United Utilities AGM and Interim Management Sta...
United Utilities Group PLC
24 July 2009
UNITED UTILITIES GROUP PLC 2009 ANNUAL GENERAL MEETING
AND INTERIM MANAGEMENT STATEMENT
United Utilities issues a trading update, for the period 1 April 2009 to 23
July 2009, ahead of its Annual General Meeting to be held today at The Midland
Hotel, Peter Street, Manchester. Commenting on the group's performance for the
year ended 31 March 2009, Chairman, Dr John McAdam will say:
"The group has had a successful year in a challenging economic environment. We
have delivered strong underlying profit growth and further operational
improvements. In addition, we completed the return of approximately £1.5
billion to shareholders as planned.
"Consistent with our policy, the board is proposing a final dividend of 22.03
pence per share, making a total of 32.67 pence per share for the 2008/09
financial year."
Current trading is in line with the group's expectations of delivering a sound
underlying financial performance in 2009/10. The regulated business is allowed
a 6.0% regulatory price increase (including inflation) for 2009/10, to help
fund the high levels of essential investment in its assets to meet strict
environmental standards and deliver an improved service for customers. The
economic pressures the group experienced in 2008/09 are continuing in the
current financial year and, as indicated previously, regulated revenue growth
for the year is expected to be lower than this allowed price rise, reflecting
lower water demand.
The group's business improvement initiatives are delivering benefits and UUW is
broadly on track to meet its operating efficiency targets across the 2005-10
price review period, although cost pressures in areas such as power and bad
debts are expected to continue in 2009/10.
As part of United Utilities' sustainability programme, the group has developed
the technology to convert biogas, a by-product of the sludge treatment process,
into biomethane for vehicle fuel and potentially for export into the national
gas distribution network. In June, the company was awarded government funding
to support a £4 million pilot project to utilise this new technology.
Improving operational performance is a key area of focus for the group. The
business met its regulatory leakage target for the third consecutive year in
2008/09, despite unfavourable winter weather, and customer satisfaction
continues to increase. Whilst United Utilities Water (UUW) has delivered real
progress, the business recognises that there is more to do and remains strongly
focused on delivering further improvements.
The group has made further progress in its non-regulated business. In June
2009, United Utilities, via the 4D consortium, won a new 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 construction phase is
expected to take approximately three years, followed by the potential for a
two-year contract to operate and maintain the new plant.
United Utilities has headroom to cover its projected financing needs through to
early 2012. The group enhanced its liquidity in 2008/09, raising over £1
billion of debt finance. Since the start of the 2009/10 financial year, this
position has been enhanced further through the issuance of an additional £100
million, 5.75% bond maturing in March 2022, an additional £50 million, 6.125%
bond maturing in December 2015 and a new £70 million, 2.40%+RPI index-linked
bond maturing in July 2039.
The planned return of £1.5 billion to shareholders was completed in April 2009,
when the residual balance of approximately £17 million was paid to those
shareholders that had elected to receive some or all of the return in the 2009/
10 financial year. Group net debt is marginally lower compared with the
position at 31 March 2009, ahead of payment of the proposed 2008/09 final
dividend. This dividend payment is scheduled for 3 August 2009 and is expected
to be approximately £150 million.
Regulatory developments
In April 2009, UUW submitted its final business plan for the 2010-15 period to
Ofwat, which was welcomed by the Consumer Council for Water and supported by
the company's independent engineering Reporter, Halcrow. This plan forms part
of the 2009 water price review process and builds on the draft plan which was
submitted in August 2008 and the strategic direction statement published in
December 2007. The business has worked hard to strike the right balance between
improvements in the network and the impact on customer bills.
Ofwat yesterday published its draft determination of price limits for the
2010-15 period, which for UUW included:
* a £3.4 billion capital investment programme (2007/08 prices);
* an average annual underlying operating efficiency of 1.8% for the water
service and 2.4% for the wastewater service;
* a return on capital of 4.5% (post-tax, real); and
* an average annual real price decrease of 0.6% across the five-year period.
UUW is currently reviewing this as part of its ongoing discussions with the
regulator ahead of the final price determination, scheduled for November 2009.
Outlook
United Utilities expects to deliver a sound underlying financial performance in
the final year of this price review period although, as indicated previously,
the group is experiencing ongoing revenue and cost pressures. Consistent with
the group's policy, the board expects to grow dividends for 2009/10 by 5%.
In line with its usual practice, United Utilities intends to issue a pre-close
trading update on 23 September 2009.
United Utilities' contacts
For further information please contact:
Philip Green, Chief Executive +44 (0) 1925 237000
Tim Weller, Chief Financial Officer +44 (0) 1925 237000
Gaynor Kenyon, Communications Director +44 (0) 7753 622282
Darren Jameson, Head of Investor Relations +44 (0) 7733 127707
James Bradley / Tom Murray, Tulchan Communications +44 (0) 20 7353 4200