Theme The utilities market is highly complex, even in the UK, where regulated businesses
(gas and electricity transmission, electricity and water distribution) coexist alongside
liberalised markets (electricity production, waste management). The market is served by both
listed companies (see below) and private operators (e.g., Thames Water, Biffa). We fail to see
value in the longer term (around five years) as most of the listed companies are tightly
regulated and post low growth, the only blessing being relatively high dividend yields (which
are currently attracting a lot of investor interest). We do not see any high risks in the short
term, but it is clear, in our view, that rising interest rates may have a negative impact on net
profit and could limit dividend growth.