AWG: Anglian Water 'exceeds performance expectations'
Utility group AWG said today that its Anglian Water business had "performed materially above management's expectations" during first-half trading, whilst the company's non-regulated businesses had performed as anticipated.
The company, which confirmed earlier this month that it had received a preliminary takeover approach for the whole group, also stressed in a trading statement that there was no guarantee that the approach would lead to a formal acquisition offer.
AWG, which is due to announce interim results for the six months to September 30th at the end of November, said that Anglian Water had benefited from an increase in seasonal demand amongst its customers, in addition to moves aimed at boosting operational efficiency and savings.
"Anglian Water's revenues benefited from increased seasonal demand, which taken together with the impact of operational efficiencies and savings realised from debt refinancing activities, contributed to a strong performance," said AWG.
The company added that despite a second successive dry winter in 2005/06, Anglian Water's overall water resources "remained within normal operating limits" throughout the first-half.
AWG revealed that as part of efforts to reduce the weighted average cost of debt at Anglian Water, it had issued a further £250 million of index-linked debt over the period to meet the company's ongoing funding requirements and in anticipation of the repayment of bonds that are due to mature in the short-term.
However, AWG said it expected its net debt to show an increase over the period due to planned capital expenditure aimed at enhancing Anglian Water's operations and investment in working capital resulting from new contracts secured by its Morrison business.
Following AWG's sale of Morrison's construction services and project investments businesses in March, the subsidiary now comprises of Utility Services, which provides repair and maintenance services to blue chip utility clients and Facility Services, which offers similar services to local authorities and housing associations.
AWG said that during the first-half, Utility Services secured a new two-year contract with National Grid and two new metering contracts with Cork County Council, while Facilities Services also added to its order book, winning a seven-year repair and maintenance contract with Manchester City Council worth more than £230 million.
Commenting on its previous announcement of a takeover approach for all its businesses, which is believed to have involved a consortium which included redundancy firm 3i Group, AWG said: "On September 14th, the board of AWG confirmed it had received a preliminary approach, which may or may not lead to an offer being made for the company."
"There can be no certainty that any offer will be made. A further announcement will be made in due course, as appropriate."