United Utilities Regulatory News (UU.)

United Utilities Group PLC 24 September 2014 UNITED UTILITIES TRADING UPDATE Current trading is in line with the group's expectations for the six monthsending 30 September 2014. Customer service continues to improve, underpinned bygood operational and environmental performance. The company remains confidentof delivering its 2010-15 regulatory outperformance targets. Operational performance United Utilities has delivered significant improvements in customer serviceover the last few years and we continue to make progress, supported by afurther reduction in customer complaints. Our asset serviceability performancehas been good, with all four major asset classes rated either `stable' or`improving'. This good performance has been recognised in Ofwat's draftdeterminations in August, with no penalties relating to the service incentivemechanism (SIM) or asset serviceability. This is underpinned by top quartileoperational performance, as measured through Ofwat's key performance indicatorsand the Environment Agency's assessment. Capital delivery Our capital delivery performance in this regulatory period has been good andplanned investment is continuing at high levels, as we invest to maintain andimprove services for customers and deliver further environmental benefits. Thiscapital programme also makes a significant contribution to the regionaleconomy, providing new investment and supporting employment. Regulatory capitalinvestment for 2014/15, including infrastructure renewals expenditure, isexpected to be similar to the high level of investment we made in 2013/14. Financials Underlying operating profit for the first half of 2014/15 is anticipated to besimilar to the first half of 2013/14. This principally reflects an allowedregulated price rise offset by the impact of the previously announced specialcustomer discount and the expected increase in depreciation and other costpressures, including bad debt. The underlying net finance expense for the firsthalf of 2014/15 is anticipated to be slightly lower than the first half of lastyear, primarily reflecting the impact of lower RPI inflation on ourindex-linked debt. As the company continues to invest in its asset base, group net debt at 30September 2014 is expected to be slightly higher than the position at 31 March2014. This principally reflects regulatory capital expenditure, payment of the2013/14 final dividend and payments in relation to interest and taxation,largely offset by operational cash flows. Gearing remains well within Ofwat's2010-15 assumed range of 55% to 65% net debt to regulatory capital value. Thissupports a solid A3 credit rating for United Utilities Water (UUW). The grouphas financing headroom into 2016. Accounting change From 1 April 2014, a change under IFRS11 impacts the accounting treatment ofthe group's investment in Tallinn Water (moving from proportional consolidationto equity accounting). As a result, the prior year financial statements will bere-presented to reflect this, reducing underlying operating profit for thefirst half of 2013/14 by around £4 million, but with minimal impact onunderlying profit before tax. Price review 2014 As part of the 2014 price review process, on 29 August 2014, Ofwat publishedits draft determinations for UUW covering the period 1 April 2015 to 31 March2020. UUW is engaged in detailed dialogue with Ofwat, alongside its on-goingdiscussions with other stakeholders, with particular focus on the wholesaletotal expenditure differences between UUW's business plan and Ofwat's draftdeterminations. UUW is scheduled to submit its response to the regulator by 3October 2014. Ofwat is expected to publish final determinations on 12 December2014. United Utilities will announce its half year results on 26 November 2014. United Utilities contacts: Gaynor Kenyon, Corporate Affairs Director +44 (0) 7753 622282 Darren Jameson, Head of Investor Relations +44 (0) 7733 127707 Peter Hewer/Martin Pengelley, Tulchan Communications +44 (0) 20 7353 4200