Interim Management Statement

United Utilities Group PLC 30 January 2014 UNITED UTILITIES INTERIM MANAGEMENT STATEMENT United Utilities today issues an interim management statement covering theperiod from 1 October 2013. Trading update Current trading is in line with the group's expectations. Customer service iscontinuing to improve, as measured by Ofwat's service incentive mechanism,underpinned by good operational and environmental performance. We continue tonarrow the gap to sector leading performance. Revenue has increased, reflectingthe regulated price change for 2013/14. This revenue increase is only partlyoffset by higher depreciation and other operating costs, as the companycontinues to tightly manage its cost base. United Utilities continues to make good progress on its regulatory capitalinvestment programme and remains on track to invest at least £800 million inits asset base in 2013/14, delivering benefits for customers, the environmentand the regional economy. We intend to undertake transitional investment in2014/15 to de-risk key projects due to be delivered in the next regulatoryperiod. In light of this, expenditure on our 2014/15 capital investmentprogramme, including spend relating to private sewers, is expected to besimilar to 2013/14. Financial position United Utilities' financial position remains robust and its regulatory capitalasset base continues to grow, reflecting high levels of capital investment andthe impact of RPI inflation. Group net debt is slightly higher compared withthe position at 30 September 2013. This principally reflects expenditure on theregulatory capital investment programme and payments in relation to interestand taxation, largely offset by operational cash flows and fair value gains onthe group's debt and derivative instruments. Gearing remains stable andcomfortably within Ofwat's assumed range (55% to 65% net debt to regulatorycapital 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 £500 million term loan with the EuropeanInvestment 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 viaa number of tranches within the next 12 months. Regulatory developments On 2 December 2013, we submitted a business plan to Ofwat covering the 2015-20period. The plan would allow our customers to benefit from below inflationchanges to average household bills for the decade to 2020, coupled withsubstantial capital investment to maintain and improve services, as well asproviding significant benefits to the environment and the local economy.Development of the plan included extensive research, involving around 27,000customers and other stakeholders. On 19 December 2013, Ofwat published a revised price review process andtimetable. As part of this process, on 27 January 2014, Ofwat published riskand reward guidance for the industry. This included guidance on certainfinancial 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 UtilitiesGroup PLC and United Utilities Water PLC with effect from 1 November 2013 andis a member of the Audit Committee and the Nomination Committee. Mark is GroupChief Executive at Barratt Developments PLC, a position that he has held since2006. Outlook United Utilities is confident of delivering a good underlying financialperformance for the year ending 31 March 2014 and is ahead of schedule inmeeting its 2010-15 regulatory outperformance targets. We are encouraged by ouroperational and customer service performance improvements and believe we canimprove further. We will continue to actively engage with our regulators, aheadof the draft and final determinations from Ofwat later this year. In line with its usual practice, United Utilities intends to issue a pre-closetrading 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 4200Communications This announcement is also available at: http://corporate.unitedutilities.com/investors.aspx