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Summary
- United Utilities announced the final dividend of 28.40 pence per share for FY2020.
- United Utilities helped customers who struggled to pay the bill due to the pandemic.
- United Utilities could raise funds close to £500 million to £800 million between 2020 and 2021.
- Severn Trent expects the negative impact of Covid-19 to be in the range of £50 million to £85 million on the revenue in FY2021.
- Severn Trent paid a final dividend of 60.05 pence per share for FY2020.
United Utilities Group PLC (LON:UU) & Severn Trent PLC (LON:SVT) are FTSE-100 index listed utility stocks. UU had a dividend yield of around 4.78 percent, and SVT had a dividend yield of about 4.06 percent. The one year return for UU & SVT was up by about 19.29 percent and 31.04 percent, respectively. Both UU and SVT were down by about 1.89 percent and 0.54 percent, respectively from the last closing price (as on 13 August 2020, before the market close at 8:10 AM GMT+1).
United Utilities Group PLC (LON:UU) – Commits £71 million to support customers over the next five year
United Utilities Group PLC is a UK based water and waste management company. The Group provides services in the North West of England, and it is included in the FTSE 100 index.
- On 11 August 2020, United Utilities Group appointed Doug Webb as a non-executive director. He would commence his duties from 1 September 2020.
FY2020 Annual results (ended 31 March 2020) as reported on 12 June 2020
(Source: Group website)
The Group reported revenue of £1,859.3 million in FY20, which was up by £40.8 million from FY19 revenue. The EBITDA and operating profit were £1,144 million and £743 million, respectively. In FY20, the profit after tax improved to £430 million from £410 million a year ago. The earnings per share were 63.0 pence. The Group made a capital investment of £722 million of which £143 million was made in IRE. Water Plus JV reported losses of £51 million for the reported period and United Utilities recognized £46 million loss related to JV on its financial statement. As on 31 March 2020, United Utilities had a gearing of 62 percent that is measured as net debt to regulatory capital value. The Group had a substantial liquidity headroom as it had cash, short term investments and undrawn credit facility of close to £1.2 billion. United Utilities announced the final dividend of 28.40 pence per share for FY20 that translated to a total dividend of 42.6 pence for FY20. The Covid-19 harmed the Group’s financial and operational performance. The Group provided financial support to the customers who struggled to pay the bill due to the pandemic as it provided funds of £3.5 million for help.
Share Price Performance
1-Year Chart as on August-13-2020, before the market close (Source: EODHD/Others, Thomson Reuters)
United Utilities Group PLC’s shares were down by close to 1.89 percent and trading at GBX 915.20 per share (as on 13 August 2020, before the market close at 8:10 AM GMT+1). UU’s 52-week High and Low were GBX 1,068.50 and GBX 743.00, respectively. United Utilities had a market capitalization of £6.36 billion.
Business Outlook
The Group continued to service during the impact of Covid-19, and it increased the number of customers eligible for social tariff support. It has committed to providing £71 million to assist customers over the next five years. United Utilities expedite the payments to suppliers, and it restricted the exposure to retail business failures. The Group has highlighted that it could raise in the range of £500 million to £800 million between 2020 and 2021.
Severn Trent PLC (LON:SVT) – AMP7 programme remains on track
Severn Trent PLC is a UK based water management and waste management Group. The Group is also focusing on renewable energy projects. Severn Trent has operations in the UK and Ireland, and it is included in the FTSE 100 index.
Trading Statement as reported on 15 July 2020
The Group stated that the Q1 FY21 performance was in line with the Group’s expectation. Severn Trent highlighted that it expects the negative impact of Covid-19 to be in the range of £50 million to £85 million on the revenue in FY21. The Group expects to recover the lost revenue in FY22.
FY2020 Annual results (ended 31 March 2020) as reported on 20 May 2020
(Source: Group website)
In FY20, the total turnover of the Severn Trent was £1,843.5 million that was £1,767.4 million in FY19. The Group reported EBITDA of £935.1 million, which increased by 1.8 percent year on year from £918.8 million in FY19. Regulated Water and Waste Water division added £838.5 million to the total EBITDA, and Business Services contributed £102.9 million. The profit before interest and tax was £570.3 million. During FY20, Severn made a total capital expenditure of £799.5 million. As on 31 March 2020, Severn Trent had net debt of £6,231.5 million and total capital employed was £7,475.2 million. It had cash of £48.6 million and bank and other loans of £6,310.4 million. The net debt to regulatory capital value was 64.9 percent. Severn Trent paid a final dividend of 60.05 pence per share for FY20 after which the total dividend payment for the whole year was 100.08 pence per share.
AMP6 and AMP7 Programme
The Group completed the AMP6 programme that included 900km of network renewal, protecting customer homes from flooding, creating sources of water. The total capital expenditure in AMP6 was £3 billion, of which £689.0 million was made on IRE. Severn made spent £800.0 million on AMP6 in FY20. AMP7 programme remains on the track that includes generating energy with new thermal hydrolysis plants and exploring new water solution. The Group has contracted 80 percent of the year one expense and plans to invest in the range of £430 million to £510 million on infrastructure over the next one year.
Share Price Performance
1-Year Chart as on August-13-2020, before the market close (Source: EODHD/Others, Thomson Reuters)
Severn Trent PLC’s shares were down by close to 0.54 percent and trading at GBX 2,575.00 per share (as on 13 August 2020, before the market close at 8:10 AM GMT+1). SVT’s 52-week High and Low were GBX 2,716.00 and GBX 1,949.00, respectively. Severn Trent had a market capitalization of £6.18 billion.
Business Outlook
In FY21, the Group expects the revenue to be in the range of £1.51 billion to £1.55 billion. The turnover in FY21 would be negatively impacted by £50 million to £85 million due to the pandemic. Non-household consumption is expected to be lower. The operating cost is expected to be higher following bad debt from the covid-19 impact. Severn Trent highlighted that is plans to pay a dividend of 101.58 pence per share for FY21.
