Prelims results 2007

05 June 2007

Focus on core skills delivers performance improvements

Sale process initiated for electricity distribution assets

1 - Electricity distribution business treated as a continuing operation in these results
2 - 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 tax2 up 16% to £561 million
United Utilities North West segmental operating profit increased by 18% to £750 million, with underlying operating profit2 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 utility infrastructure.  This strategic focus has helped deliver operational and service improvements.  We have restructured our management organisation, around separate asset operator and asset owner functions, to sharpen our commercial focus and help deliver and sustain further performance improvements.

"We are initiating a sale process for our electricity distribution assets, with a view to maximising shareholder value.  Our water business represents over 85 per cent of the group's regulatory asset value and we believe that shareholders' interests are best served by our focusing on the much larger water asset base, which offers significantly more growth potential than our electricity assets.

"We expect to return to shareholders the net equity proceeds from the proposed sale.  Furthermore, we intend 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, adjusted to take account of the manner in which the net equity proceeds are 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 started at 9.00 am on Tuesday, 5 June 2007, at the City Presentation Centre, 4 Chiswell Street, London, EC1Y 4UP.  The presentation 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 days following 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<GO>, where a multimedia version will be available.

The full announcement and presentation in PDF format are available below:

Prelims results 2007
Prelims results presentation 2007
Interviews with Philip Green, Chief Executive, and Tim Weller, Chief Financial Officer, in video/audio and text formats are available on http://w3.cantos.com/07/uu-705-20hr6/.