Water group profits rise

Water utility group Kelda hailed the success of its Yorkshire Water business today as it posted a 9.4% rise in profits.

The provider maintained its supplies despite one of the hottest and driest years on record, contributing to a “very satisfactory” set of results for Kelda.

This contrasted with mixed results from the group’s other UK operations and a steady performance by its US water business.

Bradford-based Kelda saw pre-tax profits before exceptional items rise to £191.6m (€287m) in the year to March 31, while turnover increased 5.1% to £725.5m (€1.08bn).

Chairman John Napier said the performance of Yorkshire Water was particularly commendable as it was achieved against a background of severe water shortages.

Supplies were maintained without restriction or special drought orders, with the help of groups such as the Environmental Agency.

Yorkshire Water is Kelda’s main UK subsidiary, providing water and waste water services to more than 4.7 million people and 140,000 businesses.

Kelda has a 25-year £1bn (€1.49bn) contract with the Ministry of Defence to provide water and waste water services to MoD sites in the Midlands, Wales and south west England. It said today that this contract was performing to plan.

But its UK business support services arm Loop performed below expectations during the year due to unrecovered costs on a third party contract.

Kelda also owns the US water supply business Aquarion, one of the 10 largest investor-owned water utilities in the US.

It said the performance of this arm remained “satisfactory”, although for the second successive year it experienced unusual supply and demand conditions. Sales this year were down due to excess rainfall and lower temperatures, which reduced demand.

Kelda said the outlook for this financial year was “reasonably predictable” and that improvement was expected.

This financial year will be dominated by the first draft of industry regulator Ofwat’s pricing review for 2005 to 2010, which will largely determine Kelda’s prospects for the period.

Last year Kelda made £14.6m (€21.8m) from the sale of its waste recycling group.

At the bottom line, pre-tax profits were £206.2m (€308.8m) compared with £164.3m (€246.1m) last year.