United Utilities (UU.) said its underlying operating profit for H1 of 2016/17 is expected to be marginally higher than in H1 2015/16, but warned group revenue was seen slightly lower over the same period.
The fall in revenue reflected the accounting impact of our Water Plus business retail joint venture, which completed on 1 June 2016, partly offset by the outfit's allowed regulatory revenue changes.
"It is anticipated that infrastructure renewals expenditure (IRE) in the first half of 2016/17 will be slightly lower than the first half of last year," United Utilities said in a trading update.
"In line with our planned capital investment phasing, we expect an increase in IRE in the second half of 2016/17, compared with the first half of the year.
"The underlying net finance expense for the first half of 2016/17 is anticipated to be around £20 million higher than the first half of last year, mainly reflecting the impact of higher RPI inflation on our index-linked debt and slightly higher net debt.
"As the company continues to invest in its asset base, group net debt at 30 September 2016 is expected to be slightly higher than the position at 31 March 2016.
"This principally reflects regulatory capital expenditure, payment of the 2015/16 final 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. The group has financing headroom into 2018."