2005 - 2006 - Pinsent Masons Water Yearbook 2012

UNITED KINGDOM PART 3 (i): COMPANY ANALYSIS: MAJOR PLAYERS
United Utilities Plc
United Utilities Plc (UU) is a multi-utility, whose main UK base is in the north west of England, where it
provides water supply, sewerage, and electricity supplies to 7 million people. Formed from the 1995
takeover of NORWEB (electricity distribution) by UU Water (water supply and sewerage), UU is
involved in the provision of telecommunications services (Your Communications). The integration of
customer calls for all services has been completed. UU’s set of telecommunications services for
business customers have been grafted upon these activities. These activities are now grouped in five
divisions:
• UU Service Delivery – manages and maintains the water, wastewater and electricity assets within
its statutory areas of operation.
• UU Customer Sales – manages the relationship with domestic and business customers within its
statutory water area and manages non-regulated sales growth within this region.
• UU Contract Solutions – UUCS (Infrastructure Management) manages and operates assets
outside its statutory areas of operations and brings together its other non-regulated asset-based
activities as one business. United Utilities International sits within this part of the organisation.
• Vertex – Outsourcing of customer management services in the UK
• Your Communications – Voice, mobile and datacommunications services in the UK
United Utilities’ £1 million rights issue (£500 million in September 2003 and £500 million in June 2005)
is the first rights issue to explicitly earmark funds for water and wastewater infrastructure spending
since the 1989 privatisation. While the rights issue will require additional dividend payments of £40
million per annum, this is less than the coupon additional debt would have commanded, while lowering
the coupon for future debt issues. By avoiding underwriting, the total cost of the issue is £10 million.
United Utilities, profit and loss account
Y/E 31/03 (£million) 2001 2002 2003 2004 2005
Turnover
Multi Utilities 1,102.6 1,208.9 1,230.1 1,300.7 1,384.7
Infrastructure Management 197.6 385.9 397.1 446.9 543.1
Operating Profits
Multi Utilities 500.9 529.6 502.8 516.9 587.9
Infrastructure Management 20.0 30.0 58.8 67.8 79.2
Group turnover 1,692.4 1,871.6 1,878.8 2,060.0 2,253.9
Operating profit 498.1 553.3 561.7 597.1 691.8
JVs and associates 8.7 11.8 14.9 13.6 22.7
Net interest -220.3 -230.6 -231.4 -248.1 -284.1
Disposal of businesses 191.2 0.0 34.0 1.9 8.6
Pre-tax profit 477.7 302.8 327.5 349.0 407.7
Earnings per Share (p) 61.6 42.3 45.7 54.2 61.4
Regulated water and wastewater revenues in 2005 were £1,126 million. During the 2000-05 period,
£195 million was spent on upgrading wastewater treatment works and £106 million on storm water
overflow systems.
In September 1999, the Mersey Basin gained the River Prize for the best river clean up operation in
the world. This reflects the gains made since the Mersey Basin campaign started in 1981, when
Europe’s most polluted river was described as an ‘affront to civilised society’. 2,000km of waterways
have been restored since then, with UU spending £1.6 billion on capital works to divert domestic and
industrial effluents into an integrated sewerage diversion and sewage treatment scheme between
1989 and 2002. In 2001, the first salmon were caught in the Mersey since 1921.
After £1.1 billion in spending between 1990 and 2002, the problem of the region’s bathing water is
being tackled. Compliance has moved from 18% in 1988 to 97% in 2002. In 1997, after the main
scheme had been completed, compliance was at 50% and a £150 million follow-up scheme
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Pinsent Masons Water Yearbook 2005 – 2006