Water sector operating profit up 7 per cent
20 October 2009
Water company operating profit increased 7 per cent to £3.2 billion in the 2008/09 financial year, the result of higher revenues and reduced capital maintenance charges, according to new figures from Ofwat.
Operating expenditure was up 2 per cent at £3.6 billion, in part because energy costs increased by 25 per cent.
Total investment during the year was £4.6 billion, 14 per cent more than assumed in the 2004 price limits, but 6.8 per cent lower than 2006/07.
Pre-tax profit during the last financial year fell by 22 per cent in real terms to £1.8 billion, according to Ofwat. The regulator said this was due to the impact of reduced inflation on the value of company borrowings, which affected the financing adjustment.
However, industry observers have questioned the way Ofwat chose to report the figures.
James Leigh, utilities partner at Deloitte, said: "The use of current cost accounts, which attempt to correct more usual financial accounts for the effects of inflation, have declined over the past ten years and now Ofwat is the only utilities regulator insisting on the use of current cost accounts.
"It is not clear that many people really understand how these accounts are drawn up or what they show, and it is also not clear why Ofwat continues to require them."
Source:
Utility Week
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