Operating cost cuts offset impact of price controls and lower usage at Dee Valley

Reduced consumption and regulatory price cuts at Dee Valley Water during the year to March 2016 shaved £1.5m off revenue year on year taking it to £23.1m the company reported in its year-end results. Profit before tax was down 4.8% at £4.42m.

A near 4% reduction in operating expenses to £18.88m offset the drop in sales leaving operating income down11.8% from the previous year at £6.57m.

A fall in bad debt charge was a significant contributor to the company's reduction in operating costs. Provision for bad debt was down £0.3m from £0.8m after a one-off increase in provision in the previous year. An increase in capitalisation of labour costs during the report year also influenced the fallen operating costs. It arose from "additional headcount required and recruited to enable the Group to deliver its largest ever capital investment programme."

Capital expenditure of £6.2m for the report year was, Dee Valley said, focused on projects including upgrades at its Oerog Springs treatment plant and its mains renewal programme.

Meanwhile a £14m project to decommission Dee Valley's Legacy treatment works near Wrexham and improve network connections to end persistent discolouration problems associated with Legacy began in the report year this year. Dee Valley reported that capital investment next year was forecast to reach some £10m.

Dee Valley chief executive officer, Ian Plenderleith, said: "In previous years, customer satisfaction with water quality had been a particular challenge for us, however I am pleased to report that we have risen to this challenge with customer contacts for discoloured water reducing by 27% year-on-year. We are now well on track to outperform the target set for us by our regulators and meet the standards expected by our customers."

Dee Valley Group's results for the year to 31 March 2016 are available here