United Utilities Group PLC
25 July 2014
UNITED UTILITIES GROUP PLC 2014 ANNUAL GENERAL MEETING
AND INTERIM MANAGEMENT STATEMENT
United Utilities issues an interim management statement, for the period 1 April
2014 to 24 July 2014, ahead of its annual general meeting to be held today.
Trading update
Current trading is in line with the group's expectations. Revenue has
increased, reflecting the regulated price rise for 2014/15, partly offset by
the previously announced special customer discount of c£20 million which has
been applied to this year's bills. This increase in revenue is largely offset
by higher depreciation and other operating costs, as expected.
Our capital investment programme is progressing well and, as planned, this has
continued at high levels as we invest to maintain and improve services for
customers and deliver further environmental benefits. This also provides a
significant contribution to the regional economy. Regulatory capital investment
for 2014/15, including infrastructure renewals expenditure, is expected to be
similar to the high level of investment in 2013/14.
We continue to deliver improvements in customer service, underpinned by good
operational performance. The water and sewerage companies have now published
their 2013/14 Ofwat key performance indicator reports and we are pleased to
report a top quartile performance across this range of operational metrics. In
addition, companies have recently published their overall service incentive
mechanism (SIM) scores for 2013/14 and we have achieved an above average score
across the industry on this measure, representing continued year-on-year
improvement.
Financial position
United Utilities' financial position remains robust. Group net debt is similar
to the position at 31 March 2014, despite continued high levels of capital
investment. This is before payment of the proposed 2013/14 final dividend,
which is scheduled for 1 August 2014, and totals approximately £164 million.
Gearing remains well within Ofwat's 2010-15 assumed range of 55% to 65% net
debt to regulatory capital value. This supports a solid A3 credit rating for
United Utilities Water PLC (UUW). The group has financing headroom into 2016.
Price review 2014
As scheduled, in June 2014, UUW submitted to Ofwat revisions to its business
plan covering the 2015-20 period. The revisions followed discussions with
stakeholders on a range of issues including the significant wastewater total
expenditure gap between Ofwat's initial cost threshold and our original
business plan, as submitted last December. Our business plan means that
customers would benefit from below inflation growth in average household bills
for the decade to 2020. Ofwat is expected to publish draft determinations on 29
August 2014 and final determinations on 12 December 2014.
Board changes
Nick Salmon will stand down at today's annual general meeting, having completed
nine years as a non-executive director. Mark Clare, who was appointed as a
non-executive director on 1 November 2013 and is a member of the Audit
Committee and the Nomination Committee, will replace Nick as senior independent
director. This will become effective at the conclusion of today's annual
general meeting. The Board would like to thank Nick for his valued contribution
and wish him well for the future.
Outlook
The group expects to deliver a good underlying financial performance for 2014/
15. Our improved operational and capital delivery performance will provide
further customer and environmental benefits. In respect of regulatory
outperformance, we are ahead of schedule and remain confident of delivering our
2010-15 targets. We intend to continue with our dividend policy of targeting 2%
per annum growth above the rate of RPI inflation through to at least 2015,
underpinned by a robust capital structure. We will continue to engage closely
with our regulators, before the draft and final determinations from Ofwat later
this year.
In line with its usual practice, United Utilities intends to issue a pre-close
trading update on 24 September 2014.
United Utilities contacts:
Gaynor Kenyon, Corporate Affairs Director +44 (0) 7753 622282
Darren Jameson, Head of Investor Relations +44 (0) 7733 127707
Peter Hewer / Martin Pengelley, Tulchan +44 (0) 20 7353 4200
Communications
This announcement is also available at:
http://corporate.unitedutilities.com/investors.aspx