Increased profits for water group

THE owner of Essex & Suffolk Water today announced increased profits for the first half of its current financial year.

Northumbrian Water, which supplies water to around 1.8million people in parts of north Suffolk, south Norfolk and north and mid Essex, posted a pre-tax profit of �89.7million for the six months to September 30, up 3.1% from �87m for last year's first half.

Turnover across the group, which also supplies water and sewerage services to 2.6million people within its core North East region, grew by 5.2%, from �351.2m to �369.4m.

The board is proposing an interim dividend of 4.72p per share, an increase of 7.5% on last year's mid-term payout of 4.39p per share.

Northumbrian said its water and sewerage charges had increased in line with regulator Ofwat's recent determination for the next five years and demand from both domestic and industrial customers had 'remained steady', with an increase in measured supplies.


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Operating costs had increased by 3.1%, from �192.2m to �198.2m, mainly reflecting increases in depreciation, rates, hired services and pension costs, partially offset by savings on power.

Capital investment during the period totalled �103.6m, with work on the expansion of capacity at the company's Abberton reservoir, near Colchester, on target for it to become operational in 2013.

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Both pipeline contracts involved in the project, together costing about �22million, had now been awarded, with contracts for the remaining pumping stations due to be awarded in 2011.

Reservoir levels across the group were normal for the time of year, except at Abberton which was being managed at a lower level than usual in order to accommodate the construction work, said the group.

Northumbrian added that it had achieved 99.9% compliance levels in terms of drinking water quality across both its northern and southern operating areas and it continued to meet its three-year rolling targets on leakages.

Its one-year leakage targets for 2009-10 had been slightly exceeded but his reflected the impact on the network of the harshest winter weather for 30 years and all targets for 2010-11 were expected to be met.

Chief executive Heidi Mottram, who took up the role in April this year following the retirement of John Cuthbert, said: 'The group continues to produce strong financial and operational results, providing a platform from which to fulfil its regulatory and contractual obligations over the next five years.'

She said the coming year would be important in removing current uncertainties and providing 'greater clarity on the future legislative and regulatory framework for the industry', with a proposed White Paper on water and a review of Ofwat by the Department for Environment, Food and Rural Affairs (Defra) as well as Ofwat's own review of its work.

She said that Northumbrian 'strongly' supported Ofwat's stated intention of reducing the regulatory burden and adopting a more risk-based approach to regulation in future.

'It is important that investor confidence is maintained throughout the period of review and consultation, which should aim to clarify responsibilities, simplify the regulatory framework and achieve benefits for customers,' she added.

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