Wessex profits nipped by operating costs and tucked by tax changes
Half year operating profit at Wessex Water were near unchanged at £118.8m from the previous year following the impact of a 4.7% operating costs increase to £95.9m. But profits after tax were lifted by total taxation moving further into credit for the six months to 30 September 2016 – to double the tax credit at the same stage last year at £3.9m.
Post tax profit was up £2m to £86.1m on turnover up £4.6m to £262.2m. The increase in sales was largely driven by a £5m hike in regulated tariff revenue. Other revenue-changing activity included new customers offset by the impact of customers switching to meters.
Operational costs (before depreciation) were up to £95.9m due chiefly to rising inflation, new obligations, retail costs, and repairs. Savings came from from control of chemical and energy consumption and reduced private sewer costs.
Depreciation and amortisation were up by £1.7m to £52.1m as new assets were depreciated for the first time adding £2m to base depreciation.
Wessex’ corporation tax charge fell £1.5m from the half way stage last year to £12.2m this year. Deferred tax remained flat but in credit for the second year at £16.0m. Deferred tax was in credit for both years because of a rate reduction from 20% to 18% last year and from 18% to 17% this year.