Water and waste company United Utilities (UU.) reported an 8.6% increase in underlying operating profit for the year-ended 31 March 2020, to £743.9m, and a 3.1% increase in the dividend. The shares fell 4% to 886.7p.
COPING WITH CORONAVIRUS
Some 80% of the company’s workforce is designated as key workers, providing essential services to businesses and homes. Around 60% have transitioned to home working and no employees have been furloughed.
The company has provided financial assistance to customers having trouble paying their bills alongside encouraging vulnerable customers to sign up to the Priority Services Scheme.
Credit losses related to coronavirus totalled £5m and the firm’s share of losses at Water Plus, its retail joint-venture amounted to £32m, while a bad debt provision of £19m has been put aside for future non-payment of bills.
While United Utilities said it was too early to predict the full impact of coronavirus on inflation and the economy, it did say that reduced consumption from businesses hit revenues by around £5m for the year just ended, which only included two weeks of the lockdown.
It terms of the 2020 impact, it estimated that for every 1% reduction in non-household consumption revenues would fall by around £4m. That means a 30% fall would see revenues fall by around 6.5%.
AMPLE LIQUIDITY
At March 31 the group had access to around £1.2bn of liquidity plus undrawn revolving credit facilities. The firm has headroom of £436m after covering short-term debts falling due over the next year.
The company plans to raise between £500m and £800m of funding in the 2020/21 financial year while the company also has access to the government’s Covid-19 financing facility.
The board has proposed a final dividend of 28.4 pence per share which when added to the interim dividend of 14.2 pence will result in a total dividend of 42.6 pence for the full-year, representing an increase of 3.2% and satisfying the policy to target growth at least in line with retail price inflation.
It is also reviewing the previously announced policy of targeting dividend growth in line with consumer price inflation each year to 2025 in light of the unknown economic impacts of the pandemic.
