UNITED Utilities reported falls in revenues and pre-tax profits for the six months to September 30, today.
Sales dropped from £786.6m to £762.4m, while pre-tax profits declined by 36%, from £189.6m to £122.2m.
The Warrington-based group said this was mainly due to the new five-year regulatory pricing structure imposed from April this year which included a 4.3% reduction to customer bills during 2010-11, as well as increased interest costs on index-linked debts of £2bn.
United Utilities also warned that seasonal conditions will mean that revenues from its regulated water services will be lower in the second half of its current financial year.
However, the group said today’s results were slightly ahead of management’s expectations.
Chief executive Philip Green, who this week announced he is to step down next March after five years at the head of the group, said: “We have made a good start to the new regulatory period and I am pleased to report results slightly ahead of our expectations.”
Earlier this month he completed the disposal of the group’s non-regulated businesses, reaping £600m, to complete his target of re-focusing United Utilities as a water company, and added: “With the programme of actions we are implementing, we are confident of delivering outperformance over the 2010-15 period with financing outperformance already secured.”
Looking ahead he said: “United Utilities has a robust capital structure and should benefit from predictable regulated revenue streams over the next five years.”
Capital expenditure in major infrastructure schemes totalled £307m in the first half and will continue at high levels into the second half, including the expected completion next spring of the £120m West East Link, connecting Liverpool and Manchester.
The project is one of the largest of its kind and will create a 35-mile water pipeline connecting the two regions allowing the transport of water by gravity from Greater Manchester to Merseyside, with the option to pump water in the opposite direction, aimed at providing more flexibility in supplies to meet climate and demographic change.
Among other achievements during the period was a significant reduction in pollution incidents and a reduction of bad debts, from £28m to £18m, after the introduction of a new system that can predict which customers are most likely not to pay.
United Utilities has introduced a range of cost-cutting measures to combat the lower than expected pricing structure introduced by industry watchdog Ofwat, including a reduction of about 350 staff since last year, equivalent to about 7% of the total workforce.
