Wednesday morning business bulletin
Jun 4 2008 By Andrew Mernin
Northumbrian Water today warned a "dramatic increase" in energy prices will add more than £8m to costs at its water arm this financial year.
The update came as the company reported better-than-expected profits of £170.3m in the year to March 31, up 15.2% on a year earlier. It was helped by a 6.1% increase in water revenues after the firm was allowed to increase tariffs in order to support future capital investment programmes.
Operating costs in the water arm were £1.4m lower than estimated to regulator Ofwat in 2004, but Northumbrian said a retreat in energy prices during 2007/08 reversed in recent months with prices almost doubling on February 2007.
It added: ``This will add more than £8m to Northmbrian Water Limited’s operating costs in 2008/09, despite continuous efforts to minimise energy usage."
The group serves 2.6 million people in the north with water and sewerage services and 1.7 million people in Essex and Suffolk with water services.
Housebuilders took a fresh hammering today after broker UBS placed sell ratings on three firms and cut its price targets across the sector.
Barratt Developments led the latest sell-off with a drop of more than 11%, followed closely by Taylor Wimpey, Redrow and Bellway.
The slump by housebuilders capped a grim first hour of trading in London, with the FTSE 100 Index down 62.1 points at 5955.6 after following the lead of Wall Street. The Dow Jones Industrial Average closed almost 1% lower after Lehman Brothers was forced to deny it had funding problems.
Banks were among those lower in London, with Halifax Bank of Scotland off 10p at 341.75p and Barclays down 9.25p at 351p.
B&Q owner Kingfisher bucked the gloom by revealing that it had protected profit margins despite continued sales pressure. Shares rose 1.2p to 140p, putting rival Home Retail Group in the shade as the Homebase and Argos owner slipped 3.75p to 239p.
The owner of talkSPORT today announced plans to raise almost £50m as it became the latest firm to ask shareholders for a cash boost.
Broadcasting group UTV, which runs 24 radio stations and an ITV franchise, said the discounted rights issue formed part of a wider refinancing aimed at reducing debt and strengthening its balance sheet.
UTV said it remained confident in its long-term prospects, but added it was mindful of the need to balance risk with prudence in the current climate.
As a result, it has already put in place new five year financing facilities and will ask shareholders to participate in a 130p a share rights issue, representing a 39% discount on the share price yesterday. The underwritten offer will raise £49.9 million and involve two new shares for every three held.
The pound at 9am was US$1.9556 compared to US$1.9648 at the previous close while the euro at 9am was £0.7891 compared to £0.7864 at the previous close.
