Water group United Utilities grew revenues steadily during the year, largely reflecting the impact of a 4.5 per cent regulated price increase. The dividend was boosted in line with the group's inflation plus 2 per cent formula - making for a secure and attractive yield. Yet, compared to its regulatory capital value (RCV), the shares look cheap for the sector.
Had it not been for a 12 per cent increase in capital spending during the period to £680m, the group's underlying pre-tax profit - which was largely flat at £327m - would have been better, too. Meanwhile the costs arising from October's transfer of responsibility for private sewers came in lower than anticipated. Moreover and despite relatively higher unemployment in the north west, bad debts remained roughly stable at 2.2 per cent of regulated revenue. There was also good news on borrowing costs - the group's average borrowing rate dropped to just 1.7 per cent after having secured a £200m facility from the European Investment Bank at a record low 0.9 per cent rate.
Broker Investec Securities expects adjusted pre-tax profit of £356.5m for 2013, giving EPS of 41.3p (2011: £327m/41.3p).
UNITED UTILITIES (UU.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 629p | MARKET VALUE: | £ 4.29bn | |
| TOUCH: | 629-630p | 12-MONTH HIGH: | 649p | LOW: 529p |
| DIVIDEND YIELD: | 5.1% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 259p | NET DEBT: | 288% | |
| Year to 31 Mar | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 2.36 | 478 | 61.2 | 46.7 |
| 2009 | 2.43 | 530 | 26.5 | 32.7 |
| 2010 | 1.57 | 409 | 59.2 | 34.3 |
| 2011 | 1.51 | 327 | 67.2 | 30.0 |
| 2012 | 1.57 | 280 | 46.4 | 32.0 |
| % change | +4 | -14 | -31 | +7 |
Ex-div:20 Jun Payment:03 Aug | ||||
