Surge in profits from water firm

29/11/2007

THE Northumbrian Water Group has recorded a surge in profits of 16.6% for the first six months of the year – and dismissed speculation it is likely to be the subject of a takeover bid.

The Durham company which provides the North-East’s water saw sales of £333.8m in the six months to the end of September compared to £315.9m last year – a rise of 5% and its profits rose by £12.5m to £88m in the same period.

As well as these impressive results the company also revealed it had achieved the targets set by the various regulatory bodies. These included achieving 100% bathing water compliance and containing leakage to within established targets. It also recorded the “highest levels of customer satisfaction” in England and Wales.

NWG also announced it was to end the final salary pension scheme for employees who start working for the company after January 1, next year and existing employees will have to contribute around an extra 1% of their salary to their existing pension.

Managing director John Cuthbert said: “The group has delivered strong operational and financial performance in the six months. As announced previously NWL has successfully raised the finance for its investment programme through to 2010 and will not be increasing prices to customers by the full amount allowed.”

NWG is comprised mainly of Northumbrian Water which has around 2.6 million customers in the region, and Essex & Suffolk Water, which has 1.8 million customers in the south-east. The NWG also has interests in private finance initiatives in Scotland and Ireland.

The company was keen to dispel speculation it may be the next in the sector to be the subject of a takeover bid. The Kelda Group was bought for £3bn this week and last month Southern Water went for £1.3bn.

But Northumbrian is seen as a difficult target because 26% of its shares are held by the Ontario Teachers’ Pension Plan Board.Mr Cuthbert said: “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.”

The company announced it will be paying an interim dividend of 4p per share on February 1, next year. Northumbria shares rose by 6% to 343p, valuing the group at around £1.7bn.

The Journal / Evening Gazette - www.nebusiness.co.uk