Bristol Water up for sale?

June 9, 2011

Bristol Water's Spanish owners, Agbar, have called in US bank Citigroup to advise on a possible sale of the company, according to the Financial Times.

The Spanish company, which is majority-owned by France's Suez Environment, could expect to get around £370m from a sale compared to the £362m – including debt – it paid five years ago. 

Bristol Water's pre-tax profits plummeted from £23.1m to £7.6m in the year to May 31 following what chairman Moger Woolley described as "one of the most unusual years in the company's long history". 

Not only had the company faced one of the severest Decembers and driest years in the company's history but the board's rejection of Ofwat's price limits and related obligations for the five years to March 2015 resulted in considerable effort dealing with the referral to the Competition Commission (CC). 
He said Bristol Water's underlying performance, which saw turnover rise £1m to £100.7m, had been stable but the determination by the CC had resulted in a £10m increase in the depreciation charge on infrastructure assetsThe company is experiencing uncertainty in the run-up to the regulator’s five-year pricing regime that took effect last April.

Bristol Water set out a list of expectations for the year ahead. They included increasing the number of customers that are metered; an increase in chemical and power costs; the potential for an increase in bad debts; and an increase in interest charges and related indexation arising from the £40m index-linked bond issued during the current year.

Meanwhile the company says last year was the driest for 50 years and it has having to draw nearly two thirds of its fresh water from the Sharpness Canal in Gloucestershire rather than from its Mendip reservoirs which are all suffering from lack of rain. The company stresses that it is not short of water and is not currently planning any water use restrictions such as hose bans.

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