Portsmouth is competition bound as sales and cost cuts overcome headwinds
Portsmouth Water reported a near 75% gain in pre tax profits in 2015-16 fuelled by increases in bills and customer numbers along with a fall in capital expenditure. And the firm emphasised its intention to take part in a competitive market for retail to households should one emerge.
In his statement for the annual report to 31 March, chairman of the south coast water only firm Mike Kirk said it "intends to be active in a household retail market should one be established."
In the report period the company announced plans for July this year, to provide a social tariff in supporting customers who find it difficult to pay. The tariff will add "a small general increment in customers’ bills" the company said.
Portsmouth reported a £1m growth in sales to £339.8m on the back of a tariff increase and its addition of 2,300 properties served. Infrastructure renewal spending was down £1.9m on the previous year – a change that was "expected to reverse in 2016/17." With year on year costs flat, operating profit for the year was up 23% at £8.2m.
A £1.3m fall in interest, offset by finance income of some £0.5m and a similar amount lost in asset disposals, took profit before tax to £4.2m – up 73% on the previous year.
Other movements included a step up in depreciation charges on redundant assets following Portsmouth's addition of ultra violet treatment systems to its infrastructure. And it incurred a £0.3m outcome delivery incentive penalty while staff costs increased £0.6m reflecting a 2.3% rise in wages with a £0.2m increase in pension costs.
Gearing was shaved by two percentage points to 70.2%.
During the report period Portsmouth opted out of impending non-household retail market competition and announced in February its plan to dispose of its business retail operation to water retailer, Castle Water on 1 April 2017.