The Investment column: Possible drain on profits threatens Anglian Water level
The Investment Column
Thursday 27 May 1999
But this year it has underperformed to the same degree. The market's switch to cyclical stocks has made Anglian less appealing as a defensive holding. Meanwhile, Ofwat is expected to impose on the privatised water companies some price cuts on 27 July. This uncertainty undermines Anglian's status as a stock which doesn't have surprises in the pipeline.
Operating profits in the water and sewage business fell from pounds 364m to pounds 292m last year, out of pounds 357m group profits. Ofwat is expected to make Anglian and others give customers a sharp one-off price cut to achieve fair charges over the next five years. Anglian opposes this because it will have to raise prices later to meet Ofwat's requirements on capital expenditure, which totalled pounds 347m this year. Ofwat, however, wants prices to be set according to annual investment targets, rather than averaged over the period. Depending on the outcome, Anglian may appeal to the Monopolies Commission. The significance for Anglian is that it would be less able than its larger peers to absorb a one-off hit. Anglian's interest cover is less strong than Thames Water's.
Of Anglian's pounds 829m turnover, pounds 104m comes from its international operations. These made a loss before interest of pounds 5.6m. Its US joint venture generates $40m (pounds 26m) and could perhaps provide double digit growth. Meanwhile Anglian has proved it can beat off the likes of Enron in securing new water contracts in Chile. But these are neither credible nor significant sources of non- regulated revenue. Charterhouse Securities forecasts pre-tax profits of pounds 278m and earnings of 94.5p this year, with a 47.9p dividend. The forward p/e of just 7.5 reflects uncertainty surrounding Anglian's path to growth. Investors may nevertheless wish to hold the stock for its 6.75 per cent yield.
- 1 Isis 'jihadi bride' claims forced sex with Yazidi girls is never rape because Koran condones it
- 2 Woman accidentally shoots herself in the head while posing for a selfie
- 3 Art Garfunkel calls Paul Simon a 'monster' with a Napoleon complex
- 4 Isis burns woman alive for refusing to engage in 'extreme' sex act, UN says
Isis 'jihadi bride' claims forced sex with Yazidi girls is never rape because Koran condones it
Woman accidentally shoots herself in the head while posing for a selfie
Isis burns woman alive for refusing to engage in 'extreme' sex act, UN says
Puerto Rico, island of lost dreams: People are leaving the debt-hit territory in droves as near neighbour Cuba's star rises
16-year-old girl beaten and burned alive by lynch mob in Rio Bravo, Guatemala
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
The day that Britain resigned as a global power
Almost a third of school pupils believe 'Muslims are taking over our country', study claims
SNP fury as HS2 finds 'no business case' for taking fast train service to Scotland
Gay marriage 'Bert and Ernie' cake bakery found guilty of discrimination in Northern Ireland
iJobs Money & Business
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...
£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...
£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...
£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...