United Utilities Regulatory News (UU.)

UNITED UTILITIES GROUP PLC - Interim Management Statement

PR Newswire

London, January 29

United Utilities Group PLC

30 January 2013

United Utilities today issues an interim management statement covering theperiod from 1 October 2012.

Trading update

Current trading is in line with the group's expectations.

Revenue has continued to increase at a rate slightly below the allowedregulated price rise for 2012/13, as expected, reflecting the on-going impactof a tough economic climate on commercial volumes. Depreciation, power andother costs have also increased as expected, largely offsetting the increase inrevenue. The company continues to make good progress on its regulatory capitalinvestment programme and remains on track to invest around £750 million in itsasset base in 2012/13.

Improving operational performance and customer service continue to be toppriorities for United Utilities Water (UUW).

The business met its regulatory leakage target for the sixth consecutive yearin 2011/12 and remains on course to meet its target for 2012/13. Waterresources in the region are robust, with reservoirs currently around 90% full.

UUW's significant progress on Ofwat's customer service measure, the serviceincentive mechanism (SIM), in 2011/12 has continued into 2012/13.Encouragingly, our qualitative SIM results for quarter three 2012/13 havehelped improve our ranking. Building on the performance achieved in the firsthalf of 2012/13, UUW has now moved up to 12th position out of 21 watercompanies on this qualitative measure for the financial year to date. UUW was16th in 2011/12. Overall SIM performance for 2012/13, including ourquantitative SIM score, will be published, along with the industry's results,after the financial year end.

In addition, the number of customer complaints UUW received via the ConsumerCouncil for Water (CCW) has reduced further in the three months to December2012 and, importantly, there have been no customer complaints requiringinvestigation by the CCW in the first nine months of the 2012/13 financialyear. This improved performance will positively contribute to Ofwat'squantitative SIM assessment.

Financial position

United Utilities' financial position remains robust and its regulatory capitalasset base continues to grow, reflecting continued high levels of capitalinvestment and positive RPI inflation. Group net debt is similar to theposition at 30 September 2012. This principally reflects expenditure on theregulatory capital investment programme and payments in relation to interestand tax, offset by operational cash flows. Gearing remains in the middle ofOfwat's assumed range (55% to 65% net debt to regulatory capital value),supporting a solid A3 credit rating for UUW.

Regulatory developments

We were pleased to play an active role in constructive discussions with Ofwat,which led to the publication of revised `Section 13' licence modificationproposals on 21 December 2012. These revised proposals focused morespecifically on the changes required to facilitate the forthcoming price reviewin 2014 and reduced uncertainty for investors and customers, compared with theearlier proposals issued on 26 October 2012. UUW confirmed its acceptance ofthese revised proposals on 18 January 2013.

On 28 January 2013, Ofwat published an industry consultation paper in respectof the framework and approach for the 2015-20 price control period, withresponses required by 26 March 2013. UUW is currently assessing thisconsultation and will provide its response to Ofwat in due course.

Inflation

Concluding a consultation initiated in October 2012, the UK Office for NationalStatistics published its recommendation on 10 January 2013 to continue with theexisting methodology for calculating RPI inflation, which has reduceduncertainty for investors.

Outlook

United Utilities is confident of delivering a good underlying financialperformance for the year ending 31 March 2013 and continues to be on track tomeet its 2010-15 regulatory outperformance targets. The company remainsstrongly focused on building on its recent operational and customer serviceprogress and sees plenty of scope to deliver further improvements.

In line with its usual practice, United Utilities intends to issue a pre-closetrading update on 21 March 2013.

United Utilities contacts:

Ed Orlebar / Michelle Clarke, Tulchan Communications +44 (0) 20 7353 4200