United Utilities Group Plc · LSE:UU.
United Utilities — H1 FY2024/25 Earnings Presentation
39 slides from United Utilities's earnings presentation, Nov 14, 2024
Slide 1: Half year results
Half year results Six months ended 30 September 2024 Thursday 14 November 2024
Slide 2: Louise Beardmore, Chief Executive
Louise Beardmore Chief Executive
Slide 3: Half year overview
Half year overview Strong customer Record ODI 4 star EPA service rewards performance Strong RCV growth in line Gearing stable underlying EPS with guidance 60% ND/RCV United UnitedUtilities Utilities ••2024/25 2024/25half halfyear yearresults results•• 3
Slide 4: Operational performance
Operational performance (& United Water for the North West Utilities
Slide 5: Water performance
Water performance Drinking water complaints 10000 9000 Satellite imaging -26% to locate and fix leaks 8000 Water quality 7000 26% improvements for reduction in drinking water 1 million 6000 complaints customers 5000 4000 2020 2024 United UnitedUtilities Utilities ••2024/25 2024/25half halfyear yearr
Slide 6: Wastewater performance
Wastewater performance Industry-leading performance on serious pollutions1 16 14 4 Star EPA in 2023 12 10 8 13 6 consecutive Zero serious 4 years pollutions 2 ‘Green’ on serious in HY25 0 pollutions UK Water and Sewage company peers United Utilities 1. 5-year average. Environment Agency EPA Water an
Slide 7: Pollution performance
Pollution performance Pollution incidents1 Drone imaging Rest of sector average United Utilities 120 100 80 60 AI system management 40 20 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 1. Number of pollution incidents per 10,000km of sewers United Utilities • 2024/25 half year re
Slide 8: Wastewater performance
Wastewater performance Best ever sewer blockages performance 24,000 23,000 22,000 - 21% 21,000 20,000 Success of DNM 19,000 showcased through network performance 18,000 17,000 16,000 15,000 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 Industry Forecasting to hit Progressive reduction in sewer col
Slide 9: Customer performance
Customer performance Strong performance across ALL measures of customer experience Supported Over 475,000 400,000 households customers on our through AMP7 with Priority Services affordability schemes Register United UnitedUtilities Utilities ••2024/25 2024/25half halfyear yearresults results•• 9
Slide 10: ESG performance
ESG performance Environment • On track with the delivery of all AMP7 environmental commitments - strong track record E • EA EPA - 15 out of a possible 16 stars this AMP • SBTi targets - only UK water company to have near term, long term and net zero targets validated by SBTi • Community Environmenta
Slide 11: Phil Aspin, Chief Financial Officer
Phil Aspin Chief Financial Officer
Slide 12: Financial highlights
Financial highlights Revenue Underlying operating profit1 Reported operating profit1 £1,082m +11% £336m +24% £333m +39% HY23/24: HY23/24: HY23/24: £975m £271m £241m Underlying EPS1 Interim DPS RCV gearing2 26.8p +103% 17.28p +4% 60% +1% HY23/24: HY23/24: HY23/24: 13.2p 16.59p 59% 1. Underlying profi
Slide 13: AMP7 financial framework
AMP7 financial framework Framework unchanged from full year RoRE1,2 6 – 8% real RCV growth1,3 4 – 5% CAGR Moody’s A3 / negative4 Dividend growth Growing in line with CPIH Fitch A- / stable Standard & Poor’s Strong Balance Sheet Policy target 55 – 65% gearing BBB+ / negative4 1. Based on CPIH of 2.1%
Slide 14: Underlying operating profit
Underlying operating profit 24% increase in underlying operating profit £m Revenue: £1,082m 400 • Revenue cap increase: £97m 3 0 19 360 340 2 4 Underlying opex: £414m 10 336 320 • In line with expectations: +5% 300 2 0 260 2 1 Depreciation: £241m 240 • Accelerated depreciation: £10m 220 200 1 24 Rev
Slide 15: Interest, tax and earnings
Interest, tax and earnings Underlying net finance Underlying tax Underlying profit after expense tax HY24/25: £153m HY24/25: nil HY24/25: £183m HY23/24: £180m HY23/24: £nil HY23/24: £90m Inflation charge on index-linked ‘Full expensing’ to continue to Underlying EPS of 26.8p debt of £93m (HY23/24: £
Slide 16: Financial strength
Financial strength RCV1 (£bn) RCV gearing2 Responsible financing 14.9 60% Fully funded pension 14.7 scheme FY24: 59% Not subject to unfunded costs FY24 H1 FY25 Funding raised Liquidity Net debt (£bn) c.£830m £2.6bn 9.1 8.8 AMP8 funding underway Sufficient liquidity into FY27 FY24 H1 FY25 1. Includes
Slide 17: Technical guidance 2024/25
Technical guidance 2024/25 FY24 y-o-y Revenue expected to increase by c.10%, driven by the Revenue £1,950m inflationary mechanism and the impact of prior period adjustments in respect to consumption Underlying operating costs expected to increase more than Underlying operating costs (inc. IRE) £993m
Slide 18: Financial summary
Financial summary Solid financial result Financial strength • Underlying operating profit: £336m (+24%) • RCV gearing of 60%1 • Underlying EPS: 26.8p (+103%) • Fully funded pension scheme Funding and liquidity position Dividend • Liquidity of £2.6bn extending out to FY27 • HY24/25 interim dividend:
Slide 19: Louise Beardmore, Chief Executive
Louise Beardmore Chief Executive
Slide 20: Draft Determination overview
Draft Determination overview High quality plan Significant totex meeting 22/26 quality Growing RCV assessments increase 25yr programme Efficient base costs £2bn enhancement Customer-led, underpinned by investment further evidenced in in line with business plan statutory drivers our response United U
Slide 21: Timeline
Timeline 28 August Early 2025 2024 Update dividend UU response to DD policy 2 October 11 July Ongoing 19 December April 2023 2024 dialogue 2024 2025 Business plan Draft with Final Start of submission determinations regulators determinations AMP8 United Utilities • 2024/25 half year results •• 21
Slide 22: Infrastructure delivery and economic growth
Infrastructure delivery and economic growth Driving growth in our region: 45 delivery partners already in contract for AMP 8 Working with a further 30 locally-based suppliers Supporting 30,000 jobs across UU and the supply chain Our plan will contribute £35 billion of economic value United UnitedUti
Slide 23: Tackling spills
Tackling spills Making improvements at over 1,100 sites: Creating additional storage capacity for storm water collection Enlarging wastewater treatment works with modular units to reduce spills Removing groundwater and surface water from entering the sewerage pipes Creating nature based solutions to
Slide 24: Summary
Summary Performing well Comprehensive Tackling more than operationally and response 1,100 storm overflows financially to the Draft Determination Financial strength and Already delivering for Supporting customers through sector-leading flexibility AMP8 affordability packages United UnitedUtilities Ut
Slide 25: Cautionary statement
Cautionary statement This presentation contains certain forward-looking statements with respect to the operations, performance and financial condition of the group. By their nature, these statements involve uncertainty since future events and circumstances can cause results and developments to diffe
Slide 26: Supporting information
Supporting information 1. Underlying income statement 8. Statement of financial position 2. Underlying operating costs 9. Reconciliation of net debt 3. Profit before tax reconciliation 10. Financing performance 4. Profit after tax reconciliation 11. Financing and liquidity 5. Finance expense 12. Deb
Slide 27: Underlying income statement
Underlying income statement Six months ended 30 September 2024 2023 Change (%) £m Revenue* 1,082.0 975.4 +10.9% Operating expenses* (413.8) (394.7) +4.8% Infrastructure renewals expenditure (92.0) (96.2) -4.4% EBITDA 576.2 484.5 +18.9% Depreciation and amortisation (240.5) (213.4) +12.7% Operating p
Slide 28: Underlying operating costs
Underlying operating costs Six months ended 30 September 2024 2023 Change (%) £m Revenue* 1,082.0 975.4 +10.9% Employee costs (107.7) (104.5) +3.1% Power (73.0) (74.3) -1.7% Hired and contracted services (58.2) (51.4) +13.2% Materials (69.0) (67.8) +1.8% Property rates (47.6) (42.0) +13.3% Regulator
Slide 29: Profit before tax reconciliation
Profit before tax reconciliation Six months ended 30 September 2024 2023 £m Reported operating profit 333.4 240.6 Net finance expense (193.4) (79.5) Share of profits/(losses) of joint ventures 0.6 (1.1) Reported profit before tax 140.6 160.0 Adjustments: Fleetwood outfall pipe fracture 2.3 30.5 Fair
Slide 30: Profit after tax reconciliation
Profit after tax reconciliation Six months ended 30 September 2024 2023 £m Reported profit after tax 103.1 116.8 Adjustments: Fleetwood outfall pipe fracture 2.3 30.5 Fair value losses/(gains) on debt and derivative instruments, excluding interest on 40.0 (100.2) derivatives and debt under fair valu
Slide 31: Finance expense
Finance expense Six months ended 30 September 2024 2023 £m Investment income 51.7 40.4 Finance expense (245.1) (119.9) (193.4) (79.5) Fair value losses/(gains) on debt and derivative instruments, excluding interest on derivatives and debt under 40.0 (100.2) fair value option Underlying net finance e
Slide 32: Finance expense: index-linked debt
Finance expense: index-linked debt Six months ended 30 September 2024 2023 £m Interest on index-linked debt (28.8) (28.2) RPI adjustment (£2.4bn debt at Mar-24/2.5% indexation charge for the six months to Sep-24; £2.3bn debt at (60.0) (91.5) Mar-23/3.9% indexation charge for the six months to Sep-23
Slide 33: Derivative analysis
Derivative analysis Six months ended 30 September 2024 2023 £m Derivatives hedging debt (43.6) (112.4) Derivatives – total accretion on inflation-linked swaps (122.1) (108.4) Derivatives – fixing future real interest rates through inflation-linked swaps 124.1 148.6 Derivatives – hedging future nomin
Slide 34: Statement of financial position
Statement of financial position At 30 Sep 2024 31 Mar 2024 Change (%) £m Property, plant and equipment 13,383.3 13,044.3 +2.6% Retirement benefit surplus 284.2 268.0 +6.0% Other non-current assets 201.2 210.6 -4.5% Cash and bank deposits 1,813.1 1,399.3 +29.6% Other current assets 440.9 348.4 +26.5%
Slide 35: Reconciliation of net debt
Reconciliation of net debt At 30 Sep 2024 31 Mar 2024 £m Cash and bank deposits (1,813.1) (1,399.3) Total derivative assets (334.1) (382.8) Gross borrowings 10,697.9 10,001.4 Total derivative liabilities 269.5 280.6 Balance sheet net debt 8,820.2 8499.9 Exclude: The fair value impact of: Interest ra
Slide 36: Financing performance
Financing performance Existing debt locked in at rates favourable to the AMP7 allowed cost of embedded debt 9000 Floating Fixed CPI-linked RPI-linked 8000 7000 3.6% 2.2% 2.6% 2.5% 2.4% 6000 5000 4000 (0.6)% (0.6)% (0.6)% (0.2)% (0.6)% 3000 1.3% 1.3% 1.3% 1.4% 1.4% 2000 1000 0 2020/21 2021/22 2022/23
Slide 37: Financing and liquidity at 30 September 2024
Financing and liquidity at 30 September 2024 Gross debt = £10.7bn Liquidity = £2.6bn £m Other borrowings including EIB & other floating lease obligations and short- GBP loans Cash and short-term deposits1 1,813.1 term debt £866.3m £204.8m Medium-term committed bank facilities 800.0 GBP CPI linked bo
Slide 38: Debt structure at 30 September 2024
Debt structure at 30 September 2024 United Utilities Group PLC United Utilities PLC Yankees: • $400m in 28s on-lent at issue to UU Water Baa1 negative; BBB- negative; A- stable7 Euro MTNs: Other debt: • £300m in 27s • £100m in 40s1 • £510m in 56s1 • EIB RPI-linked loans £346m1 United Utilities Water
Slide 39: Term debt maturity profile
Term debt maturity profile as at 30 September 20241 Average term to maturity of approximately 16 years 1 Future repayments of index-linked debt include RPI/CPI/CPIH market derived forecasts out to 2028, subsequently transitioning to an average annual RPI rate of 3% and an average annual CPI/CPIH rat
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