UU. United Utilities Group Plc

 
TIDMUU. 
 
United Utilities Group PLC 
 
30 January 2014 
 
                 UNITED UTILITIES INTERIM MANAGEMENT STATEMENT 
 
United Utilities today issues an interim management statement covering the 
period from 1 October 2013. 
 
Trading update 
 
Current trading is in line with the group's expectations. Customer service is 
continuing to improve, as measured by Ofwat's service incentive mechanism, 
underpinned by good operational and environmental performance. We continue to 
narrow the gap to sector leading performance. Revenue has increased, reflecting 
the regulated price change for 2013/14. This revenue increase is only partly 
offset by higher depreciation and other operating costs, as the company 
continues to tightly manage its cost base. 
 
United Utilities continues to make good progress on its regulatory capital 
investment programme and remains on track to invest at least GBP800 million in 
its asset base in 2013/14, delivering benefits for customers, the environment 
and the regional economy. We intend to undertake transitional investment in 
2014/15 to de-risk key projects due to be delivered in the next regulatory 
period. In light of this, expenditure on our 2014/15 capital investment 
programme, including spend relating to private sewers, is expected to be 
similar to 2013/14. 
 
Financial position 
 
United Utilities' financial position remains robust and its regulatory capital 
asset base continues to grow, reflecting high levels of capital investment and 
the impact of RPI inflation. Group net debt is slightly higher compared with 
the position at 30 September 2013. This principally reflects expenditure on the 
regulatory capital investment programme and payments in relation to interest 
and taxation, largely offset by operational cash flows and fair value gains on 
the group's debt and derivative instruments. Gearing remains stable and 
comfortably within Ofwat's assumed range (55% to 65% net debt to regulatory 
capital value), supporting a solid A3 credit rating for United Utilities Water. 
 
The group now has headroom to cover its projected financing needs into 2016, 
following the recent agreement of a GBP500 million term loan with the European 
Investment Bank to support the delivery of our capital investment programme. 
The loan, which can be taken in either fixed or floating interest rate form, 
will have an average maturity of 10 years and is expected to be drawn down via 
a number of tranches within the next 12 months. 
 
Regulatory developments 
 
On 2 December 2013, we submitted a business plan to Ofwat covering the 2015-20 
period. The plan would allow our customers to benefit from below inflation 
changes to average household bills for the decade to 2020, coupled with 
substantial capital investment to maintain and improve services, as well as 
providing significant benefits to the environment and the local economy. 
Development of the plan included extensive research, involving around 27,000 
customers and other stakeholders. 
 
On 19 December 2013, Ofwat published a revised price review process and 
timetable. As part of this process, on 27 January 2014, Ofwat published risk 
and reward guidance for the industry. This included guidance on certain 
financial parameters for the 2015-20 period, which we are currently reviewing. 
 
Board changes 
 
Mark Clare was appointed as a non-executive director of both United Utilities 
Group PLC and United Utilities Water PLC with effect from 1 November 2013 and 
is a member of the Audit Committee and the Nomination Committee. Mark is Group 
Chief Executive at Barratt Developments PLC, a position that he has held since 
2006. 
 
Outlook 
 
United Utilities is confident of delivering a good underlying financial 
performance for the year ending 31 March 2014 and is ahead of schedule in 
meeting its 2010-15 regulatory outperformance targets. We are encouraged by our 
operational and customer service performance improvements and believe we can 
improve further. We will continue to actively engage with our regulators, ahead 
of the draft and final determinations from Ofwat later this year. 
 
In line with its usual practice, United Utilities intends to issue a pre-close 
trading update on 20 March 2014. 
 
United Utilities contacts: 
 
Gaynor Kenyon, Corporate Affairs Director                +44 (0) 7753 622282 
 
Darren Jameson, Head of Investor Relations               +44 (0) 7733 127707 
 
Martin Pengelley / Michelle Clarke, Tulchan              +44 (0) 20 7353 4200 
Communications 
 
This announcement is also available at: http://corporate.unitedutilities.com/ 
investors.aspx 
 
 
 
END 
 

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