Welsh Water half-year profits wither as operating and financing costs escalate

Dwr Cymru Welsh Water has reported a 39% drop in interim operating profit for the half year to £57.1m with increased operating expenditure and renewal costs along with an exceptional business refund in the same period last year accounting for the decrease.

The company reported a 31% hike in overall investment to £161m which included a 67% boost to capital expenditure to £54.4m for the six months to 30 September 2016. Cost of bad debt fell £1.3m to £12.5m compared to the same period last year.

Discounting fair value adjustments for financial derivatives, the company reported an underlying profit before tax of £1.1m – a decrease from £24.8m in the same six months in 2015. This was mainly the product of a £20m exceptional gain in the previous year and increased financial costs. Operational expenditure was up £10m year on year to £152m while infrastructure and renewals expenditure was also up by close to £10m to £40m.

Chief executive officer Chris Jones said the results were “a testament to the customer-led way of working that is a fundamental part of our not-for-profit model.” He added: “The progress we’ve made is borne out in the encouraging independent reports, which show we are consistently achieving amongst the highest standards of customer satisfaction in our industry. “

Fair value losses on derivative instruments reported as required under International Financial Reporting Standards were £128.3m compared to an £86m gain in the same six months in 2015. Including derivative adjustments Dwr Cymru Welsh Water’s made an interim loss before tax of £93.1m versus an interim profit of £104m in 2015.