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Trading statements

United Utilities says current trading in line with its views

28 March 2017 07:31

United Utilities said current trading in line with its views, warning that while underlying operating profit for 2016-17 was seen moderately higher its revenue would be slightly lower on the year.

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

"Underlying operating profit for 2016/17 is expected to be moderately higher than 2015/16," it added.

United Utilities said infrastructure renewals expenditure (IRE) had risen slightly in H2, although FY IRE for 2016/17 was expected to be moderately lower than last year mainly due to a slightly different mix of capital investment.

The company said reported operating profit would be impacted by costs relating to non-household retail market reform and also restructuring within the business.

"These costs are expected to total around £16m for the full year, of which £8m was recognised in the first half."

United Utilities said RPI inflation had increased this year, which had the beneficial effect of increasing the company's regulatory capital value.

Since United Utilities was well hedged for inflation, there was also an impact of higher RPI inflation on our index-linked debt and it anticipated the 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," it said in a statement.

"This principally reflects capital expenditure, payment of the 2016/17 interim dividend and payments in relation to interest and tax, largely offset by operational cash flows.

"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."

Story provided by StockMarketWire.com

Related Company: UU.

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