Profits have fallen at Portsmouth Water, according to its latest set of Unaudited Interim Accounts for the six months ended 30 September 2016.

At £19.9 million turnover rose slightly compared £19.5 million for the same period last year, while operating costs rose to £13.8 million compared to £12.4 million. However, total operating profit has fallen from £4.1 million to £3.3 million.

The rise in operating costs has been attributed to a number of factors, the most significant being:

• Mains renewals costs - £900,000 However, the water company said activity in 2015/16 was very low following a change of contractors. The increased renewals activity is now almost at a steady state level.
• Castle Water retail costs - £200,000 in retail operating costs under the outsourced Non Household agreement with Castle Water.
• Electricity costs £100,000 – due to increased power usage and tariff.

Capital expenditure in the half year of £5.9 million increased in line with the phasing of the overall capital programme for the year, and was particularly impacted by three large capital schemes at water treatment works.

Commenting on its customer service, the company said it has continued its good customer performance in the industry Service Incentive Mechanism survey and was ranked second overall in aggregate across the 2 surveys undertaken to date.

During the period Portsmouth Water took the decision to exit the non-household(NHH) retail market and entered into a transaction with Castle Water. The agreement was structured with an operating agreement for retail services from April 2016 until market opening and the sale of the NHH retail operations at the point of market opening.

Commenting on market reform, the utility said the sector has evolved significantly since privatisation, the introduction of competition in the NHH retail market being the most recent example. Portsmouth said it it had progressed well in executing its Open Market implementation plans, achieving a number of key milestones during the first half of the year and remaining on track for market opening in April 2017.