United Utilities Group PLC has published its Annual Report and Accounts for the year ended 31 March 2010. the company announced its final results on 21st May.

The company said it had delivered “sound results in a challenging economic environment.”  Underlying operating profit was £756 million (up from £736 million in 2009), with the final dividend increased by 5.0% to 23.13 pence per share.

Commenting on the results, Philip Green, Chief Executive, said:

“We are well positioned for the 2010-15 regulatory period. With the detailed efficiency plans we are implementing and the low cost of the group’s debt portfolio, we believe we can deliver outperformance over the five years.

“This is a sound set of results in a tough economic climate, reflecting our strong focus on cost management and efficiency improvement. In line with our policy the board has proposed a final dividend for 2009/10 of 23.13 pence per share, an increase of five per cent.

“Improving operational performance is an important part of our strategy and we are pleased to have met our regulatory leakage target for the fourth consecutive year, despite the exceptional winter weather conditions. Customer satisfaction has continued to increase and is now at its highest recorded levels.

“In light of the recent water price review, we have had to balance the need to retain a robust and sustainable financial profile for the group with the importance of income to our shareholders. As outlined in January, the board intends to pay a dividend of 30 pence per share for the 2010/11 financial year and thereafter continue with our policy of targeting real dividend growth of 2% per annum through to 2015.

“We recently agreed the sale of our Australian business, increasing the total value from non-regulated disposals from £132 million to approximately £267 million. We will continue to review the expressions of interest we have received for our remaining non-regulated businesses.”

Capital investment in the year, including £114 million of infrastructure renewals expenditure, was £620 million - in line with the planned capital investment profile for the final year of United Utilities Water’s (UUW) 2005–10 regulatory programme.

Efficiency initiatives

Over the last year, United Utilities has undertaken a comprehensive review of the business and is currently implementing detailed plans to improve performance and reduce its cost base.

During 2009/10, United Utilities reduced the number of people working in the group by the equivalent of around 500 full time employees (includes United Utilities staff and agency staff). Approximately 350 of the 500 worked in or supported the regulated business, equivalent to around seven per cent of that workforce.

The company said it was reviewing and streamlining its processes as it aims to become a leaner, more efficient company. The group is focused on operating with fewer, simpler and more consistent processes e.g. UUW is halving the number of steps from metering to cash collection. The group is also rationalising its IT infrastructure to provide greater automation and visibility of workflow. As a result, the company said managers now have ownership of all steps in a process to help enhance performance, while individuals also had greater visibility and understanding of how their performance influenced the efficiency of the entire process.

The group said it would continue to focus on delivering benefits from its existing efficiency initiatives, such as its workforce management system which it sees as a key element in improving the efficiency of frontline staff, utilising remote operational site management and optimisation of chemical and power usage, improving efficiency of operational pumps, developing combined heat and power assets, which recycle energy generated from wastewater treatment processes, and improving supply chain management to deliver further procurement economies.

On energy use, unit power costs in 2009/10 were approximately 10 per cent higher than in 2008/09 – United Utilities  power expense increased by around £6 million. However, the business has entered into new forward contracts for the majority of its power requirements for 2010/11 and 2011/12 and unit power costs are expected to be in the order of 20 per cent lower than in 2009/10.