Inflation lets down United Utilities as it heads for £100m totex savings
Inflationary increases in financial expenses dented income at United Utilities as it posted a 2.3% fall in profit before tax to £432m on revenue up 1.9% at £1.74bn for the year to 31 March 2018.
A 5.1% year-on-year rise in operating profit to £636.4m was offset by a £40m hike in financial expenses attributable largely to the impact of inflation on retail price index-linked debt and cost relating to United Utilities’ Water Plus business retail joint venture with Severn Trent Water. The
Adjustments for exceptional financial and operating expenses gave an underlying pre tax profit of £370m – down by 4.9% year-on-year.
Operating costs were boosted largely by a £11.9m depreciation charge increase and added to by employee costs up £6.1m largely down to increased costs in the company’s defined benefits pension scheme. This was offset by a reduction bad debt by £9.1m following the sale of its non-household debt book.
The company said it was on track to deliver total expenditure savings of £100m at the end of the regulatory period.
It reported a cumulative net outcome delivery incentives penalty for 2017-18 of £7m with a cumulative net reward for AMP6 to date of £2.2m.