Profits up in outstanding year for water group Kelda.
Utility group Kelda said yesterday that an outstanding year for its water operation in Yorkshire had helped it boost annual pre-tax profits by 16.8% to pounds 223.7m.Kelda, which is hiking water bills by 18% in the next five years, said Yorkshire Water Services (YWS) was the single largest driver of the rise in profits in the year to March 31.
It said YWS achieved operating cost savings of pounds 120m and capital cost efficiencies of 13% during the year.
The business produced its best ever drinking water and waste water quality performance and further reduced water leakage and pollution incidents. It was named Utility of the Year at the Utility Industry Achievement Awards.
The group said the main area of below-expectations performance was its Aquarion business in the US, which was affected by a very wet summer that reduced metered consumption.
It said the division's new management had reduced costs and maintained underlying profitability.
Chairman John Napier said the group's focus on water operations had continued to offer significant benefits.
'YWS has had an outstanding year and this, along with the continued growth of the outsourcing operations business, has resulted in an excellent set of results,' he said.
In December, Kelda welcomed as 'reasonable and fair' a regulatory settlement that will allow it to raise bills to around pounds 288 by 2009-10.
Kelda said the price hikes would allow it to strike a balance between improving and maintaining levels of service and keeping bills affordable for customers.
YWS - which is regulated by Ofwat - is Bradford-based Kelda's main UK subsidiary, providing water and waste water services to more than 4.7 million people and 140,000 businesses.
Elsewhere, the group has formed Kelda Water Services (KWS) to provide contract operations to third parties. KWS has implemented a Ministry of Defence contract secured last year and has gained a further deal with Welsh Water, which started in April.
'KWS remains actively engaged in the pursuit of further outsourcing opportunities,' it said.
Bottom-line pre-tax profits came in at pounds 212m against pounds 206.2m last time.
Kelda said it was increasing its full-year dividend by 8.1% to 29p per share.
It said its strong financial position would allow it to launch a limited share buyback programme expected to involve about 5% of its equity over the next two years.