Welsh posts £15m underlying interim loss pre tax as inflation and depreciation bite

Inflation and increased depreciation took Dwr Cymu Welsh Water into a £15m underlying loss for the six months to 30 September 2017 from a £1m profit in the same period last year. Revenues were flat year-on-year at £377m reflecting a 1% increase in prices.

Retail Price Index inflation upped net interest due on index-linked debt by £8m to £64m excluding derivative movements. Depreciation and amortisation was up £9m to £134.9m.

Operating costs were near unchanged from the previous interim result at £152.8m with infrastructure renewals expenditure similarly stable at £41.1m.

Interim operating profit was off 14% at £49.2m. Bad debt was unchanged at £12m although customer debt recovery remained a “big challenge.”

A £77m fair value gain on financial derivatives took pre tax profit for the report period to £62m – from a £127m loss before tax at the same stage in the previous year when the firm posted a fair value loss of £128m.

Adjustments for the fair value movements in financial derivatives gave an underlying pre tax loss of £15.1m (£1m profit in 2016).

The company invested £196m in capital projects during the first half of the year and pleged a further £200 million during the second half. Chief executive officer, Chris Jones (pictured), said: “Our not-for-profit ownership model is designed to place our customers’ interests at the heart of everything we do. Not having shareholders enabled us to announce an extra £34 million of funding for investment in June, showing the benefits of the model for our customers, for the environment, and for the communities we serve.”

Dwr Cymru picked up the ‘Most Recommended’ water company in the 2017” prize at the Moneywise Home Finances Awards and it claimed an independent research finding that it had 90% satisfaction from its business customers.