Report on Northumbrian Water Group Plc

Topics: Financial ratio, Public utility, Cash flow Pages: 12 (3656 words) Published: July 11, 2013
University of Stirling|
Report on Northumbrian Water Group plc
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* Content
1Introduction2
2Assessment of Strategic Capability2
2.1General strategy2
2.2Expansion strategy3
2.3Lifecycle3
2.4Key Change Factors (PEST)4
Political4
Economic4
Social4
Technology4
2.5SWOT analysis5
Strength5
Weakness5
Opportunity5
Threat5
2.6Overall6
3Cash flow statement6
3.1Cash flow from operating activities (£231.9m in 2011: £230.4m in 2010)6
3.2Cash flows from investing activities (2011: -£167.4m, 2010: -£54.6m)7
3.3Cash flow from finance activities (2011: £161.2m, 2010: -£9.5m)8 4Analysis of company’s capital structure and operating performance8 5Forecast for the Year Ending 31 March 201211
5.1Notes to the Forecast11
5.1.1Turnover & profit11
5.1.2Finance income12
5.1.3Share of post-tax results of Joint Ventures12
5.1.4Taxation12
6Share Price Performance12
7Conclusion13
Reference15

Introduction
Northumbrian Water Group plc. (“NWG” or “the Group”) is an independent company quoted on the FTSE 250 Index of the London Stock Exchange. The Group principally works in the provision of water and waste water services. It provides water and sewerage services in the north east of England and water services in the south east. The year-end of NWG is 31 March and the results for 2011 show a turnover of £738.1 million (2010:£704.7 million), producing profit £178.4 million (2010:122.9 million). Its EPS is 34.44 pence (2010:23.67 pence) and its share price is 283 pence with a P/E ratio of 13.0. Comparing with the Utilities sector, NWG is a medium company with a market capitalization of £1720.3 million. Assessment of Strategic Capability

General strategy
NWG’s vision is “to be the national leader in the provision of sustainable water and waste water service.” Then it achieves the vision around five themes which are customer, competitiveness, people, environment and communities. The theme of customer focuses on satisfying customers by delivering high-caliber services. The Group regards customer service as the heart of the company, and high satisfaction will generate reputation for the company. Competitiveness is the theme for company to become a most efficient water company by driving cost down and using innovation. NWG also recognizes that people are their greatest asset. It is necessary to satisfy employees with their working environment and provide training and promote for them. Environment is a critical issue for the Group; it is responsible for protecting and enhancing the nature environment. NWG reduces their carbon footprint and adopts good environmental practice through carbon management plan. For the theme of communities, the Group aims to build strong relationship with the communities they serve. In order to review its vision, NWG have made a clear commitment to five core values which are one team, customer focused, results driven, creative and ethical. Expansion strategy

Last year NWG finished the construction of enlarging the reservoir near Colchester, which is a part of the Abberton Scheme. This scheme costs £150 million in 17 year’s planning. As a result, the reservoir is enlarged by 58% with its footprint extended by 40%. Moreover, now water is flowing into the reservoir and it will help secure water supply to 1.5m customers in Essex in the future. 2011 was also the first year for NWG commencing on the construction of advanced anaerobic digestion plant at Howdon, on Tyneside. The Group aims to generating 20% of its energy from renewable sources by 2015. Lifecycle

As an aspect of the lifecycle, NWG was established in 1989 through several acquisitions and mergers. So there is no doubt that the Group is out of the start-up stage. And according to the Group’s profit over years, the numbers presented a growing trend. The company will not be at the relative decline stage as well. Hence, NWG is...
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