united-utilities-annual-report-2015

UNITED UTILITIES GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015Stock Code: UU.unitedutilities.comCorporate governance reportCode principle:Relations with shareholdersThe board as a whole accepts itsresponsibility for engaging withshareholders and is kept fully informedabout information in the marketplaceincluding:• Makinson Cowell produces an annualsurvey of investors’ views andperceptions about United Utilities,the results of which are presentedand discussed by the board;• the board receives regular updatesand feedback on activities withininvestor relations and reports fromsector analysts to ensure that theboard maintains an understandingof investors’ priorities; and• the board welcomes engagementwith institutional investors. Theexecutive and non-executivedirectors are available to meet withmajor shareholders; in fact, thisis one of the specific roles of thesenior independent director.Institutional investorsWe are always keen to hear the viewsof and engage with our shareholdersand investors and we have an activeinvestor relations programme. Theactivities of the programme include:• the CEO and CFO have a regularschedule of meetings withrepresentatives from majorshareholders. This is supplementedwith meetings hosted by ourinvestor relations team. During theyear, the programme covered over100 institutions based in the UK,Europe, North America and AsiaPacific region;• the CEO and CFO undertakepresentations to groups ofinstitutional shareholders andinvestors, both on an ad hoc basisand linked to our half and full yearresults announcements;• the board receives regular feedbackon the views of its institutionalinvestors following on from the CEOand CFO’s meetings;• close contact is also maintainedbetween the investor relations teamand a range of City analysts thatresearch United Utilities; and• in total, we met or offered tomeet with 39 per cent by valueof the overall shareholder base,which represents 72 per centof the targetable institutionalshareholder base (when adjustingfor shareholders who do nottypically meet with companies, suchas indexed funds).In meetings with investors, frequentareas of common interest includeoperational and environmentalperformance, customer service, capitalinvestment, efficiency initiativesand regulatory outperformance.Investors are always keen to observefinancial stability, and investors areinterested in the level of gearingversus regulatory assumptions, costof finance, debt portfolio and maturityprofile, future financing requirementsand dividends. The outcome of theprice review, covering the 2015–20period, was also a key area of interestfor them. Looking ahead, investorswill be keen to understand how thecompany is performing relative to theprice review allowances and targets.Retail shareholdersDespite the privatisation process beingover 25 years ago, we have retaineda large number of shareholders withregistered addresses in the North Westof England – in fact around 41 per cent.We have historically always held ourAGM in Manchester, which enables ourmore local shareholders to attend themeeting. These shareholders are alsoour customers.There is a considerable amountof information on our website,including our online report whichprovides information on our keysocial and environmental impacts andperformance during the year. Togetherwith the annual and half-yearly resultsannouncements, our annual report andfinancial statements are available onour website; these are the principalways in which we communicate with ourshareholders. Our company secretariatand investor relations teams, alongwith our registrar, Equiniti, are also onhand to help our retail shareholderswith any queries. Information forshareholders can also be found on theinside back cover of this document,with a number of useful websiteaddresses.Relations with other providersof capitalRunning a water and wastewaterbusiness, by its very nature, requiresa long-term outlook. Our regulatorycycle is based on five-year periods,and we raise associated funding inorder to build and improve our waterand wastewater treatment works andassociated network of pipes for eachfive-year cycle. We are heavily relianton successfully acquiring long-termfunding from banks and debt capitalmarkets to fund our capital investmentprogramme.This requires a long-term commitmentand involvement from our creditinvestors who lend us the funds withthe company paying them a return fordoing so. We arrange term debt financein the bond markets (with maturitiestypically ranging from seven years toup to 50 years at issue). Debt financeis raised via the group’s London listedmulti-issuer Euro Medium Term NoteProgramme, which gives us accessto the sterling and euro public bondmarkets. Committed credit facilitiesare arranged with various relationshipbanks on a bilateral basis. Additionally,the European Investment Bank (EIB),which is the financing arm of theEuropean Union, is our single biggestlender, currently providing circa £1.9billion of term funding (of which circa£1.5 billion has been advanced and£400 million remains available to drawdown) used to support our capitalinvestment programme. The groupcurrently has gross borrowings of£6,645 million.SHAREHOLDER INFORMATION FINANCIAL STATEMENTS GOVERNANCESTRATEGIC REPORT73