United Utilities has reported a rise in underlying profits and an increased shareholder dividend, according to its latest set of financial results for the six months ended 30 September 2018 released this morning.

Revenue was up £40 million, at £916 million, largely reflecting allowed regulatory revenue changes.

Underlying operating profit was up £24 million, at £368 million reflecting the £40 million increase in revenue, partly offset by an £11 million increase in IRE and a £6 million increase in depreciation.

Reported operating profit was down £3 million, at £339 million, impacted by the same movements as underlying operating profit as well as one off costs of £25 million associated with the extreme hot and dry weather earlier this year.

Total net regulatory capital investment in the first half of the year was £393 million including IRE and the additional capex associated with the extreme hot and dry weather earlier this year. The company is on track to deliver a total of around £830 million of regulatory capex for the full year.

The Board has proposed an interim dividend of 13.76 pence per ordinary share, an increase of 3.9 per cent, in line with its policy of targeting an annual growth rate of at least RPI inflation through to 2020.

Commenting on its total expenditure (totex) performance, United Utilities said the totex assumed at PR14 for the 2015-20 regulatory period represented a significant challenge compared with the costs originally submitted as part of its business plan.

However, not only has the gap to the PR14 assumption now been closed, the utility is also confident of delivering the AMP6 scope for £100 million less than assumed in the Final Determination at PR14. This has been achieved through a combination of driving efficiency into the capital programme and through Systems Thinking, United Utilities said.

United Utilities is the top water and wastewater company on the UK Customer Satisfaction Index UKCSI and now expects an AMP6 SIM reward of £11 million or more. The firm is also maintain its strong environmental, social & governance (ESG) credentials, achieving World Class rating in the Dow Jones Sustainability Index for the eleventh consecutive year. The utility is the only UK water company to have a World Class rating as measured by the Index.

Operational overview –Systems Thinking approach delivering enhanced levels of service and resilience

The operational review says the United Utilities’ innovative Systems Thinking approach and use of data and technology are wide ranging and permeate all areas of the business, delivering sustainable and long-term improvements in operational performance and contributing around £450 million of savings identified in its PR19 business plan.

Commenting on the results, Steve Mogford, Chief Executive Officer, said:

"Customers are at the heart of everything we do. Our approach to affordability and vulnerability together with our sustained improvements in customer service position us as a leader in the sector. In the most recent UK Customer Satisfaction Index we were the most improved utility company and the highest ranked water and wastewater company. The Institute of Customer Service, which assesses excellence in customer service across all sectors, recently awarded us its top Service Mark with Distinction.

"Our approach to innovation and the use of advanced technology from around the world alongside our capital investment is delivering better service, greater resilience and improved efficiency. Fundamental to this is our pioneering Systems Thinking approach which continues to unlock innovation opportunities and is making a significant and positive difference to our sustainable, long-term performance.

"The significant progress we have made positions us well for the remainder of the current regulatory period and beyond. We have responded well to the challenges brought about by the impact of more variable weather and have created a platform for continuing strong operational performance. We will continue to provide a great service to our customers and create long-term value for all of our stakeholders."