LONDON (ShareCast) - (Sharecast News) - United Utilities said current trading is in line with its expectations for the year ending 31 March on Tuesday, as it updated the market ahead of its full-year results, due on 23 May.
The FTSE 100 water utility confirmed it had been awarded fast-track status by the regulator Ofwat in its initial assessment of company business plans for the 2020-2025 period.

It claimed its plan received "the highest grades overall" for the sector, with Ofwat commending it in a number of areas including customer engagement, affordability and vulnerability, resilience, innovation and confidence and assurance.

"As a fast-track company, we now have greater clarity with a year to go before the start of the next regulatory period," the United Utilities board said in its statement.

"We will use this time to refine our plan in order to make a flying start to delivering our proposals for AMP7."

The firm said its approach to innovation and use of technology, alongside its capital investment, was delivering better service, greater resilience and improved efficiency for customers.

It added that the progress it had made positioned its well to deliver against its targets for the remainder of the current regulatory period, with no material change to prior guidance on total expenditure, outcome delivery incentives (ODIs) or service incentive mechanism (SIM).

"In January, Ofwat published the results of its annual company monitoring framework assessment which measures the quality and transparency of company reporting and the level of trust and confidence that customers and other stakeholders can place in it.

"We are delighted to have retained 'self assurance' status in this assessment," United Utilities said.

"This is the highest category available and we are the only company in the sector to have held this status for three consecutive years."

On the financial front, United Utilities said group revenue was expected to be higher than last year, largely reflecting its allowed regulatory revenue changes.

Underlying operating profit for the financial year ending 2019 was expected to be higher than in 2018, while underlying infrastructure renewals expenditure (IRE) in the second half of the year was expected to be "broadly consistent" with the first half of the year.

United Utilities said its reported operating profit would be impacted by costs relating to the exceptional period of dry weather in the summer of 2018, guaranteed minimum pension (GMP) equalisation and restructuring within the business.

"To provide a more representative view of business performance, operating costs associated with these items will be excluded from the underlying profit measures.

"These adjusted items are expected to total £52m for the full year, of which £29m was recognised in the first half."

The company said the retail price index inflation that is applied to its index-linked debt was lower than last year, and as a result it expected the underlying net finance expense for 2019 to be around £45m lower than 2018.

As the company continued to invest in its asset base, it said it expected a "small increase" in group net debt at 31 March, compared with the position as at 30 September.

"Our responsible approach to financial risk management continues to deliver benefits including a strong balance sheet, a stable IFRS pension surplus and gearing comfortably within our target range of 55% to 65% net debt-to-regulatory capital value, supporting a solid A3 credit rating for United Utilities Water with Moody's."

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE