United Utilities Plc Issues Update

United Utilities (LSE: UU) today issued an update on the period from 1 April to 25 July, ahead of its annual general meeting also to be held today.

The company confirmed that trading is in line with the group’s expectations. Revenue is higher, reflecting the regulated price increase for 2013/14. The increase in revenue is partly offset by higher depreciation and other operating costs, as the company expected.

The company said it continues to deliver improvements in customer service, underpinned by good operational performance. It also reported that its financial position remains robust. Group net debt is marginally lower than when last reported (March 2013) despite continued high levels of capital investment.

This is before payment of this year’s final dividend, which is scheduled for 2 August, and totals approximately £156 million.

The group said it expects to deliver a good underlying financial performance for the rest of 2013/14. The business will continue with its strong focus on customer service through sound operational performance and sees plenty of opportunities for further improvements. The company remains well on track in delivering its 2010-15 regulatory outperformance targets.

It was also announced today that Paul Heiden will stand down at today’s annual general meeting, after more than seven years as a non-executive director. Brian May, who joined the Board in September 2012, will take over Paul’s position as chairman of both the Audit and Risk Committee and the Treasury Committee.

Along with the other utilities companies, United has been rewarding shareholders pretty nicely — dividend yields have been around 5% over the past few years, with the year to March 2013 delivering 4.8% after the company recorded an 8% rise in underlying pre-tax profit to £354m with underlying EPS up 10.8% to 39.1p.

The board’s dividend policy of targeting 2% per annum growth above the rate of inflation through to at least 2015 continues to be underpinned by a robust capital structure, it reported today.

Consensus forecasts for 2013 put United on a P/E of 16.9, with the prospect of a 5.1% yield, which is a nice boost for shareholders.

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> Jill does not own shares in United Utilities.