United Utilities Group PLC Trading Statement (6645A)
March 28 2017 - 1:00AM
UK Regulatory
TIDMUU.
RNS Number : 6645A
United Utilities Group PLC
28 March 2017
United Utilities Group PLC
28 March 2017
UNITED UTILITIES TRADING UPDATE
Current trading is in line with the group's expectations for the
year ending 31 March 2017.
Accelerated investment delivering results
Further improvements in operational performance and customer
satisfaction are being delivered through continued acceleration of
investment in our assets across this five-year regulatory period.
Regulatory capital investment in 2016/17, including infrastructure
renewals expenditure (IRE), is expected to be around GBP800 million
this year and in line with our plan.
Service delivery across our wastewater business has again been
very good throughout the year, particularly in the areas of private
sewers and pollution incidents. Underlying performance across our
water system has also improved year-on-year, reflecting our
significant investment and focus in this area, despite experiencing
a small number of bursts which affect our water service outcome
delivery incentives (ODIs). As a result of our good overall
performance, we now expect to deliver a small net reward from our
ODIs this year.
Our operational performance improvements and strong customer
focus continue to deliver measurable advances in customer
satisfaction. This is reflected in our Service Incentive Mechanism
(SIM) performance and our latest scores indicate that we are in a
leading position on Ofwat's quantitative SIM among the water and
sewerage companies. We are also one of the most improved companies
this year on qualitative SIM, having achieved our best ever score.
This means that we expect to be the top performing listed water and
sewerage company on SIM for 2016/17.
Our region suffers from high levels of income deprivation and we
continue to offer wide-ranging schemes to help customers struggling
to pay. We are particularly pleased with the results from our
billing and collections improvement initiatives, along with
innovations in this area that are facilitating enhanced engagement
with customers. This is all contributing to improved customer
payments, with beneficial implications for bad debt.
Our innovative Systems Thinking approach is continuing to
deliver benefit across the business providing us with improved
visibility of asset performance, reducing the number of asset
failures and delivering improved service standards for customers.
We are on target to deliver the efficiency improvements enabled by
Systems Thinking through this regulatory period.
Financials
Group revenue is expected to be slightly lower than last year,
reflecting the accounting impact of our Water Plus business retail
joint venture, which completed on 1 June 2016, partly offset by our
allowed regulatory revenue changes.
Underlying operating profit for 2016/17 is expected to be
moderately higher than 2015/16. IRE has increased slightly in the
second half of the year, although full year IRE for 2016/17 is
expected to be moderately lower than last year mainly due to a
slightly different mix of capital investment.
Reported operating profit will be impacted by costs relating to
non-household retail market reform and also restructuring within
the business. These costs are expected to total around GBP16
million for the full year, of which GBP8 million was recognised in
the first half. To provide a more representative view of business
performance, these adjusting items will be excluded from the
underlying profit measures.
RPI inflation has increased this year, which has the beneficial
effect of increasing the company's regulatory capital value. Since
United Utilities is well hedged for inflation, there is also an
impact of higher RPI inflation on our index-linked debt and we
expect the underlying net finance expense for 2016/17 to be around
GBP240 million.
As the company continues to invest in its asset base, we expect
a small increase in group net debt at 31 March 2017 compared with
the position at 30 September 2016. This principally reflects
capital expenditure, payment of the 2016/17 interim 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, and
the group has financing headroom into 2019.
Full year results
United Utilities will announce its 2016/17 full year results on
25 May 2017.
United Utilities contacts:
Gaynor Kenyon, Corporate Affairs +44 (0) 7753
Director 622282
Darren Jameson, Head of Investor +44 (0) 1925
Relations 237033
+44 (0) 20
Peter Hewer, Tulchan Communications 7353 4200
LEI 2138002IEYQAOC88ZJ59
Classification - Trading update
This information is provided by RNS
The company news service from the London Stock Exchange
END
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