UNITED Utilities (UU), the Warrington-based water company, expects the sale of its remaining non-regulated businesses to realise £600m which the group will retain.
And it said in a trading update today that changes to corporation tax after the June Budget should net UU more than £200m over five years, with about £50m anticipated during the current financial year.
The boost will benefit the company which had price cuts for its water customers imposed on it by industry watchdog Ofwat over the current five year regulatory pricing review to 2015, together with increased levels of investment to deliver service improvements.
Chief executive Philip Green said today that the business remains on course, but that underlying operating profits in the regulated water division will be lower than last year, due to the new pricing structure.
He said: “The group is on track to deliver results in line with our expectations, reflecting the impact of the recent regulatory price review.
“In line with our strategy of focusing on our core activities, we have now agreed the sale of the vast majority of our non-regulated businesses for a total enterprise value of approximately £600m.”
He added: “We believe that, with the group’s consistent focus on its core activities and the low cost of its debt portfolio, we are well positioned to deliver outperformance over the 2010-2015 regulatory period.”
UU said it should complete the disposal of most of its non-core businesses in the second half of the current financial year.
Chief executive Philip Green declared a strategy on his arrival five years ago of re-focusing on the core regulated business of North West water and waste-water which began with the sale of UU’s outsourcing arm Vertex, followed by the disposal of its electricity division.
At the time the non-regulated business, which included stakes in companies from Australia to the former Eastern Bloc, represented less than 10% of UU’s total revenues.
The strategy is aimed at clearing up the group’s portfolio of businesses, while improving performance levels of its regulated North West water operations.
Today’s update also revealed one-off charges of about £15m this year relating to restructuring costs.