Utility Week

UTILITY WEEK | 18TH - 24TH MAY 2018 | 15 This week Southern to wind up subsidiary by year end Water company aims to close Cayman Islands subsidiary by the end of this year to increase trust Southern Water aims to close its subsidiary finance company in the Cayman Islands by the end of this year in a bid to increase trust with customers. The water company said it wants to make its financial structure and its 100 per cent UK tax status "more transparent and easier to understand". The Cayman Islands company was set up by South- ern Water in 2003 for debt raising purposes and the firm insists it has never "offshored its tax obligations". Southern said it has made the decision to wind up the subsidiary as it recognises the Cayman Islands contrib- utes to "misconceptions" about its business practices. Southern Water has been working towards the move since last autumn and the board reached an agreement to close the offshore company at the end of last year. Ian McAulay, chief executive of Southern Water, told Utility Week: "I'm not the sort of chief executive that's going to come out and say we are thinking about this – we are going to do it. We started talking about this on the board last year and we agreed towards the end of last year that we would proceed with winding it up. "There are no tax benefits with the Cayman Islands company but it has become toxic and there's an ability for things like that to becoming damaging in terms of trust." He said the company is making "reasonably good progress" but would not be drawn on a specific date for completion. "I don't like the whole 'we're going to get it done on this date' thing, it's more a case of we're target- ing being finished by the end of the year," he said. KP ENERGY Extra Energy made £26.7m loss in 2016 Extra Energy made a £26.7 mil- lion post-tax loss in 2016, accord- ing to its accounts, which were filed late with Companies House. The Birmingham-based energy supplier said part of the reason for the loss was a 10 per cent increase in its customer base, which grew from 404,000 to 441,000 during the period. As a result of the rise in customer numbers, Extra Energy saw its turnover increase to £359 million, up from £253.7 mil- lion the previous year. However, despite a "reasonable gross margin" being available, the cost of serving these additional cus- tomers resulted in an operating loss of £13.7 million, compared with a profit of £1.2 million the previous year. In addition, the company – which is funded in euros – made a foreign exchange loss of £7.8 million due to the signifi- cant devaluation of sterling aer the Brexit vote. ENERGY Npower announces 5.3 per cent price rise Npower has announced an aver- age price rise of 5.3 per cent. The increase is made up of an average rise of 4.4 per cent for gas and 6.2 per cent for electricity. The company blamed "whole- sale and policy costs" that are "largely outside its control". The changes, which come into effect on 17 June, will affect approximately 1 million of Npower's domestic customers, but the company insisted more than 60 per cent of its total customer base will not receive a price increase. ENERGY Centrica results hit by cold weather Chief executive Iain Conn remained upbeat as British Gas owner Centrica filed a trading update ahead of the company's AGM on 14 May. The update confirmed that shares have slipped by 23 per cent over the past year, but Conn said: "2018 has begun well and overall financial performance in the year to date has been good, despite high competitive inten- sity in all our markets." The company said its services division had been under unpre- cedented pressure during the bad weather caused by the Beast from the East, which increased energy demand, but also caused a record number of boiler break- downs – 145,000 in one week. It said this would result in lower first half adjusted operat- ing profit compared with the same period a year ago. Despite this, Centrica said it remained on track to achieve its 2018 targets. McAulay: 'it has become toxic' Stock watch 45 40 35 30 25 INNOGY SHARE PRICE, FIVE DAY Sep 17 Jan 18 May 18 INNOGY SHARE PRICE, FULL YEAR Innogy stocks were largely unmoved by the company's first quarter trading update this week (14 May) in which it reported a slight drop in revenues and adjusted earnings before interest and tax (EBIT) at the same time as a small rise in pre-tax profits to €1,176 million (£1,038 million). From a low base, adjusted EBIT for its UK retail arm Npower increased by nearly a quarter to £37 million, despite the supplier losing around 114,000 customers over the first three months of the year. 36.8 36.6 36.4 36.2 36.0 9 May 10 May 11 May 14 May 15 May Finance & Investment euros euros

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