5th Jun 2007 07:00
5 June 2007
FOCUS ON CORE SKILLS DELIVERS PERFORMANCE IMPROVEMENTS SALE PROCESS INITIATED FOR ELECTRICITY DISTRIBUTION ASSETS
Preliminary results* for the year ended 31 March 2007
‚£m (except dividends) Year ended 31 March % 2007 2006 Change Revenue from continuing operations 2,323 2,086 +11% Operating profit from continuing 828 730 +13% operations Underlying operating profit from 816 753 +8% continuing operations** Profit before tax from continuing 676 445 +52% operations Underlying profit before tax from 561 484 +16% continuing operations** Total dividends per ordinary share 44.93 43.87 +2.4% (pence) Basic earnings per share (pence) Year ended 31 March
2007 2006 Continuing operations 57.1 37.8
Continuing and discontinued operations 49.4 24.3
* Electricity distribution business treated as a continuing operation in these results
**Underlying profit before tax and underlying operating profit from continuing operations are defined in the underlying profit measure table on page 12
Focus on core skills delivers performance improvements
* Underlying profit before tax**up 16% to ‚£561 million
* United Utilities North West segmental operating profit increased by 18% to
‚£750 million, with underlying operating profit** up 11% to ‚£736 million
* ‚£748m of capital expenditure in the year to improve services for customers
* Strategic focus on core skills of managing water, wastewater, electricity
and gas networks * Operational performance improvements delivered for customers
* Customer satisfaction for water and wastewater customers at a three-year
high * First UK water company to announce an action plan to reduce carbon emissions * Asset owner/operator management reorganisation implemented to generate higher performance * ‚£10 million of cost savings expected from management reorganisation
Sale process initiated for United Utilities' electricity distribution assets
* Focus on the much larger water asset base, offering significantly more
growth potential
* Expect to return to shareholders the net equity proceeds from the proposed
sale * Capital structure and dividend policy to be reviewed at end of sale process, recognising the importance of income to shareholders
* Board's intention that shareholders will realise total distributions over
the remainder of the 2005-10 price control period at least equivalent to
the distributions targeted for the same period under the current dividend
policy * Target a credit rating to best mirror regulatory assumptions for United Utilities Water * Intend to continue to operate electricity assets, consistent with core skills strategy
Commenting, Philip Green, Chief Executive, said:
"We have delivered good profit growth, with a strong financial and operational performance.
"Our strategy is to focus on our core skills of managing water, wastewater,electricity and gas networks to create a world class operator of utilityinfrastructure. This strategic focus has helped deliver operational and serviceimprovements. We have restructured our management organisation, around separateasset operator and asset owner functions, to sharpen our commercial focus andhelp deliver and sustain further performance improvements."We are initiating a sale process for our electricity distribution assets, witha view to maximising shareholder value. Our water business represents over 85per cent of the group's regulatory asset value and we believe thatshareholders' interests are best served by our focusing on the much largerwater asset base, which offers significantly more growth potential than ourelectricity assets."We expect to return to shareholders the net equity proceeds from the proposedsale. Furthermore, we intend that shareholders will realise total distributionsover the remainder of the 2005-10 price control period at least equivalent tothe distributions targeted for the same period under the current dividendpolicy, adjusted to take account of the manner in which the net equity proceedsare returned."For further information on the day, please contact: Philip Green - Chief Executive +44 (0) 20 7307 0300 Tim Weller - Chief Financial Officer +44 (0) 20 7307 0300 Gaynor Kenyon - Communications Director +44 (0) 7753 622282 Darren Jameson - Investor Relations Manager +44 (0) 7733 127707 Dominic Fry / Peter Hewer - Tulchan Communications +44 (0) 20 7353 4200 Alan Brown - Deutsche Bank +44 (0) 20 7545 8000
United Utilities has retained Deutsche Bank AG, London Branch ("Deutsche Bank") as its financial adviser in relation to the proposed sale process for its electricity distribution assets.
A presentation to investors and analysts starts at 9.00 am on Tuesday, 5 June2007, at the City Presentation Centre, 4 Chiswell Street, London, EC1Y 4UP. Thepresentation can be accessed via a one-way listen in conference call facility,by dialling: + 44 (0) 20 7162 0125. This recording is available for seven daysfollowing 5 June 2007, on +44 (0) 20 7031 4064, access code 748731.
The presentation, with further information on United Utilities, will be available at 9.00 am on the day at: http://www.unitedutilities.com and, later, on Bloomberg at: UUIR, where a multimedia version will be available.
Interviews with Philip Green, Chief Executive, and Tim Weller, Chief Financial Officer, in video/audio and text formats are available on http:// www.unitedutilities.com and http://www.cantos.com.
CHIEF EXECUTIVE'S REVIEW
United Utilities has again delivered a strong financial performance in the year to 31 March 2007. Underlying profit before tax** increased by 16% to ‚£561 million and underlying operating profit** was up by 8%, to ‚£816 million.
The Board is proposing a final dividend in respect of the year ended 31 March2007 of 30.30 pence per ordinary share. This is an increase of 2.4%, consistentwith the group's policy of growing dividends in line with inflation. Togetherwith the interim dividend of 14.63 pence per ordinary share, the total ordinarydividend relating to the year is 44.93 pence.United Utilities North West (UUNW) has delivered strong growth in the year withsegmental operating profit up 18%, an increase of 11% on an underlying basis**.This growth primarily reflects the allowed price increases which support thesubstantial levels of capital investment being made by the company to improveoperational standards and services for customers. Capital investment in ourregulated operations, including infrastructure renewals expenditure, totalled ‚£748 million during the year. We remain confident of meeting the regulatoryoperating and capital expenditure efficiency targets.In United Utilities Contract Solutions (UUCS), operational performance acrossthe contract portfolio was good. Underlying operating profit** was slightlybelow that of the previous year. UUCS renewed the contract with Scottish Water,via Scottish Water Solutions, during the year although new opportunities werelimited. The order book remains strong with future revenue streams secured.At our interim results on 5 December 2006, we outlined a number of keyoperational and customer service measurements for UUNW to help achieve our goalof creating a world class operator of utility infrastructure. Thesemeasurements are based around relative efficiency, security of water supply,sewer flooding, pollution, customer satisfaction and, for electricitydistribution, customer minutes lost and customer interruptions. We haveachieved a number of significant performance improvements and are on track tomeet the targets we have set in all of these areas. In particular, I am pleasedthat we have met the 2006/07 economic level of leakage rolling target. This isthe first time we have done so in five years.We have restructured our management organisation to sharpen our commercialfocus and help drive further performance improvements. The business has beenseparated into an asset owner function, Asset Management and Regulation, and anasset operator function, Utility Solutions, which will be responsible for allof the group's UK utility operations formerly held within UUNW and UUCS. Thisnew structure will help optimise performance by instilling the operationaldisciplines inherent in commercial trading arrangements and enable greatersharing of best practice and utilisation of management capital. It is expectedthat the overall management reorganisation initiative will deliver annualsavings of around ‚£10 million, which are expected to be realised in full in2008/09.As part of this reorganisation, we have reviewed the composition and membershipof our executive team and redefined a number of roles. We have recruited highcalibre individuals and retained key internal talent to ensure that the grouphas the right blend of skills, experience and resources to help become a worldclass operator of utility infrastructure. Six of our nine executive officersand around one quarter of our senior managers are new to the business. As aresult of the sale of Vertex, the group reduced its workforce by around a halfwith minimal impact on profitability.With regard to the new business functions, Charlie Cornish is Managing Directorof Utility Solutions and Clive Elphick heads Asset Management and Regulation.Paul Capell joined the group on 1 May 2007 from Veolia and brings with himsignificant strategic planning and utility experience and is Managing Directorof Business Development. I am also pleased to welcome Alison Clarke, our newHuman Resources Director, who joins us from AS Watson, a division of HutchisonWhampoa.United Utilities is the first UK water company to set out an action plan toreduce its carbon emissions. The group's electricity consumption has almostdoubled since privatisation, as a result of delivering environmental andcustomer improvements, and this plan is actually targeting a reversal in therising trend of carbon emissions. We have developed a cost-effective programmeafter working closely with the Carbon Trust to maximise our contribution intackling climate change. Our carbon investment programme is estimated at around‚£37 million, with an expected 3-5 year payback period. We are targeting a grossreduction in carbon emissions of around 26% in the medium term, withapproximately 8% to come from our internal carbon reduction plans and around18% via renewable energy supply contracts. Harvesting sustainable energy fromwastewater treatment processes is a key element in meeting this target and wenow have close to a quarter of the UK's sewage-gas combined heat and powerplants.
The Board has taken the decision to initiate a sale process for United Utilities' electricity distribution assets, with a view to maximising shareholder value. We believe that shareholders' interests are best served by the group focusing on the much larger water asset base, which offers significantly more growth potential than its electricity assets.
We expect to return the net equity proceeds from the proposed sale to shareholders. The mechanism for this return will be determined at the time of sale completion.
At the conclusion of this sale process, United Utilities intends to review itscapital structure and dividend policy so that they will be appropriate for therevised composition of the group, recognising of course the importance ofincome to our shareholders.Furthermore, it is our intention that, as part of this capital restructuring,shareholders will realise total distributions over the remainder of the 2005-10price control period at least equivalent to the distributions targeted for thesame period under the current dividend policy, adjusted to take account of themanner in which the net equity proceeds are returned.The review of capital structure will also involve determining a target creditrating that the group believes best mirrors regulatory assumptions for UnitedUtilities Water and we will be consulting with the credit rating agencies onappropriate financial indicators to maintain this rating.As part of the group's asset owner and asset operator management reorganisationinitiative, a separate asset operator has been established that carries outcapital delivery, operations and maintenance activities for United Utilities'electricity distribution assets. We intend to continue operating these assets,consistent with our strategy of focusing on our core skills.As we announced last week, the group is pursuing a delisting and deregistrationin the US with the aim of reducing compliance costs. Annual savings of around ‚£2 million are expected. We remain committed to our US investors and intend tomaintain our American Depositary Receipts facility as a Level I programme on anover-the-counter basis and continue our equity and credit US investor relationsactivity.Summary and outlook
The group has again delivered a good set of results, supported by a robust financial performance in United Utilities North West.
Our goal is to be a world class operator of utility infrastructure and we haveimplemented a new management organisation to help generate high performance andbuild on the operational and service improvements already achieved.On completion of the proposed sale of our electricity distribution assets, weintend to review our capital structure and dividend policy in light of therevised composition of the group, recognising the importance of income to ourshareholders.Through our strategy of focusing on core skills, the business is well placed tomeet our expectations for the forthcoming financial year. With predictableregulated revenue increases ahead, we expect United Utilities to continue todeliver strong profit growth.OPERATING PERFORMANCEUNITED UTILITIES NORTH WEST * Segmental revenue increased by 9% to ‚£1,636 million * Segmental operating profit increased by 18% to ‚£750 million, with underlying operating profit** up 11% to ‚£736 million Segmental revenue increased by 9% to ‚£1,636 million, principally as a result ofallowed price increases, including inflation, of 8.8% in the water business and2.6% in the electricity business. These price increases support the regulatedbusinesses' substantial capital investment programmes to deliver improvementsfor customers.Operating profit for the year increased by 18% to ‚£750 million, which reflectsallowed price increases and delivery of efficiencies. As expected,infrastructure renewals expenditure was higher in the second half of this year,compared with the first six months, in line with the planned re-phasing of thisprogramme. Adjusting for a number of one-off items (as outlined in theunderlying profit measures table on page 12), underlying operating profit** forthe year increased by 11% to ‚£736 million.Capital investment in the period, including ‚£101 million of infrastructurerenewals expenditure, was ‚£748 million, of which ‚£570 million related to waterand wastewater and ‚£178 million to electricity distribution. This represents anincrease in expenditure of more than 25% when compared with the previous year.The rise in capital expenditure is consistent with the planned re-phasing ofthe company's investment programme to help optimise the delivery of outputs.Cumulative water capital expenditure remains on track to match regulatoryassumptions by 2008 and cumulative wastewater capital expenditure by 2009.Progress on delivering efficiencies has been good and the business remains oncourse to meet its regulatory efficiency targets. The customer transformationprogramme is progressing well and the new customer billing system is deliveringefficiencies, alongside improved cash collection. The business has improvedefficiency at its large wastewater treatment plants and the process andoptimisation programmes are delivering benefits. New work planning andscheduling processes, which make better use of mobile technology, are nowembedded in the business and the project and investment management system ishelping to optimise the delivery of outputs.Although energy costs in United Utilities Water (UUW) have increased by justover 30% in 2006/07, compared with the previous year, energy costs onlyrepresent around 6% of the total cost base of the business. Energy costs infuture years are anticipated to be slightly lower than those incurred in 2006/07. UUW continues to benefit from a largely gravity-fed clean water system,which substantially reduces pumping costs. In addition, the business isfocusing on increasing its renewable energy generation to mitigate costsfurther.The business aims to be a world class operator of utility infrastructure and aspart of this goal is targeting an upper quartile position on key operationaland service measures in the medium term. At the group's interim results,announced on 5 December 2006, the company outlined a number of measurementsagainst which it would assess its performance. UUNW is making good progress andremains on course to meet its medium term targets on these measures:
* Relative efficiency - UUW has improved its 2005/06 operating expenditure
relative efficiency position, as assessed by Ofwat. The company is now in
band B for the water service and in band C for the wastewater service. This
represents a one band improvement for each service, compared with the
previous year, moving the company closer to the efficiency frontiers.
* Security of water supply - UUW met the economic level of leakage rolling
target of 470 megalitres per day for 2006/07 for the first time in five
years. In addition, there were no water restrictions in the year.
* Pollution - the business has achieved a significant reduction in the number
of Category 1&2 pollution incidents in 2006/07, with no water pollution
incidents (2005/06: 2 incidents) and only 9 wastewater pollution incidents
(2005/06: 21 incidents). This performance already meets the medium term
target of reducing these incidents by around 50% and the challenge for the
business is to sustain performance at these levels and aim for
outperformance against this target.
* Sewer flooding - UUW is on track to meet its medium term target of reducing
the number of properties on the sewer flooding register by around 50%. This
is defined as properties at risk of experiencing at least one sewer
flooding incident in ten years. Good progress was made in 2006/07 with a
reduction of 172 properties (on a net basis), leaving 469 properties on the
register compared with 641 properties in 2005/06.
* Customer minutes lost (CMLs) and customer interruptions (CIs) - United
Utilities Electricity (UUE) met the 2006/07 regulatory targets for CMLs and
CIs set by Ofgem, which is in line with the aim to meet or outperform the
regulatory targets over the 2005-10 period.
* Overall customer satisfaction - Good progress continues to be made and 74%
of UUW's water customers and 70% of UUE's electricity customers, who had
made an enquiry, were satisfied with the overall service they received.
This compares with a start point satisfaction level of less than 50% for
water and wastewater customers and less than 70% for electricity customers.
With regard to capital programme outputs, UUW continues to exceed its regulatory and business plan targets. During the year, 810 kilometres of water mains were replaced and good progress was made in removing a number of properties from the low pressure and flooding registers. The quality of drinking water remains high and mean zonal compliance for 2006 was 99.92%.
UUE places a strong focus on maintaining the integrity, security and safety ofits electricity distribution network and outputs remain in line with itsfive-year delivery plan. During the year, the business replaced or refurbished293 kilometres of overhead lines and replaced 91 kilometres of undergroundcables. It also replaced or refurbished 579 switchgear units and replaced 280transformers.In the previous price control period (2000-05), around ‚£200 million of fundingwas provided to deliver a number of obligations, primarily relating toUnsatisfactory Intermittent Discharges (UIDs) of wastewater for that period,which have been carried over into 2005-10. UUW, in its negotiations with theEnvironment Agency and Ofwat, is seeking to finalise requirements relating tothose UID outputs. The business expects the bulk of this capital expenditure tobe incurred over the next 2-3 years.At the last water price review, it was also recognised that there was potentialfor additional investment relating to projects that were not part of UnitedUtilities' 2005-10 regulatory contract, but which may be confirmed asadditional obligations during this period by the regulators. These potentialprojects, which primarily relate to UIDs of wastewater, with an estimatedmaximum value of up to ‚£500 million, continue to be the subject ofinvestigations and studies which are driving discussions with the regulators.A planning inquiry was held in October 2006 which considered three appeals forUIDs discharging to inland waters to help establish principles going forward. The inspector's findings were published in January 2007. Based on the outcomeof the inquiry, United Utilities is currently preparing a submission to Ofwatwhich, if endorsed by DEFRA, should allow the related investment programme,estimated to be over ‚£200 million, to be funded through price limits anddeliver additional growth in the regulatory asset value (RAV). A furtherplanning inquiry relating to coastal discharges is expected to be held laterthis financial year and the outcome of this inquiry may also result inadditional investment and RAV growth.
UNITED UTILITIES CONTRACT SOLUTIONS
* Segmental revenue increased by 13% to ‚£742 million
* Segmental underlying operating profit** marginally decreased to ‚£66 million
United Utilities Contract Solutions (UUCS) applies the core utility skills ofUnited Utilities North West, through outsourcing contracts, and is involved inthe operation or management of assets representing around 35% of the UK waterindustry's asset base. The business also provides gas services to over 6million people and in total now serves a population of around 17 million in theUK. UUCS has an order book worth more than ‚£4.5 billion.Revenue in UUCS increased by 13% to ‚£742 million. This partly reflects a full12-month contribution in 2006/07 from the ‚£1.1 billion, eight-year contractwith Northern Gas Networks which commenced on 1 June 2005. The revenue increasealso benefited from the planned capital investment profile relating to theSouthern Water Contract, which provided a strong contribution in the year.Segmental underlying operating profit** for the year decreased slightly to ‚£66million.
The contract with Scottish Water, via Scottish Water Solutions, was renewed earlier in the year, although new opportunities for UUCS were limited. The order book remains strong with future revenue streams secured and UUCS is the leading utility infrastructure outsourcing company in the UK water sector.
UUCS holds major utility outsourcing contracts in the UK with Dwr Cymru WelshWater (DCWW), Southern Water, Scottish Water, and Northern Gas Networks. Italso has a meter installation contract with British Gas Trading and has threeScottish PFI operations. In addition, the business applies the group's coreskills in related international markets and currently operates concessions inBulgaria, Estonia, Poland, the Philippines and Australia. Performance acrossthe contract portfolio is in line with management expectations.UUCS holds a ‚£1.5 billion, 15-year contract with DCWW to provide operations,maintenance and shared services, which commenced in April 2005. This contractwas renewed following the successful delivery of an initial four-year contractwith DCWW. The contract is progressing well and, despite inflationary costpressures, the profit level has moderately increased compared with the previousyear. Performance against the contract key performance indicators (KPIs) isgood and UUCS has helped DCWW achieve the regulatory economic level of leakagerolling target for 2006/07 and sustain an upper quartile position in Ofwat'soverall performance assessment (OPA) league table for the last four years.The business has a 40% share in the 4D consortium, which secured a five-yearcapital delivery contract with Southern Water worth around ‚£750 million. Thecontract commenced on 1 April 2005 and performance continues to be good. Arounda half of the contract spend had been delivered by the end of 2006/07 anddelivery of outputs is in line with Southern Water's expectations. This plannedinvestment profile has resulted in a strong contribution from this contract inthe year and a natural reduction in contribution is expected in the forthcomingfinancial year.Earlier in the year, Scottish Water Solutions (SWS), a joint venture company inwhich UUCS is a key partner, was successful in winning a new ‚£760 millioncontract with Scottish Water to deliver a substantial part of its 2006-10capital investment programme. This follows on from a similar contract SWS heldwith Scottish Water covering the 2002-06 period and a good performance on thisinitial contract helped in achieving this contract win. In addition, there ispotential to secure further programme management related work, over the newcontract period, with an estimated value of ‚£240 million. UUCS' share of thispotential combined contract is estimated to be worth around ‚£150 million.Performance in relation to the contract KPIs, delivery of outputs and in thearea of health and safety is good.United Utilities acquired a 15% stake in the CKI-led consortium that purchasedthe North of England gas distribution network from National Grid in early 2005/06. UUCS also won a ‚£1.1 billion, eight-year contract to operate and maintainthe network, and manage the capital expenditure programme, on behalf of theconsortium, which commenced on 1 June 2005, and performance has been robust.The final proposals for the gas distribution price review were published inDecember 2006, covering the one-year period 1 April 2007 to 31 March 2008. Theproposals were accepted, with an allowed increase in revenue for the one-yearperiod of 8.7% in real terms. The next price control will cover the period 1April 2008 to 31 March 2013 and will be subject to detailed regulatoryconsultation throughout this year.UUCS won the first major meter installation contract to be outsourced withBritish Gas Trading in 2002 and the contract has around one year to run. Thebusiness is responsible for full meter provision and management services toapproximately 5 million gas and electricity customers in the north of Englandand Wales. It provides a 24 hour, 365 day operation covering meter replacement,emergency response services and customer requested work. It also operates adedicated operational call centre. By the end of the contract, it isanticipated that approximately 1.9 million gas meters and 800,000 electricitymeters will have been installed. The initial value of the contract was ‚£225million and this was subsequently increased to ‚£276 million. The contractcontinues to progress well.
OTHER ACTIVITIES
Other activities include United Utilities Property Solutions (UUPS), the property trading and management business of United Utilities PLC, which owns land and property assets worth in excess of ‚£100 million. UUPS' operating profit for the year was ‚£18.2 million.
UUPS has been consistently profitable for over five years and has a securedpipeline of work for the next few years. It is expected to continue to make apositive contribution, although, due to the nature of the business, profits areunlikely to follow a smooth profile.
FINANCIAL PERFORMANCE
Revenue and operating profit from continuing operations
Revenue from continuing operations rose 11% to ‚£2,323.0 million, principally reflecting growth in UUNW.
Group operating profit from continuing operations rose 13% to ‚£827.5 million.This increase was underpinned by a strong performance in UUNW. Group underlyingoperating profit from continuing operations** increased by 8% to ‚£816.0million.
Investment income and finance expense
Finance expense of ‚£308.4 million was ‚£44.5 million lower than thecorresponding period last year. This expense included a ‚£2.7 million fair valuegain on debt and derivative instruments, whereas the comparative period wasimpacted by a ‚£71.3 million fair value loss. This volatility in financingexpense fair value adjustments arises from the fact that, in order to hedge theinterest cost implicit in the regulatory contracts, the group fixes interestrates for the duration of each five-year review period, typically by swappingfixed rate debt to floating rate at the time of issue and then swapping back tofixed rate at the outset of each five-year regulatory contract period. IAS 39(Financial Instruments: Recognition and Measurement) limits the use of hedgeaccounting for these commercial hedges, thereby increasing the potentialvolatility in the income statement. However, this has no cash flow impact andthe effect of IAS 39 on the reported profit should substantially balance outover the 2005-10 period. Interest expense on swaps and debt under the fairvalue option was ‚£81.7 million compared with a ‚£55.4 million expense in theprior year.
Interest income and expenditure associated with the group's defined benefit pension schemes have been reclassified from employee benefits expense to investment income in the income statement as the directors believe this provides a fairer presentation of the nature of those income and costs. The effect of this reclassification was to increase investment income by ‚£25.1 million in 2006/07 and ‚£16.5 million in 2005/06, with a corresponding reduction in operating profit. There was no effect on profit before tax.
Investment income and finance expense before the impact of the aforementionedfair value adjustments and pension interest reclassification was ‚£279.7million, compared with ‚£285.0 million in the corresponding period last year.The decrease in underlying net finance expense reflects a decrease in thegroup's average net cost of borrowing from around 6.8% to 6.6%, offset by anincrease in average net debt of ‚£105.4 million.
Restructuring costs
During the year there was a total restructuring charge of ‚£10.6 million to theincome statement, of which ‚£4.5 million was recognised in the first six monthsof the year.Profit before taxationProfit before taxation increased by 52% to ‚£676.0 million. Adjusting for theimpact of restructuring costs, other one-off items and fair value movements inrespect of debt and derivative instruments, underlying profit before taxation**was ‚£561.4 million, 16% ahead of last year's result.
Taxation
The group recorded a current tax charge, relating to continuing operations, of‚£75.8 million during the period, compared with a tax charge of ‚£49.4 millionlast year. This increase is primarily a result of the increase in pre-taxprofits, coupled with the ongoing impact of the change in the tax treatment ofcapitalised revenue expenditure which took effect in 2005/06. The deferred taxcharge relating to continuing operations was ‚£99.5 million, reflecting therequirement to provide in full for deferred tax under IAS 12 (Income Taxes).This compares with a ‚£72.6 million charge in the corresponding period lastyear. The total tax charge relating to continuing operations is ‚£175.3 million.After adjusting for the share of results of the associated company of ‚£18.7million, the total effective tax rate of 26.7% represents a decrease on lastyear when the total tax rate was 27.4%. For the twelve month period to 31 March2007, the effective tax rate was lower than 30% principally as a result ofadjustments to the charge in respect of prior periods.
Discontinued operation
The Board announced in the group's interim results on 5 December 2006 theinitiation of a process to divest Vertex. The sale of Vertex was completed on26 March 2007 and confirmed on 27 March 2007, based on initial consideration of‚£217.5 million. The fair value of the net proceeds comprising cash, therepayment of intra-group debt and the retention of certain liabilities ofVertex was ‚£192.9 million. United Utilities recognised a pre-tax loss ondisposal of ‚£65.1 million, before the assumption of deferred contingentconsideration of ‚£13.5 million taking the total pre-tax loss on disposal to ‚£78.6 million.
In the period 1 April 2006 to 26 March 2007, Vertex's operating profit was ‚£ 15.0 million, compared with a ‚£6.0 million loss in the year ended 31 March 2006.
Earnings per share
Basic earnings per share, relating to continuing operations, increased by 51% to 57.1 pence.
Dividends per shareThe Board is proposing a final dividend in respect of the year ended 31 March2007 of 30.30 pence per ordinary share. Together with the interim dividend of14.63 pence per ordinary share, the total ordinary dividend relating to theyear is 44.93 pence per ordinary share. This is an increase of 2.4%, consistentwith the group's policy of growing dividends in line with inflation. Theinflationary increase is based on the Retail Price Index (RPI) element includedwithin the allowed regulated price increase in United Utilities Water for the2006/07 financial year (i.e. the movement in RPI between November 2004 andNovember 2005).
This final dividend will be paid on 24 August 2007 to shareholders on the register at the close of business on 29 June 2007. The ex-dividend date for the final dividend is 27 June 2007.
Cash and short-term deposits and borrowings
Cash and short-term deposits at 31 March 2007 were ‚£2,403.3 million which,inclusive of medium term committed bank facilities and net of short-term debt,results in total available liquidity of ‚£2,080.8 million. This gives UnitedUtilities an excellent pre-funded position for its capital investmentprogrammes. Net borrowings including derivatives at 31 March 2007 were ‚£4,125.7 million, adecrease of ‚£105.3 million compared with 31 March 2006. This decreaseprincipally reflects cash flow from operating activities and proceeds from thesale of Vertex, partly offset by expenditure on the regulated businesses'water, wastewater and electricity capital programmes and payment of interest,tax and dividends.Index-linked debt
In the year ended 31 March 2007, the group issued a total of ‚£710 million oflong-term, index-linked notes through its multi-issuer euro medium term noteprogramme, at maturities ranging from 37 to 50 years, and at real interestrates ranging from 1.38% to 1.85%. During the period, the group also drew downa 10-year loan provided by the European Investment Bank, in an amount of around‚£200 million in index-linked form, with an effective real interest rate ofapproximately 2.25%.Since the year-end, United Utilities Water has raised a further ‚£50 million ofindex-linked borrowings, with a term of 50.5 years, at a real interest rate of1.702%. United Utilities now has in place index-linked funding totalling ‚£1,410million in nominal terms. Including indexation of the principal, this fundingtotals ‚£1,446 million, supporting around 18% of the group's total regulatoryasset base, at an average real interest rate of approximately 1.8%.The principal amount of these borrowings will be adjusted to track movements inthe UK Retail Price Index (RPI). This form of liability is a good match for thegroup's regulated assets, which are also linked to RPI.
Underlying profit measures
In considering the results for the year, the directors have adjusted thegroup's statutory measures for fair value movements on debt and derivativeinstruments and those items identified as non-recurring. Operating profit andprofit before taxation from continuing operations are reconciled to underlyingoperating profit and underlying profit before taxation from continuingoperations as follows:Continuing operations UU UU Operating profit for the year ended 31 North Contract Other
March 2007 West Solutions activities Total ‚£m ‚£m ‚£m ‚£m ----- ----- ----- ----- Operating profit*** per published results 750.1 69.1 8.3 827.5 ----- ----- ----- ----- Restructuring costs 5.3 0.3 5.0 10.6 Other one-off items: Settlement claims**** (27.6) (3.0) - (30.6)
Ofwat transfer pricing fine***** 8.5 - -
8.5 ----- ----- ----- ----- Total adjustments (13.8) (2.7) 5.0 (11.5) ----- ----- ----- ----- Underlying operating profit 736.3 66.4 13.3 816.0 ----- ----- ----- ----- Continuing operations UU UU
Operating profit for the year ended 31 North Contract Other
March 2006 West Solutions activities Total ‚£m ‚£m ‚£m ‚£m ----- ----- ----- ----- Operating profit*** per published results 637.5 68.5 23.5 729.5 ----- ----- ----- ----- Restructuring costs 0.1 4.7 - 4.8 Other one-off items: Write off of IT systems 25.0 - - 25.0 Profit on disposals - (6.4) - (6.4) ----- ----- ----- ----- Total adjustments 25.1 (1.7) - 23.4 ----- ----- ----- ----- Underlying operating profit 662.6 66.8 23.5 752.9 ----- ----- ----- ----- Continuing operations Year YearProfit before taxation ended ended 31 31 March March 2007 2006 ----- -----
Profit before taxation per published 676.0
445.1results ----- -----
Adjustment for share of results of (18.7)
-
associated company (THUS Group plc) Operating profit adjustments (see above) (11.5)
23.4
Fair value (gain)/loss on debt and (2.7)
71.3
derivative instruments (note 3) Interest on swaps and interest on debt (81.7)
(55.4)
under fair value option (note 3)
----- -----
Underlying profit before taxation 561.4
484.4 ----- -----Notes*** Interest income and expenditure associated with the group's defined benefitpension schemes have been reclassified from employee benefits expense toinvestment income and finance expense in the income statement as the directorsbelieve this provides a fairer presentation of the nature of those income andcosts. This reclassification is detailed in note 2 of the preliminary resultsannouncement.**** During the period, United Utilities North West (UUNW) benefited from a ‚£27.6 million one-off credit and United Utilities Contract Solutions (UUCS)benefited from a ‚£3.0 million one-off credit. These credits are in respect ofsettlement of claims made by the group against contractors and from the end ofthe statutory period of potential claims against the group. Although suchclaims are a regular occurrence in the ongoing business of UUNW and UUCS, theseparticular claims were unusual in size.
*****A provision of ‚£8.5 million was made in respect of a proposed Ofwat fine relating to historical transfer pricing issues.
US delisting and deregistration
United Utilities (the "Company") announced on 30 May 2007, following the recentapproval of regulatory rule changes in the United States, that it intends topursue a delisting from the New York Stock Exchange (NYSE) and deregistrationunder the US Securities Exchange Act of 1934 (the "Exchange Act"), with the aimof reducing compliance costs. Annual savings of around ‚£2 million are expected.The Company has American Depositary Shares, evidenced by American DepositaryReceipts (ADRs), listed on the NYSE and Securities and Exchange Commission(SEC) registered debt securities. Each ADR represents two ordinary shares inthe Company. These US listings require SEC registration and the ongoingreporting and compliance obligations under both the Exchange Act and the 2002Sarbanes-Oxley Act incur significant costs. Deregistration will provide theCompany with exemption from meeting these US reporting and compliancerequirements.Subsequent to its deregistration, the Company intends to maintain its ADRfacility with JPMorgan Chase Bank N.A. as a Level I programme. This means thatthe Company's ADRs will be traded on the over-the-counter market. Accordingly,the Company has not arranged for the listing of its ADRs on another nationalsecurities exchange. The Company's ordinary shares will continue to trade onthe London Stock Exchange.The Company is subject to comprehensive UK reporting and governancerequirements and is committed to maintaining the highest standards of corporategovernance. It expects to continue to publish its Annual Report and Accountsand other documents and communications on its website at www.unitedutilities.com. -o0o-
Consolidated income statement
Year ended Year ended 31 March 31 March 2007 2006 ‚£m ‚£m Continuing operations Revenue 2,323.0 2,086.0 ----- ----- Other income 22.2 21.1 Employee benefits expense (280.3) (257.3) Depreciation and amortisation expense (288.5)
(282.8)
Infrastructure renewals expenditure (101.2) (70.6) Other operating costs (847.7) (766.9) ----- ----- Total operating expenses (1,495.5) (1,356.5) ----- ----- Operating profit 827.5 729.5 Investment income (note 2) 138.2 68.5 Finance expense (note 3) (308.4) (352.9) ----- ----- Investment income and finance expense (170.2) (284.4) ----- -----
Share of results of associated company 18.7
- ----- ----- Profit before taxation 676.0 445.1 Current taxation charge (note 4) (75.8)
(49.4)
Deferred taxation charge (note 4) (99.5) (72.6) ----- ----- Taxation (175.3) (122.0) ----- ----- Profit for the yearfrom continuing operations 500.7
323.1
Loss for the period fromdiscontinued operations (67.2) (114.9)(note 6) ----- ----- Profit for the year 433.5 208.2 ----- ----- Attributable to: Equity holders of the company 433.5 207.9 Minority interest - 0.3 ----- ----- 433.5 208.2 ----- -----
Earnings per share from continuing anddiscontinued
operations (note 5) Basic 49.4p 24.3p Diluted 49.2p 24.2p
Earnings per share from continuing operations (note
5) Basic 57.1p 37.8p Diluted 56.9p 37.6p Dividend per ordinary share (note 7) 44.93p 43.87pConsolidated balance sheet 31 March 31 March 2007 2006 ‚£m ‚£m Assets Property, plant and equipment 8,894.6 8,543.9 Goodwill 5.0 153.1 Other intangible assets 115.5 236.2 Investments 201.8 170.7 Trade and other receivables 21.6 22.0 Retirement benefit surplus 62.2 19.3 Derivative financial instruments 15.2 40.8 ----- ----- Non-current assets 9,315.9 9,186.0 ----- ----- Inventories 24.3 28.2 Trade and other receivables 418.2 490.1 Investments 38.5 29.7 Cash and short-term deposits 2,403.3 1,513.5 Derivative financial instruments 61.0 48.9 ----- ----- Current assets 2,945.3 2,110.4 ----- ----- Total assets 12,261.2 11,296.4 ----- ----- Liabilities Trade and other payables (414.3) (383.7) Borrowings (4,854.9) (5,081.1) Deferred tax liabilities (1,550.8) (1,426.6) Provisions (30.4) (16.6) Derivative financial instruments (173.5) (57.6) ----- ----- Non-current liabilities (7,023.9) (6,965.6) ----- ----- Trade and other payables (749.2) (855.1) Borrowings (1,509.5) (619.1) Current income tax liabilities (168.0) (112.8) Provisions (8.5) (36.5) Derivative financial instruments (67.3) (76.4) ----- ----- Current liabilities (2,502.5) (1,699.9) ----- ----- Total liabilities (9,526.4) (8,665.5) ----- ----- Total net assets 2,734.8 2,630.9 ----- -----
Capital and reserves attributable to equity holders of
the company Share capital 879.8 875.4 Share premium account 1,421.9 1,407.8 Revaluation reserve 158.8 158.8 Treasury shares (0.3) (0.3) Cumulative exchange reserve (4.2) 2.2 Retained earnings 278.8 185.3 ----- ----- Shareholders' equity 2,734.8 2,629.2 Minority interest - 1.7 ----- ----- Total equity 2,734.8 2,630.9 ----- -----
Consolidated cashflow statement
Year ended Year ended 31 March 31 March 2007 2006 Continuing operations ‚£m ‚£m Operating activities Cash generated from operations 1,035.8 997.2 Interest paid (385.3) (345.0) Interest received and similar income 111.6 66.2 Tax paid (35.2) (2.5) ----- ----- Net cash generated from operating 726.9 715.9 activities (continuing operations) Net cash generated from/(used in) 28.4 (4.5) operating activities (discontinued
operations) ----- ----- 755.3 711.4 Investing activities Disposal of subsidiaries 206.4 - Purchase of investments - (85.3) Purchase of property, plant and equipment (659.3) (598.1) Purchase of other intangible assets (5.9) (31.6) Proceeds from sale of property, plant and 34.3 29.1 equipment Financial restructuring of joint ventures - 13.2 ----- ----- Net cash used in investing activities (424.5) (672.7) (continuing operations) Net cash used in investing activities (20.7) (106.5) (discontinued operations) ----- ----- (445.2) (779.2) Financing activities Proceeds from issue of ordinary shares 18.5 528.3 Proceeds from structured financing 81.4
- Proceeds from borrowings 1,700.8 943.8 Repayment of borrowings (825.4) (472.6) Dividends paid to equity holders of the (387.3) (344.7) company ----- ----- Net cash generated from financing 588.0 654.8 activities (continuing operations) Net cash used in financing activities (7.7) (0.7) (discontinued operations) ----- ----- 580.3 654.1 Effects of exchange rate changes 6.4 (8.0) (continuing operations) ----- ----- Net increase in cash and cash equivalents 896.8 690.0 - continuing operations Net decrease in cash and cash equivalents - (111.7) - discontinued operations ----- ----- 896.8 578.3 ----- ----- Cash and cash equivalents at beginning of 1,443.9 865.6 the year ----- ----- Cash and cash equivalents at end of the 2,340.7 1,443.9 year ----- -----
Consolidated statement of recognised income and expense
Year ended Year ended 31 March 31 March 2007 2006 ‚£m ‚£m Actuarial gains on defined benefit pension schemes 46.5 119.2 Revaluation of investments 8.9 14.6 Fair value gain/(loss) on cashflow hedges 2.8 (0.9) Foreign exchange adjustments (6.4) (1.5) Tax on items taken directly to equity (14.8) (35.6) ----- ----- Net income recognised directly in equity 37.0 95.8 Profit for the year 433.5 208.2 ----- ----- Total recognised income and expense for the year 470.5 304.0 ----- ----- Attributable to: Equity holders of the company 470.5 303.7 Minority interest - 0.3 ----- ----- 470.5 304.0 ----- -----Reconciliation of movements in consolidated equity Year ended Year ended 31 March 31 March 2007 2006 ‚£m ‚£m Total net income recognised for the year 470.5 304.0 Dividends (387.3) (344.2) New share capital issued 18.5 528.3 Other movements 2.2 1.9 ----- ----- Net increase in equity for the year 103.9 490.0 Opening equity 2,630.9 2,140.9 ----- ----- Closing equity 2,734.8 2,630.9 ----- ----- Attributable to: Equity holders of the company 2,734.8 2,629.2 Minority interest - 1.7 ----- ----- 2,734.8 2,630.9 ----- -----
Cash generated from continuing operations
Year ended Year ended 31 March 31 March 2007 2006 ‚£m ‚£m Profit before taxation 676.0 445.1 Adjustment for investment income and finance 170.2 284.4expense
Adjustment for share of results of associated (18.7)
-company ----- ----- Operating profit 827.5 729.5 Adjustments for: Depreciation of property, plant and equipment 277.5
248.6
Amortisation of intangible assets 11.0
34.2
Profit on disposal of property, plant and equipment (5.8) (4.7) Decrease in inventories 3.9 8.7 Increase in trade and other receivables (75.6)
(166.2)
(Decrease)/increase in provisions and payables (2.7) 147.1 ----- ----- Cash generated from continuing operations 1,035.8 997.2 ----- -----
Segmental analysis by class of business
Continuing operations Year ended Year ended 31 March 31 March 2007 2006 Revenue ‚£m ‚£m United Utilities North West 1,636.2 1,502.9 United Utilities Contract Solutions 742.2 654.5 Other activities 53.0 39.9 ----- ----- 2,431.4 2,197.3 Inter-segment revenue (108.4) (111.3) ----- ----- 2,323.0 2,086.0 ----- -----Continuing operations Year ended Year ended 31 March 31 March 2007 2006 Operating profit ‚£m ‚£m United Utilities North West 750.1 637.5 United Utilities Contract Solutions 69.1 68.5 Other activities 8.3 23.5 ----- ----- 827.5 729.5 ----- -----
During the year, for management purposes, the group's business was divided intoUnited Utilities North West, United Utilities Contract Solutions and Vertex,which is disclosed within discontinued operations (see note 6). These divisionsform the basis on which the above primary segment information is reported.
NOTES
1. Basis of preparation
The results for the year ended 31 March 2007, have been prepared on the basisof accounting policies consistent with those set out in the annual report toshareholders for the year ended 31 March 2006.The financial information set out in this statement relating to the year ended31 March 2007 does not constitute statutory accounts for that period as definedin section 240 of the Companies Act 1985. Statutory accounts for 2007 will bedelivered to the Registrar of Companies following the company's annual generalmeeting. The auditors have reported on those accounts; their report isunqualified and does not contain a statement under section 237(2) or (3) of theCompanies Act 1985.The financial information set out in this statement relating to the year ended31 March 2006 does not constitute statutory accounts for that period. Fullstatutory accounts of United Utilities PLC in respect of that financial periodwhich received an unqualified audit opinion and did not contain a statementunder either section 237(2) or (3) of the Companies Act 1985, have beendelivered to the Registrar of Companies.2. Investment income Year ended Year ended 31 March 2007 31 March 2006 ‚£m ‚£m Interest receivable 82.2 34.9
Preference dividends receivable -
0.3
Foreign exchange gains on forward contracts 30.9
16.8 Net pension interest income 25.1 16.5 ----- ----- 138.2 68.5 ----- -----The group has changed its presentation of interest income and expenditureassociated with its defined benefit pension schemes. The amounts werepreviously disclosed within employee benefits expense in arriving at operatingprofit, but have been reclassified to investment income in the income statementas the directors believe this provides a fairer presentation of the nature ofthe income and costs. Corresponding amounts for 2006 have been re-presented
accordingly.3. Finance expense Year ended Year ended 31 March 2007 31 March 2006 ‚£m ‚£m Interest payable (311.1) (281.6) Fair value gain/(loss) on debt and derivative 2.7 (71.3)instruments ----- ----- (308.4) (352.9) ----- -----
The group has changed its presentation of interest on swaps and interest ondebt under the fair value option. The amounts were previously disclosed withininterest payable on bank borrowing but have been reclassified to the fair valuemovement on debt and derivative instruments line as the directors believe thisprovides a fairer presentation of the nature of the interest. Correspondingamounts for 2006 have been represented accordingly.The group follows a policy of economic hedging its interest rate and currencyexposures, with particular regard to the five-year regulatory period. Includingthe interest element of swaps and interest on debt under the fair value optionwithin interest payable, as opposed to within the fair value movement on debtand derivative instruments, and adjusting for the reclassification of interestincome and expenditure associated with the group's defined benefit pensionschemes, would give an underlying cost of net borrowings of ‚£279.7 million
(2006: ‚£285.0 million): Year ended Year ended 31 March 2007 31 March 2006 ‚£m ‚£m Finance expense (308.4) (352.9)
Fair value (gain)/loss on debt and derivative (2.7)
71.3instruments Add back interest on swaps and debt under fair (81.7) (55.4)value option ----- ----- Underlying interest payable (392.8) (337.0) Investment income 138.2 68.5 Adjustment for net pension interest income (25.1) (16.5) ----- ----- Underlying cost of net borrowings (279.7) (285.0) ----- -----4. Taxation Year ended Year ended 31 March 2007 31 March 2006 ‚£m ‚£m Current tax: UK corporation tax (123.6) (60.2) Foreign tax (3.1) (2.3) Prior year 50.9 13.1 ----- ----- (75.8) (49.4) Deferred tax: Current year (79.7) (64.6) Prior year (19.8) (8.0) ----- ----- (99.5) (72.6) ----- ----- Total tax charge for the year (175.3) (122.0) ----- -----5. Earnings per share
Basic earnings per share and diluted earnings per share are calculated by dividing profit for the year attributable to equity holders of the company by the following weighted average number of shares in issue:
Basic Diluted million million Year ended 31 March 2007 876.8 880.6 Year ended 31 March 2006 853.9 858.4The difference between the weighted average number of shares used in the basicand the diluted earnings per share calculations represents those ordinaryshares deemed to have been issued for no consideration on the conversion of allpotential dilutive ordinary shares in accordance with IAS 33 (Earnings PerShare).
The basic and diluted earnings per share for the year are as follows:
Year ended Year ended 31 March 2007 31 March 2006
From continuing and discontinued operations
Basic 49.4p 24.3p Diluted 49.2p 24.2p From continuing operations Basic 57.1p 37.8p Diluted 56.9p 37.6p 6. Discontinued operations
On 26 March 2007 the group sold the Vertex business as part of the declared strategy of concentrating on its core skills in managing water, wastewater, electricity and gas networks. The purchaser was a consortium of US-based private equity firms led by Oak Hill Capital Partners and also including GenNx360 and Knox Lawrence International.
The results of Vertex have been disclosed within discontinued operations in theconsolidated income statement. The detailed trading results and loss ondisposal of Vertex for the period ended 26 March 2007 and the loss for the yearended 31 March 2006 are shown below. Period ended Year ended 26 March 31 March 2007 2006 ‚£m ‚£m Revenue External sales 303.4 300.8 Intra-group sales 89.5 119.6 ----- ----- Total revenue 392.9 420.4 ----- ----- Depreciation and amortisation (14.2) (37.5) Other operating expenses (363.7) (388.9) ----- ----- Operating expenses (377.9) (426.4) ----- ----- Operating profit/(loss) 15.0 (6.0)
Investment income and finance expense 4.2
0.2 ----- ----- Profit/(loss) before taxation* 19.2 (5.8) Taxation on (profit)/loss (5.9) 1.7 ----- ----- Profit/(loss) for the period from discontinued 13.3 (4.1)operations
Loss on disposal before assumption of deferred (65.1)
-contingent consideration
Assumption of deferred contingent consideration (13.5)
- ----- -----
Loss on disposal of discontinued operations (78.6)
-
Taxation on loss on disposal of discontinued (1.9)
-operations ----- ----- Total loss for the period from discontinued (67.2) (4.1)operations ----- -----
* Profit/(loss) before taxation includes profit generated from intercompany trading of ‚£8.7 million (2006: ‚£13.5 million).
Your Communications
On 26 February 2006, the group sold the Your Communications business as part ofthe declared strategy of a progressive exit from the telecoms market. Thepurchaser was THUS Group plc and the consideration comprised an initialconsideration of 391,532,852 ordinary shares with a market value of 15.5 penceeach (in aggregate ‚£60.7 million), together with the option to acquire up to afurther 4.8 per cent of shares in THUS Group plc dependent upon the futureshare price of THUS Group plc. On 1 February 2007, the group received a further2,274,701 shares with a value of ‚£4.3 million in THUS Group plc as a result ofthe vesting of part of this option. This investment, in listed securities,presents the group with the opportunity for return through dividend income andtrading gains.
The results of Your Communications, which have been disclosed within discontinued operations in the consolidated income statement comparatives as required by IFRS 5, are as follows:
Period ended 26 February 2006 ‚£m Revenue External sales 163.6 Intra-group sales 11.8 ----- Total revenue 175.4 Depreciation and amortisation (18.1) Other operating expenses (162.2) ----- Operating expenses (180.3) ----- Operating loss (4.9) Investment income and finance expense (12.7) ----- Loss before taxation (17.6) Taxation on loss 8.6 ----- Loss for the period from discontinued (9.0)operations Adjustment to value before taxation
(147.7)
Taxation on adjustment to value
31.6 ----- Net adjustment to value (116.1) ----- Loss on disposal of discontinued (9.1)operations
Taxation on loss on disposal of
23.4discontinued operations -----
Net profit on disposal after taxation
14.3 ----- Total loss for the period from (110.8)discontinued operations -----7. Dividends Year ended Year ended 31 March 2007 31 March 2006 ‚£m ‚£m
Dividends relating to the year comprise:
Interim dividend 128.3 124.8 Final dividend 266.6 259.0 ----- ----- 394.9 383.8 ----- ----- Year ended Year ended 31 March 2007 31 March 2006 ‚£m ‚£m
Dividends deducted from shareholders' equity:
Interim dividend 128.3 124.8 Final dividend 259.0 219.4 ----- ----- 387.3 344.2 ----- -----The final dividend of 30.30 pence per ordinary share will be paid on 24 August2007 to shareholders on the register at the close of business on 29 June 2007.The ex-dividend date for the final dividend is 27 June 2007.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This preliminary results statement contains certain forward-looking statementswith respect to the financial condition, results of operations and business ofthe company.Statements that are not historical facts, including statements about thecompany's beliefs and expectations, are forward-looking statements within themeaning of the US Private Securities Litigation Reform Act of 1995. Words suchas "expects", "anticipates", "intends", "plans", "believes", "seeks","estimates", "potential", "reasonably possible" and variations of these wordsand similar expressions are intended to identify forward-looking statements.These statements are based on current plans, assumptions, estimates andprojections which may be significantly varied, and therefore investors shouldnot rely on them. Forward-looking statements involve known and unknown risksand speak only as of the date they are made, and except as required by therules of the UK Listing Authority and the London Stock Exchange, the companyundertakes no obligation to update publicly any of them in the light of newinformation or future events.Forward-looking statements involve inherent risks and uncertainties. UnitedUtilities PLC cautions investors that a number of important factors could causeactual results to differ materially from those anticipated or implied in anyforward-looking statements. These factors include: (i) the effect of, andchanges in, regulation and government policy; (ii) the effects of competitionand price pressures; (iii) the ability of the company to achieve cost savingsand operational synergies; (iv) the ability of the company to service itsfuture operations and capital requirements; (v) the timely development andacceptance of new products and services by the company; (vi) the effect oftechnological changes; and (vii) the company's success at managing the risks ofthe foregoing. The company cautions that the foregoing list of importantfactors does not address all the factors that could cause the results to differmaterially.
UNITED UTILITIES PLCRelated Shares:
United Utilities