United Utilities saw revenue rise after applying a 4.5 per cent regulated price increase – in line with inflation. However, underlying pre-tax profit at the utility giant slipped 5 per cent to £185m as the group invested in its network of pipes and reservoirs and the cost of its debt crept up.
The spend on repairing and replacing old water infrastructure grew £18m in the period to £66m, which brought total capital investment in the first half to £275m – chief executive Steve Mogford is confident that the group is on target to hit £700m for the full-year. Meanwhile, the statutory gearing – or group net debt as a proportion of regulatory capital value – was stable at 60 per cent, and well within regulator Ofwat's 55-65 per cent range. The underlying interest rate on borrowings, however, crept up 10 basis points to 5.8 per cent as index-linked debt rose with inflation. But as household finances come under increasing pressure the water utility has improved its debt collection systems – bad debts as a proportion or revenue fell to 2.1 per cent from 2.5 per cent a year ago.
Investec Securities expects full-year adjusted pre-tax profit of £310m, giving EPS of 35.5p (from £329m and 43.2p in 2011).
UNITED UTILITIES (UU.) | ||||
---|---|---|---|---|
ORD PRICE: | 602p | MARKET VALUE: | £4.1bn | |
TOUCH: | 602-603p | 12-MONTH HIGH: | 644p | LOW: 529p |
DIVIDEND YIELD: | 5.1% | PE RATIO: | 9 | |
NET ASSET VALUE: | 258p | NET DEBT: | 285% |
Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2010 | 762 | 122 | 22.5 | 10.0 |
2011 | 793 | 124 | 20.8 | 10.7 |
% change | +4 | +2 | -8 | +7 |
Ex-div: 14 Dec Payment: 1 Feb |