Interim results 2007

29 November 2007

United Utilities delivers strong results and improved performance. Proposed £1.5 billion return to shareholders. Half yearly financial report* for the six months ended 30 September 2007.

£m (except dividends)	Six months ended 30 September 2007	Six months ended 30 September 2006	% Change
Operating profit from continuing operations	348	332	+5%
Underlying operating profit frm continuing operations**	348	322	+8%
Profit before tax from continuing operations	252	250	+1%
Underlying profit before tax from continuing operations**	243	221	+10%
Interim dividend per ordinary share (pence)	15.20	14.63	+3.9%

Basic earnings per share  (pence)	Six months ended 30 September 2007	Six months ended 30 September 2006
Continuing operations	29.8	19.7
Continuing and discontinued operations	38.3	25.8

*Contribution from electricity distribution assets, facilities management operations, industrial liquid waste operations and telecoms are treated as discontinued operations in these results.  Therefore, results from continuing operations for the six months to 30 September 2006 have been re-presented
**Underlying profit before tax from continuing operations and underlying operating profit from continuing operations are defined in the underlying profit measure table on page 13
*** Regulatory asset value of electricity distribution assets £1,230 million (as at 31 March 2008 based on a forecast RPI assumption for 2007/08 of 3.2%)
**** As explained in the distributions to shareholders under current and new dividend policies section on page 14 of this announcement

 

United Utilities delivers strong results and improved performance

. Underlying profit before tax** up 10% to £243 million
. Regulated activities operating profit increased by 5% to £325 million, with underlying operating profit** up 9%
. Capital expenditure in regulated activities up 49% to £362 million, delivering customer and environmental benefits
. Operational performance improvements underpinned by our strategy to focus on core skills
. On track to meet 2007/08 leakage target

 

Sale of electricity distribution assets, proposed return of value and dividend policy

. £1,782 million sale of electricity distribution assets for a 45% premium to regulatory asset value***

Proposed return of value to shareholders	£m	Pence per share
Net equity proceeds from sale	1,050	119
Additional return to create more efficient capital structure	450	51
Total proposed return via B share scheme	1,500	170

. 2007/08 forecast dividend per share of 46.67 pence to be based on current dividend policy
. 2008/09 dividend per share to be reduced by 30% reflecting revised composition of group
. New dividend policy targets real growth of RPI+2% per annum to be applied from 2009/10
. Total projected distributions**** to 2010 to meet expectations under current dividend policy

Commenting, Philip Green, Chief Executive, said:

"The group has delivered both a good set of financial results and further operational performance improvements, supported by our strategy to focus on core skills. 

"Our water business has now entered the peak phase of its 2005-10 capital expenditure programme and we remain confident of meeting our regulatory outputs.  This major investment in essential infrastructure continues to deliver customer and environmental benefits.

"The successful sale of our electricity distribution assets for a substantial premium to the regulatory asset value enables the group to focus on the much larger, higher growth water asset base and meets our target of agreeing the sale by the end of this calendar year.  We are pleased to have a £1.5 billion contract to manage the electricity assets through to 2015 which is consistent with our strategy.  Our new dividend policy, targeting real growth, takes account of the revised composition of the group and ensures that income remains an important reason to invest in United Utilities.

"As a result of the sale and the review of our capital structure, we are very pleased to be proposing a total return of £1.5 billion.  Shareholders should expect to receive distributions through to 2010 in line with expectations under the current dividend policy, in addition to the net equity proceeds from the sale."

For further information on the day, please contact:
 
Philip Green - Chief Executive +44 (0) 20 7307 0300
Tim Weller - Chief Financial Officer +44 (0) 20 7307 0300
 
Gaynor Kenyon - Communications Director +44 (0) 7753 622282
Darren Jameson - Head of Investor Relations +44 (0) 7733 127707
 
Dominic Fry / Peter Hewer - Tulchan Communications +44 (0) 20 7353 4200

A presentation to investors and analysts starts at 9.00 am on Thursday 29 November 2007, at the City Presentation Centre, 4 Chiswell Street, London, EC1Y 4UP.  The presentation can be accessed via a one-way listen in conference call facility, by dialling: + 44 (0) 20 7162 0125.  This recording is available for seven days following 29 November 2007, on +44 (0) 20 7031 4064, access code 772442.

The presentation, with further information on United Utilities, will be available at 9.00 am on the day at: http://www.unitedutilities.com and, later, on Bloomberg at: UUIR<GO>, where a multimedia version will be available.

Interviews with Philip Green, Chief Executive, and Tim Weller, Chief Financial Officer, in video/audio and text formats are available on http://w3.cantos.com/07/unitedut-711-9and2/
and http://www.unitedutilities.com.

 

Half yearly financial results 2007/08 (pdf117kb)
Interim Webcast 2007 (htm0kb)
Interim results 2007 presentation (pdf146kb)