Anglian Water is to seek powers to buy back up to 10 per cent of its shares, marking a first for the industry. The company also kicked off the reporting season in the industry with plans to give customers a rebate of up to pounds 6 each at a cost of pounds 12m and to establish a fund to help those with genuine problems in paying bills.
Robin Gourlay, chairman, said the restructuring of the company over the last year had "laid foundations for delivering benefits to our customers as well as significant real dividend growth for our shareholders". Anglian said that about 600 jobs had been lost and a further 300 would be cut later this year.
Mr Gourlay was speaking as the company announced a 19.7 per cent increase in pre-tax profits to pounds 230.1m before exceptional items in the year to 31 March. Earnings per share rose by 20.1 per cent to 71.1p and the dividend is up 14 per cent at 26p.
The results prompted a sharp attack from the Labour Party. Andrew Smith, Shadow Chief Secretary to the Treasury, said he was "outraged" at the profits figure at a time when the company was cutting investment and jobs.
Anglian said the share buyback would increase its gearing from 38 per cent to 66 per cent and would be beneficial to the company's tax position. The shares rose 12p to pounds 5.43.
The company denied any pressure from the regulator, Ofwat, to give customers a rebate. A spokeswoman said: "We wish to share the efficiency savings we have made in a responsible way." The full pounds 6 rebate will go to customers who take both water and sewage services from the company, while those using one service will receive a pounds 3 rebate.
The improvement in profits was despite a loss of pounds 3.4m in the process engineering arm, compared with a profit of pounds 2.3m the previous year. Anglian Water International also made a loss of pounds 2.9m as the company continued its drive to win contracts overseas.
A spokeswoman for the company said: "The AWI result is not so much a loss as an investment in the future. This is a long-term business." During the year, Anglian won its first big contract for the design and construction of a sewage plant in New Zealand. The deal is worth pounds 50m plus about pounds 2.5m a year to operate the plant.
One City analyst said the results were "even further bad news" in the non-core business and questioned the wisdom of pursuing further expansion overseas. "It is a management travesty," he said.
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