A “SOLID” underlying financial performance is in prospect for North West water group United Utilities (UU).
In an update today the Warrington-based business said trading during the period from October 1, 2010, to today was in line with expectations.
A new five-year regulatory period under the scrutiny of watchdog Ofwat began last April, when the regulator limited UU’s requested price increases for customers between 2010 and 2015.
However, today’s statement said the utility group has made good progress in the early part of the new regulatory period and investment in its assets and improvements to services has “continued at high levels”.
Furthermore, today’s update goes on to say: “The company remains confident of delivering outperformance over the five-year period.”
Last November UU completed the sale of its non-regulated businesses, raising £600m in proceeds which will be retained by the group instead of returned to shareholders.
However, investors will share a £68m payout from a 10p interim dividend, set to be paid on February 2, and part of the 30p total dividend target for the full year.
Following the total payment UU intends to reward shareholders with annual payouts equivalent to inflation, plus 2%.
The remaining regulated business of water and wastewater operations across the region generated better than expected revenues in the first half of the current financial year, although UU expects earnings to be a little lower in the second half due to seasonal conditions.
It also warned that December’s freezing weather conditions, resulting in an increase in burst water pipes, will also impact on UU’s attempts to reduce leakage levels.
Nevertheless, UU says its financial position “remains robust and its asset base continues to grow in line with management expectations” with headroom to cover its projected financing needs through to the summer of 2012.
Earlier this month Steve Mogford joined the group as chief executive designate, ahead of replacing current chief executive Philip Green who will stand down on March 31.
