Operating costs hike at Welsh Water as PR19 challenge takes toll on jobs

Operating profit at Welsh Water fell 56% year on year to £30.1m for the year to 31 March 2020. The drop reflected a £36m hike in operating costs including a £10.5m exceptional charge which the firm associated with staff layoffs to meet PR19 efficiencies. Revenue for the year was flat at £779m.

The not-for-profit company reported a £10m fall in operating expenditure which offset increases of £12.5m in asset renewal costs and £23m in depreciation and amortisation. “Restructuring plans to meet a challenging cost efficiency” under PR19 included a “headcount reduction of around 200” for the AMP7 period which was recognised in the current report.

Dividends to customers in the form investment into services under the company’s Return of Value model totalled £47m – up from £40m last year.

Financial expenses ticked down to £164.3m and offset fair value losses on derivatives up £19m. The company reported a pre tax loss up 42% on the previous year to £175.9m.

Welsh Water has forecast a £4m addition to its bad debt charge arising from the Covid pandemic.