#223893
Postby tjh290633 » May 23rd, 2019, 10:08 am
This bit further down in the RNS may be of interest:
Our dividend policy targets a growth rate of at least RPI inflation each year through to 2020, with further details set out below.
· Policy period - the dividend policy aligns with the five-year regulatory period which runs from 1 April 2015 to 31 March 2020.
· Policy approval process - the dividend policy was considered and approved by the United Utilities Group Board in January 2015, as part of a comprehensive review of the 2015-20 regulatory final determination in the context of a detailed business planning process, with due regard for the group's financial metrics, credit ratings and long-term financial stability, and is reviewed at least annually.
· Distributable reserves - as at 31 March 2019, the company had distributable reserves of £3,139 million. The total external dividends relating to the 2018/19 financial year amounted to £282 million. The company distributable reserves support over 11 times this annual dividend.
· Financing headroom - supporting the group's cash flow, we adopt a funding/liquidity headroom policy of having available resources to cover the next 15-24 months of projected cash outflows on a rolling basis.
· Cash flows from subsidiaries - the directors consider that the group's principal operating subsidiary, United Utilities Water Limited, has sufficient resources to pay dividends to United Utilities Group PLC for the duration of the current dividend policy period to support the external payment of dividends to shareholders.
· Financial stability - the water industry has invested significant capital since privatisation in 1989 to improve services for customers and provide environmental benefits, a large part of which is driven by legislation. Water companies have typically raised borrowings to help fund the capital investment programme. Part of total expenditure is additive to the regulatory capital value, or RCV, on which water companies earn a return allowed by the economic regulator, Ofwat. RCV gearing is useful in assessing a company's financial stability in the UK water industry and is one of the key credit metrics that the credit rating agencies focus on. We have had a relatively stable RCV gearing level over the last nine years, always comfortably within our target range of 55 to 65 per cent, supporting a solid A3 credit rating for UUW with Moody's. RCV gearing at 31 March 2019 was 61 per cent and the movement in net debt is outlined in the cash flow section below.
· Dividend sustainability - in approving the policy, the board is satisfied that across the current regulatory period the projected dividend is adequately covered by underlying profit after tax. Separately, during the current regulatory period the executive directors' long-term incentive awards have been directly linked to a measure of sustainable dividends. Whilst specific targets are not disclosed in advance, for commercial sensitivity reasons, there is a major focus on the creation of strong earnings that ensure the sustainability of dividends.
· Viability statement - the dividend policy is underpinned by the group's long-term viability statement (contained within the group's annual report and financial statements). Assurance supporting this statement is provided by the review of: the group's key financial measures; the key credit financial metrics; the group's liquidity position; the contingent liabilities of the group; and the key risks of the group together with the associated mitigating actions.
· Annual dividend approval process - the group places significant emphasis on strong corporate governance, and before declaring interim and proposing final dividends the United Utilities Group board undertakes a comprehensive assessment of the group's key financial metrics.
TJH