Portsmouth Water has announced a reduced operating profit for the year ending March 31, 2017, from £7.6 million in 2016 to £5.6 million. Turnover was up at £40.3 million, compared with £39.8 million for the same period in 2016.
Chairman Mike Kirk played down the drop in operating profit saying Portsmouth Water’s financial results “show a return to more typical levels of profitability” after the 2016 results benefitted from lower infrastructure renewals expenses. The increase in turnover reflects the allowed regulatory price increase together with 2,100 new properties and higher measured consumptions, offset by lower chargeable work of £0.4 million.
The company’s preliminary results revealed that Castle Water paid it £2.9 million for its business customer base last year. The sale was completed in time for market opening.
The group said there were incremental costs of £0.5 million under the operating agreement to outsource non-household retail activities to Castle Water before the market opened. However, this was a one off cost and will not recur in 2017/18.
During the year, Portsmouth invested £4.2 million to replace 21km of pipes to improve the long-term reliability of its network. Over the five years of this regulatory period it expects to replace 110km of pipe representing 3.3 per cent of the network. The company also conducted a study of the resilience of all our resources to pollution and flooding. Although the study showed it has strong resilience, Portsmouth Water identified the requirement for some further investment, which it plans to bring forward in the next regulatory period.
The company also completed construction of an ultraviolet (UV) treatment plant at its Eastergate and Westergate water treatment works, at a total cost of almost £5 million. The improvements were made to address the risk of cryptosporidium, which, although low can, if left untreated, cause sickness. It is also close to completing a £5 million scheme to introduce UV treatment at its largest works at Farlington, and at the same time install a facility to recycle wastewater from the works.
Reusing the wastewater will increase the amount of water available for supply making the company more resilient to droughts.
Despite Portsmouth Water exiting the non-household water market when it opened to competition back in April, Kirk said there had still been a tremendous amount of work needed to be ready as a wholesaler. In October 2016, the company implemented a new
£2.8 million company-wide IT system to handle almost all of its business activities except for customer billing. The new system will enable Portsmouth Water to improve services
to customers and to provide it with the information needed to maintain its assets effectively and its planning capability.