United Utilities Group PLC has this morning issued a confident trading update for the year ending 31 March 2010. The company will announce its full year results on 21 May 2010.
Commenting on the group's trading position, Philip Green, Chief Executive, said:
"The group is on track to deliver a sound underlying financial performance for the year ending 31 March 2010. We continue to benefit from a robust financing position and have headroom to cover our projected financing needs through to early 2012.
"We are well prepared for the 2010-15 regulatory period. With the extensive efficiency plans we are implementing and the low cost of the group's debt portfolio, we believe we can deliver outperformance across a broad range of areas. We will continue with our strong focus on operational performance and cost efficiency and aim to build on the improvements already achieved."
Regulated activities
The regulated business is expected to deliver a modest increase in underlying operating profit for the year ending 31 March 2010, reflecting the allowed price rise partly offset by lower water demand and ongoing cost pressures in areas such as power and bad debts, as indicated previously. Capital expenditure is expected to total over £600 million for the year, including infrastructure renewals expenditure, consistent with the company's planned investment profile for the 2005-10 period.
Looking ahead, the company said that its £3.6 billion capital investment for the 2010-15 regulatory period would drive real growth in the regulatory capital value of 12% across the five years. With all of UUW's contractor partners now in place, the company said it was “well set for delivery of the forthcoming capital investment programme”. UUW expects capital investment, including infrastructure renewals expenditure, in 2010/11 to be substantial as the company aims for a smoother capital delivery profile across the five year period compared with 2005-10.
United Utilities said it has a continuing focus on operational performance and cost efficiency and is implementing a range of business improvement initiatives and cost control measures across the group, as it aims to lower the cost to serve its customers whilst maintaining and improving levels of service.
In February 2010 Welsh Water announced that it intended to take operations and maintenance services in-house and its current contract with United Utilities would not be renewed for the 2010-15 regulatory period.
The group said it continues to benefit from a robust financing position and has headroom to cover its projected financing needs through to early 2012. During the year ending 31 March 2010, United Utilities raised £220 million through the issue of new bonds, extended committed banking facilities and in January 2010 repaid a £150 million, 5.25% bond.
As part of the group's efficiency programme, one-off restructuring costs in the order of £30 million are expected in the year ending 31 March 2010, of which £11 million was recognised in the first half of 2009/10. United Utilities is currently reviewing its defined benefit pension provision and expects to provide further details later in the year.
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