United Utilities expects lower first-half revenue

Warrington-based United Utilities, the UK’s largest listed water company, said in a trading update on Thursday it expects its first-half revenue to be lower than the first six months of last year “largely reflecting our allowed regulatory revenue changes and lower consumption from businesses as a result of COVID-19 …”

United Utilities said: “Cash collection from our household customer base has been consistent with the targets that we set before the COVID-19 pandemic.

“Although we anticipate bad debt may increase as government support schemes come to an end, we secured early agreement during the pandemic to extend our social tariff and this, combined with our extensive range of financial assistance schemes, underpins our confidence in the adequacy of the provision we made at the March 2020 year end.

“Group revenue is expected to be lower than the first half of last year, largely reflecting our allowed regulatory revenue changes and lower consumption from businesses as a result of COVID-19, partly offset by higher consumption from households.

“Overall, the net reduction in revenue in the first half of the year is expected to be around 5 per cent.

“Underlying operating profit for the first half of 2020/21 is expected to be lower than the first half of 2019/20 largely reflecting the lower revenue and an anticipated moderate increase in infrastructure renewals expenditure (IRE).

“The rate of inflation that is applied to the group’s index-linked debt is lower for the first half of the year and we therefore expect the underlying net finance expense for the first half of 2020/21 to be around £30 million lower than the first half of last year.

“As the company continues to invest in its asset base we expect a small increase in group net debt at 30 September 2020 compared with the position as at 31 March 2020.”

United Utilities said in May its net debt including derivatives at March 31, 2020, was £7.361 billion, up from £7.067 billion a year earlier.

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