The United Utilities Board has proposed an interim dividend of 14.20 pence per ordinary share, an increase of 3.2 per cent, in line with their policy of targeting an annual growth rate of at least RPI inflation through to 2020.
Other financial highlights include:
Revenue - revenue was up £19 million, at £936 million, largely reflecting their allowed regulatory revenue changes.
Operating profit - underlying operating profit was up £24 million, at £392 million. This reflects the £19 million increase in revenue and a £13 million reduction in infrastructure renewals expenditure (IRE) partly offset by an £8 million increase in depreciation. Reported operating profit was up £44 million, at £383 million, impacted by the same movements as underlying operating profit as well as the impact of one off costs of £25 million associated with the extreme hot and dry weather incurred in the prior year.
Capex - total net regulatory capital investment in the first half of the year was £323 million including £68 million of IRE. They are on track to deliver a total of around £700 million for the full year, including around £190 million of the £350 million additional investment of outperformance sharing which was not anticipated at the time of the PR14 settlement. Their five-year AMP6 regulatory capex programme is around £3.9 billion including this additional investment.
Profit before tax - underlying profit before tax was up £4 million, at £244 million, largely reflecting the increase in underlying operating profit partly offset by an £11 million increase in the underlying net finance expense and a £6 million share of losses of joint ventures compared with a £3 million share of profits in the first half of last year. The increase in the underlying net finance expense was mainly due to the impact of higher RPI inflation on their index-linked debt. Reported profit before tax was £195 million, reflecting fair value movements and other adjusting items as outlined in the underlying profit measures tables below.
Profit after tax - underlying profit after tax was up by £1 million, at £198 million. Reported profit after tax was lower at £159 million, mainly reflecting fair value movements.
Capital structure - the group has a robust capital structure with gearing of 62 per cent as at 30 September 2019 (measured as group net debt to 'shadow' regulatory capital value, or RCV). Their shadow RCV adjusts for actual spend and was £11.9 billion as at 30 September 2019. This gearing level is comfortably within their target range of 55 per cent to 65 per cent, supporting a solid investment grade credit rating. United Utilities Water Limited (UUW) has long-term credit ratings of A3 on stable outlook from Moody's, A- on negative outlook from Standard & Poor's and a senior debt rating of A- on stable outlook from Fitch.
Financing headroom - the group benefits from headroom to cover its projected needs into 2021, enhanced by the recent raising of new finance. At 30 September 2019, the group had headroom of £716 million consisting of cash and undrawn committed funding, and having taken account of debt maturities due in the next 12 months. This headroom provides flexibility in terms of when and how further debt finance is raised to help refinance maturing debt and support the delivery of their regulatory capital investment programme.
