United Utilities sees full year results in line with expectations

North West water company United Utilities said current full year trading was in line with expectations with underlying profit forecast to be “moderately higher” than 2015/16.

Group revenue is expected to be slightly lower than last year, reflecting the accounting impact of United's Water Plus business retail joint venture, which completed on 1 June 2016, partly offset by its allowed regulatory revenue changes.

Infrastructure Renewal Expenditure (IRE) increased slightly in the second half of the year, although full year IRE for 2016/17 was expected to be moderately lower than last year mainly due to a slightly different mix of capital investment.

Reported operating profit will be hit by £16m in costs relating to non-household retail market reform and also restructuring within the business, United said.

“To provide a more representative view of business performance, these adjusting items will be excluded from the underlying profit measures,” it added.

The company said the rise in RPI inflation had increased its regulatory capital value.

It would also increase its index-linked debt and it expected underlying net finance expense for 2016/17 to be around £240m.

“As the company continues to invest in its asset base, we expect a small increase in group net debt at 31 March 2017 compared with the position at 30 September 2016,” United said.

“Gearing remains comfortably within our target range of 55% to 65% net debt to regulatory capital value, supporting a solid A3 credit rating for United Utilities Water, and the group has financing headroom into 2019,” United said.