong financial performance and continuing good
overall customer service levels and the fact that Welsh Water's customers have
received an increased 'customer dividend' this year of #19.

Glas Cymru is the Company that has owned Welsh Water since May 2001, with the
single purpose of delivering a high quality service and value for money to its
customers. Glas Cymru has no shareholders and reinvests all financial surpluses
for the benefit of Welsh Water's customers.

Financial highlights include:

   * Profit before tax of #11 million, which will be retained for the benefit
     of customers (2005: #4 million).

   * From April 2006 - customers benefit from a #19 'customer dividend' (at
     an annual cost of some #24 million) - up from #18 in the previous year.

   * Financial gearing (the ratio of net debt (see note 4) to Regulatory
     Capital Value) reduced to 78% - down from 93% on the acquisition of Welsh
     Water in May 2001.

   * #525 million of floating rate bonds refinanced during the year,
     achieving an annual saving of some #6 million (bringing the overall annual
     interest saving to over #11 million from redemptions in the last two years).

   * Funding now substantially in place for the Company's #1.2 billion
     investment programme to 2010, which will bring substantial benefits to
     customers and the environment.

Operational and performance highlights include:

   * Joint best performing water and sewerage Company in industry regulator
     Ofwat's latest published 'Overall Performance Assessment'.

   * On 10 of the 15 measures that make up the 'Overall Performance
     Assessment", at or ahead of the previous year's performance.

   * Leakage reduction target achieved, and water resource position normal
     for this time of year with all major reservoirs currently over 90% full.

   * Capital investment of #238 million (including infrastructure renewals
     expenditure) in the first year of the five year capital investment programme
     which will deliver further improvements in water quality, environmental
     quality and customer service, notably in mitigating the risk to customers of
     repeat flooding from sewers.

   * A record number of 47 Blue Flag beaches gained in Wales - a third of the
     total awarded in the UK - demonstrating the highest bathing water quality,
     together with 50 equivalent Green Coast awards for rural beaches.

Commenting on the performance and financial results, Glas Cymru Chairman Lord
Burns said, "I am pleased to be able to report that our customers have again
seen a good year of overall service performance from Welsh Water. We have been
able to increase our 'customer dividend' to #19 this year, reflecting our
improved financial performance, which has exceeded our expectations."


Welsh Water has commenced its five year (2005-2010) #1.2 billion investment
programme to maintain and improve its network of water supply and sewerage
assets - equivalent to an investment of some #1,000 for every Welsh Water
customer.

Examples of capital investment schemes completed during the year include:

   * 407km of unlined iron water mains renovated to reduce the risk of
     discoloured water at customers' taps plus 72km of poor condition water mains
     to reduce the number of bursts and interruptions to supply.

   * Completion of the new #35 million Holyhead wastewater treatment works on
     Anglesey, serving some 25,000 customers.

   * Improvements to 81 wastewater treatment works and 82 intermittent sewer
     discharges to meet tighter environmental standards.

   * Schemes to reduce the risk of repeat flooding from sewers for 89
     properties.

   * 70km of new sewers and 58km of new water mains to support economic
     development.

Challenging targets for further improvements in efficiency, both in operations
and in capital investment, have been set by Ofwat for the current five year
regulatory period. The Company currently believes that it will be able to
achieve these targets, although significant upward cost pressures are being
experienced, notably power costs which increased by some #9 million, or 54%, in
the year, with further increases expected to follow.

A successful transition has been made to new, longer-term contracts for service
delivery, capital investment and income and billing services, without adverse
impact on customer service.

Last Autumn the Company had to deal with possibly its biggest challenge to date
when a higher than usual number of cases of illness caused by cryptosporidium
was linked to the tap water supplied by Cwellyn water treatment works serving
part of north west Wales. The Outbreak Control Team, in which we played a full
part, decided that Welsh Water should issue a Boil Water Notice to the
households supplied by the works.

In order to restore public confidence in tap water in the area, Welsh Water
installed additional ultra violet treatment at Cwellyn allowing the Boil Water
Notice to be lifted at the end of January. The Outbreak Control Team and the
Drinking Water Inspectorate will in due course be publishing the results of
their enquiries into this outbreak.

Lord Burns added, "I am pleased with how all the people at Welsh Water and our
new service partners have responded to the various challenges that we have faced
last year. It is now just over five years since Glas Cymru became responsible
for Welsh Water. Much has been achieved in that period, but we and our partners
remain committed to delivering further improvements in value for money to our
customers in the years ahead."

Ends

For further information contact the Glas Cymru press office on 02920 556140.


Notes for editors:

1.       Glas Cymru was formed in April 2000 for the sole purpose of acquiring
Welsh Water. It is a 'company limited by guarantee' registered under the
Companies Act 1985. Glas Cymru has no shareholders. Instead, Members carry out
an important corporate governance role but they do not receive dividends nor do
they have any other financial interest in the Company. This corporate structure
ensures that all financial surpluses generated are retained and reinvested for
the benefit of Welsh Water and its customers.

2.       Glas Cymru's constitution limits its purpose to that of financing water
assets in Welsh Water's area of appointment and managing Welsh Water's business
so that high quality water and sewerage services are delivered at least cost to
the communities served by Welsh Water. Glas Cymru cannot diversify into other
unrelated commercial activities.

3.       Profit before tax as reported in the accounts was #11 million (2005: #4
million), which includes an accounting loss of #33 million (2005: #8 million) in
respect of movements in fair value of financial instruments, as required by
International Financial Reporting Standards (IFRS).

4.        Net debt as defined for financial covenant purposes in the Common
Terms Agreement (CTA) for the Group's financing programme.

5.        Welsh Water out-sources the provision of operational and customer
services and the delivery of its investment programme. Working closely in a
partnership framework with industry specialists has delivered improving business
performance and customer service.




                      This information is provided by RNS
            The company news service from the London Stock Exchange

END
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