29 November 2001
Delivering growth and efficiency 29/11/2001
Profit* before tax increased by 8 per cent to £163.9 million
Asset management services - sales nearly doubled to £175.0 million
Customer management outsourcing - sales increased by 39 per cent to £134.3 million
Licensed multi-utility operations - operating profit increased by 5 per cent to £261.8 million
Telecommunications - turnover increased by 42 per cent to £75.3 million
EPS** increased by 7 per cent to 28.4 pence
Interim dividend of 15.3 pence, an increase of 2 per cent
* excluding discontinued activities, exceptional items and goodwill ** adjusted for discontinued activities, exceptional items, goodwill and FRS19 deferred taxation
Chief Executive John Roberts said:
"Six months ago, we reported on the progress we had made in pursuing our strategy to deliver growth by applying our core skills in the expanding support services market, and to increase efficiency in our licensed multi-utility operations. Today, I can report on the significant headway we have made notwithstanding the uncertain economic environment. "In our support services activities, we've made tangible progress in developing United Utilities Contract Solutions, our asset management services business, and Vertex, our customer management outsourcing business. More than 30 per cent of the group's turnover now comes from these growth businesses and we have seen a substantial increase in their profitability. But our efforts to expand these businesses do not mean that we are neglecting our other activities. "Stock market conditions in the telecommunications sector have been highly volatile and outside our control. What has been within our control is to develop Your Communications, our telecommunications business, in a measured and focused way. Year on year sales increased 42 per cent in a business highly focused on exploiting its regional strengths in the Midlands and the North of England. As planned, operating losses were lower than the corresponding period last year and, as we move through the second half of the year, the business is EBITDA positive on a month by month basis. "In our licensed multi-utility operations, we have been working hard over the last eighteen months to identify effective ways of exploiting new technology to achieve savings in our substantial capital programmes. Of particular note is the pioneering use we are now making of reverse auctions hosted by Eutilia, the European utilities' web portal in which we are a founder shareholder. Although these are still early days, significant cost savings have been secured already, compared with traditional procurement channels."
Commenting on the outlook for United Utilities, John Roberts added:
"Both Vertex, our customer management outsourcing business, and United Utilities Contract Solutions, our asset management services business, have highly visible income streams based substantially on long-term operations. Neither business has been immediately adversely affected by recent global events, and there is no market evidence of a significant reduction in the future opportunities available to these businesses. "Looking ahead, there are continuing uncertainties for the UK economy. Our monopoly regulated businesses enter this period with the sound platform of highly predictable revenues, fixed by regulatory reviews up to 2005. Given these predictable revenues, and our expectation of outperformance of our regulatory cost targets, we believe that our earnings and dividend prospects are sound. "Over the last six months, the debate within the water industry concerning new company capital structures has continued. We will continue to review the implications of any developments against the background of the long-term demands for capital investment in the industry. We believe a substantial equity capital component may well continue to be required if the increasing debt requirements of the industry are to be financed and refinanced, efficiently and economically, given the current allocation of risk among the industry's stakeholders. "For our part, we continue to deliver additional benefits through our multi-utility strategy. I believe there are more savings yet to be secured in terms of both operational and capital efficiency and we are confident of our ability to provide good rewards for our equity investors based on this strategy. Looking to the future, our current equity-based structure provides a strong foundation to grow our businesses whilst retaining the flexibility to fund the future development of the group for the long-term benefit of all our stakeholders.
In conclusion, the Chairman, Sir Richard Evans, said:
"I am very pleased with the progress that the group is making in developing its growth businesses, exploiting the opportunities to deploy its core skills in growth markets, and achieving multi-utility efficiency in its licensed businesses. The board's confidence in the group's performance is reflected in its decision to increase the interim dividend."
For further information, please contact
John Roberts - Chief Executive: 020 7307 0300 Simon Batey - Finance Director: 020 7307 0300 Paul Deehan - Investor Relations Manager: 01925 237000 Alan Price - Head of Corporate and Financial Communications: 020 7307 0300 Andrew Lorenz - Financial Dynamics: 020 7831 3113 A presentation to investors and analysts will commence at 9.00 am on Thursday, 29 November 2001 at the City Conference Centre (inside the Institute of Marine Engineers), Coleman Street, London EC2. A web-cast of the results presentation will be on our web site later today at: www.unitedutilities.com, together with further information on United Utilities. Photographs for media use supporting these results can be downloaded via www.newscast.co.uk". Click here to view the full press release. The release is in PDF format. In order to open this format you will need the Acrobat Reader.