United Utilities (LSE: UU) is making news today with the announcement that it has appointed Mark Clare as a non-executive director, with effect from the 1st of November 2013.
Mr Clare comes to United’s board from Barratt Developments (LSE: BDEV), where he has served as Group Chief Executive since 2006. His industry experience is impressive, as he’s held various board positions at Centrica (between 1997 and 2006) including the post of Group Finance Director and Managing Director of British Gas Residential. He was a non-executive director of BAA from 2001 to 2006.
United Utilities’ Chairman, Dr John McAdam, commented on the appointment:
“As a current Chief Executive of a FTSE 250 company and with his background in regulated utilities, Mark’s
appointment will strengthen the Board’s expertise; we are delighted to welcome him to the Board as a non-executive director.”
Mr Clare will also be appointed as a non-executive director of United Utilities Water with the same effective date.
United Utilities dominates the water market in North East England and it has a near monopoly over the provision of water and related services in that area.
But its pricing power and profits are limited, as the former is strictly regulated by the water regulator, Ofwat, and the latter depends on the amount of infrastructure and upkeep United is required to do each year.
In 2013 the company generated £630 million in cash from operations but spent £661 million on infrastructure projects. Thanks to this high level of capital spending, net debt has ballooned 20% during the past two years.
United Utilities still dominates its market and may be a good long-term play from here — indeed, having Mr Clare on board to help guide the company should be positive news for shareholders.
> Jill does not own any shares mentioned.