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Water company United Utilities (UU) has said it is “confident of delivering a good underlying financial performance” for the year ending 31 March 2014 in its interim management statement published today.
The statement, which covers the period from October 1 2013, highlighted the continuing growth of the company’s regulated capital asset base, reflecting high levels of capital investment and the impact of RPI inflation.
Revenue has also increased, according to the statement, reflecting the regulated price change for 2013/14. This revenue increase said UU, is only partly offset by higher depreciation and other operating costs, “as the company continues to tightly manage its cost base”.
However, UU’s group net debt is slightly higher compared with the position at 30 September 2013, which it said reflected expenditure on the regulatory capital investment programme and payments in relation to interest and taxation. This it said, has been largely offset by operational cash flows and fair value gains on the group’s debt and derivative instruments.
Gearing remains stable and comfortably within Ofwat’s assumed range of 55 per cent to 65 per cent net debt to regulaed capital value, supporting a solid A3 credit rating for United Utilities Water.
UU said in the statement: “Current trading is in line with the group’s expectations. Customer service is continuing to improve, as measured by Ofwat’s service incentive mechanism, underpinned by good operational and environmental performance. We continue to narrow the gap to sector leading performance.
“United Utilities continues to make good progress on its regulatory capital investment programme and remains on track to invest at least £800 million in its asset base in 2013/14, delivering benefits for customers, the environment and the regional economy.”
The company also confirmed it would undertake transitional investment in 2014/15 to “de-risk” projects due to be delivered in the next regulatory period.
In addition, UU said it had headroom to cover its projected financing needs into 2016, following the recent agreement of a £500 million term loan with the European Investment Bank. The loan, which can be taken in either fixed or floating interest rate form, will have an average maturity of 10 years and is expected to be drawn down via a number of tranches within the next 12 months.
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