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Research Tree provides access to ongoing research coverage, media content and regulatory news on UNITED UTILITIES GROUP PLC. We currently have 6 research reports from 2 professional analysts.
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UNITED UTILITIES GROUP PLC
UNITED UTILITIES GROUP PLC
H1 result in line albeit impacted by fair value adjustments
23 Nov 16
United Utilities reported its first half results and confirmed its guidance. Revenue reached £853m, down £4m yoy, reflecting the accounting impact of the Water Plus JV with Severn Trent completed on 1 June 2016. EBIT was up 9%, at £303.6m, while PBT was down £57.2m at £158.4m and net profit up by £30.7m, to £202.6m. The company said it had invested £383m in the first half and remains on track to invest around £800m for the full year. The company did not give any update regarding Outcome Delivery Incentives and said it will provide the net rewards/penalty quantification in May 2017 for the full-year results while confirming the validity of previous 2020 guidance. At 30 September, RCV remained within the group’s target of between 55% and 65%, at £10.5bn, while RCV gearing increased from 59% to 62% mostly reflecting the change in net debt. The board has declared an interim dividend of 12.95p per ordinary share, an increase of 1.1%, in line with the policy of targeting an annual growth rate of at least RPI through to 2020.
28 Sep 16
"How to solve the dilemma of ultra-low interest rates? The question was being posed again yesterday by members of both the ECB and the Fed. The Governor of the Central Bank of Ireland, Philip Lane, went as far as calling for a ‘forceful pursuit of stimulus’ in order to return interest rates to more normal levels, while Vice Chairman, Stanley Fisher, added that the economy is better off when there is ‘a price for using money’. They are simply reflecting the common desire to stimulate inflation to return interest rates and growth trajectories back to more historical trend - not that they have any chance of forming a consensus on how to do it, nor appear to embrace the reality that the dramatic changes to world order being created through the drive into new technologies means the old ways of doing things and predictable economics have probably gone forever. One hope the markets had had was that the Saudi-Russia proposal to cap oil production might succeed, but Iran’s stated determination to ramp-up production until it hits 4.2m bbl/day appears to have blown apart any idea of OPEC reasserting a binding quota system before its meeting in Algiers closes today, leaving oil traders to shift their focus to the Organisation’s next scheduled meeting in November instead. US equity markets, however, looked beyond these concerns to focus on positives from technology and consumer stocks, as well as some modest recovery in the over-sold banking sector, leaving all principal indices to close quite firmly up led from the start by the NASDAQ. Asia by contrast was marked down across the board, with the Nikkei in particular hurt by weaker oil prices, while banking sector jitters also reached its shores and sentiment toward export-related shares continued to be knocked by Yen strength. This mixed picture leaves London and Europe in an undecided mood for this morning’s opening, with the FTSE-100 seen opening around 10 points higher. No major UK macro data is due for release this morning, although traders will be listening out for closing statements from OPEC’s 2-day meeting, a press statement due from ECB President, Mario Draghi and a speech from the IMF’s Christine Lagarde. Later this afternoon, Fed Chair, Janet Yellen, is due to make her Testimony, while member Kashkari is also scheduled to make a statement. Corporates due to release earnings reports include Moss Bros (MOSB.L), Sainsbury (SBRY.L) and Smiths Group (SMIN.L), while today SAB Miller (SAB.L) shareholders are due to vote on their proposed merger with Anheuser Busch InBev." - Barry Gibb, Research Analyst
27 May 16
"Following quiet, low volume overnight trading across the US and Asian markets, London equities are seen following suit at this morning's opening with the FTSE- 100 little changed. Crude-oil prices fell back after climbing above $50/bbl during UK trading, which spurred profit taking in the materials and energy sectors, while utilities, telecommunications and consumer discretionary equities gained modestly as investors repositioned after days of buying riskier stocks. With little other consensus amongst investors, today's principal focus is likely to be on Fed Chairwoman Janet Yellen's speech this afternoon, from which further hints regarding timing and extent of prospective rate hikes will be keenly sought. This follows Powell's anticipation yesterday that such an event should be expected 'fairly soon' and that subsequent moves will proceed at a gradual pace, while the G-7 noted downside risks to the global economy still remained, as it called for major economies to ensure they sustain balanced policy. No other major data releases are anticipated from Europe or the US today, while results or trading statements are only expected to be seen from Bodycote, Caffyns and Conviviality." - Barry Gibb, Research Analyst
Trading update ahead of the FY 03/16 results to be published 26/05/2016
22 Mar 16
The clearance from the Competition and Markets Authority of the joint venture between UU and Severn Trent announced on 01/03/2016 (please see our 01/03/2016 Latest) to combine their non-household retail businesses is expected later this spring. This trading information seems to anticipate better results than previously expected, although the notion of ”underlying costs and profit” always alters clarity.
A first step in more structural changes of UU’s shareholder equity?
01 Mar 16
UU and Severn Trent announced this morning the creation of a JV to combine their non-household retail businesses, subject to regulatory approvals. On the basis of the FY 03/15 accounts, the JV would see (before synergies) sales of £940.2m, gross assets of £200.0m and PBT £9.7m (1.03% of sales). The JV would have a 25% market share including Scotland. A long conference call was held this morning with the participation of prestigious investment banks. Of course, the main questions were on synergies, margins and the next steps (toward more ventures), if any.
H1 03/16 underlying EBIT in line with expectations, fair value gains enhance reported net profit
25 Nov 15
FY 03/16 is the first year of the regulatory period. H1 03/16 is globally in line with expectations: Revenue: -£2.4m (to £857m) Underlying EBIT -£35m (to £309m) Underlying net finance expense -£18m (to -£106m) Underlying PBT was £205m, -£16m Underlying profit after tax £163m, -£12m Underlying EPS increased from 24.7p to 25.8p The interim DPS declared of 12.81p (+2%) is in line with the group’s dividend policy of now targeting growth of at least RPI each year (vs RPI+2% during the preceding regulatory period.
Emerging from the clouds
16 Feb 17
Rolls-Royce’s underlying performance in FY16 was ahead of both its own and market expectations. Media focus on the non-cash £4.4bn headline FX loss is missing what looks to be the basis for optimism. As the civil model starts to move from investment in engines for the A350 and A330neo into the aftermarket delivery phase over the remainder of the decade, we think cash flow is likely to improve, particularly if supported by an eventual recovery in Marine.
15 Feb 17
At the current market capitalisation of £29m, we believe the shares are significantly undervalued. We estimate that the highly profitable Maritime business is alone worth at least £40m. With net cash of £9m at end-2016, this implies that the market is currently ascribing a combined negative value of £17m to the rest of the group, which together account for c.54% of group revenues. This is very harsh given the management actions to transform TP Group to a profit-driven Tier 2 specialist services and engineering company are bearing fruits across the divisions. TPG Managed Solutions is expected to more than double its profits in 2017, while TPG Engineering and Design & Technology are on course to deliver sustainable profits from 2019. Even if we ascribe zero value to Engineering, Design & Technology and Managed Solutions, the shares are worth 9.5p a share, a 38% upside from the current share price. BUY.
Taking the bull by the horns
15 Feb 17
Avon Rubber announced this morning that CEO Rob Rennie has left and been replaced with Paul McDonald, formerly managing director of Avon’s Dairy division. This news comes as a surprise and is likely to raise some questions over the CEO and CFO transition, with the CEO only being in post for just over a year. However, the group has appointed an executive already known to many who have followed the business, and as such should be seen as a good appointment with a track record of decisiveness and getting things done.
The Slide Rule
12 Jan 17
What is The Slide Rule? The Slide Rule has been designed to dramatically simplify the identification of the best companies in the UK small/mid-cap sector by making a quantitative assessment of the relative potential of each company. At its core, The Slide Rule aims to identify those companies that create genuine shareholder value through strong returns on capital and solid growth, but also present a value opportunity with the potential tailwind of earnings momentum. Companies are assessed within a Quality, Value, Growth and Momentum (QVGM) framework.
Share & share alike
14 Feb 17
The rally in the last fortnight, highlighted in the table, reflects a continued flow of positive updates and economic news. The FTSE 250, Small cap and Fledgling indices have reached record highs. We are in the lull ahead of results for those companies with a December year end, a welter of economic data regarding the UK economy, the State of the Union address in the US on 28 February and the UK Budget on Wednesday 8 March. We will learn at that stage the latest forecasts from the Office of Budget Responsibility. As highlighted previously, the reaction to corporate updates will continue to set the tone.