United Utilities Group (UU.)

[idpickering]

Further to my last, I still haven't received the dividend thus far. I spoke to Halifax earlier and was told they hadn't received it themselves yet. On receipt of it they'd process it/pay it out as is normal practise.

Ian.

Further update - the UU. dividend hit my Halifax account in the last hour or so.

Likewise. Thanks for your feedback.

Ian.

[idpickering]

United Utilities announces the following trading update ahead of its half year results on 23 November 2022.

At the group's full year results in May, we provided detailed guidance on the 2022/23 financial outlook. Since then, the increasing inflationary environment and higher power prices have resulted in somewhat higher cash operating costs and increased non-cash indexation on the group's index-linked debt. Further details, together with updated revenue guidance are provided in the financial performance section below.

Inflation and cost of living

We recognise the increasing cost of living challenges for customers and continue to offer support through our extensive range of affordability schemes. With £280 million of support available over AMP7 we expect to help over 200,000 households to reduce the burden of debt.

Continued strong environmental performance

In July, we retained our top-ranking 4 star status as measured through the Environment Agency's annual assessment of environmental performance for 2021. We work extremely hard to maintain a high level of environmental performance and continue to lead the sector on minimising pollution incidents.

We have a long-standing commitment to protect and enhance the environment and have invested over £1.25 billion to improve our region's bathing waters and £1.2 billion to reduce the impact of sewer spills over the last three decades. This year we published our road map to better river health in the North West and will invest £230 million over AMP7 to improve 184km of rivers. In May 2022 we committed to invest a further £250 million over and above our AMP7 allowance to improve environmental outcomes.

Delivering our ESG commitments

Earlier this month, we were delighted to win the EMEA Sustainability Reporting of the Year award in Environmental Finance's inaugural Sustainable Company Awards and have recently retained an MSCI ESG rating of AA for the eighth year running.

Over the next eight weeks we will be releasing a series of short videos leading up to our half year results presentation, with the first introductory video made available today. They will help to bring to life some examples of how we are using innovative solutions to tackle sustainability challenges. The first video can be viewed at unitedutilities.com/corporate/responsibility/ .

Financial performance

We maintain our existing AMP7 guidance on regulatory performance provided at our full year results in May 2022. We are maintaining our ODI guidance for the year, although performance against particular measures can be sensitive to weather and one-off events during the year, and particularly during the winter months.

Due to moderately lower than forecast consumption, group revenue for the first half of 2022/23 is expected to be around 1 per cent lower than the first half of last year. We expect this lower consumption to continue into the second half of the year and therefore full year group revenue is expected to be lower than the guidance that we gave in May.

We previously guided to around £100 million increase in underlying operating costs for the 2022/23 financial year, with around half in relation to previously announced additional investment and half inflationary cost increases. Inflationary increases in our input costs, particularly on chemicals and power, are now expected to be somewhat higher than the forecast used to derive this guidance. We actively manage the impact of inflation on our cost base and while we are in a strong position for 2022/23 with wage deals agreed and the majority of our power consumption hedged. As highlighted at our full year results, we started the year with around 10 per cent of unhedged consumption exposed to market rates. As a result of these factors, underlying operating costs are now expected to be £65 million higher for the first half of 2022/23 leading to a lower underlying operating profit than the first half of last year. We expect these factors to also impact the second half of the year, however we continue to closely monitor the impact of ongoing volatility in power costs and await clarity on the impact of the Energy Bill Relief Scheme for non-household customers. Our regulatory determination for AMP7 allows for inflation through CPIH indexation of the RCV and the totex allowance. This provides mitigation of non-cash indexation on the group's index-linked debt and mitigation against higher cash operating costs over time.

We expect the underlying net finance expense for the first half of 2022/23 to be around £135 million higher than the first half of last year, largely as a consequence of higher inflation rates. Cash interest is expected to remain stable when compared with the first half of last year.

As a result of the impact of capital allowances, including the temporary super deductions available for the current year, we would expect an underlying tax charge close to £nil for both the first half of the year and the full year.

We expect an increase in group net debt at 30 September 2022 compared with the position as at 31 March 2022. This largely reflects the impact of higher inflation leading to a higher indexation of principal on our index-linked debt along with the group's ongoing investment in its asset base, partly offset by the expected receipt of proceeds in relation to the previously announced sale of our renewable energy business United Utilities Renewable Energy Limited.

https://www.investegate.co.uk/united-ut ... 00077000A/

Ian.

[idpickering]

Half Year Results.

Investment strategy and Systems Thinking delivering for customers…

· Investment in sophisticated real time planning and integrated network has enhanced our water supply resilience

· Additional investment announced in May driving 21% reduction in water quality contacts

· Dynamic Network Management investment helping to deliver lowest ever levels of sewer flooding

· On track to deliver leakage target; helped by early investment, latest innovations and detection techniques

· Sector leading customer support package with c£280m support in AMP7 helping more than 200,000 households

· Strong supporter of the CCW's1 proposal for a national social tariff to help customers right across the country

· Investing in the North West's future, with our biggest ever intake of graduates and apprentices

And later;

The interim dividend of 15.17 pence per ordinary share (year ended 31 March 2022: interim dividend of 14.50 pence per ordinary share, final dividend of 29.00 pence per ordinary share) is expected to be paid on 1 February 2023 to shareholders on the register at the close of business on 23 December 2022. The ex-dividend date for the interim dividend is 22 December 2022.

https://www.investegate.co.uk/united-ut ... 00062776H/

Ian.

[idpickering]

United Utilities key corporate dates.

https://www.investegate.co.uk/united-ut ... 52244512Q/

Ian (I hold).

[idpickering]

Retirement of Steve Mogford, Chief Executive Officer (CEO) on 31 March 2023.

On 27 April 2022, the company announced the intention of CEO Steve Mogford to retire in early 2023 and the appointment of Louise Beardmore as CEO designate. Steve will step down from the Boards of United Utilities Group PLC and United Utilities Water Limited on 31 March 2023, when Louise will become CEO.

Sir David Higgins, Chair of the United Utilities Board said: 'It has been a privilege to work with Steve, who has been CEO since 2011. On behalf of the Board, I wish to express my sincere thanks to him for the extensive improvements he has overseen in the performance of the business during his tenure as CEO, along with a number of key projects, in particular, the successful delivery of the West Cumbria Project providing customers in the region with a new resilient water supply. Steve has driven forward the group's strategy and improved engagement with all our stakeholders. He has made a huge contribution to United Utilities and we wish him well for the future.'

https://www.investegate.co.uk/united-ut ... 00061247T/

I've held UU. throughout Sir David's tenure, wish him well for the future, and a thank you from me to him too.

Ian (I hold).

[AsleepInYorkshire]

I don't have a holding in this or any utility.

There's been a huge rise in the number of "water companies" dumping raw sewage into rivers & the sea. Whilst the water companies can do this in certain circumstances it's becoming clear that an amount of the "dumping" is illegal. There are also issues with chalk streams and rivers running dry as the aquifers that supply them are being used excessively.

Documentaries have appeared on mainstream channels and social media has a large amount of interest in the subject.

It may be worth finding out how well not just UU but other utilities balance sheets look. Thames Water have debts exceeding £14bn and are looking to strengthen their balance sheet. I think there's a reasonable possibility that government will take actions against all utility companies, and this could result in a significant reduction in their margins.

The general argument being put forward is that the utility companies are paying out dividends instead of spending on new infrastructure. The issue, in a nutshell, is that during times of heavy rain the sewers fill with rainwater and the infrastructure cannot cope. During heavy rainfall the water companies can [legally] discharge untreated raw sewage into water courses and seas. There is only one river (The Test) which can claim it's "clean".

AiY(D)

[AsleepInYorkshire]

I don't have a holding in this or any utility.

There's been a huge rise in the number of "water companies" dumping raw sewage into rivers & the sea. Whilst the water companies can do this in certain circumstances it's becoming clear that an amount of the "dumping" is illegal. There are also issues with chalk streams and rivers running dry as the aquifers that supply them are being used excessively.

Documentaries have appeared on mainstream channels and social media has a large amount of interest in the subject.

It may be worth finding out how well not just UU but other utilities balance sheets look. Thames Water have debts exceeding £14bn and are looking to strengthen their balance sheet. I think there's a reasonable possibility that government will take actions against all utility companies, and this could result in a significant reduction in their margins.

The general argument being put forward is that the utility companies are paying out dividends instead of spending on new infrastructure. The issue, in a nutshell, is that during times of heavy rain the sewers fill with rainwater and the infrastructure cannot cope. During heavy rainfall the water companies can [legally] discharge untreated raw sewage into water courses and seas. There is only one river (The Test) which can claim it's "clean".

AiY(D)

Can I add a small caveat before posting please. This post is not about saying I told you so. It's about sharing information with the single agenda of being of help. In particular idpickering spends a great deal of his time bringing information to the Fool and I find it very easy to respect this.

Ofwat's Power to Restrict Dividend Payments


I'd humbly suggest this could amount to a substantial risk to future dividend payments. Although she has not [yet] followed up on her request for water companies to deliver plans to "clean up their act", which Therese Coffey made some time ago this does not prevent the Tories realising they are potentially going to lose votes if they don't act [well] before the next election.

AiY(D)

[AsleepInYorkshire]

Caveat: Just to confirm to our moderators that I believe this post is on the correct board as the underlying consensus represents a threat to the future dividend payment of United Utilities (and other water companies)

Failures of regulators, water companies and Government leaving public and environment in the mire

Under investment, insufficient government strategy, and inadequate co-ordination has resulted in a failure to “treat water with the care and importance it deserves”, warns committee.

Key recommendations
The Committee is calling on the Government to:

• give Ofwat guidance on how it should handle the trade-off between balancing the financial needs of customers during a cost-of-living crisis with the urgent need for infrastructure and environmental investment.
• legislate to introduce a single social tariff in time for its inclusion in the next Price Review which will protect vulnerable customers from bill increases and provide a baseline of support for customers regardless of who supplies their water.
• consider banning the sale of wet wipes that are not rapidly biodegradable.
• publish a National Water Strategy which sets clear expectations in relation to the quality of the water environment and the resilience of water supplies, giving regulators clear benchmarks to work towards.
• ensure adequate funding is available to the Environment Agency to inspect and enforce environmental offences by water companies.
• give Ofwat powers to prevent directors of companies that are responsible for serious pollution incidents from continuing to work in the sector, providing individual accountability.
• accelerate the planning process for reservoirs, including by designating, and if necessary, amending its National Policy Statement for Water Resources Infrastructure as a matter of priority.
• make water metering compulsory for all households and businesses where it is possible to do so.

The affluent and the effluent: cleaning up failures in water and sewage regulation
A huge level of investment—that the Government has estimated will cost £56 billion over 25 years—is required so that storm overflows are only used in times of exceptional weather. Given that water companies are responsible for maintaining their own sewage networks, they must bear a significant degree of responsibility for the necessary investment costs. However, we recognise that the scale of investment needed is vast, and for the private sector to meet this challenge there will need to be stable, long-term funding arrangements that provide certainty for investors.

At first glance I'm beginning to think this has all the hallmarks of a crisis similar to that we've witnessed in banking in previous years. The cost of the fines being levied on the water companies are less than the cost of the infrastructure needed to prevent the fines. Thus the water companies have taken the least expensive option. The Conservative government have said no public money will be used to pay for new infrastructure. Indeed it would be a significant sign of failure regarding the privatisation of the industry by the Conservatives in 1987 should they now in any way subsidise the industry.

I can’t predict the future with any certainty but I wonder if Labour win the next election if they will move water companies back into public ownership?

I am not convinced that the future dividends from water companies are nailed on. I think there’s a large risk and they may come to either a temporary or more radically a permanent end.

AiY(D)

[idpickering]

Trading Update ahead of 2022/23 results.

Financial performance

ODI Performance : In December we experienced a period of extreme weather. While our teams and partners worked tirelessly to minimise disruption, some customers experienced short-term supply interruptions caused by rapid freeze-thaw events, leading to burst pipes. As a result, ODI performance for the year will be adversely impacted. Net ODI outperformance for 2022/23 is now expected in the range £20m to £25m. ODI guidance for AMP7 remains unchanged and we continue to target a net reward of c.£200m.

Operating result: Group revenue for 2022/23 is expected to be around 1% lower than previous guidance driven by timing effects, primarily lower consumption, which are fully recovered in future years. Operating costs are expected to be inline with previous guidance.

Net finance and tax: Underlying net finance expense for 2022/23 is expected to be around £175m higher than last year, some £10m higher than our previous guidance and largely as a consequence of higher inflation. Cash interest is expected to remain stable when compared to last year. We now expect an underlying tax credit for 2022/23 of between £15m and £25m, reflecting higher interest charge and a change in approach to carried forward tax losses.

Balance sheet: Group net debt is expected to increase compared with the interim result, largely reflecting the impact of inflation on index-linked debt. Gearing remains in range, supporting a solid A3 credit rating for United Utilities Water with Moody's and our AMP7 dividend policy.

Annual results presentation

United Utilities 2022/23 results will be presented by incoming CEO Louise Beardmore on 25 May 2023, which will include an update on group strategy.

https://www.investegate.co.uk/united-ut ... 00093721U/

Ian (I hold).

[monabri]

I'm surprised there has been no comment regarding possible unlimited fines for water companies ; from the Department for Environment Food and Rural Affairs (Defra)

https://deframedia.blog.gov.uk/2022/10/ ... 50million/

( lifts max fine from £250k to £250m)

Whilst perusing 'something else' , it has been reported in the FT that "Two water groups are blamed for 40% of England’s sewage spills in 2022". The companies are United Utilities and Yorkshire Water.

( paywalled link)
https://www.ft.com/content/f07442f4-0a0 ... 8407e7b893

Thus, I would imagine the CEOs of the water companies are going to take this extremely seriously as repeat offences will most definitely be 'career limiting' .

[AsleepInYorkshire]

I'm surprised there has been no comment regarding possible unlimited fines for water companies ; from the Department for Environment Food and Rural Affairs (Defra)

https://deframedia.blog.gov.uk/2022/10/ ... 50million/

( lifts max fine from £250k to £250m)

Whilst perusing 'something else' , it has been reported in the FT that "Two water groups are blamed for 40% of England’s sewage spills in 2022". The companies are United Utilities and Yorkshire Water.

( paywalled link)
https://www.ft.com/content/f07442f4-0a0 ... 8407e7b893

Thus, I would imagine the CEOs of the water companies are going to take this extremely seriously as repeat offences will most definitely be 'career limiting' .

Theresa Coffey has announced they are going to be made unlimited.

The two largest contributors to sewage dumping are Yorkshire Water & United Utilities

AiY(D)

[88V8]

The two largest contributors to sewage dumping are (Yorkshire Water) & United Utilities

Yes, and anyone who is into ethical investing should not be holding their shares.

V8

[idpickering]

Final Results.

2022/23 Financial highlights

· Revenue in line with guidance -2% to £1,824m largely reflecting lower consumption more than offsetting the allowed regulatory revenue increase. Around £40m of the reduction will be recoverable in two years' time under the revenue control.

· Underlying operating profit of £441m, down from £610m driven by lower revenue and the inflationary impact on operating costs, in particular procurement of electricity and chemicals.

· Underlying EPS of -1.3p, down from 53.8p due to the impact of inflation on debt indexation and the operating result.

· Return on regulated equity (RoRE) +3% to 11.0% real for 2022/23, reflecting strong financing, customer ODI and tax outperformance which more than outweighed total expenditure (totex) underperformance driven by additional investment in service and environmental improvements.

· Strong balance sheet with RCV +10.0% to £14.0bn and RCV gearing at 58%, slightly lower than the prior year equivalent 59% and within our target range of 55-65%.

· ODI reward in line with guidance at approximately £25m for FY23.

· Recommended final dividend of 30.34p, to bring full year dividend to 45.51p, up +4.6% in line with policy.

And later;

The final dividend of 30.34 pence per ordinary share (2022: 29.00 pence per ordinary share) is expected to be paid on 1 August 2023 to shareholders on the register at the close of business on 24 June 2023. The ex-dividend date for the final dividend is 23 June 2023.

https://www.investegate.co.uk/announcement/7541982

Ian (I hold).

[tjh290633]

Ian, they seem to have their knickers in a twist about XD and Record dates. The RNS now says XD 22 Jun and Record Date 26 Jun. That latter should be 23 Jun. Presumably a further change will appear.

TJH

[idpickering]

Ian, they seem to have their knickers in a twist about XD and Record dates. The RNS now says XD 22 Jun and Record Date 26 Jun. That latter should be 23 Jun. Presumably a further change will appear.

TJH

Thanks for your input Terry.

From UU. itself;

Financial calendar.

22 June 2023 - Ex-dividend date for 2022/23 final dividend

23 June 2023 - Record date for 2022/23 final dividend

01 August 2023 - Payment of 2022/23 final dividend to shareholders

https://www.unitedutilities.com/corpora ... -calendar/

Ian.

[idpickering]

Ian, they seem to have their knickers in a twist about XD and Record dates. The RNS now says XD 22 Jun and Record Date 26 Jun. That latter should be 23 Jun. Presumably a further change will appear.

TJH

You were right Terry. UU. put this out today;

GENERAL TEXT AMMENT

The following amendment has been made to the 'Final Results' announcement released on

25 May 2023 at 07:00 under RNS No 5711A.

The record date for the 2023 final dividend was incorrectly stated in the above announcement as 26 June 2023, the correct record date is 23 June 2023.

All other details remain unchanged.

The full amended relevant text is shown below:

The final dividend is expected to be paid on 1 August 2023 to shareholders on the register at the close of business on 23 June 2023. The ex-dividend date is 22 June 2023. The election date for the Dividend Reinvestment Plan is 11 July 2023.

https://www.investegate.co.uk/announcement/7547359

Ian.

[idpickering]

Annual Report and Financial Statements.

United Utilities Group PLC announces that its Annual Report and Financial Statements (ARFS) for the year ended 31 March 2023 and the 2023 Notice of Annual General Meeting (Notice of Meeting) are now available for viewing, in accordance with Disclosure Guidance and Transparency Rule ("DTR") 6.3.5(3), on the Company's website at the following website addresses:

https://www.investegate.co.uk/announcem ... rt/7581755


Ian (I hold).

[monabri]

https://news.sky.com/story/amp/water-gi ... l-12918572

"The FTSE-100 water group United Utilities (UU) has struck a £1.8bn deal to offload a chunk of its pension liabilities amid unprecedented scrutiny on the industry's financial resilience.

Sky News has learnt that UU, which has more than seven million customers across the northwest of England, has signed an agreement with Legal & General (L&G) to make future payments to pension scheme members.

The agreement is one of a deluge of so-called pension risk transfer (PRT) deals being struck with specialists such as L&G, Aviva and Pension Insurance Corporation (PIC)."


(Also posted on the LGEN thread)

[AsleepInYorkshire]

Canadian pension scheme shorts UK water companies

I think it's UU & STW - I can't get past the paywall (sorry)

AiY(D)
Edit: This is a better link

[monabri]

Canadian pension scheme shorts UK water companies

I think it's UU & STW - I can't get past the paywall (sorry)

AiY(D)
Edit: This is a better link

Not a very big position at 0.5% and they are the only 'visible' fund (<0.5% shorting).

https://shorttracker.co.uk/company/GB00B39J2M42/