United Utilities Group PLC United Utilities Trading Update (8739Z)
September 23 2015 - 2:00AM
UK Regulatory
TIDMUU.
RNS Number : 8739Z
United Utilities Group PLC
23 September 2015
United Utilities Group PLC
23 September 2015
UNITED UTILITIES TRADING UPDATE
Current trading is in line with the group's expectations for the
six months ending 30 September 2015.
The 2015-20 regulatory price review means our customers are
benefiting from lower prices, which came into effect on 1 April
2015, alongside continued substantial investment in our assets.
Operational performance
United Utilities has delivered significant improvements in
customer service over recent years and in 2014/15 we achieved top
quartile operational performance, as measured through Ofwat key
performance indicators and the Environment Agency's assessment.
Furthermore, our 'systems thinking' approach, which integrates the
use of our assets, leverages data intelligence and employs
technology and new work processes, is supporting our drive for
continuous improvement.
Water quality incident
Customer satisfaction is a key area of focus and so we were very
disappointed that a significant water quality incident occurred
this summer in parts of the Lancashire region, and we are
continuing to investigate the cause. Public health is a fundamental
priority and we issued a 'boil water' notice to over 300,000
properties, representing approximately 10% of our customer base. We
deployed extensive additional resources, including enhanced UV
treatment, to restore the water quality to the high standards
expected as quickly as possible, and full service was restored in
early September. We recognise the inconvenience this placed on many
of our customers and are very grateful for their patience and
understanding. We are in the process of paying compensation, as
outlined in the financials section.
Capital delivery
We have made a good start to the 2015-20 regulatory period and
our planned investment is continuing at high levels as we invest to
maintain and improve services for customers and deliver further
environmental benefits. This capital programme also makes a
significant contribution to the regional economy, providing new
investment and supporting employment. In line with the company's
plans to accelerate the five-year programme, regulatory capital
investment for 2015/16, including infrastructure renewals
expenditure, is expected to be around GBP800 million.
Financials
Group revenue is expected to be similar to the first half of
last year, as the impact of lower regulated revenue for 2015/16 is
offset by slightly higher non-regulated sales.
Underlying operating profit for the first half of 2015/16 is in
line with management expectations, albeit lower than the first half
of 2014/15. This reflects the new regulated price controls, an
expected increase in depreciation and other costs, partly offset by
a reduction in bad debts and regulatory fees. It is anticipated
that infrastructure renewals expenditure (IRE) in the first half of
2015/16 will be similar to the first half of last year. In line
with our planned phasing, we expect an increase in IRE in the
second half of 2015/16, compared with the first half of the
year.
Reported operating profit in the first half of the year will be
impacted by customer compensation and one-off costs, totalling
around GBP25 million, relating to the aforementioned water quality
incident. In addition, restructuring costs of around GBP5 million,
including costs relating to business retail market reform, have
been incurred in the first half of the year. These one-off items
will be excluded from the underlying profit measures.
The underlying net finance expense for the first half of 2015/16
is anticipated to be around GBP20 million lower than the first half
of last year, reflecting the impact of lower RPI inflation on our
index-linked debt and a lower rate of interest locked-in on our non
index-linked debt.
As the company continues to invest in its asset base, group net
debt at 30 September 2015 is expected to be slightly higher than
the position at 31 March 2015. This principally reflects regulatory
capital expenditure, payment of the 2014/15 final dividend and
payments in relation to interest and tax, largely offset by
operational cash flows. Gearing remains comfortably within our
target range of 55% to 65% net debt to regulatory capital value,
supporting a solid A3 credit rating for United Utilities Water. The
group has financing headroom into 2017.
United Utilities will announce its half year results on 25
November 2015.
United Utilities contacts:
Gaynor Kenyon, Corporate Affairs +44 (0) 7753
Director 622282
Darren Jameson, Head of Investor +44 (0) 7733
Relations 127707
Peter Hewer / Martin Pengelley, +44 (0) 20
Tulchan Communications 7353 4200
This information is provided by RNS
The company news service from the London Stock Exchange
END
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