United Utilities Group PLC full year results show underlying operating profit of £518m

United Utilities Group PLC (LON:UU) has announced its full year results for the year to 31 March 2024.

Louise Beardmore, United Utilities Chief Executive Officer, said:

“Colleagues have worked exceptionally hard throughout the year to deliver for our customers, communities and the environment. As a result, operational performance has been strong, and I am pleased to report that we have met or exceeded around 80% of our regulatory targets, and we have also been ranked as the number one water and sewerage company for customer service in the independent UK Customer Service Index. In addition, we are providing over 375,000 customers with affordability support against the backdrop of significant increases in the cost of living.  

We take our role in protecting the environment very seriously; our ambitious business plan would see us investing more than ever before to improve services across the five counties of the North West. This would deliver a genuine step-change in infrastructure for the benefit of customers and the environment, and support 30,000 jobs.

Our finances are robust with one of the lowest levels of gearing in the sector. We are readying our supply chain, and bringing forward around £400 million of AMP8 investment to reduce spills at more than 150 storm overflows, and to accelerate environmental schemes in communities such as Windermere, where we are fast-tracking investment to drive improvements earlier. This is on top of the river health improvements we are already delivering through our Better Rivers programme and accelerated environmental improvements funded through reinvestment of our AMP7 outperformance.”

Key financials – year ended 31 March

Operational highlights

·    Accelerating c.£400m⁶ of AMP8 investment, which includes prioritising work on more than 150 storm overflows; implementing accelerated solutions to achieve spill reductions faster

·    ODI reward for FY24 of £34m, our highest ever reward despite the impact of exceptionally high rainfall

·    Ranked as the top water and sewerage company, and retained top five position out of 31 utilities in the UK Customer Satisfaction Index⁷

·    Helped more than 375,000 customers with affordability support so far this AMP, and over 400,000 households on Priority Services register

·    Strong leakage performance, meeting regulatory target for the 18th year and fixing six leaks every 30 mins

·    Achieved 3 or 4 star EPA rating since records began – our 2023 performance will be confirmed in July but we believe we are on track for 4 star in the EA’s Environmental Performance Assessment

Financial highlights

·    Underlying operating profit of £518m, reported operating profit of £480m

·    Underlying EPS of 33.3p, up from -1.3p, and reported EPS of 18.6p

·    Low level of gearing at 59% and solid credit ratings 

·    Re-entered the Euro bond market, pricing a €650m 10.25yr green bond – 3.8x oversubscribed

·    Liquidity extending into 2026; AMP8 funding underway

·    Recommended final dividend of 33.19p, in line with policy

Financial framework guidance for current AMP7 regulatory period

·    Targeting to achieve an FY25 net ODI reward at least in line with FY24

·    Continue to forecast average real RoRE of 6-8%

·    Unchanged RCV growth guidance of 4-5% nominal compound annual growth rate

·    Targeting dividend growth in line with CPIH

·    Maintain gearing within target range of 55-65%

Notes

¹ Underlying measures are defined in the underlying profit section below.

² Revenue for the year to 31 March 2023 has been re-presented so as to include £20.2 million of income not derived from the output of the group’s ordinary activities in Other income rather than in revenue. This income relates to amounts receivable under government renewable energy schemes and the sale of energy generated to the grid.

³United Utilities Water Limited’s adjusted RCV (adjusted for actual spend, timing differences and including full expected value of AMP7 ex-post adjustment mechanisms)

⁴ RCV gearing calculated as group net debt including loan receivable from joint venture/United Utilities Water Limited’s adjusted RCV (adjusted for actual spend, timing differences and including full expected value of AMP7 ex-post adjustment mechanisms)

⁵ Return on regulated equity

⁶ Comprising c.£200m through Accelerated Infrastructure Delivery Project and c.£200m of transitional investment submitted in our PR24 business plan

⁷ UKCSI is an Institute of Customer Service measure