Pre-tax profits up 17% for United Utilities

Jun 3 2008

United Utilities today said it had beaten leakage targets for the second year in a row and posted higher than expected annual profits.

The Warrington-based group, which has 3.2 million customers, said it had outperformed more demanding water leakage targets from regulator Ofwat, with serious pollution incidents also 60% lower than two years ago.

Underlying pre-tax profits for the year to March 31 were 17% up at £475.6 million, beating the £461 million expected by the City.

The company added that plans to return £1.5 billion to shareholders following the sale of its North West electricity distribution network assets last year were on track for August.

United said the group's higher profits reflected the higher prices it was allowed to levy on customers to fund capital spending this year.

The company invested £826 million on its regulated water and wastewater operations this year, 45% higher than the previous year. This includes replacing 650 km of water mains.

“The board expects United Utilities to continue to deliver a strong financial performance over the remainder of this regulatory period, underpinned by allowed price rises to fund substantial investment in our networks,” the group added.

United said it had achieved “real progress” in improving operating performance, although it added that there was more work to do after a higher number of sewer flooding incidents following last year’s poor weather.

The group, which sold off its electricity distribution network to concentrate on water assets, said operating profits from non-regulated activities were marginally ahead at £62 million.

This partly reflected the first income from United’s contract to operate the electricity network on behalf of the financial consortium which now owns it. The eight-year deal will run until 2015 and generate £1.5 billion in revenues, with the potential to extend until 2020.

United Utilities was created from the merger of North West Water and Norweb in November 1995.