South West Water has reported a 10.8% rise in profits in its latest financial results revealed to the London Stock Exchange last week.
Reaching a record £162.5 million in year-on-year pre-tax profits, the company has been able to up its operating profits by 5.7% to £277 million.
The surprising figures have emerged despite a wave of difficult factors that South West Water (SWW) has had to face. These include a string of extreme weather conditions throughout the last twelve months, with a long, hot and dry summer in 2013 and a more stormy winter than usual.
SWW’s positive growth is a knock-on effect of its parent company Pennon’s own profit increase. The utility giant saw its operating profits rise by 4.8% to £257.5 million in the last financial year, while its revenues have risen by 10% t reach £1.32 billion.
Ken Harvey, chairman of the Pennon group, said:
“South West Water continues to deliver robust operational performance and improving standards of customer service.”
He also drew attention to the fact that this was “notwithstanding the dry summer of 2013” and the “extreme weather and resultant flooding” of the preceding winter.
“This has been a year of significant achievements for our group,”
he told stakeholders.
The increase in revenue for SWW is believed to be thanks to tariff increases, which have amounted to £25 million over the last 12 months. Meanwhile, new water connections have generated £3.7 million in additional revenue and the company has seen higher other sales.
These have helped to offset profit losses of £2.8 million caused by an overall reduction in demand and by many customers switching to metered tariffs. Metered tariffs help customers to monitor their usage effectively and give more accurate readings. Currently, 78% of SWW’s domestic customers are on a metered tariff.
Mr. Harvey said that despite the dry summer months endured last year, SWW had managed its water resources efficiently to ensure a consistent supply of water in the Westcountry. This removed the need to call a hosepipe ban for the 17th summer on the run.
The company was also helped by its ‘Pure Water, Pure Service, Pure Environment’ strategy, which enabled it to upgrade its largest water treatment works, Restormel, and maintain the quality of drinking water for its customers in Cornwall.
While both SWW and its parent Pennon enjoyed an encouraging financial year, however, the same could not be said for Pennon’s waste management firm, Viridor. The company saw its pre-tax profits drop by a whopping 19.5%, to £27.6 million.