United beats profit forecast

United Utilities said it has beaten profit forecast

United Utilities said it has beaten leakage targets for the third year in a row as it posted higher than expected annual profits.

The Warrington-based group, which has more than three million customers, outperformed water leakage targets from regulator Ofwat despite unfavourable winter weather.

Serious pollution incidents were also more than 50% lower.

Pre-tax profits for the year to March 31 were 11% up at £529.8 million, with tight cost controls helping to offset lower water demand and higher depreciation and power costs.

Revenues from regulated water activities increased by 6% to £1.5 billion after Ofwat allowed the company to increase its prices by 7.8% in order to support investment in infrastructure.

Capital spending in the year, including £118 million of renewals expenditure, amounted to £740 million in the 12 month period.

In a business plan recently submitted to Ofwat, United expects infrastructure spending of around £3.7 billion in the 2010-15 period, leading to an average annual price increase of 1.8% across its customer base.

United said this maintained the "affordability" of customer bills and was equivalent to an increase of seven pence a day in real terms by 2015.

Chief executive Philip Green added: "We expect investment in our assets to continue at high levels, providing further growth as well as environmental and customer benefits."

As well as providing water and wastewater services to 3.2 million homes and businesses, United has non-regulated operations working on behalf of firms including Welsh Water, Southern Water and Scottish Water.