Shareholders are to be paid an interim dividend worth 17.28 pence per ordinary share after United Utilities recorded £335.7m in underlying operating profits for the first half of this year. The company’s profits have increased by almost 24% from £271.1m a year ago.
“In October we were confirmed as the leading water and sewerage company by Ofwat on a suite of performance measures (ODIs) in 2023/24, delivering on the things that matter most to customers,” Louise Beardmore, United Utility chief executive, said in a statement released to the London Stock Exchange.
“In July the Environment Agency awarded us the top 4-star rating in its 2023 assessment, and we continue to support customers with affordability assistance having helped over 400,000 families since 2020.”
She added: “Improving rivers continues to be a key area of focus. We are already making progress at reducing spills from storm overflows, having commenced a programme of accelerated solutions.
“Our five-year plan builds on this, with a step-change in investment, and last week we announced that we would go further and faster, accelerating more work to reduce spills. By 2030, we will deliver improvements at more than 1,100 overflows across the North West.”
The company also highlighted work in Cumbria stating: “Our Wonderful Windermere programme is taking a holistic approach to phosphorus removal, looking beyond our own impact and acting as a catchment convenor to facilitate third parties to reduce their inputs into the mere as well.”
The scale of the fault caused when a pipe close to the wastewater treatment works at Fleetwood fractured has emerged in the report. £70.4m has so far been spent on hired and contracted services, including the cost of ‘tankering to reduce the volume of sewage spills along the Fylde Coast while remediation activity was undertaken.’
It added that while the underlying profit had increased, underlying costs had risen with depreciation also increasing:
‘Underlying operating profit at £336 million was £65 million higher than the first half of last year, primarily reflecting higher revenue.
Underlying operating costs have increased by around 5 per cent compared to the prior half year, in line with expectations. Depreciation has increased by £27 million, reflecting accelerated depreciation of £10 million in relation to decommissioning of assets following completion of the new West Cumbria water treatment works, as well as an increase due to growth in the underlying asset base.’
The company is currently under investigation by the water regulator Ofwat and the Environment Agency.
In July 2024 Ofwat announced that it is opening an enforcement case to investigate UU following detailed analysis of the company’s environmental performance and data about the frequency of spills from storm overflows.
If the company is found to have breached its legal obligations this could result in a financial penalty of up to 10 per cent of relevant waste-water turnover (which in UU’s case would be around £100 million). It could also be required to rectify any issues raised by the investigation.
Meanwhile the Environment Agency has requested data and undertaken site visits as part of its industry-wide investigation focusing on environmental permit compliance at waste-water treatment works and waste-water networks.
The EA has enforcement options including the potential for criminal prosecution and unlimited fines if it concludes that companies have breached their permit conditions and/or illegally polluted the environment.
