For customer service, United Utilities (UU) has moved from last place to ninth out of 18 water companies since the last regulatory cycle began in 2010, according to regulator Ofwat's measure. That was recognised in this summer's draft determination for the regulatory period 2015-20 - so-called AMP6 - removing the risk of an £80m revenue penalty. The final determination, due out on 12 December, will determine the future direction of the group.
Meanwhile, the group continued with its capital investment programme under AMP5, ploughing a further £419m into operational improvements during the first half, including £75m in renewing its infrastructure.
Half-year revenues rose just 1.6 per cent - less than the 3.8 per cent increase allowed by the regulator. That's because a £20m one-off customer discount is being applied to this year's bills. Underlying operating profits grew even more modestly, partly because of an uptick in bad debts. These now account for 2.7 per cent of regulated revenue, up from 2.2 per cent. Management blamed "the tightening of real disposable incomes" in the UK's north-west, where it operates. At least this should be recognised in AMP6 - Ofwat made a £19m adjustment to the group's retail costs in its draft determination.
Broker Whitman Howard expects adjusted EPS of 50.4p this year, up from 46.7p in 2013-14.
UNITED UTILITIES (UU.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 909p | MARKET VALUE: | £6.2bn | |
| TOUCH: | 909-910p | 12-MONTH HIGH: | 920p | LOW: 641p |
| DIVIDEND YIELD: | 4.0% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 331p | NET DEBT: | £5.7bn | |
| Half-year to 30 Sept | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 846 | 334 | 80.2 | 12.01 |
| 2014 | 859 | 205 | 23.9 | 12.56 |
| % change | +2 | -39 | -70 | +5 |
Ex-div: 18 Dec Payment: 02 Feb | ||||
