The underlying profit for the water company for the six months to 30 September 2014 was £343.1 million, up £3.3 million on the same period last year.
This came despite the cost of servicing bad debt increasing by £5 million, from 2.2 per cent to 2.7 per cent of regulated revenue (£27 million).
The company warned that bad debts “will continue to be challenging” because of the tightening of real disposable incomes; the impact of recent welfare reforms; and the possibility of further provision reviews as we enhance our systems.
UU’s H12 revenue increase from £845.7 million in 2013 to £859.4 million in 2014, and the underlying profit after taxation went up by £8 million to £176 million, benefiting from the 2 per cent fall in the mainstream rate of corporation tax, compared with the previous year.
The interim dividend has increased from 12.01 pence per share (p/s) in H1 2013 to 12.56p/s for H1 2014 and “is in line with policy”.
The company also avoided a potential £80 million penalty from the regulator for poor customer performance after moving up from last place position to ninth place on Ofwat’s combined SIM measure over the three years to 2013/14.
UU chief executive Steve Mogford said: “This strong performance has given us the capacity to reinvest around £280 million, for the benefit of all our stakeholders.
“In addition, our customers are set to benefit from below inflation growth in average household bills for the decade to 2020.
“The next regulatory period will place more emphasis on operational performance. Our significant improvements and the foundations we have built provide a solid platform for the future.”
UU also stated it is the most successful new entrant and the second largest water retailer in Scotland and is “extending our presence in the retail water market for business customers”.
The company’s retail arm now has more than 200 customers, covering 2,600 sites, and representing future annual revenue of £14 million.