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UK water: delivering shareholder returns beyond expectations for a stable infrastructure asset

Laura Hill and Ivan Poon, Valuations, PwC, report on UK water company valuations and shareholder returns.

In the short term, we expect the market to value UK listed water companies at PE ratios in line with their fundamental PE ratios, even though it is the first time in the last five years that this is the case (figure 1 – see link below). This is due to two key factors:

Perhaps surprisingly, UK water companies have consistently delivered shareholder returns in excess of the FTSE All Share index over the last 15 years. In our view, returns for listed UK water companies will stay in the range of 10% to 12% and will not revert to the 20% total shareholder returns achieved in the mid-2000s.