East Anglia-based water firm AWG has announced plans to sell off its international businesses in order to concentrate on its UK operations.

Shares in the firm rocketed 10.5% on the London Stock Exchange following the announcement.

Investors were cheered by the news that AWG has potential buyers for the overseas businesses.

The also welcomed a stronger-than-expected set of half-year results.

Under offer

AWG, formerly known as Anglian Water, has subsidiaries in Chile, the Czech Republic, China, Ireland and Thailand.

But the company now plans to focus on matters closer to home.

"The AWG board believes that shareholder value will be better achieved in the longer term through concentrating the group's capital and skills on opportunities in the UK," the firm said.

Its UK customers are concentrated in Norfolk, Suffolk, Essex, Cambridgeshire, Northamptonshire and Bedfordshire.

It provides domestic water supplies and specialist services to hospitals, schools and the public sector.

It is not yet clear if AWG will make a profit on the disposals.

AWG is believed to have paid �320m to build up its portfolio of overseas businesses over the last three years.

Chief executive Chris Mellor said he has received offers worth more than �200m.

Since the overseas assets are valued at �200m on AWG's balance sheet, the firm should be able to sell them without costly asset write-downs.

Mixed picture

"The market expected these assets to come up for sale but its good news that they've had this kind of interest," said analyst Raimundo Fernandes-Cuesta of UBS Warburg.

AWG also said that its financial and operational performance in the six months to end-September had been strong.

It reported pre-tax profit of �54.8m in the six months to end-September 2002, down from �65.8m in the same period of last year because of one-off costs.

However, the firm said underlying pre-tax profit was up 2.4%, while sales rose 2% to �364m.

It has completed a financial restructuring under which it took on more debt in order to cancel shares, leading to �500m windfall for shareholders.

By 1252 GMT, AWG shares were up 48.5 pence, or 13.7%, at 402.5p.