Last checked at 30 Jan 2008 07:00
United Utilities PLC
30 January 2008
UNITED UTILITIES INTERIM MANAGEMENT STATEMENT
United Utilities today issues a trading update for the period from 1 October 2007 to 29 January 2008. Current trading is in line with the group's expectations.
The regulated water business is benefiting this financial year from allowed price increases, including inflation, of 8.3 per cent to help invest in its network and provide essential services for customers.
United Utilities' balance sheet remains robust and its asset base continues to grow in line with management's expectations as the company has entered the peak phase of its substantial regulated capital investment programmes.
During the period, United Utilities Water PLC (A3, stable; A-, stable) redeemed a ¢â€š¬1 billion 6.625% bond from existing cash resources and raised ‚£35 million of long-term, index-linked funding.
The group completed the sale of its electricity distribution assets on 19 December 2007 for a 45 per cent premium to the forecast 31 March 2008 regulatory asset value. The net equity proceeds of ‚£1,050 million from this sale, along with other balance sheet resources to create a more efficient capital structure, are expected to be utilised to enable the planned ‚£1.5 billion return of value to shareholders. Looking ahead, the group intends to target an investment grade credit rating of A3 for United Utilities Water PLC, which it believes best mirrors regulatory assumptions.
As detailed in United Utilities' half yearly financial report, published on 29 November 2007, the Board outlined a new dividend policy to reflect the revised composition of the group. The dividend per share from 2008/09 will be reduced by 30 per cent from the 2007/08 base. Thereafter, the group's revised dividend policy is intended to target a sustainable and growing level of dividends and will improve dividend cover. The new target real growth rate of RPI+2% will be applied from 2009/10 to the 2008/09 revised dividend per share.
In line with its strategy of focusing on core skills, during the period the group sold its industrial liquid waste operations to Tradebe. These operations were very small in the context of the group.
United Utilities is the leading utility infrastructure outsourcing company in the UK and earlier this month secured an 18-month extension to its metering contract with British Gas Trading, which now runs through to 30 June 2010. This extension is estimated to be worth an additional ‚£45 million in revenue to United Utilities.
United Utilities published its Strategic Direction Statement in December 2007 which takes a long term view of the challenges facing the group's water and wastewater businesses over the next 25 years. It is the first element in the process of agreeing what United Utilities will deliver between 2010 and 2015 and allows the five-year regulatory plan to be put into a longer term context. In addition, United Utilities responded earlier this month to Ofwat's consultation paper "Setting price limits for 2010-15: Framework and approach" and this response has been published on the company website (www.unitedutilities.com).
The group's focus on its core skills has helped deliver operational and service improvements for customers. United Utilities Water remains on course to meet the 2007/08 economic level of leakage rolling target of 465 megalitres per day, as set by Ofwat.
The group's business improvement initiatives continue to progress well and United Utilities Water remains on track to deliver its regulatory efficiency targets. With clarity on future regulated revenue flows, management is confident of delivering profits in line with its expectations for the year.
In line with its usual practice, United Utilities intends to issue a pre-close trading update on 26 March 2008.
United Utilities' contacts
For further information please contact:
Philip Green, Chief Executive +44 (0) 1925 237000 Tim Weller, Chief Financial Officer +44 (0) 1925 237000 Gaynor Kenyon, Communications Director +44 (0) 7753 622282 Darren Jameson, Head of Investor Relations +44 (0) 7733 127707
Dominic Fry / Peter Hewer, Tulchan Communications +44 (0) 20 7353 4200
UNITED UTILITIES PLC