United Utilities Group PLC has issued an update on trading for the six months ending 30 September 2010. The company will announce its half year results on 24 November 2010.
Commenting on the group's trading position, Philip Green, Chief Executive, said:
"The group is on track to deliver results in line with our expectations, reflecting the impact of the recent regulatory price review.
"In line with our strategy of focusing on our core activities, we have now agreed the sales of the vast majority of our non-regulated businesses for a total enterprise value of approximately £600 million.
"We believe that, with the group's consistent focus on its core activities and the low cost of its debt portfolio, we are well positioned to deliver outperformance over the 2010-15 regulatory period."
United Utilities Water (UUW) AMP5 price limits took effect from 1 April 2010 and included a 4.3% real price decrease for 2010/11.
The company said that in line with the new limits and as expected, underlying operating profit in the regulated business is anticipated to be lower compared with the previous year.
This also reflected continuing cost pressures, including an expected increase in property rates and depreciation, partly offset by a reduction in power costs. The company are also anticipating that infrastructure renewals expenditure and depreciation will be higher in the second half of 2010/11 compared with the first half of the year, while capital expenditure is expected to remain at high levels this year.
UUW has a strong focus on operational performance and is on course to meet its regulatory leakage target for the fifth consecutive year. In addition, UUW expects to have improved its position in Ofwat's 2009/10 wastewater non-infrastructure serviceability assessment, returning all four asset classes to a "stable" rating.
Sell-offs raise £600M
In line with its strategy of focusing on core activities, over the last half year, the group has entered agreements to sell the vast majority of its remaining non-regulated businesses. These include a stake in the 2010-15 capital management contract with Southern Water and a stake in the capital delivery contract with Southern Water to manage the design and build of a new wastewater treatment works in the Brighton and Hove area.
The group has now agreed non-regulated disposals for a total value of approximately £600 million and intends to retain the proceeds from the disposals within the group. United Utilities said its financial position remains robust and the group has headroom to cover its projected financing needs through to the summer of 2012.
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