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18 | 2ND - 8TH DECEMBER 2016 | UTILITY WEEK Finance & Investment This week Thames-Castle Water deal worth £99m Thames financial report reveals value of the business customer arm it has sold to Castle Thames Water has put the value of its non-household retail business – bought by Castle Water in a deal announced in July 2016 – at about £99 million. It added that the transfer of its business customers was "on-track to complete at business retail market opening in April 2017". In its financial statement for the six months to September 2016, Thames said it had invested £540.9 million, as part of its £4 billion investment programme for the 2015 to 2020 period. Underlying profit before tax was down at £127.3 million, compared with £216.8 million for the same period last year, excluding the impact of net losses and gains on financial instruments. Thames generated 127GWh of energy from sewage aer its technology investment – a 26 per cent increase on the first six months of its 2015/16 financial year, and a resultant saving of £15 million on its energy bill. The company also announced it has installed 90,000 smart meters to date, and that its combined water and wastewater bills remain the third-lowest in England and Wales. Second-stage customer complaints fell by 50 per cent, and 95 per cent of complaints were resolved first time. Thames Water chief executive Steve Robertson said: "We've lagged behind others in our customer service in recent years, but we're seeing record performance in resolving complaints first time and we're working hard to accelerate our rate of improvement." LV WATER Severn Trent ups Dee Valley bid Severn Trent raised its cash offer for Dee Valley Water, valuing its neighbour at about £84 million. The revised bid came aer the market closed on Wednesday 23 November, 24 hours aer Ancala had outbid Severn Trent's previous offer. Severn Trent had announced the previous week that it would buy Dee Valley in a deal worth £78.5 million, overtaking an original £71.3 million takeover agreed by Ancala. According to reports in the media, local MPs have raised concerns that Severn Trent's takeover of Dee Valley could result in job losses. Ancala said that, under its ownership, Dee Valley would "continue to be a local company, run by staff situated locally". Severn Trent said it intends to "extend support for vulnerable customers, where we provide discounts and support for local people who most need it". WATER Water Plus pushes UU revenue down United Utilities has reported a £4 million revenue fall as a result of the Water Plus joint venture approved earlier this year. The company reported revenue of £853 million in the six months to September 2016. It said the decrease was expected, and reflected the accounting impact of its JV. It added that "as expected, due to start-up costs, our Water Plus JV made a small loss of £0.9 million in the first half of 2016/17". UU's underlying operating profit was up £4 million year on year, at £313 million. The firm said this reflects the new regulated price controls, lower infrastructure renewal spending, and small falls in depreciation and the remaining cost base. Underlying profit before tax was down £16 million year on year to £189 million, as a result of a £19 million increase in underlying net finance expense. ELECTRICITY Capacity auctions expect higher prices Driven by higher procurement targets and less competition from existing generation, the upcoming capacity market auctions will clear at "significantly higher" levels than previous rounds, Macquarie Research has predicted. The four-year-ahead (T-4) auction for 2020/21 is projected to clear at £34/kW, and the early auction for 2017/18 at £38/kW. The two completed T-4 auctions for 2018/19 and 2019/20 cleared at £19.40/kW and £18/kW respectively. Uniper, RWE and SSE are set to benefit most. Thames' year-on-year profit before tax dipped Stock watch CENTRICA SHARE PRICE, 23 NOVEMBER - 29 NOVEMBER 23 Nov 24 Nov 25 Nov 28 Nov 29 Nov 1,500 1,480 1,460 1,440 SSE SHARE PRICE, 23 NOVEMBER - 29 NOVEMBER Shares in SSE and Centrica rose on Monday morning following the weekend news that GB Energy Supply had ceased trading due to rising wholesale prices. Credit Suisse said GB's collapse is likely to head off government intervention over retail prices, and so benefit the big six. Ratings agency Moody's said it could also make consumers less willing to consider other independent suppliers. SSE and Centrica are heavily exposed to the UK market. 220 215 210 205 200 23 Nov 24 Nov 25 Nov 28 Nov 29 Nov