Profits flow freely at Yorkshire Water

YORKSHIRE Water's interim pre-tax profits have moved ahead by 12 per cent to pounds 71.8m, despite price increases being restricted to 7.1 per cent - below the level allowed by its licence.

The core business made pounds 67m of the profits in the six months to 30 September as tight cost-control saw operating margins edge up to 30.5 per cent, against 29 per cent last time.

Non-regulated activities, such as the collection and burning of clinical waste, contributed pounds 5m. Of this, however, pounds 4.4m was exceptional income following the transfer of its engineering subsidiary to a joint venture with Babcock.

Over the next two years, bills will be on average 2 per cent lower than had been anticipated, primarily due to a revision of the water companies' pricing formula made by Ofwat, their regulator.

Sir Gordon Jones, chairman, said Yorkshire was saving money by using outside contractors for maintenance work. It also hopes to run all its operations from one location to improve efficiency.

'It remains difficult to get much out of the core business for shareholders,' Sir Gordon said.

Yorkshire has net debt of pounds 100m. The interest payable was pounds 5.7m, against interest of pounds 400,000 received last time.

The shares closed up 1p at 502p yesterday. Earnings per share were up 11 per cent at 34.4p and the interim dividend was 7.05p, against 6.5p last time. Turnover of pounds 239.5m was up by 9.1 per cent.