UU set to splash out as profits jump

WATER company United Utilities has hailed a “good” set of results as it reported a 15% hike in profits.

The Warrington-based group, the region’s only member of the country’s 100 biggest listed companies, said it was looking forward to the start of the next five year regulatory period after a period of “tough” negotiations with watchdog OFWAT.

Chief executive Steve Mogford said the next five years would see £3.5bn invested in the region, while customer bills will rise at a lower rate than inflation.

Revenue in the year to the end of March was 1.9% higher at £1.72bn. It could have been £21m higher but for a special customer discount this year.

Underlying pre-tax profits came in at £447m, £59m higher than in 2014, due to a £30m increase in underlying operating profit and a £29m fall in the group’s net finance expense.

Over the course of the last five year regulatory period UU said it had made great progress in improving its track record of customer service. It has moved from rock bottom, 19th place, in OFWAT’s customer service league table to a more respectable 9th.

Over the last five year regulatory period the group has invested around £3.8bn in the region, enhancing assets and services for customers.

Chief executive Steve Mogford said: “We are pleased with the results and the progress that has been made since I joined the business four years ago.

“We have now completed the 2010-15 regulatory period and are pleased to have achieved a strong overall performance for the benefit of all our stakeholders.

“We have delivered substantial improvements in customer satisfaction and have become a leading operational performer in our sector. We have exceeded our regulatory outperformance targets, enabling us to reinvest around £280m in customer service improvements and in helping customers struggling to pay.

“We expected our 2015-20 price determination to be tough and it was. However, our operational improvements and preparation provide us with a good platform to deliver further value in the forthcoming regulatory period.

“For shareholders, we are targeting to grow dividends by at least RPI inflation for the next five years. For customers, we will continue to provide benefits through significant levels of investment, improved service and below inflation growth in average household bills.”

He said UU would strive to continue improving its operational performance, while looking at growth opportunities such as the the opening-up of competition in the business supply market in 2017.

“We have made good progress in Scotland – where the market is already open – we have focused not just on market share but achieving a reasonable margin too.”