Operational performance

Water and waste water contracts

Revenue for the Group’s water and waste water contracts was £39.8 million for the year to 31 March 2009 (2008: £35.5 million) and profit on ordinary activities before interest was £9.1 million (2008: £8.4 million). The increase is principally due to a credit in respect of gas indexation (£2.4 million) on tariffs at Caledonian Environmental Services offset slightly by increased power and sludge disposal costs. All contracts are performing well, in line with expectations.

The Group is a member of two consortiums delivering long term private finance initiative contracts with Scottish Water for waste water treatment. At Levenmouth, the Group has a 75% shareholding in both project and operating companies and the benefit of a 40 year contract. Funding was provided through a 37 year fixed interest rate corporate bond with the principal amortising from 2008.

In Ayrshire, the Group has a 75% shareholding in the project company and a 100% shareholding in the company that operates the three effluent treatment plants that make up this 30 year contract. Finance was provided through a 27 year loan on a fixed interest basis with the principal amortising from 2003.

In Ireland, the Group is part of a contractual consortium that designed and built a waste water treatment plant for Cork City Council. Under the consortium agreement, the Group has responsibility for a 20 year contract for the operation and maintenance of the plant.

AquaGib Limited, two thirds owned by the Group in a joint venture with the Government of Gibraltar, operates Gibraltar’s dual drinking water and sea water distribution systems under its 30 year contract with the Government of Gibraltar. The project to install two new reverse osmosis plants to replace ageing and relatively inefficient distillation plants, a £3.4 million investment, has been completed.

Other

Agrer

Revenue for the year to 31 March 2009 was £7.2 million (2008: £6.9 million). During the year, the level of new projects has been lower than the previous year but the order book at the end of the period, as Agrer enters its 50th year, is reasonable. Several contracts have been extended and the most significant new contracts are: technical assistance to the management and development of natural resources in Chad (€0.9 million – two years); a study for the privatisation of the coffee sector in Burundi (€0.6 million – ten months); and the study of the agricultural development of the Guiers Lake area in Senegal (€0.4 million – one year).

Corporate responsibility

NWL supports the communities we serve in a number of different ways. As well as providing financial support and facilities, we encourage employees to volunteer their time, skills and expertise. These activities generally support projects that make the areas we serve better places in which to live, work or invest. The programme focuses on key themes throughout these communities but, increasingly, we are developing initiatives designed to tackle lasting and sustainable change in specific areas.

In April 2009, NWL received the Queen’s Award for Enterprise, in the category of Sustainable Development and the citation read:

“Northumbrian Water Limited receives the Award for its ongoing and impressive commitment to sustainability.

“It has actively striven to promote best practice within its sector and is committed to ongoing review and continuous improvement.