1H23 results broadly in line UU has reported 1H23 underlying operating profit of £285.5m (down 22.3%, INVe £256m, consensus £258m), underlying EPS of (1.8)p (vs. 28.4p in 1H22, INVe (2.0)p, consensus (1.6)p), and an interim dividend of 15.16p (up 4.6%, INVe 15.16p). Net debt of £7.8bn was in line with our £7.9bn estimate. (See Figure 1 overleaf). Presentation to be held at 9am: http://www.unitedutilitiestv.live/. FY guidance – revenue down, costs up, but largely flagged Revenue is expected to be around 1% lower than 2021/22, largely reflecting lower overall consumption offsetting the uplift from November 2021 CPIH. This is a downgrade vs. the around 1% higher guidance at FY22, but consistent with comments in the 27th September trading statement, which flagged demand reduction. Our pre-existing estimates assume a 1.0% decrease. Underlying operating costs are expected to be £130m higher year-on-year, reflecting inflationary increases and higher power costs, net of efficiencies coming through core costs. Guidance provided at FY22 pointed to an increase of around £100m, although the upwards pressure was flagged in the trading statement. Our pre-existing estimates assume a £125m increase. Underlying finance expense is expected to be £165m higher year-on-year, as higher inflation impacts index-linked debt. At FY22, the guidance was for a £150m increase, but the direction of travel was flagged in the trading statement. Our pre-existing estimates point to a £204m increase, but we note that each 1% on inflation impacts the finance charge by c.£43m. Capex in 2022/23 is expected to be in the range of £660-715m, higher than the £640-690m guidance at FY22. Our pre-existing estimate is for £683m. UU remains confident in targeting a net customer ODI reward of around £30m in 2021/22. No change.