Yorkshire Water makes £142m profit but pays no corporation tax

Richard Flint, Chief Executive of Yorkshire Water
Richard Flint, Chief Executive of Yorkshire Water
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YORKSHIRE Water defended its non-payment of corporation tax this year saying the hundreds of millions it spends on improving services, bathing water and keeping customers’ bills down means it is exempt from payment.

The Bradford-based group said it will pay out £111.5m in other taxes this year such as business rates, employee taxes and VAT.

Yorkshire Water claimed that customer bills have been kept low because if has borrowed money for capital investment rather than asking customers to pay up-front.

The company was heavily criticised by MPs last year for paying no corporation tax.

The firm made a pre-tax profit of £142.2m in the year to March 31, down from last year’s £186m.

Operating profit fell five per cent £330.2m and turnover rose five per cent to £984.2m.

Yorkshire Water said its position is in full compliance with the letter and spirit of UK tax law.

The firm said it has borrowed significant sums to invest in infrastructure and improve water and waste water services to meet customer expectations and legal requirements.

Tax law states that interest costs on these borrowings are tax deductible.

The firm’s net debt at the end of March was £4.56bn, which is up from £4.43bn the previous year.

A spokeswoman said the firm has always been open with its accounts and will pay corporation tax when it is due in accordance with UK law.

Yorkshire Water’s structure means it can offset tax losses from other parts of its parent company, Kelda Group.

Other parts include Kelda Water Services, a water and waste water contract operations company that works for The Ministry of Defence, Northern Ireland Water and Scottish Water.

The group will receive a deferred tax credit for the year of £49.6m, down from £62.3m last year, following a reduction in future UK corporation tax rate from 23 per cent to 20 per cent.

The total pay package for directors fell from £4.21m last year to £3.18m, a reduction of 25 per cent after the number of executive directors was reduced by a third, from nine to six.

Chief executive Richard Flint’s total pay minus pension stayed static at £695,000 and non-executive chairman Kevin Whiteman’s total pay rose from £267,000 to £363,000.

Dividends to shareholders fell from £256.6m last year to £165.5m.

Over the year the utility spent £344.6m on capital projects, down 10 per cent on last year, as part of a five year investment programme totalling £1.8bn.

Yorkshire Water said that in light of the financial pressures being faced by its customers, it decided not to increase charges by as much as originally planned in 2014/15, limiting the increase to the rate of inflation.

Mr Whiteman said: “During the year we continued to make substantial capital investment in the region, one outstanding highlight being our £110m initiative to improve the quality of bathing waters on Yorkshire’s east coast.

“As we conclude this work I am pleased that environmental benefits were already being delivered prior to the start of this year’s official bathing season.”

Following a £30m investment at one of its biggest waste water treatment works in Bradford, the group said the site is now well on the way to being entirely energy self-sufficient.

It added that a £23m investment in a new anaerobic digestion facility at its waste water treatment works in Sheffield will play a key role in minimising its environmental impact.