REG - United Utilities Grp - United Utilities Trading Update

United UtilitiesAnnouncement

25/03/2022 07:16

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RNS Number : 9782F  United Utilities Group PLC  25 March 2022

United Utilities Group PLC

25 March 2022

 

UNITED UTILITIES TRADING UPDATE

 

United Utilities announces the following trading update ahead of its full year
results on 26 May 2022.

 

Current trading is in line with the group's expectations for the year ending
31 March 2022.

Performing strongly

 

In Ofwat's Service Delivery Report for 2020/21 we were assessed as the joint
top performer across directly comparable areas of outcome delivery,
demonstrating focus on delivering objectives that matter to stakeholders. We
were identified as a "top performer" in reducing water supply interruptions
and minimising pollution incidents. Our pollution performance continues to be
sector leading. We have delivered a 31 per cent reduction in incidents in the
first year of the AMP and we expect to have maintained this high level of
performance in the current year.

 

Protecting the environment

 

In the Environment Agency's most recent assessment of environmental
performance, we were awarded the top 4 star ranking. We have achieved this
industry leading status in four of the last six years, demonstrating our
commitment in this important area. It is our duty to protect the environment
we rely on, which includes the health of our rivers and coastlines. We are
determined to play our part in tackling the problem of river pollution, which
is why we are on track with the investment of almost £900 million in AMP7 to
improve the quality of our region's rivers and seas.

 

The Environment Act sets out important requirements about the progressive
reduction to the adverse impacts of discharges to rivers. Building on our
track record of delivering environmental improvements, such as no serious
pollution incidents for two consecutive years, we are making good progress
implementing plans to improve our rivers and waterways. In 2021 recorded
levels of spill volume and spill frequency from our storm overflows were
around 25 per cent lower than reported in 2020. We continue to roll out
additional monitoring capability, further improving measurement and
identifying potential operational improvements.

 

Earlier this month we launched our plan for "Better Rivers: Better North
West(1)" to improve river health and recreation in AMP7. Our four-point plan
contains a series of commitments, most of which will be delivered over the
next three years, and includes asset improvement, enhanced data monitoring and
sharing, greater innovation and more use of nature-based solutions. This
activity will also enable us to be better positioned as we plan for AMP8. We
are committed to securing the investment necessary to modernise the North
West's sewer system and working with partners across the region to make our
rivers the healthiest they can be.

 

Long-standing commitment to ESG

 

We perform well across a broad range of ESG indices and were pleased to have
been assessed by Sustainalytics as an Industry Top Rated Company for 2022, in
recognition of our approach to managing ESG matters.

 

We have a strong track record of ensuring executive remuneration is directly
linked to ESG performance. We intend to further align our executive
remuneration policy with our ambitions to operate in an environmentally and
socially conscious manner and will be seeking shareholder support at our AGM
in July 2022 for the introduction of a new climate change measure in our
long-term incentive plan that aligns with our previously announced carbon
pledges.

 

We are very conscious of our responsibility to support our customers at a time
when many households in the North West are seeing significant rises in the
cost of living. Our typical household bills have seen a 6 per cent real
reduction since the start of AMP7 and we are also supporting more than 200,000
customers through extensive affordability schemes.

 

Financial performance

 

Our AMP7 guidance on regulatory performance remains unchanged from that given
at our half year results in November 2021.

 

Group revenue is expected to be higher than last year, largely reflecting
higher consumption from business customers. Overall, the net increase in
revenue is expected to be around 3 per cent.

 

Underlying operating profit for 2021/22 is expected to be broadly the same as
in 2020/21 as higher revenue is broadly offset by higher underlying operating
costs, largely as a result of inflationary increases in our core costs.

 

We expect the underlying net finance expense for 2021/22 to be around £175
million higher than 2020/21 largely due to higher inflation applied to the
group's index-linked debt. However, with inflation at a 30-year high, we will
benefit from higher indexation increasing the regulatory capital value of the
regulated business at the year-end, as well as increasing future revenues.

As a result of the impact of capital allowances, including the temporary super
deductions available for the current year, together with the expected
agreement of prior years' tax matters as part of the group's normal processes
of ensuring the right amount of tax is paid, we would expect an underlying tax
credit for 2021/22 of around £60 million.

We expect an increase in group net debt at 31 March 2022 compared with the
position as at 31 March 2021. This largely reflects the inflation accretion on
the group's index-linked debt along with ongoing investment in its asset base
including the acceleration of capital expenditure and the previously announced
£365 million of incremental totex to deliver service improvements sooner.

 

Our responsible approach to financial risk management continues to deliver
benefits, including a strong balance sheet, a stable IFRS pension surplus and
gearing within our target range supporting a solid A3 credit rating for United
Utilities Water with Moody's.

 United Utilities contacts:
 Gaynor Kenyon, Corporate Affairs Director  +44 (0) 7753 622 282
 Robert Lee, Head of Investor Relations     +44 (0) 7500 087 704
 Graeme Wilson, Tulchan Communications      +44 (0) 2073 534 200

 

LEI 2138002IEYQAOC88ZJ59

Classification - Trading update

(1) https://www.unitedutilities.com/corporate/newsroom/latest-news/united-utilities-publishes-road-map-to-better-river-health/
(https://www.unitedutilities.com/corporate/newsroom/latest-news/united-utilities-publishes-road-map-to-better-river-health/)

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