Northumbrian Water details flood plan

28/11/2007

LONDON (Reuters) - Water utility Northumbrian Water Group reported a 16.6 percent rise in first-half profit on Wednesday and set out its strategy for tackling floods in the north and drought in the south.

Managing Director John Cuthbert also told Reuters he saw no sign of any change in strategy by the group’s main shareholder that would make Northumbrian a more attractive bid target amid the current frenzy of water utility buyouts.

Rival Kelda Group agreed to be bought for 3 billion pounds this week, and last month Southern Water went for 1.3 billion.

But Northumbrian is seen as a difficult target because 26 percent of its shares are held by the Ontario Teachers’ Pension Plan Board.

"When they first became investors, they said they were in it for the long term, and nothing we’ve seen would cause us to think they’ve changed that view," said Cuthbert.

Profit before tax was 88 million pounds in the six months to September 30, compared to 75.5 million a year earlier.

Northumbrian shares rose 0.5 percent to 325 pence by 8:09 a.m., valuing the group at around 1.7 billion pounds.

Cuthbert said the group’s 25-year strategy statement included investment to deal with surface water flooding in the north of England, and a 60 percent expansion of its Abberton reservoir in the south by 2014.

Northumbrian said energy prices were lower this year than last, but remained volatile and looked set to rise.

"It is already evident that substantial increases in energy costs will be experienced in 2008/09, largely removing the benefit gained this year," it added.

Cuthbert said the group was aiming at increasing the amount of green energy it generates itself, such as more hydroelectric projects and a 38 million pounds plant at Bran Sands in the northeast that will generate green energy from sewage sludge.

Northumbrian proposed an interim dividend of 4 pence, up 6.7 percent on last year.

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