Half sector outperforms on return on regulatory equity
Eight water companies reported an average Return on Regulatory Equity (RoRE) in excess of their base RoRE, while nine companies reported an average RoRE below the base level over the 2015-19 period.
That was one of many financial observations reported by Ofwat in its Monitoring financial resilience report 2018-19, published last week. The report pulls together information already published by companies in their Annual Performance Reports for the year ended 31 March 2019, to enhance visibility of sector performance.
The base RoRE for each company represents the return a company would earn if its performance was in line with the assumptions included in Ofwat’s PR14 price determinations and assuming that companies are geared in line with the notional capital structure. Variances are driven by both operational and financial performance.
Many other financial measures were covered in the report, including credit ratings, long term viability, gearing, interest cover and gearing.