Capital expenditure at Yorkshire Water increased by 78.2% in the six month period to 30 September 2016, rising to £175.5m compared to £98.5m for the same period last year, according to its interim results for the six months ended 30th September 2016.
The water company said the increase was to be expected as it is now into the second year of the new investment period and a higher proportion of the capital programme has moved from feasibility and design into the construction phase of delivery.
During the period Yorkshire Water has also agreed a total insurance claim of £56m in relation to the severe flooding in December last year which damaged its assets. In this six month period the company has received a further £10m from the insurance claim and incurred £9.9m of operational costs associated with the assets damaged in the event.
Turnover increased by 2.6% to £506.5m from £493.5m for the same period in 2015 attributed to higher trade effluent charges and a slight increase in volume used by measured customers.
However, operating profit reduced in the period by 5.8% to £147.8m compared to last year (£156.9m). The company said its operating costs have increased by 6.6% - up from £336.6m to £358.7m, primarily due to the planned increase in infrastructure repair and maintenance (£12.8m), and an increase in depreciation (£9.3m) due to the on-going capital programme.
During the six month period to 30 September 2016, total net debt has increased to £3,700.5m (31 March 2016: £3,551.7m) which reflects the raising of external debt to offset the utilisation of the capital facility to finance the capital programme.
Overall business performance for the first six months of the year has been strong, with Yorkshire Water currently meeting or exceeding 21 of its 26 operational, service and environmental performance commitments.
Final approval given for major overhaul of the company’s business and technology systems
The water company said good progress was continuing to be made on delivery of the company’s Blueprint 2020 change programme, with final approval recently given for a major overhaul of the company’s business and technology systems. The key enabling initiative will deliver significant operational and financial benefits over the current five-year AMP programme and beyond, according to Yorkshire Water.
Commenting on operational performance, while water quality compliance remains high, the number of customer contacts is above target as a result of a major water contamination issue in Thorne, near Doncaster, caused by the actions of a third party business customer.
During the period the £31m Hull waste water treatment works project saw all planned improvements necessary to manage odour and compliance risk completed by 31 May 2016, with the works performing well under elevated seasonal loading.
Approval has been given for, and work has started on, major drinking water quality improvements at Rivelin (£25 m) and Irton (£17 m) water treatment works and the £72 m Knostrop sludge and energy project, approved in 2015/16 is currently in detailed design and construction is on track.
Chief Executive Richard Flint commented:
"This strong performance was delivered against the backdrop of major change in the water sector with the opening of the Shadow Market for non-household retail competition on 3 October 2016."
"During the year we have delivered major organisational, operational and cultural changes to Yorkshire Water’s wholesale operations to ensure the business can service the needs of multiple retail operators in the future."
The firm is currently preparing to transfer all of Yorkshire Water’s business customer accounts to Three Sixty – the new business created by Yorkshire Water’s parent company, Kelda, which is competing to provide retail services to businesses across the UK.