United Utilities kick-started its results week by announcing that chief executive Philip Green would step down after five years in the job. He has overseen £600m of disposals that have streamlined United from being an eclectic mix of telecoms, outsourcing and utility to a focused regulated water group. When he steps down in March, Mr Green will hand over to Steve Mogford, currently chief executive of Selex Galileo, the defence electronics company owned by Italian organisation Finmeccanica.
Following on from news of the departure, the group has reported, as expected, a fall in revenues due to reduced utilities prices under the new five-year regulatory regime. This reduction, along with an increase in depreciation and property rates, was partly offset by lower employee and power costs, but meant that operating profit decreased by 5 per cent to £328m.
Underlying pre-tax profits fell by 24 per cent to £196m due to a higher interest charge on inflation-linked debt. Overall, though, management is confident that it has secured approximately £300m of financing outperformance over the five-year regulatory period compared with Ofwat estimates. And, as previously guided, the group will pay a total dividend of 30p for this year and will grow it thereafter at 2 per cent above inflation until 2015.
Investec Securities forecasts adjusted pre-tax profits of £303m and EPS of 34.2p (from £523m and 70.4p in 2010).
ORD PRICE: | 615p | MARKET VALUE: | £4.19bn | |
TOUCH: | 615-616p | 12-MONTH HIGH: | 635p | LOW: 474p |
DIVIDEND YIELD: | 5.4% | PE RATIO: | 12 | |
NET ASSET VALUE: | 213p | NET DEBT: | £4.86bn |
Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2009 | 787 | 190 | 29.1 | 11.2 |
2010 | 762 | 122 | 22.5 | 10.0 |
% change | -3 | -36 | -23 | -10 |
Ex-div: 15 Dec Payment: 2 Feb |