23rd Sep 2015 06:42
LONDON (Alliance News) - United Utilities PLC on Wednesday said current trading is in line with expectations but said its financial results in the first half of the financial year will be hit by compensation payments related to a water incident in August and restructuring costs.
The FTSE 100-listed water and wastewater firm said revenue in the first half of the financial year ended September 30 will be similar to the GBP859.0 million reported a year earlier, but warned its operating profit will take a GBP30.0 million hit in the period.
In August, customers across Lancashire were forced to boil their water before consumption after routine tests at the company's Franklaw water treatment works in Preston detected small traces of cryptosporidium - a microscopic bug - in the water.
The problem, which started in early August, was only fully resolved at the start of September, meaning some customers were affected by the problem for almost a month. United Utilities pledged to pay compensation to retail and business customers who were affected.
United Utilities said it will book a one-off cost totalling GBP25.0 million in the first half to account for the compensation it is in the process of paying customers, alongside a further GBP5.0 million one-off restructuring cost.
Underlying finance costs are expected to be around GBP20.0 million lower in the period compared to a year earlier, reflecting the impact of lower RPI inflation on its index-linked debt and a lower rate of interest locked-in on its non index-linked debt.
However, the company is said net debt will have risen at the end of September from the end of March as it continued to invest in its asset base, but gearing "remains comfortably" within its 55% to 65% target, giving it financing headroom until 2017.
The company said it has also made "significant improvement" in its customer service offering in the first half.
United Utilities will report its first half results on November 25.
By Joshua Warner; [email protected]; @JoshAlliance
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