NORTHUMBRIAN Water’s contribution to the profits of its owner Cheung Kong Infrastructure has exceeded the Chinese company’s expectations.
Cheung Kong Infrastructure, part of a consortium which paid £2.4bn for the Durham-based company last year, has said its profits rose 18% last year to £385m in the six months to the end of June.
The firm, backed by Li Ka-shing, Hong Kong’s richest man, said that its UK businesses, which also include EDF’s UK power grids contributed £224m, which is 45% up on the previous year.
It also owns Northern Gas Networks, which supplies gas across the North East. That also performed well with profit contribution rising by 16% to £30.5m.
The company said Northumbrian Water’s profits beat its own forecast while its UK power business benefited from cost cutting, higher revenue and a tax reduction.
CKI chairman Victor Li said the business said the business could make further acquisitions because it had a strong cash-to-debt ration.
“A challenging economic landscape may also create opportunities. Acquisition prospects for quality assets often arise during periods of instability. “Backed by our strong financial platform, we will continue to seek acquisitions that further enhance our asset base and income stream,” he said in a statement.
CKI is an affiliate of Cheung Kong Holdings, headed by Victor’s father Li Ka-shing. The company has been buying up UK utilities as it reportedly favours the stability of the sector.
Northumbrian Water was bought by UK Water which is a consortium of Hong Kong companies – Cheung Kong Infrastructure Holdings Ltd (CKI), Cheung Kong (Holdings) Ltd and Li Ka Shing Foundation Ltd – which was specially set up to buy out Northumbrian.
CKI used to own Cambridge Water, but sold the company to HSBC to avoid any competition issues.