Business Weekly - Cambridge, UK

Chief executive Chris Mellor, providing a double dose of cheer to investors and analysts as he announced interim results ahead of expectations, said the group had received “a number of good bids” for its businesses in Chile, the Czech Republic, China, the Republic of Ireland and Thailand.

Shares rose 13 per cent on the back of the news along with the results for the half-year to the end of September.

In that period, incidentally, AWG’s international businesses performed well, with profit up 18.1 per cent to £8.5m.

Group turnover increased to £945.8m, up 9.2 per cent on the same period last year, primarily due to a £73.2m increase from the infrastructure management businesses, which represents a rise of 14.1 per cent on the same period last year.

Operating profit fell by £4.6m to £154m. This was due principally to Anglian Water Services (AWS) benefiting in the prior period from the one-off release of accruals of £4.5m.

The infrastructure management business increased operating profit to £21.1m, an increase of 2.4 per cent on the same period last year. 

Interest charges increased by £6.4m to £99.2m before exceptional items, mainly due to the increase in debt as a result of the refinancing of the business and funding AWS’s normal capital expenditure.

Profit before tax, goodwill and exceptionals therefore fell to £54.8m (2001: £65.8m).

Mellor, who is a judge in Business Weekly’s East of England Business Awards, felt the performance was “satisfactory.” AWS continued to perform strongly and the group’s infrastructure management businesses were “making good progress.”

Anglian Water Services boosted turnover 2 per cent to £364m although pre-exceptional operating profit was down 3.1 per cent to £143.3m due to additional operating costs as a result of new capital works.

Project Management Services produced an operating profit of £1.5m compared to a loss of £1.9m last time. The division is focused on secure, long-term framework and PFI contracts. At present, over a quarter of its turnover comes from utilities.

Mellor said: “Now that the financial restructuring of the group has been successfully completed, the group is benefiting from a reduced cost of capital.

“Taken together with its strong operational performance, this reduction leaves AWS well placed ahead of the next regulatory pricing determination in 2005.”

He said that the forward order book for the infrastructure management businesses was £2.9bn at the period end, which broke down as follows: Utility Services, £0.5bn; Government Services, £0.6bn; Project Management Services, £0.5bn and International Services, £1.3bn.