United Utilities Group Plc · LSE:UU.
United Utilities — Investor Day (March 2021)
42 slides from United Utilities's investor day presentation, Mar 4, 2021
Slide 1: Capital Markets Day
Capital Markets Day 3rd and 4th March 2021 United United Utilities Utilities • Capital • Capital Markets Markets Day Day • 1
Slide 2: Excellent performance in a challenging year
Excellent performance in a challenging year Strong financial ESG Accelerating performance embedded in all capital investment that we do and delivering totex Leading customer Excellent Expect ODI service and operational outperformance community delivery; Systems of up to £20m in engagement Thinking a
Slide 3: Agenda
Agenda Operational Delivering People, Financing performance value retail and update and driving through ODI ESG customer totex performance ODIs Phil Aspin Kevin Fowlie Louise Beardmore Simon Chadwick Chief Financial Commercial, Engineering Customer Service and Water, Wastewater and Officer and Capit
Slide 4: Financing update and ESG
Manchester Financing update and ESG Phil Aspin Chief Financial Officer United Utilities • Capital Markets Day • 4
Slide 5: Financial resilience
Financial resilience Low customer RCV gearing of Fully funded debtor risk – only A3 stable pension schemes on a 63% credit rating with low dependency £17m at September 2020 Moody’s aged >1yr at basis March 2020 Access to Delivered Flexibility efficient financing >£500m financing and headroom driving
Slide 6: Financing performance
Financing performance Existing debt locked in at rates favourable to the AMP7 allowed cost of embedded debt RPI-linked CPI/CPIH-linked Fixed Floating • £2.4bn financing to raise in AMP7 9,000 8,000 • £600m raised in H1 at attractive rates 7,000 6,000 • Liquidity extended out to September 2022 £milli
Slide 7: Sustainable financing based on strong ESG credentials
Sustainable financing based on strong ESG credentials £300m More than notional 3x over- amount subscribed 2 days’ Long-8yr engagement term, maturing Sustainable with c50 October 2029 Finance Framework institutional investors launched in November 2020 replacing green EIB funding no 0.875% longer avai
Slide 8: Reporting complexities require normalisation
Reporting complexities require normalisation Underlying AMP6 RoRE of 7.99% Definition of net debt to include or 1 – 99bps higher than reported RoRE 2 exclude derivatives – can impact calculation of financing outperformance Financing performance 2.12% ODI performance2 0.24% Alternative performance me
Slide 9: Protecting and enhancing the environment
Protecting and enhancing the environment A top performer Sector leading Overall on EPA catchment management performance Leading performance in minimising Led sector’s approach to Zero serious pollution incidents in 2019 pollution in AMP6 catchment management and 2020 On track for 4* industry leading
Slide 10: Managing climate change
Managing climate change Future targets aligned to the Paris • Reduced our carbon footprint by 73% since 2005/06 Agreement’s more ambitious objective to limit global warming • Over 95% electricity from renewable sources, to 1.5degC above pre industrial levels rising to 100% in 2021 • Maintained our p
Slide 11: Delivering for society – customers
Delivering for society – customers £71m voluntary funding for financial assistance in AMP7 Helping 145,000 customers through financial support schemes Increased eligibility for social tariff to help a further 45,000 customers 114,000 customers supported through Priority Services scheme On track for
Slide 12: Delivering for society – colleagues and communities
Delivering for society – colleagues and communities 85% £35m employee to engagement communities in AMP6 200 Social mental health Mobility and wellbeing Pledge champions signatory Colleagues Communities Charitable Targeting support including zero accidents 600,000 meals by 2030 provided by local food
Slide 13: Responsible governance
Responsible governance Corporate Innovation Responsible finance governance Industry leading approach / A3 credit rating with Moody’s Annual compliance with UK most embedded culture of 63% gearing Corporate Governance Code innovation (Ofwat) (at 30 September 2020) Multiple winner of PwC Public Three
Slide 14: Delivering value through totex
Hallbank: HA connection Delivering value through totex Kevin Fowlie Commercial, Engineering and Capital Delivery Director United Utilities • Capital Markets Day • 14
Slide 15: Asset planning
Asset planning 1. Monitor & respond 5. Refurbishment Accept the current level of risk, define and agree an appropriate Major refurbishment of existing assets to prolong asset life and level of monitoring. Develop a local contingency plan restore performance capability to original design 2. Operation
Slide 16: Pervasive engineering driving value
Pervasive engineering driving value Area deployed engineering teams engaged in all processes Asset monitoring and optimisation at Davyhulme Wastewater Treatment Works Route Proactive leading to lower energy costs cause analysis Reactive Optimisation Capital Efficiency projects Process control change
Slide 17: Catchment Systems Thinking
Catchment Systems Thinking • Viewing the catchment as a whole system and managing it as one • Aligning water company interests with others: • Communities • Businesses • Local authorities • Promoting partnerships and delivering in a consistent way – the right intervention from the right organisation
Slide 18: Innovation + Digital + Systems Thinking the showcase
Innovation + Digital + Systems Thinking the showcase The West Cumbria project is providing a new water supply to 150,000 customers This major investment in a pipeline and new water treatment works is an ideal opportunity to establish a new benchmark for advanced operation of a water system Key syste
Slide 19: Case study: Hallbank Tunnel replacement
Case study: Hallbank Tunnel replacement Overview of the Haweswater Aqueduct: • Delivers up to 570 million litres of water every day • Serving up to 2 million customers • 35% of United Utilities daily regional supply • Consists of 35km raw water section and 110km treated water section • Diameter of s
Slide 20: Technology and Innovation
Technology and Innovation Extensive use of 4D modelling to simulate the works • Simulation of working practice Reduced • Covid compliance, social distancing and methodology Over 15,000 construction • Construction activity and sequencing, hours without window from (effectively built the asset in virt
Slide 21: Innovation case study: NEREDA
Innovation case study: NEREDA United Utilities • Capital Markets Day • 21
Slide 22: People, retail and ODI performance
People, retail and ODI performance Louise Beardmore Customer Service and People Director United Utilities • Capital Markets Day • 22
Slide 23: Fantastic engaged workforce delivering strong performance
Fantastic engaged workforce delivering strong performance • UK high performance levels of • Placed 110 out of 15,000 companies employee engagement across Europe UK High Leading listed • The top ranking water company in UK Performance • Glassdoor top 20 employer company in Statista Survey in the Fina
Slide 24: Developing skills for now and the future
Developing skills for now and the future • Continued with all of our graduate and • Purpose built technical training academy for 7 years apprentice recruitment • We are the only Ofsted registered facility in the sector – • Now have 230 Apprentices and 36 Graduates ‘Good’ on schemes • Means we maximi
Slide 25: Doing more for the North West
Doing more for the North West • Recognising challenges of the North West we were one • Huge supporters of the Social Mobility Pledge taking a of the first to sign up to the Government’s KickStart leading role in the North West bringing together over programme 150 businesses • Bringing in 250 young p
Slide 26: Brilliant performance in a challenging year
Brilliant performance in a challenging year Best ever 60% of colleagues 1 million ODI performance; Underlying delivering from customers now 9/10 in reward cash collection home utilising digital and 3 reputational is performing channels already well £15m Social delivered Leading customer Tariff agree
Slide 27: Fantastic people delivering brilliant customer service
Fantastic people delivering brilliant customer service We are the only listed water company on track for positive rewards on both C-MeX and D-MeX with over £3.5m reward this year C-MeX D-MeX 3rd out of 11 WASCs year to date; 4th out of 11 WASCs year to date; firmly in reward firmly in reward New tea
Slide 28: Fantastic customer service delivery
Fantastic customer service delivery Service Mark Mobile App WOW’s Priority Services Accreditation 4.7/5 Over 13,000 Now have 114,000 One of only 18 App store from 5,096 this year customers on our Priority brands with Service reviews Services Register achieving Mark with Distinction in Over 50,000 si
Slide 29: ODI delivery
13 ODIs 10 Reward/ Penalty based 3 reputational 9 out of 10 all in positive reward All 3 delivered ODI delivery only Voids Already £41million Achieved full delivered a maximum reward for further £24m reward over year one of of future AMP £3.9m years benefits • Comprehensive data analytics capability
Slide 30: ODI delivery: customers lifted out of water poverty
13 ODIs 10 Reward/ Penalty based 3 reputational 9 out of 10 all in positive reward All 3 delivered ODI delivery only Customers lifted out of water poverty £13.65 million Will achieve 90,000 maximum full reward for 80,000 reward over year one of AMP £2.5m 70,000 No. of customers 60,000 50,000 • Bespo
Slide 31: Delivering further efficiencies in cost to serve
Delivering further efficiencies in cost to serve AMP6 Total efficiencies in AMP6 = £165m AMP7 Efficiency Efficiency Total efficiencies in AMP 7 = £57m Already Delivering delivered now 1 2 3 4 Data Increased Robotic Metering analytics and digital process capability service delivery automation segment
Slide 32: Encouraging cash performance in a challenging climate
Encouraging cash performance in a challenging climate • Data led customer engagement strategy enabling us to focus on high risk customers and customers with furlough status to target support • Benefiting from the new debt manager technology delivered last year • Introduced additional data share part
Slide 33: Invested in our credit capability – serves us well
Invested in our credit capability – serves us well Recognition of collections capability Leveraging data Segmenting and Exploiting partnerships and managing risk technology These awards recognise excellence across the utility and credit industries and reward organisations that have achieved outstand
Slide 34: Operational performance driving customer ODIs
Liverpool Operational performance driving customer ODIs Simon Chadwick Water, Wastewater and Digital Services Director United Utilities • Capital Markets Day • 34
Slide 35: Year 1 AMP7 operational performance headlines
Year 1 AMP7 operational performance headlines 35% 4 star 54% Lowest reduction in (“industry leading reduction in water ever level of environmental company”) Environment pollution Agency performance supply interruptions leakage incidents rating forecasted for 2020 100% Zero 23% 94% wastewater treatme
Slide 36: Case study – Sewer flooding
Case study – Sewer flooding In AMP7 we have a basket of four customer ODIs for sewer flooding. We are forecasting a positive overall flooding outcome for AMP7 through our work to protect customers from the risk of flooding Flooding ODIs 5 year reward range (£m) 5 year penalty range (£m) Year 1 forec
Slide 37: Case study – Sewer flooding
Case study – Sewer flooding Dynamic Network Management (DNM) What is DNM? What is the What are the benefits? This is the most advanced progress so far? implementation of Systems Thinking in The first phase of testing and development has demonstrated that a machine operated the water sector and fully
Slide 38: DNM local system visualisation
DNM local system visualisation Wastewater System Connectivity and Status view United Utilities • Capital Markets Day • 38
Slide 39: DNM pumping station dashboard
DNM pumping station dashboard Actual and predicted performance United Utilities • Capital Markets Day • 39
Slide 40: Case study – Pollution
Case study – Pollution An important measure for customers and for the environment. There is a new structure for the customer ODI for pollution for AMP7. In the last 12 months we have delivered a 35% improvement in performance, establishing further opportunities for years 2-5 of AMP7 Delivered throug
Slide 41: Track record of digital transformation
Track record of digital Industry leading Systems Thinking transformation innovation capability competitive advantage 8 Machine Intelligences Created (AI) 16 custom mobile apps delivering ‘Exactly the sort of innovation operational water companies need to be performance embracing’: Battery storage sy
Slide 42: Customer ODI guidance
Customer ODI guidance Following the continued focus on improving service to customers, guidance for year 1 customer ODI performance updated to a net reward of up to £20 million Penalties Rewards Key ODIs driving -20 -15 -10 -5 0 5 10 15 20 current year Reducing interruptions to water supply performa