South Staffs half-year results: delaying capex after dry summer

(by Verity Mitchell)

South Staffs has reported half-year results. Turnover increased to £96.6m from £75.9m, driven by the new price control. Operating profit before exceptional items grew to £24.2m from £15.8m. Debt/RCV decreased substantially to 61.1% from 69.4%, reflecting the delay in the ramp-up of capital expenditure. Purchase of tangible fixed assets in its cashflow statement fell slightly to £19.3m from £20.3m.

Management flagged that, because of the prolonged hot and dry spell, the business paused some capital activity to protect resilience of supply to customers during this extended period of high demand. Therefore, the business has rephased a number of schemes into the second half of the year. The company has commenced its infrastructure renewals expenditure in line with the AMP8 commitment to spend £84m on delivering 250km of mains replacement.

A second interim dividend of £1.84m was approved for the financial year to 31 March 2025, after the end of the reporting year.

Management flagged likely penalties for failing to meet targets on: per capita consumption, C-MeX and BR-MeX, water quality contacts and mains repair targets for the year. In addition, Compliance Risk Index, numbers of unplanned outages, discharge permit compliance and operational greenhouse gas emissions are all at risk of falling short of target.

Management says it is developing a new customer-centred strategy to improve the company’s performance. This includes ensuring people receive appropriate training and achieve the relevant quality standards. As part of this, management is focusing on: complaint handling, billing processes, operational processes and what it called ‘critical customer journeys’.