United Utilities latest financial results for the year ending 31 March 2009 show underlying pretax profit up 12% at £532M, with underlying operating profit up by 10% to £742M and a revenue increase of 3% to £2.435bn.
However, despite strongth growth, the company is planning to cut its upcoming proposed AMP5 capital spend from £4.03bn to £3.7bn between 2010 and 2015.
Commenting, Philip Green, Chief Executive, said:
"This is a robust set of results in a difficult economic climate. We have delivered strong underlying profit growth and continued to make high levels of investment in our water and wastewater infrastructure. United Utilities continues to benefit from a robust financing position and we have a healthy level of headroom to cover our projected financing needs through to mid-2011.
"We have a consistent strategy to focus on our core skills of managing utility networks, as we aim to build on the operational and customer service improvements seen over the last few years. Our non-regulated business has made further progress, leveraging our core skills to secure additional long-term revenue streams for the group.
"We submitted our final business plan for 2010-15 to Ofwat in April 2009, which we believe balances the needs of all our stakeholders and maintains the affordability of customer bills. We expect investment in our assets to continue at high levels, providing further growth as well as environmental and customer benefits.
"We expect to deliver a sound underlying financial performance in the final year of this regulatory period, although the group faces ongoing revenue and cost pressures. In line with our policy, we expect to grow dividends for 2009/10 by five per cent."
The cuts in United Utilities total proposed capital expenditure programme for AMP5 are a combination of the impact of the recession on the company’s growth plans which accounted for £119M, efficiency gains of £130M, and the deferral and cutting of projects worth £433M.
The company has asked water regulator Ofwat to look again at the costs of borrowing in order to ensure that water companies can maintain an A3 credit rating. United Utilities board said that this was an appropriate investment grade rating to allow it to raise finance to fund its substantial capital investment programmes, particularly in light of conditions in the debt markets over the last 12 months
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