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    Lakis Athanasiou

    Research Analyst at Agency Partners

    Lakis Athanasiou's questions to United Utilities Group (UUGRY) leadership

    Lakis Athanasiou's questions to United Utilities Group (UUGRY) leadership • FY 2017

    Question

    Lakis Athanasiou of Agency Partners asked about the recent increase in business rates, the company's dividend policy in comparison to peers like Severn Trent, and the potential for misinterpretation of phased Return on Regulated Equity (RORE) figures by investors.

    Answer

    CEO Steve Mogford addressed the dividend, stating the board prioritizes sustainable growth and a competitive yield over a 'catch-up' dividend, focusing on long-term value. CFO Russ Houlden provided specific business rate figures, noting they rose from £86.3 million to £91.6 million and are expected to rise further. He also agreed that phased RORE can be misleading and that a long-term view of performance and risk is more appropriate for valuation.

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    Lakis Athanasiou's questions to United Utilities Group (UUGRY) leadership • Q2 2016

    Question

    Lakis Athanasiou asked for an estimate of the pension surplus impact if asset hedging had not been in place. He also questioned the cost scalability of the non-household business, specifically if operating costs could be reduced in proportion to customer losses.

    Answer

    CEO Steven Mogford confirmed that the Water Plus JV was designed for scalability, with a low fixed-cost base and flexible front-office staffing. CFO Russ Houlden addressed the pension question by pointing to the financial statements, which show both assets and liabilities rising together due to the asset/liability matching approach, preventing the large deficit swings seen at other companies.

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    Lakis Athanasiou's questions to United Utilities Group (UUGRY) leadership • H1 2016

    Question

    Lakis Athanasiou of Agency Partners asked about the company's thinking on its 10-year reducing balance policy for debt hedging. He also questioned whether the company was concerned about Ofwat's desire under Water 2020 to introduce more competition by potentially splitting out services like treatment and distribution.

    Answer

    CFO Russ Houlden stated the 10-year reducing balance policy remains appropriate as it minimizes variance against all possible ways Ofwat could set the cost of debt. CEO Steve Mogford and CFO Russ Houlden addressed the competition issue, advocating for a Long-Run Incremental Cost (LRIC) principle for access pricing to enable efficient entry without stranding existing assets, thereby protecting the RCV.

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