United Utilities Profile

Company: 
United Utilities
Author: 
David Hall
Date published: 
2007

United Utilities latest interim report , in December 2006, confirms that it still operates concessions in Bulgaria (Sofia), Estonia (Tallinn), Poland, the Philippines and Australia. The employees in the UK, Tallinn and Sofia justify an EWC.

UU retains 75% of the shares of Sofyska Voda, according to the latter’s website.

However, UU has reduced its stake in Tallinna Vesi, Estonia, to just over 25%, following an IPO of the company shares in May 2005. The city still owns 34.7%; 35.3% is held by a joint venture between UU and the EBRD, of which UU owns ¾ and EBRD ¼; and another 30% is floated on the stock exchange, half of which is held by international investors, according to the company roadshow in early 2007: the 2006 annual report states that Morgan Stanley hold 6.87% and Citigroup Global Markets holds 5%, as at the end of 2006.  The roadshow presentation emphasises that although it is regulated, future price rises are easily agreed, and although the costs are largely fixed – variable costs being equal to only about 10% of revenues – reliable profit growth can be expected from steady revenue growth.  UU’s behaviour in Tallinn has been similar to the private equity model: a rapid extraction of a high return, combined with the withdrawal of equity, followed by an exit after a few years – in this case, a gradual sale of shares to the public following the IPO.

UU has also reduced its stake in Manila Water to just 11% of shares: 30% is now owned by the Philippine group, Ayala; 7.8% by Mitsubishi; 7.3% by the private investment arm of the World Bank, the IFC; 4.3% by the Bank of the Philippine Islands Capital; and 35% is floated on the stock exchange.

The future may be uncertain.  The annual report is unenthusiastic about the international business, saying only: “The business currently operates concessions in Bulgaria, Estonia, Poland, the Philippines and Australia. United Utilities will continue to pursue opportunities in selected international markets, which are based around the group’s core utility skills and where the business is comfortable with the risk and reward dynamics.”

Table 1.                United Utilities subsidiaries in water in Europe

Country

Company

Sector

Ownership

Website

Employees

Contact

UK

North West Water

water

100%

 www.unitedutilities.com

4775 (2006)

 

Estonia

Tallinna Vesi

Water

26.5%

www.tallinnavesi.ee

322 (2006)

Ädala 10 Tallinn 10614 Tel: 6262 200 Fax: 262 300 tvesi@tvesi.ee

Poland

Aqua

Water

25%

www.aqua.com.pl

640 (1999)

Tel: 82-80-200 

Bulgaria

Sofiiska Voda

Water

75%

www.sofiyskavoda.bg

1000 (2003)

Tel: +359 2/ 974 44 13 Fax: 359 2/ 75 01 68