United Utilities on track to deliver c£10m ODI reward for 2020/21

water tap

United Utilities Group PLC (LON:UU) has announced its half year results for the six months ended 30 September 2020.

Supporting customers, colleagues and communities through the COVID-19 pandemic

·    Maintaining resilient and reliable services to over 7 million people

·    Helping 142,000 customers facing financial difficulties through support schemes

·    Increased eligibility for social tariff to help a further c45,000 customers

·    Playing key role in regional economy – no employees furloughed and continuing to recruit

Strong and confident start to the new regulatory period (AMP7)

·    Positive momentum coming into AMP7 through £130m additional investment in 2019/20

·    Accelerating £500m AMP7 capital investment and scope extended by £150m

·    Delivering service improvements sooner and supporting 17,700 jobs in the supply chain

·    On track to deliver c£10m ODI reward for 2020/21

·    Leading the way on customer satisfaction

Responsible, long-term commitment to ESG

·    7% real reduction in average household bills in 2020/21

·    Number of customers supported through Priority Services scheme increased to 110,000

·    Zero serious pollution incidents; best performing company for the second year in a row

·    On track for industry leading 4* environmental performance for 2020

·    Supporting local communities including funding for local foodbanks to deliver 600,000 meals

·    Opportunity Action Plan launched outlining our commitment to the Social Mobility Pledge

·    Achieved World Class status on Dow Jones Sustainability Index for the 14th consecutive year

·    Committed to provide £71m AMP7 funding to support customers struggling to pay their bills

Strong financial performance and robust balance sheet

·    Underlying1,2 profit after tax of £174m down 16%, reflecting new price control

·    Customer debtor position and household cash collection remain strong

·    Household bad debt stable in the first half at 1.8%

·    Strong balance sheet; A3 stable credit rating with Moody’s

·    Pension schemes fully funded on a low dependency basis

·    Reaffirming responsible AMP7 dividend policy of growth in line with CPIH inflation

Key financials

 Six months ended
30 September 2020
Six months ended
30 September 2019
Reported operating profit£318.5m£383.0m
Underlying operating profit1£319.1m£391.7m
Reported profit after tax£162.0m£158.6m
Underlying profit after tax1,2£174.0m£207.2m
Interim dividend per ordinary share (pence)14.41p14.20p
Net regulatory capital spend3£276.4m£255.0m
RCV gearing463%562%

1 Underlying profit measures are defined in the underlying profit measures tables

2 Approach used to derive underlying profit after tax excludes the impact of deferred tax to better reflect the regulatory revenue allowances, with prior year numbers restated for comparability

3 Net regulatory capital spend excludes infrastructure renewals expenditure, with prior year numbers restated for comparability

4 Regulatory capital value (RCV) gearing calculated as group net debt/United Utilities Water Limited’s shadow RCV (outturn prices)

5 September 2020 gearing based on new definition of net debt to exclude the impact of derivatives that are not hedging specific debt instruments

Steve Mogford, Chief Executive Officer, said:

“Our focus throughout the COVID-19 pandemic has been on supporting customers, protecting our colleagues and maintaining essential services. We have continued to provide high quality water and wastewater services to more than three million households in the North West thanks to the extraordinary hard work and dedication of my colleagues, many of whom are key workers.

“Average customer bills have reduced by 7 per cent in real terms this year but we recognise that for many in our region, these are still challenging times. For those struggling to pay their bills, we offer the sector’s widest range of financial assistance schemes. We have also acted swiftly to increase the number of customers eligible for reduced tariffs.

“Despite the pandemic, our operational performance in this first year of the new regulatory period is on track. We are accelerating our capital expenditure to bring forward benefits and help support 17,700 jobs in the supply chain. We recognise the role that we can play in a successful society, economy and a thriving natural environment and are confident in our ability to deliver our AMP7 plans to achieve this.

“We now have a clearer understanding of the impact of COVID-19 on our business which remains robust and supported by a strong balance sheet. This, together with a stabilised inflation outlook supported by central bank policy and government actions, gives us the confidence to reaffirm our responsible AMP7 dividend policy of growth in line with CPIH inflation.”

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