UNITED UTILITIES GROUP PLC: Interim Management Statement
United Utilities Group PLC
30 January 2013
UNITED UTILITIES INTERIM MANAGEMENT STATEMENT
United Utilities today issues an interim management statement covering the period from 1 October 2012.
Current trading is in line with the group's expectations.
Revenue has continued to increase at a rate slightly below the allowed regulated price rise for 2012/13, as expected, reflecting the on-going impact of a tough economic climate on commercial volumes. Depreciation, power and other costs have also increased as expected, largely offsetting the increase in revenue. The company continues to make good progress on its regulatory capital investment programme and remains on track to invest around £750 million in its asset base in 2012/13.
Improving operational performance and customer service continue to be top priorities for United Utilities Water (UUW).
The business met its regulatory leakage target for the sixth consecutive year in 2011/12 and remains on course to meet its target for 2012/13. Water resources in the region are robust, with reservoirs currently around 90% full.
UUW's significant progress on Ofwat's customer service measure, the service incentive mechanism (SIM), in 2011/12 has continued into 2012/13. Encouragingly, our qualitative SIM results for quarter three 2012/13 have helped improve our ranking. Building on the performance achieved in the first half of 2012/13, UUW has now moved up to 12th position out of 21 water companies on this qualitative measure for the financial year to date. UUW was 16th in 2011/12. Overall SIM performance for 2012/13, including our quantitative SIM score, will be published, along with the industry's results, after the financial year end.
In addition, the number of customer complaints UUW received via the Consumer Council for Water (CCW) has reduced further in the three months to December 2012 and, importantly, there have been no customer complaints requiring investigation by the CCW in the first nine months of the 2012/13 financial year. This improved performance will positively contribute to Ofwat's quantitative SIM assessment.
United Utilities' financial position remains robust and its regulatory capital asset base continues to grow, reflecting continued high levels of capital investment and positive RPI inflation. Group net debt is similar to the position at 30 September 2012. This principally reflects expenditure on the regulatory capital investment programme and payments in relation to interest and tax, offset by operational cash flows. Gearing remains in the middle of Ofwat's assumed range (55% to 65% net debt to regulatory capital value), supporting a solid A3 credit rating for UUW.
We were pleased to play an active role in constructive discussions with Ofwat, which led to the publication of revised `Section 13' licence modification proposals on 21 December 2012. These revised proposals focused more specifically on the changes required to facilitate the forthcoming price review in 2014 and reduced uncertainty for investors and customers, compared with the earlier proposals issued on 26 October 2012. UUW confirmed its acceptance of these revised proposals on 18 January 2013.
On 28 January 2013, Ofwat published an industry consultation paper in respect of the framework and approach for the 2015-20 price control period, with responses required by 26 March 2013. UUW is currently assessing this consultation and will provide its response to Ofwat in due course.
Concluding a consultation initiated in October 2012, the UK Office for National Statistics published its recommendation on 10 January 2013 to continue with the existing methodology for calculating RPI inflation, which has reduced uncertainty for investors.
United Utilities is confident of delivering a good underlying financial performance for the year ending 31 March 2013 and continues to be on track to meet its 2010-15 regulatory outperformance targets. The company remains strongly focused on building on its recent operational and customer service progress and sees plenty of scope to deliver further improvements.
In line with its usual practice, United Utilities intends to issue a pre-close trading update on 21 March 2013.
United Utilities contacts:
Gaynor Kenyon, Corporate Affairs Director +44 (0) 7753 622282
Darren Jameson, Head of Investor Relations +44 (0) 7733 127707
Ed Orlebar / Michelle Clarke, Tulchan Communications +44 (0) 20 7353 4200
This announcement is also available at: http://corporate.unitedutilities.com/investors.aspx
-0- Jan/30/2013 07:00 GMT