South West Water has seen its profit before tax climb 10 per cent to £83.8 million as its parent company Pennon Group announces its results for the first half of financial year 2012/13.
Revenues at the water company rose 5 per cent to £256.5 million as a result of tariff increases and new connections, offset by an overall reduction in demand and the effects of customers switching to a metered tariff.
Approved tariff increases, including the 2.5% K factor, amounted to £20.4m and 2,600 new customer connections contributed £1.2m of additional revenue, the company said.
Operating profit for the half year increased by £7.1m (6.6%) to £115 million.
Capital expenditure in the first half of 2012/13 was £42.7 million, compared with £50.9m in the first half of last year. Regulatory net capital expenditure was £49.5 million. The focus for the capital programme remains weighted towards asset maintenance schemes and increasing the resilience of the company’s infrastructure, South West Water said.
Pennon Group revenue was down by 1.4 per cent year-on-year to £633.7 million while operating profit reduced by 4.8 per cent to £136.3 million. The firm’s recycling arm, Viridor, suffered a profit fall of 26.5 per cent, down to £22.5 million as the company has been impacted by recyclate prices. Despite this, Pennon posted a profit before tax of £111.1 million, up 3.4 per cent on last year.
Ken Harvey, Pennon Group Chairman said:
“South West Water is continuing its strong operational performance against the 2010-2015 regulatory contract with further advances in operating efficiency and customer service. Despite the wettest summer in 100 years impacting customer demand and operating costs, the company’s profit before tax has increased through rigorous cost control, efficiency delivery and stable interest costs. South West Water was unable to consent to Ofwat’s licence change proposals but has responded constructively on how its concerns can be addressed.
“Notwithstanding current challenges, the Group has delivered increased overall profit before tax for the first half year and an increase in dividend in line with our stated policy.”
He added that trading in Viridor has been significantly below the high level of last year’s first half due to recyclate prices, and remains cautious about future prospects for the prices. However, Viridor has made strong progress on its PPP and Energy from Waster (EfW) pipeline to form the basis for future growth, Harvey said.