Warrington’s United Utilities warns on nationalisation

Warrington-based United Utilities, the UK’s largest listed water company, said on Wednesday its profit before tax rose £4 million to £244 million in the six months to September 30 and revenue rose about £19 million to £935.5 million.

But the firm warned that Brexit and the possibility of renationalisation, which has been put forward by the Labour Party, are potential risks to its business.

The company’s net debt including derivatives at September 30 was £7.3 billion.

United Utilities said: “The possibility of ‘renationalisation’ is a key area of uncertainty as is the opening up to competition of upstream markets (including the current focus on possible competition in bioresources and water abstraction) and the potential for competition covering domestic retail activities. 

“Our operations continue to be substantially UK-based, but the potential impacts of Brexit remain under review and have been reported to the group board. 

“In common with other UK companies, a significant issue is the uncertainty surrounding the effects of any Brexit deal that the UK Government may ultimately deliver and the possibility of a no-deal Brexit. 

“Our review has considered the availability of European funding, the availability of critical goods (including chemicals and spare parts) through our supply chain, the price of goods and services due to tariff changes, exchange rate changes and potential inflationary shifts outside current predicted parameters, the effect to the labour resource of both the company and our delivery partners and our ability to collect cash were there to be an economic downturn. 

“For each of these consequences, the impact assessment considers a range of possible scenarios and we have developed a contingency plan (in collaboration with key stakeholders including Water UK and Defra) which has involved discussing the implications of Brexit, including the no-deal scenario, with our key suppliers and capital delivery partners, as well as considering mitigation measures such as stockpiling and using alternative suppliers, a large proportion of which is already built into our multi-party frameworks.”

United Utilities CEO Steve Mogford said: “We are well prepared for the next regulatory period and are already moving forward with our implementation plans.

“This, together with the sustainable improvements in performance, gives us confidence that we will continue to create long-term value for all our stakeholders.”