Anglian Water has blamed tighter price controls for its 24.8% fall in operating profits.
The increasing operating costs and regulatory price reduction have been specified as the primary reasons for the profit drop.
For the year ending March 31 2016, the firm posted a £340.4 million underlying operating profit for the year, a fall from the £452.6 million profit made in the year before.
In addition, the year’s revenue was £1,185.4 million, that’s a decrease of £58.9 million from the previous year and is chiefly a reflection of the reduced number of customer bills that were introduced on April 1 2015.
This reduction in customer bills was introduced to ensure the water company fell in line with the regulation review of price setting. Customer growth in the area offset this partially.
Furthermore, the year’s operating costs went up to £560.6 million, an increase of £36.7 million (7%) in comparison to the 2015 figure of £523.9 million.
The company said that rising minor repair fees have contributed to the bulk of this increase, which was formerly capitalised before the introduction of the new infrastructure, in particular the newly established accounting rules.
As a result, this has led to further volatility in Anglian’s costs of operating the business.
The year’s bad debt charge has been reduced to £31.9 million, a 3.6% decrease from the previous year (£33.1 million in 2015). The firm has put this down to an improvement in customer credit management along with the effects of tariff reduction in the year.
Across the five year period of AMP6, the company is planning to pump over £2 billion into its operating systems via its investment programme.
Anglian said that the business retail sector of the company, ‘Anglian Water Business’ (AWB) is preparing in advance for the market opening of supplying to non-household customers by this time next year.