United Utilities (UU.) managed to mitigate the impact of new regulatory price controls to marginally enhance its top line, although underlying operating profits for its year to March contracted by 9 per cent on last year's comparative to £604m. Earnings are heading in the right direction, albeit as the result of steep index-linked finance costs in the prior year, and shareholders in the UK's largest listed water utility can take heart from good operational progress in the first year of its latest five-year regulatory period.
The Warrington-based group accelerated its investment programme, in addition to identifying efficiency initiatives to meet its total expenditure allowance. United also received the go-ahead from the Competition and Markets Authority to merge its retail business operations with those of Severn Trent (SVT). The resultant joint venture, named Water Plus, is expected to create further synergies and scale benefits, and so enhance value for shareholders.
Despite the aforementioned step-up in capital spending, United's balance sheet isn't under undue strain, with gearing - net debt to regulatory capital value - judged to be "comfortably" within the target range, at 61 per cent at the year-end.
Prior to release of these figures, analysts at JPMorgan Cazenove gave adjusted cash profits of £1.01bn for the March 2017 year-end, leading to EPS of 45.2p.
| UNITED UTILITIES (UU.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 948p | MARKET VALUE: | £6.5bn | |
| TOUCH: | 947p-948p | 12-MONTHHIGH: | 1,010p | LOW: 817p |
| DIVIDEND YIELD: | 4.1% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 397p | NET DEBT: | £6.26bn | |
| Year to 31 Mar | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 1.56 | 280 | 46.4 | 32.0 |
| 2013 | 1.64 | 305 | 43.5 | 34.3 |
| 2014 | 1.69 | 543 | 36.0 | 36.0 |
| 2015 | 1.72 | 342 | 39.8 | 37.7 |
| 2016 | 1.73 | 354 | 58.3 | 38.45 |
| % change | +1 | +3 | +46 | +2 |
Ex-div: 23 Jun Payment: 1 Aug | ||||
