Anglian Water has reported a slight drop in operating profit and an increased dividend payment with the publication this morning of its results for the six months ended 30 September 2014.

Profit before tax was £201.3 million (2013: £183.3 million), with profit after tax of £173.5 million (2013: £173.6 million). Operating profit has fallen by 1.1% to £260.0 million.

Dividends of £111.0 million (excluding intra-group dividends of £96.4 million, 2013: £96.4 million) were paid during the period (2013: £95.0 million).

Turnover increased to £637.3m up 2.0% from £624.8m for the same period last year, while operating costs rose 4.8% from £238.7m to £227.7m. The increase is primarily due to general inflationary increases, including £2.9m on energy costs, £2m on sludge treatment and tankering costs, and costs of £2.3m associated with newly commissioned plant, partially offset by savings from efficiency initiatives.  

Anglian said it had seen a modest improvement in customer debt collection, which has led to the bad debt charge reducing by £1.3 million compared with the same period last year to £15.5 million. Customer bills will be reduced by around £10 million for the full year. Looking ahead, preparations are underway for the introduction of a social tariff from April 2015.

Capital investment in the six months to 30 September 2014 was £175.4 million compared with £214.5 million in the same period last year.  This includes £5.5 million of expenditure brought forward from the AMP6 period, using the Transition Investment methodology allowed by Ofwat to aid a smoother transition between the current and next AMP period.  The water company said it is in a good position to deliver all its obligations and expenditure targets for the remainder of AMP5, which ends in March 2015.

 On operational performance, Anglian said the further development of its Optimised Water Network strategy, which sees pressure in the network proactively managed, has marked a step-change in the firm’s ability to manage water mains, and dramatically reduced the number of bursts and leaks that require repair. Over 25 schemes covering around one-fifth of the network  have been introduced in the last four years. The largest scheme to date, which covers much of the city of Peterborough and some of the surrounding area, was introduced in June. Anglian’s  intention is to expand the schemes further in AMP6, with the aim of having 50% of the network proactively pressure-managed by 2020.

On the quantitative Service Incentive Mechanism  (SIM) Anglian said it is confident that the firm is leading the industry on customer service and that its innovations are keeping pace with the changing expectations of customers.  The utility achieved joint first place in Ofwat’s combined qualitative and quantitative Service Incentive Mechanism (SIM) league table for 2013/14, This is in addition to first place in Ofwat’s qualitative SIM league table for the year to April 2014, placing Anglian in first place overall for the three years from 2011-2014.

In the run-up to the introduction of competition in 2017, Anglian said it is “making the appropriate preparations internally” to strengthen the Anglian Water Business team ready for a competitive non-household retail market.

Anglian Water is still separately awaiting the outcome of an investigation by Ofwat into allegations may have infringed the Competition Act 1998 in respect of its approach to pricing supplies to a housing development at Milton Keynes – the water company has refuted the allegations.