Sir Gordon Jones, chairman, said the water companies were caught between the two dinosaurs of Ofwat and the National Rivers Authority. 'We could be knocked sideways by one swish of their giant feet as they rampage around,' he said.
Trevor Newton, group managing director, said he had mixed feelings about Ofwat's recently announced guidelines for its periodic review of water charges. 'On balance, though, my view is negative. The return on capital is too low - we need 'K' factors of five or six to deal with the capital expenditure profile we've got under present legislation.'
Yorkshire's 'K' is three: it can raise charges by the rate of inflation as measured by the retail prices index plus 3 percentage points.
Mr Newton said the Government could help by applying pressure on the NRA to 'be sensible about the interpretation of the directives that are coming from Brussels'.
The 4.2 per cent rise in pre-tax profits was achieved on turnover that jumped 8.3 per cent to pounds 259.4m in the six months to the end of September. Operating profits were 14.6 per cent ahead at pounds 83.8m.
The non-regulated businesses - waste management and property - contributed 3.5 per cent of operating profits. Yorkshire has been relatively cautious in developing non-core divisions to sit alongside the regulated water business. Malcolm Batty, finance director, said it was gratifying that they made a positive contribution even after interest costs.
The turnover rise in the core water and sewage business masked a fall in activity - the jump in revenue was less than what would have been raised by the annual increase in charges.
Mr Batty said: 'Customers are looking for more effective ways of treating effluent without using so much water and we expect this trend to continue. Our strategy remains to run an efficient core business, while proceeding with our aspiration to have non-regulated businesses delivering significant earnings. That second objective has taken longer than we thought, and there are costs involved.'
Operating costs in the core business rose 3.5 per cent, but Mr Batty said the company had become more efficient. 'The rise comes from factors such as the costs associated with commissioning new capital schemes and rising insurance costs on our pounds 12bn of assets. We've actually cut core costs at headquarters.'
Yorkshire's interim dividend rises 7.8 per cent to 7.6p on earnings per share 4.9 per cent higher at 36.1p. Mr Batty said the real rise in EPS was 12 per cent if a one-off profit from last year on the creation of a joint venture with Babcock was excluded. The shares rose 25p to 585p.
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