Increase in underlying annual profit for Anglian Water

'Love every drop' branding on an Anglian Water van.

'Love every drop' branding on an Anglian Water van. - Credit: Archant

Regional water and sewerage services group Anglian Water has announced an increase in underlying annual profits, following a year which marked the end of a five-year settlement with regulator Ofwat.

Anglian Water (AW), which is based in Huntingdon but operates across the eastern region, said revenue for the 12 months to March 31 rose by 2.5% to £1.244billion, from £1.214bn the previous year.

This reflected an inflation-based price increase of 2.6%, partly offset by reduced demand due to a wet spring and a cooler summer compared with the previous year.

AW added that a decision not to implement the full price increase permitted under the terms agreed with Ofwat had resulted in customer bills being around £10million lower than they would otherwise have been.

The bad debt charge for the year was £33.1m, up slightly from £32.4m the previous year but representing 2.66% of revenues against 2.67% the previous year.

Underlying operating profit fell by 3.5% from £468.0m to £452.6m, reflecting increases in operating costs and depreciation, but pre-tax profit on an underlying basis rose by 8.4% from £167.9m to £182m, largely as a result of a reduction in net finance costs.

However, one-off losses of £212.8m on financial derivaties saw the statutory bottom line profit fall to £160.7m, from £441.2m the previous year when derivatives delivered a gain of £86.4m.

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AW said it had fully met its obligations for the regulatory period just ended, known as AMP5, and had engaged with more than 50,000 customers in developing its new plan for the next five years, AMP6.

Peter Simpson, Anglian Water Group chief executive, said: “The plan, which we agreed with Ofwat in January 2015, promises a 7% price drop for an average household bill in 2015-16.

“This is the largest percentage reduction of any of the water and sewerage companies, and is something we are able to commit to as we have become an increasingly efficient business during AMP5 between 2010 and 2015.”

He continued: “In 2014-15, the final year of AMP5, we invested £439m in essential services, maintaining and developing our networks, and running our business.

“This is in the context of our £2.1billion investment programme since 2010. This concludes AMP5, during which we have delivered 100% of our regulatory obligations, have achieved and retained an industry-leading customer service proposition, and have become an increasingly efficient business.”

And he added: “We are delighted to have received a Queen’s Award for Enterprise for Sustainable Development, in recognition of the work we have done to embed sustainability across our business. This award is a reflection of how much our staff and our customers have done to help us become a more sustainable business, and to protect the region we serve for the future.”