ltr rd0709 appen1

							Appendix 1




         Small Company
           Reporting
       Regulatory accounts
          information
                       Covering:
       Analysis of turnover and operating costs
Line definitions
A        TURNOVER

    1                 Unmeasured – household (water services)            £m      3
    Definition        All revenue accrued from the sale of water to households other
                      than on a measured basis.
    Primary Purpose   Informing future price limit determinations
    Processing rule   Input
    Reference         BR581
    Responsibility    Water Resource Economics Team


    1                 Unmeasured – household (sewerage services)         £m      3
    Definition        All revenue accrued from the provision of sewerage services to
                      households other than on a measured basis.
    Primary Purpose   Informing future price limit determinations
    Processing rule   Input
    Reference         BR881
    Responsibility    Water Resource Economics Team


    2                 Unmeasured – non-household (water services)       £m     3
    Definition        All revenue accrued from the sale of water to non-households
                      other than on a measured basis.
    Primary Purpose   Informing future price limit determinations
    Processing rule   Input
    Reference         BR583
    Responsibility    Water Resource Economics Team


    2                 Unmeasured – non-household (sewerage services)        £m       3
    Definition        All revenue accrued from the provision of sewerage services to
                      non-households other than on a measured basis.
    Primary Purpose   Informing future price limit determinations
    Processing rule   Input
    Reference         BR883
    Responsibility    Water Resource Economics Team


    3                 Measured – household (water services)                   £m     3
    Definition        All revenue accrued from the sale of water to households where
                      all or some of the charges for the supplies are based on measured
                      quantities of volume.
    Primary Purpose   Informing future price limit determinations
    Processing rule   Input:
    Reference         BR582
    Responsibility    Water Resource Economics Team


    3                 Measured – household (sewerage services)              £m       3
    Definition        All revenue accrued from provision of sewerage services to
                      households where all or some of the charges for the supplies are
                      based on measured quantities of volume.
    Primary Purpose   Informing future price limit determinations
    Processing rule   Input
Reference         BR882
Responsibility    Water Resource Economics Team


4                 Measured – non-household (water services)              £m      3
Definition        All revenue accrued from the sale of water to non-households
                  where all or some of the charges for the supplies are based on
                  measured quantities of volume.
Primary Purpose   Informing future price limit determinations
Processing rule   Input field
Reference         BR584
Responsibility    Water Resource Economics Team


4                 Measured – non-household (sewerage services)            £m    3
Definition        All revenue accrued from provision of sewage treatment and
                  disposals to non-households where all or some of the charges for
                  the supplies are based on measured quantities of volume.
                  Exclude reception, treatment and disposal of trade effluent.
Primary Purpose   Informing future price limit determinations
Processing rule   Input
Reference         BR884
Responsibility    Water Resource Economics Team


5                 Trade effluent (sewerage services)                    £m       3
Definition        All revenue accrued from the reception, treatment and disposal of
                  trade effluent.
Primary Purpose   Checking compliance with statutory and Licence requirements
Processing rule   Input (positive number)
Reference         BO1140
Responsibility    Water Resource Economics Team


6                 Large user and special agreements (water               £m      3
                  services)
Definition        All revenue accrued from the sale of potable water to:

                  i.   premises where the premises were supplied in the reporting
                      year with not less than such quantity of water as was
                      specified at the time under section 7(5)(a) of the Water
                      Industry Act 1991. From 2005-06 this has been 50Ml per
                      annum, unless the undertaker’s area is wholly or mainly in
                      Wales for which the quantity is 250Ml per annum. Include
                      revenue from new licensees;
                  ii. or where the charges are fixed in accordance with
                      agreements with the persons to be charged as is referred to in
                      section 142 (2)(b) of the Water Industry Act 1991, instead of
                      being fixed in accordance with a charges scheme.
Primary Purpose   Informing future price limit determinations
Processing rule   Input
Reference         BR565
Responsibility    Water Resource Economics Team
6                 Large user and special agreements (sewerage              £m    3
                  services)
Definition        All revenue accrued from provision of sewerage services including
                  the reception, treatment and disposal of trade effluent to:

                  i.   premises where the premises were supplied in the reporting
                      year with not less than such quantity of water as was
                      specified at the time under section 7(5)(a) of the Water
                      Industry Act 1991. From 2005-06 this has been 50Ml per
                      annum, unless the undertaker’s area is wholly or mainly in
                      Wales for which the quantity is 250Ml per annum;
                  ii. or where the charges are fixed in accordance with
                      agreements with the persons to be charged as is referred to in
                      section 142 (2)(b) of the Water Industry Act 1991, instead of
                      being fixed in accordance with a charges scheme.
Primary Purpose   Informing future price limit determinations
Processing rule   Input
Reference         BR865
Responsibility    Water Resource Economics Team


7                 Other sources (excluding large users, third parties      £m     3
                  and special agreements) (water service)
Definition        All other sources of turnover for water services that are not
                  reported in the lines 1 to 6.
Primary Purpose   Informing future price limit determinations
Processing rule   Input
Reference         BR574
Responsibility    Water Resource Economics Team


7                 Other sources (excluding large users, third parties     £m       3
                  and special agreements) (sewerage service)
Definition        All other sources of turnover for sewerage services that are not
                  reported in lines, 1 to 6.
Primary Purpose   Informing future price limit determinations
Processing rule   Input
Reference         BR874
Responsibility    Water Resource Economics Team


8                 Total turnover (water service)                       £m         3
Definition        Total appointed business revenue for water services.
Primary Purpose   Informing relative performance and efficiency assessments
Processing rule   Sum of lines 1 to 7.
Reference         BO1181
Responsibility    Water Resource Economics Team


8                 Total turnover (sewerage service)                    £m         3
Definition        Total appointed business revenue for sewerage services.
Primary Purpose   Informing relative performance and efficiency assessments
Processing rule   Sum of lines 1 to 7.
Reference         BO1182
Responsibility    Water Resource Economics Team
B        OPERATING COSTS

    9                 Employment costs                                          £m     3dp
    Definition        The sum of the total costs of "non-manual and manual manpower"
                      which are directly attributable to each service. To be included are
                      the gross salaries and wages of all employees within the relevant
                      activity, including payments resulting from bonus and profit-related
                      payment schemes, employer's National Insurance contributions,
                      superannuation, unfunded pension liabilities, sick pay, sickness
                      benefits, private health insurance, retirement awards, death in
                      service benefits, paid leave, subsistence, travel, entertaining and
                      conference expenses.
    Primary Purpose   Informing relative performance and efficiency assessments.
    Processing rule   Input
    Reference         BM101 BM201 BM301
    Responsibility    Comparative Efficiency Team


    10                Power                                                   £m      3dp
    Definition        All energy costs, including the climate change levy, other than
                      energy used for transport and energy costs, including the climate
                      change levy, associated with the provision of depots and offices -
                      which are included in general and support activities - which are
                      directly attributable to each service. Income from energy
                      generation should be treated as negative operating expenditure.
    Primary Purpose   Informing relative performance and efficiency assessments.
    Processing rule   Input
    Reference         BM102 BM202 BM302
    Responsibility    Comparative Efficiency Team


    11                Hired and contracted services                             £m     3dp
    Definition        All hired and contracted equipment and services, which are
                      directly attributable to each service. (Hired services excludes the
                      hire of vehicles and plant, which is included in general and support
                      activities). Contracted services includes all contracted labour;
                      professional advice (such as lawyers and consultants); computer
                      software; and local authority contracts for the collection of water
                      and sewerage charges. (The provision of services by associated
                      companies is dealt with in line 12.)
    Primary Purpose   Informing relative performance and efficiency assessments.
    Processing rule   Input
    Reference         BM104 BM204 BM304
    Responsibility    Comparative Efficiency Team
12                Associated companies                                    £m     3dp
Definition        The total cost of associated companies that are directly
                  attributable to each service.

                  If the total cost of all hired and contracted services from
                  associated companies (excluding services that are capitalised or
                  included in infrastructure renewals expenditure of
                  prepayment/accrual) exceeds 20% of the total operating costs of
                  the appointed business, before interest and tax, then such costs
                  must be analysed across the headings of the segmental analysis
                  as if the sub-contracted activities were carried out by the
                  appointee. If the total costs of such subcontracted services fall
                  below this limit then companies may, instead of the foregoing
                  analysis, identify their total cost as a separate and additional
                  component of the segmental analysis within the commentary.
                  (Such transactions with associated companies are also subject to
                  the general requirements of paragraph 6 of Condition F of the
                  Licence, as described in part 3 of RAG 3.02.)
Primary Purpose   Informing relative performance and efficiency assessments.
Processing rule   Input
Reference         BM105 BM205 BM305
Responsibility    Comparative Efficiency Team


13                Materials and consumables                                 £m  3dp
Definition        All materials and consumables that are not in hired and contracted
                  services which are directly attributable to each service.

                  This category of cost includes equipment (such as small tools and
                  clothing), provisions, tarmac and backfill materials, but excludes
                  all items capitalised or included within infrastructure renewals
                  expenditure. Most if not all stock items fall into this category.
Primary Purpose   Informing relative performance and efficiency assessments.
Processing rule   Input
Reference         BM106 BM206 BM306
Responsibility    Comparative Efficiency Team


14                Service charges                                          £m  3dp
Definition        Total cost of service charges by the Environment Agency or BWB
                  (British Waterways Board) for water abstraction or discharge
                  consents which are directly attributable to each service.
Primary Purpose   Informing relative performance and efficiency assessments.
Processing rule   Input
Reference         BM131 BM231 BM331
Responsibility    Comparative Efficiency Team


15                Bulk supply imports                                     £m     3dp
Definition        Total payments for imported bulk supplies.

                  If a supply is a shared supply and is jointly owned, the costs
                  associated with it should not be reported in the bulk supply imports
                  line.
Primary Purpose   Informing relative performance and efficiency assessments.
Processing rule   Input
Reference         BM140 BM240 BM340
Responsibility    Comparative Efficiency Team


16                Other direct costs                                      £m      3dp
Definition        Any other operating costs, but excluding interest and taxation, on
                  an aggregated basis, including costs associated with the provision
                  of depots and offices, and insurance premiums, (where such costs
                  exceed 5% of total operating costs, an analysis should be
                  provided), also include fines and penalties, which can be directly
                  attributable to each service.
Primary Purpose   Informing relative performance and efficiency assessments.
Processing rule   Input
Reference         BM108 BM208 BM308
Responsibility    Comparative Efficiency Team


17                General and support expenditure                             £m     3dp
Definition        General and support activities include all centrally provided
                  services, except for any items specifically covered under the
                  individually identified activities. The following services should be
                  included:

                     administrative;
                     personnel;
                     financial;
                     legal and property management;
                     research and development;
                     policy determination, implementation and monitoring;
                     audit;
                     public and employee relations;
                     data processing;
                     planning liaison;
                     vehicles and plant (including hired vehicles and plant, and
                      leased company cars);
                     electrical and mechanical maintenance;
                     land and property maintenance;
                     materials storage;
                     operational and technical support; and
                     general and support buildings.

                  Where an associated company provides such services, the
                  relevant charge should be included.
Primary Purpose   Informing relative performance and efficiency assessments.
Processing rule   Input
Reference         BM110 BM210 BM310
Responsibility    Comparative Efficiency Team
18                Customer services                                       £m     3dp
Definition        Total costs directly associated with customer services, except for
                  current cost depreciation.

                  Include customer accounting, the reading of meters, debt recovery
                  and the costs of disconnections, customers' enquiries relating to
                  tariff matters and charging/billing, and complaints handling. The
                  cost of billing services purchased should be included but the costs
                  of services provided for third parties excluded. For these
                  purposes, the latter costs should be estimated, and adjustments
                  made to the appropriate headings (and compensating adjustments
                  made under Services provided for third parties). Include donations
                  made to charitable trusts assisting customers or to other assisting
                  customers with payment difficulties.

                  See RAG 4.01 for further definitions.
Primary Purpose   Informing relative performance and efficiency assessments.
Processing rule   Input
Reference         BM341
Responsibility    Comparative Efficiency Team


19                Scientific services                                       £m      3dp
Definition        Total costs directly associated with scientific services except for
                  current cost depreciation.

                  Include the costs of scientific and laboratory services, and of the
                  monitoring of quality. The cost of such services purchased should
                  be included but the costs of services provided for third parties
                  excluded. For these purposes, the latter cost should be estimated,
                  and adjustments made to the appropriate subjective lines (and
                  compensating adjustments made under Services provided for third
                  parties).

                  See RAG 4.01 for further definitions.
Primary Purpose   Informing relative performance and efficiency assessments.
Processing rule   Input
Reference         BM342
Responsibility    Comparative Efficiency Team


20                Other business activities                                £m      3dp
Definition        Total costs directly associated with other business activities
                  except for current cost depreciation.

                  This should include the cost of regulation, including all incremental
                  managerial costs of regulation associated with a periodic review,
                  licence fees payable to Ofwat and DEFRA in respect of regulation;
                  certification fees associated with the Licence requirements; and
                  staff and associated costs incurred in the preparation of
                  submissions to, and liaison with, regulators. (Note: Environment
                  Agency service charges are included under the operational
                  activities.)
Primary Purpose   Informing relative performance and efficiency assessments.
Processing rule   Input
Reference         BM343
Responsibility    Comparative Efficiency Team
    21                Local Authority rates                                   £m      3dp
    Definition        The cost of Local Authority rates. This should include both the
                      Uniform Business Rate and the National Non-Domestic Rate (if
                      appropriate).
    Primary Purpose   Informing relative performance and efficiency assessments.
    Processing rule   Input
    Reference         BM317
    Responsibility    Comparative Efficiency Team


    22                Doubtful debts                                           £m    3dp
    Definition        The charge/credit to the profit and loss account for bad and
                      doubtful debts.
    Primary Purpose   Informing relative performance and efficiency assessments.
    Processing rule   Input
    Reference         BM318
    Responsibility    Comparative Efficiency Team


    23                Exceptional items                                    £m        3dp
    Definition        Exceptional items are defined in FRS3 Reporting Financial
                      Performance.
    Primary Purpose   Informing relative performance and efficiency assessments.
    Processing rule   Input
    Reference         BM319
    Responsibility    Comparative Efficiency Team


    24                Total operating expenditure                          £m        3dp
    Definition        Total operating expenditure
    Primary Purpose   Informing relative performance and efficiency assessments.
    Processing rule   Sum of lines 9 to 23
    Reference         BM351
    Responsibility    Comparative Efficiency Team


C        DEPRECIATION

    25                Depreciation - above ground assets                   £m        3dp
    Definition        Depreciation on above ground assets
    Primary Purpose   Informing relative performance and efficiency assessments.
    Processing rule   Input
    Reference
    Responsibility    Regulatory Accounts and Business Affairs Team


    26                Depreciation - below ground assets                   £m        3dp
    Definition        Depreciation on below ground assets
    Primary Purpose   Informing relative performance and efficiency assessments.
    Processing rule   Input
    Reference
    Responsibility    Regulatory Accounts Team
    27                Total depreciation                                   £m    3dp
    Definition        Total depreciation on below ground and above ground assets
    Primary Purpose   Informing relative performance and efficiency assessments.
    Processing rule   Sum of lines 25 and 26
    Reference
    Responsibility    Regulatory Accounts and Business Affairs Team


D        OTHER INCOME

    28                Other income                                            £m       3
    Definition        Other income, this should include any profit/loss on disposal of
                      fixed assets.
    Primary Purpose   Informing relative performance and efficiency assessments
    Processing rule   Input (positive number)
    Reference
    Responsibility    Regulatory Accounts and Business Affairs Team


    29                Total operating profit                               £m         3
    Definition        Total operating profit
    Primary Purpose   Informing relative performance and efficiency assessments
    Processing rule   Sum of line 8 and line 28, less lines 24 and 27
    Reference         BO2060
    Responsibility    Regulatory Accounts and Business Affairs Team