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United Utilities PLC (UU.)

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Tuesday 03 June, 2008

United Utilities PLC

Final Results


                 STRONG OPERATIONAL AND FINANCIAL PERFORMANCE                  

                          CAPITAL PROGRAMME ON TRACK                           

Preliminary results* for the year ended 31 March 2008

£m (except dividends)                           Year ended           %    
                                                                   Change 
                                           31 March    31 March           
                                             2008        2007             
                                                                          
Operating profit from continuing             663.2       642.1      +3%   
operations                                                                
                                                                          
Underlying operating profit from             677.2       630.6      +7%   
continuing operations**                                                   
                                                                          
Profit before tax from continuing            478.3       502.3      -5%   
operations                                                                
                                                                          
Underlying profit before tax from            475.6       407.5      +17%  
continuing operations**                                                   
                                                                          
Total dividends per ordinary share           46.67       44.93     +3.9%  
(pence)                                                                   

Basic earnings per share (pence)                     Year ended           
                                                                          
                                           31 March 2008   31 March 2007  
                                                                          
Continuing operations                           47.3            40.9      
                                                                          
Continuing and discontinued operations         103.3            49.4      

*Contribution from United Utilities Electricity, facilities management
operations, industrial liquid waste operations and telecoms and the profits or
losses on disposal of each of these operations are treated as discontinued
operations in these results. Results from continuing operations for the year
ended 31 March 2007 have therefore been re-presented

**Underlying operating profit from continuing operations and underlying profit
before tax from continuing operations are defined in the underlying profit
measure table

  * Underlying operating profit** up 7% to £677 million
   
  * Completed sale of United Utilities Electricity for a substantial premium to
    its regulatory asset value
   
  * Proposed £1.5 billion return of value to shareholders scheduled for August
   
  * Capital expenditure in regulated activities up 45% to £826 million and in
    line with regulatory assumptions
   
  * Focus on core skills delivers operational improvements: outperformed
    tougher leakage target
   
  * Enhanced liquidity: pre-funded for capital investment programmes through to
    2010
   
  * Extended major outsourcing contracts with Southern Water and British Gas
    Trading
   
Commenting, Philip Green, Chief Executive, said:

"We have had a successful year. We sold United Utilities Electricity for a
substantial premium to its regulatory asset value, addressed the portfolio and
capital structure of the group and announced a new dividend policy. We remain
on course to return £1.5 billion to shareholders and I am pleased to report
another good set of financial results.

"We are on track to deliver our regulatory capital programme and have spent £
826 million on our infrastructure during the year. Our focus on improving
operational performance is delivering results. We have improved the level of
customer service we are providing and for the second year running have achieved
Ofwat's leakage target.

"We are confident of delivering a strong financial performance over the
remainder of this regulatory period and continued investment in our assets will
help to raise environmental standards further and improve the service we offer
to customers."

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 - Head of Investor Relations            +44 (0) 7733 127707     
                                                                               
Dominic Fry/Tom Murray - Tulchan Communications        +44 (0) 20 7353 4200    

A presentation to investors and analysts starts at 9.00 am on Tuesday 3 June
2008, at the Auditorium, Deutsche Bank, Winchester House, 1 Great Winchester
Street, London, EC2N 2DB. The presentation can be accessed via a one-way listen
in conference call facility by dialling: +44 (0) 20 7162 0025. A recording of
the call will be available for seven days following 3 June 2008 on +44 (0) 20
7031 4064, access code 795933.

The presentation, with further information on United Utilities, will be
available at 9.00 am on the day at: http://www.unitedutilities.com.

CHIEF EXECUTIVE'S REVIEW

Financial performance

United Utilities has delivered a good financial performance in the year ended
31 March 2008. Underlying profit before tax** increased by 17% to £476 million
and underlying operating profit** was up by 7% to £677 million.

The group is pre-funded for its capital investment programme through to 2010.
We recently improved our liquidity position by enhancing our committed
medium-term bank facilities. This provides us with increased flexibility in
terms of when and how we raise further debt finance.

Our regulated activities have delivered strong growth in the period with
operating profit up 5%, an increase of 8% on an underlying basis**. This growth
primarily reflects the regulated price increase which supports high levels of
essential investment in our infrastructure. This investment enables us to
deliver better service for customers and make environmental improvements.

Capital investment in our regulated water and wastewater operations, including
infrastructure renewals expenditure, amounted to £826 million during the year.
This is 45% higher than last year as we are now in the peak phase of our
current capital expenditure programme. We have agreed a new strategy with Ofwat
for processing and disposing of sewage sludge, based on increasing capacity at
an existing site rather than developing a new site. Our capital investment
programme has been re-profiled to reflect this agreement and we are now broadly
in line with regulatory assumptions. This new strategy will reduce our carbon
footprint compared with the original solution.

Our business improvement initiatives are delivering cost savings and we remain
confident of delivering our regulatory outputs and meeting our efficiency
targets across this price review period.

In our non-regulated activities, underlying operating profit** was slightly
higher than the prior year reflecting the first time inclusion of the results
of the outsourcing contract with Electricity North West. We have a strong order
book worth over £6 billion in revenue and we were pleased to announce recently
that we have extended the contract with Southern Water through to March 2015.
In January we also agreed an 18 month extension to our metering contract with
British Gas Trading to June 2010. In addition, we have recently been selected
as preferred bidder by Townsville City Council in Australia to undertake its
water supply upgrade project.

Sale of United Utilities Electricity, capital structure and £1.5 billion return
to shareholders

Following the sale of United Utilities Electricity (UUE) and the review of the
group's capital structure, as outlined in our half year results published on 29
November 2007, the Board intends to return to shareholders a total of £1.5
billion or 170 pence per share. We expect to issue a circular that contains
further details of the corporate restructuring and the proposed £1.5 billion
return on 6 June. The return of value to shareholders is scheduled for August
2008. The Board is targeting a credit rating of A3 for United Utilities Water
PLC and, following the return of value, is anticipating a group net debt to
regulatory capital value gearing level towards the upper end of Ofwat's range
(55% to 65% for the 2005-10 price control period) by 2010.

Operational performance

Improving operational performance is an integral part of our vision to be a
world class operator of utility infrastructure. We continue to make good
progress. The business outperformed its 2007/08 leakage target of 465
megalitres per day, a tougher target than the previous year, underlining our
commitment to higher performance. We are also pleased to report a 60% reduction
in the number of serious pollution incidents compared with two years ago. We
have continued to remove properties from our sewer flooding register and have
now achieved a net reduction of 32% over the last two years and remain on
course to achieve our medium term target of a 50% reduction.

Since 2005, we have closed the operational efficiency gap to the most efficient
water companies and this has been reflected in Ofwat's recent relative
efficiency assessments. Improving customer service is a key area for us and
since 2005 we have markedly improved customer satisfaction levels from below
50% to 73%. We believe there are more improvements to come.

Climate change and sustainability

United Utilities takes a long-term view of its operations and we see mitigation
of and adaptation to climate change as key elements of our future plans. We
were pleased to note Ofwat's increased focus on climate change and
sustainability in its recently published methodology document relating to the
next price review.

Our carbon action plan is progressing well through schemes which, in addition
to helping the environment, also contribute to improving the efficiency of the
group. These schemes include increasing the efficiency of our pumping stations
and using our wastewater processes to generate electricity and heat.

Adaptation to climate change and flooding risk is now of increasing importance
and will influence investment in the water industry in both the short and long
term. We are actively involved in deliberations with our regulators ahead of
the next price review and would expect significant levels of capital investment
to continue beyond 2010.

Outlook

We are building on the performance improvements already achieved supported by
our focus on core skills. The key elements of our strategy are to continue to
improve operational performance, successfully execute our capital investment
programme and meet our efficiency targets, prepare for the next water price
review and deliver our non-regulated growth strategy. The Board expects United
Utilities to continue to deliver a strong financial performance over the
remainder of this regulatory period, underpinned by allowed price rises to fund
substantial investment in our networks.

OPERATING PERFORMANCE

REGULATED ACTIVITIES

Financial highlights

  * Regulated revenue increased by 7% to £1,416 million
   
  * Regulated operating profit increased by 5% to £612 million, with underlying
    operating profit** up 8%
   
Revenue from regulated activities increased by 7% to £1,416 million,
principally as a result of an allowed price increase of 8.3% (including
inflation), offset to a small extent by lower water consumption and trade
effluent volumes and retrospective claims by unmetered customers. The increase
in price supports the investment of significant sums in improving the company's
infrastructure which provides vital clean water and wastewater services to
customers.

Reported operating profit for the year increased by 5%. After adjusting for a
number of one-off items in the current and prior years (as outlined in the
underlying profit measures table), underlying operating profit** for the year
increased by 8% to £614 million. This growth in underlying profit primarily
reflects the allowed price increase offset by a higher depreciation expense as
a consequence of increased capital spend and growth in infrastructure renewals
expenditure which was 19% higher than the prior year, in line with the planned
profile of the renewals programme.

Capital investment in the period, including £120 million of infrastructure
renewals expenditure, was £826 million. This represents a 45% increase in
expenditure compared with the prior year and reflects the peak phase of the
company's 2005-10 investment programme. A revised strategy on processing and
disposing of sewage sludge has recently been agreed with Ofwat. After adjusting
for this strategy, cumulative capital expenditure on water and wastewater
assets was broadly in line with regulatory assumptions as at 31 March 2008. The
business remains on course to meet its regulatory efficiency targets and
deliver its outputs across the 2005-10 period.

It is likely that there will be additional investment, mainly in respect of
unsatisfactory intermittent discharge (UID) projects that were not part of
United Utilities' 2005-10 regulatory contract. A large proportion of this
investment, if endorsed by Defra and Ofwat, is expected to fall into the
2010-15 period and be considered as part of the forthcoming price review.
United Utilities estimates that the additional funding likely to be required to
complete this UID programme, which is designed to meet statutory obligations
and deliver environmental benefits, could be in the order of £700 million.

Operational performance

United Utilities has a vision to be a world class operator of utility
infrastructure and is targeting an upper quartile position among UK water
companies on key operational measures in the medium term. The business
continues to upgrade its infrastructure and replaced 650 kilometres of water
mains during 2007/08. The company supplies a high quality of drinking water,
with a mean zonal compliance water quality performance of 99.94% for the year.
United Utilities was ranked first among the UK's water and sewerage companies
in 2006/07 by Ofwat for both water and sewerage in its most recent asset
serviceability assessment, reflecting the company's long-term stewardship of
its assets.

United Utilities is making good progress against its key performance indicators
and remains on course to meet its targets:

  * Relative efficiency - United Utilities has closed the operational
    efficiency gap to the most efficient water companies over the last two
    years. For the water service, the company has narrowed the gap from 16% to
    12% and for the wastewater service from 27% to 18% (based on United
    Utilities' internal estimates). This is reflected in Ofwat's 2006/07
    assessment of United Utilities as band B for the water service and band C
    for the wastewater service and represents a one band improvement for both
    services over the two-year period.
   
  * Security of water supply - United Utilities outperformed the tougher
    economic level of leakage rolling target of 465 megalitres per day, as set
    by Ofwat for 2007/08. This is the second consecutive year that United
    Utilities has met or outperformed its leakage target. In addition, there
    were no water restrictions on customers during the year.
   
  * Pollution - one water and eight wastewater Category 1&2 incidents were
    recorded in 2007 compared with the base position of two water and 21
    wastewater incidents in 2005. The business has again outperformed its
    target of a 50% reduction in the medium term
   
  * Sewer flooding - United Utilities continues to remove properties from the
    sewer flooding register. It has set a medium term target of reducing the
    number of properties on this register by 50% compared with a start point of
    641 properties in 2005/06. This target is based on properties at risk of
    experiencing at least one sewer flooding incident in ten years. Further
    progress has been made in 2007/08 with 434 properties now on the register.
    This represents a 32% reduction over the last two years and the business
    remains on track to meet its medium term target.
   
  * Overall customer satisfaction - Good progress was made in 2007/08 and 73%
    of United Utilities' water and wastewater customers surveyed 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% in 2005.
    These satisfaction levels are based on a comprehensive independent survey
    conducted on behalf of United Utilities each month. Going forward, the
    business has a strong focus on resolving customer queries on the first
    contact which should improve customer satisfaction and lower the cost of
    service.
   
Although United Utilities has delivered real progress, there is more to do in
improving operational performance. During 2007/08 there was a higher level of
sewer flooding incidents influenced by adverse weather conditions. This
together with environmental underperformance at our Fleetwood wastewater
treatment works will lead to a lower Overall Performance Assessment (OPA) score
from Ofwat for 2007/08, compared with the prior year.

Efficiency initiatives

United Utilities is confident of meeting its regulatory efficiency targets
despite increasing cost pressures in areas such as power and property rates.

The company's principal efficiency initiatives include an integrated
performance management project, which increases remote operational site
management and optimises chemical and power usage, and its asset improvement
programme which is improving the efficiency of operational pumps. These schemes
are key elements of United Utilities' plan to mitigate its carbon emissions,
alongside its combined heat and power assets which recycle energy generated
from wastewater treatment processes.

Other key initiatives include a workforce management project, which is designed
to improve data systems, deliver more efficient field operations and enhance
customer service, and supply chain management which has now been centralised
and is delivering procurement economies. There is a strong drive to improve
customer service and the business is focusing on reducing the number of
customer queries, improving staff productivity, implementing improved cash
collection procedures and enhancing the overall customer experience.

Regulatory developments

Strategic Direction Statement

Consistent with its approach to longer term asset planning, in December 2007
United Utilities published its strategic direction statement (SDS) which
considers the needs of the North West region out to 2035. The SDS enables the
company to set its plans for the next price review period (2010-15) in this
longer term context, develop sustainable solutions and respond to future
challenges.

The six key elements identified in the SDS are:

  * Responsible long-term stewardship of networks. This includes protecting
    health and the environment, improving the company's understanding of
    network performance and investing in research and new technology with clear
    efficiency and service benefits.
   
  * Listening and responding to the views of customers and other stakeholders.
    Ensuring that the company's plans meet the changing needs and priorities of
    customers and other stakeholders and provide good value for money. United
    Utilities recently undertook a substantial customer survey which identified
    key areas where customers are willing to pay for improvements including
    supply interruptions, sewer flooding, odour and reductions in greenhouse
    gas emissions. Customer priorities can help shape future investment
    programmes, aligning expenditure to those areas that customers consider
    most important.
   
  * Making water resources more sustainable and resilient. This means improving
    both our own and customers' water efficiency, ensuring the company enhances
    and protects its network and developing water resources to help address
    increasing drought risk and meet supply and demand requirements.
   
  * An integrated approach to drainage to reduce flooding risk. Storm water
    volumes entering the sewer system need to be reduced and the government's
    proposal to transfer responsibility for private sewers from householders to
    water companies will facilitate a more integrated approach to this
    challenge.
   
  * Reduce the group's carbon impact. The company aims to halve its greenhouse
    gases by 2035, supported by achieving energy neutrality for its wastewater
    operations.
   
  * Bills to rise, on average, no faster than incomes. United Utilities
    believes that the water and wastewater services it provides are already of
    good value, but there will be future upward pressure on costs.
   
The implications of climate change on drought and flood risk are set to feature
strongly in United Utilities' plans for decades to come and these implications
will be incorporated in the company's forthcoming price review submission. The
importance of this is recognised by the government which intends to publish a
draft Floods and Water Bill for consultation later in the year.

2009 water price review

United Utilities' preparations for the forthcoming price review are well
advanced and the company is in active deliberations with its regulators and
other key stakeholders. In March 2008, Ofwat published its methodology for the
2009 water price review which will set price limits for the five year period
starting 1 April 2010. In many respects, the methodology is similar to that
used in previous price reviews but United Utilities is pleased to note the
increased focus on the issues of climate change and sustainability.

Following the outcome of the group's recent capital structure review, the Board
announced that it will be targeting an A3 credit rating for United Utilities
Water PLC which it believes best mirrors Ofwat's assumptions for the 2005-10
regulatory period. The Board believes this to be an appropriate investment
grade rating to allow the company to raise finance to fund its substantial
capital investment programmes.

United Utilities believes that Ofwat should ensure that companies can at least
maintain an A3 rating and should consider recent developments in the credit
markets. The raising of debt finance is particularly important given the likely
scale of investment that is still required in the water industry to replace and
refurbish ageing infrastructure, address flooding risk and climate change and
deliver further statutory environmental obligations and customer priorities.
United Utilities believes significant investment will be required during the
next price review period (2010-15) and beyond.

United Utilities has been consistent in its approach that the regulator should
consider both short and long term economic data in the price review. Sub-prime
debt problems and US recession fears have seen higher risk premiums on the cost
of debt and difficulties experienced by the monoline credit insurance industry
have implications for the raising of further index-linked debt.

NON-REGULATED ACTIVITIES

Financial highlights

  * Non-regulated revenue increased by 30% to £949 million
   
  * Non-regulated underlying operating profit** marginally increased to £62
    million
   
Non-regulated revenue in the year increased by 30% to £949 million compared
with the prior year, reflecting the contribution from the first year of the
electricity distribution outsourcing contract. Underlying operating profit**
was slightly higher than last year. This reflects the first time inclusion of
contribution from the group's electricity outsourcing activities, partly offset
by the expected reduction in contribution from the Southern Water contract
where the investment profile peaked in 2006/07. Reported operating profit was
down 19% compared with 2006/07 reflecting £12 million of restructuring costs,
principally relating to the company's planned efficiency delivery in its gas
and electricity outsourcing activities.

Business update

The non-regulated business incorporates the former United Utilities Contract
Solutions' activities and applies the core utility skills of the regulated
business through outsourcing contracts. United Utilities holds major water and
wastewater utility outsourcing contracts, working on behalf of Dwr Cymru Welsh
Water, Southern Water and Scottish Water and is the leading utility
infrastructure outsourcing company in the UK. United Utilities also has three
Scottish PFI operations and currently operates in Bulgaria, Estonia, Poland,
the Philippines and Australia.

United Utilities holds the only outsourced contracts to operate electricity and
gas distribution networks in the UK, working on behalf of Electricity North
West and Northern Gas Networks (NGN). United Utilities' electricity outsourcing
contract extends through to 2015 and is projected to generate revenues of
around £1.5 billion over the eight-year period, with the potential for the
contract to be extended by a further five years to 2020. United Utilities also
has a 15% stake in NGN, which provides a steady income stream.

In addition, United Utilities has a meter installation contract with British
Gas Trading which was extended to 30 June 2010 earlier this year, building on a
good performance on the contract to date. Furthermore, this provides an
enhanced revenue stream to United Utilities through rental income from meter
ownership. Last month, the group was also awarded a three-year contract to
provide the Greater Manchester Waste Disposal Authority with water, electricity
and gas connections to 27 sites across the Manchester region. Whilst this is a
relatively small contract, it is a useful addition to the contract portfolio.

United Utilities has a strong order book worth over £6 billion in revenue which
secures long-term income streams for the group. This was further enhanced
through the recent extension of the contract with Southern Water, which now
runs through to 31 March 2015. Overall, the business is pleased with its
performance across the contract portfolio, reinforced by positive feedback
received from its customers during the year.

The group continues to seek opportunities to grow its non-regulated business by
applying its core skills where it identifies opportunities to generate
additional shareholder value with little impact on the risk profile of the
group. In addition to the UK utility outsourcing market, United Utilities is
currently focusing business development resources on specific opportunities in
the UK municipal solid waste treatment market, Australia and the
fast-developing Gulf region.

In line with its business development strategy, United Utilities was recently
named preferred bidder for the water supply upgrade project in Townsville,
Australia. The project involves upgrading the water facilities in Townsville
and designing, building and operating two water treatment plants.  Facilities
are due to be completed and operational by mid-2010 and upon award, United
Utilities expects to hold a 20-year operations and maintenance contract with a
minimal equity investment requirement.  The project forms part of a AUD$300
million water and sewerage infrastructure programme in Townsville.

OTHER ACTIVITIES

Operating profit from other activities for the year ended 31 March 2008 was £1
million. This segment includes central costs and the contribution from United
Utilities Property Solutions (UUPS). UUPS is the property sales and management
business of United Utilities PLC and it made an operating profit of £19 million
in the year. It owns a land and property portfolio and is expected to continue
to deliver a positive contribution for the next few years, although due to the
nature of the business, profits may not follow a smooth profile.

FINANCIAL PERFORMANCE

Revenue and operating profit from continuing operations

Revenue from continuing operations rose 19% to £2,363 million, reflecting the
allowed price rise in the regulated business and the first year of the
electricity distribution outsourcing contract in the non-regulated business.

Group operating profit from continuing operations increased by 3% to £663
million, with group underlying operating profit from continuing operations** up
by 7%. This increase was underpinned by a strong performance in the regulated
business.

Investment income and finance expense

Finance expense of £332 million was £74 million higher than in the prior year.
This expense included a £43 million fair value loss on debt and derivative
instruments, whereas the prior year included a £26 million fair value gain.
This volatility in financing expense reflects the fact that, in order to hedge
the interest cost implicit in the regulatory contracts, the group fixes
interest rates for the duration of each five-year review period for the
majority of its debt using interest rate swaps. IAS 39 limits the use of hedge
accounting for these commercial hedges, thereby increasing the potential
volatility of the income statement. In addition, the impact of changes in
credit spread on debt accounted for at fair value through profit or loss can
result in significant additional volatility. However, this volatility has no
cash flow impact. Interest expense on swaps (on a pre-IAS 39 basis) and debt
under the fair value option was £42 million, £16 million lower than the prior
year.

Investment income was £147 million, compared with £118 million in the prior
year partly reflecting the higher level of cash held following the sale of UUE.
The underlying cost of net borrowing for continuing operations of £207 million
is lower than the prior year and reflects a lower average net debt and a
reduction in the group's average net borrowing rate from around 6.3% to 5.8%.
The group redeemed a €1 billion 6.625% bond in November 2007 which has served
to reduce the underlying cost of net borrowings, partly offset by the impact of
higher inflation on the index-linked debt. However, the higher inflation rates
will result in increased allowed revenues and growth in the regulatory capital
value of United Utilities Water since both of these are linked to the UK retail
price index (RPI).

Profit before taxation

Profit before taxation decreased by 5% to £478 million. Adjusting for the
impact of restructuring costs, other one-off items, fair value movements in
respect of debt and derivative instruments and the expected short-term interest
benefit associated with the cash proceeds from the sale of UUE, underlying
profit before taxation** was £476 million, 17% ahead of the year ended 31 March
2007.

Taxation

The current tax charge relating to continuing operations is £89 million and the
current tax effective rate is 19% compared with 11% in the prior year. The
increase in current tax primarily relates to the fair value movement in
derivatives, and is matched by an equal and opposite movement in deferred tax,
resulting in no net impact on the total effective rate.  Deferred tax has been
calculated after taking into account the reduction in the corporation tax rate
from 30% to 28% with effect from April 2008.  The deferred tax credit on
continuing operations arising from the restatement of the opening deferred tax
liability is £82 million. The overall deferred tax credit relating to
continuing operations is £27 million compared with a deferred tax charge in the
prior year of £90 million.

Excluding the impact of the change in corporation tax rate, the total tax
charge relating to continuing operations would be £144 million or 30%, compared
with a £144 million charge or 29% in the prior year.  A total tax charge of £62
million relating to continuing operations has been recognised for the year
ended 31 March 2008.

The company is forecasting a one-off deferred tax charge in 2008/09 relating to
the abolition of industrial buildings allowances. This one-off adjustment is
anticipated to be over £200 million and is likely to result in a significant
increase in the effective tax rate for the year ended 31 March 2009; however
the cash impact will be spread over a period of approximately 20 years.

Discontinued operations

UUE, which principally comprised the group's electricity distribution assets,
is treated as a discontinued operation in the results for the year ended 31
March 2008. In the period 1 April 2007 to 19 December 2007, profit after tax
generated from UUE was £122 million compared with £119 million for the year
ended 31 March 2007. The profit on disposal of UUE amounted to £371 million.

United Utilities had previously announced its intention to dispose of its
industrial liquid waste operations and facilities management operations in line
with its strategy to focus on its core skills. The contribution from these
operations has therefore also been treated as discontinued. In 2007/08, the
group completed the disposal of its industrial liquid waste operations to Group
Tradebe, the parent company of Advanced Waste Solutions Limited, and its
facilities management operations were sold to Europa Facility Holdings Limited.
In the period 1 April 2007 to 26 October 2007, a loss after tax of £0.1 million
was recorded from the group's industrial liquid waste operations compared with
a profit after tax of £1.7 million for the year ended 31 March 2007. The
facilities management operations made a profit after tax of £1.3 million for
the period 1 April 2007 to 22 February 2008 compared with a profit after tax of
£3.4 million for the year ended 31 March 2007. These results have all been
included within discontinued operations in the consolidated income statement.

United Utilities sold its 22.63% stake in THUS Group plc earlier in the
financial year, which completed its exit from the telecoms sector. The £10
million loss on disposal of the stake in THUS Group plc is treated as an
adjustment to the consideration arising on the disposal of Your Communications
and so both the loss and the group's share of THUS' results prior to disposal
are disclosed as discontinued operations.

Earnings per share

Basic earnings per share relating to continuing operations increased by 16% to
47.3 pence.

Dividends per share and future dividend policy

The Board is proposing a final dividend of 31.47 pence per ordinary share in
respect of the year ended 31 March 2008. Taken together with the interim
dividend of 15.20 pence per ordinary share, the total proposed dividend for
2007/08 is 46.67 pence per ordinary share. This is an increase of 3.87%,
consistent with the group's previous policy of growing dividends in line with
inflation (based on the issued share capital prior to the share reduction
associated with the £1.5 billion proposed return of value to shareholders, as
summarised on page 15 of this announcement). The inflationary increase is based
on the RPI element included within the allowed regulated price increase in
United Utilities Water for the 2007/08 financial year (i.e. the movement in RPI
between November 2005 and November 2006).

The proposed final dividend is expected to be paid on 8 August 2008 to
shareholders on the register at the close of business on 27 June 2008. The
ex-dividend date for the final dividend is 25 June 2008.

As announced at the group's half year results on 29 November 2007, the Board
has outlined a new dividend policy which will apply from 2008/09 to reflect the
revised composition and earnings profile of the group. In light of the sale of
UUE and the proposed £1.5 billion return of value to shareholders, the dividend
per share from 2008/09 will be reduced by 30% compared with the proposed 2007/
08 dividend per share. Thereafter, the group's revised dividend policy is
intended to target a sustainable and growing level of dividends. The new target
real growth rate of RPI+2% will be applied from 2009/10 to the 2008/09 dividend
per share.

Cashflow

Cash generated from the group's continuing operations for the year ended 31
March 2008 was £877 million compared with £811 million in the prior year. High
levels of capital expenditure continue, principally in the regulated water and
wastewater investment programmes. The group's net capital expenditure on
property, plant and equipment for 2007/08 was £630 million, excluding
infrastructure renewals expenditure which is included as an operating cost in
the income statement under IFRS.

Cash and short-term deposits at 31 March 2008 amounted to £1,811 million which,
inclusive of medium term committed bank facilities and net of short-term debt,
results in total available liquidity of £2,494 million. During the year United
Utilities redeemed a €1 billion 6.625% bond from existing cash resources
primarily generated from issuances of index-linked debt.

The group retains an excellent pre-funded position for its capital investment
programmes through to 2010 and enhanced its liquidity further by arranging or
extending the maturity dates of £500 million of committed medium-term bank
credit facilities since 30 September 2007. Furthermore, the group is in
discussions with the European Investment Bank, with which it has a
long-standing relationship, regarding a new £400 million term loan for United
Utilities Water PLC.

Net debt, including derivatives at 31 March 2008 was £2,903 million, a decrease
of £741 million compared with 31 March 2007 (after adjusting for £482 million
of net debt relating to discontinued operations which has exited the group).
This movement principally reflects the receipt of cash proceeds from the sales
of UUE and the group's stake in THUS Group plc, plus cashflow from operating
activities, offset by expenditure on the regulated water and wastewater capital
investment programmes and payments of interest, tax and dividends. This
reduction in net borrowings is expected to be short-term since the group
intends to return £1.5 billion to shareholders, as outlined in its 2007/08 half
year results announced on 29 November 2007. Details of the return will be
published in the circular scheduled to be issued on 6 June, with the return of
value expected in August 2008.

Gearing (net borrowings divided by the regulatory capital value) decreased to
39% at 31 March 2008, compared with 52% at 31 March 2007. Following the
proposed £1.5 billion return to shareholders, gearing will increase and is
expected to move United Utilities towards the upper end of Ofwat's assumed
range of 55% to 65% by the end of this regulatory review period. The Board will
continue to target an A3 credit rating for United Utilities Water PLC.

In the year ended 31 March 2008, the group issued a total of £185 million of
long-term, index-linked notes through its multi-issuer euro medium-term note
programme. This comprised a £50 million issue at a real interest rate of 1.702%
with a 50.5 year maturity, a £100 million issue at a real interest rate of
1.585% with a 50 year maturity and a £35 million issue at a real interest rate
of 1.66% with a 30 year maturity.

United Utilities now has index-linked funding totalling approximately £1.5
billion, including indexation of the principal. However as a result of the
current economic climate and the uncertainty in the monoline insurance sector,
the group sees limited opportunity for further index-linked debt issuance.

The principal amount of the index-linked borrowings is adjusted to track
movements in RPI. This form of liability is a good match for the group's
regulated assets, which are also linked to RPI, and delivers a cashflow benefit
to United Utilities since compensation for inflationary risk is provided via
adjustment to the principal rather than through regular cash payments.

Underlying profit

In considering the results for the year, the directors have adjusted the
group's statutory measures for fair value movements on debt and derivative
instruments and those significant items identified as non-recurring. Operating
profit and profit before taxation from continuing operations are reconciled to
underlying operating profit from continuing operations and underlying profit
before taxation from continuing operations as follows:

Continuing operations                    Regulated      Non-     Other     Total
Operating profit for the year ended 31             regulated                    
March 2008                                      £m        £m        £m        £m
                                                                                
                                             -----     -----     -----     -----
                                                                                
Operating profit per published results       611.6      50.6       1.0     663.2
                                                                                
                                             -----     -----     -----     -----
                                                                                
Restructuring costs                            2.6      11.6     (0.2)      14.0
                                                                                
                                             -----     -----     -----     -----
                                                                                
Underlying operating profit                  614.2      62.2       0.8     677.2
                                                                                
                                             -----     -----     -----     -----
                                                                                
Continuing operations                    Regulated      Non-     Other     Total
Operating profit for the year ended 31             regulated                    
March 2007                                      £m        £m        £m        £m
(Re-presented)                                                                  
                                                                                
                                             -----     -----     -----     -----
                                                                                
Operating profit per published results       581.0      62.6     (1.5)     642.1
                                                                                
                                             -----     -----     -----     -----
                                                                                
Restructuring costs                            5.3       0.3       5.0      10.6
                                                                                
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                  567.2      59.9       3.5     630.6
                                                                                
                                             -----     -----     -----     -----
                                                                                

Continuing operations                                               Re-presented
Profit before taxation                                    Year ended  Year ended
                                                           31 March     31 March 
                                                               2008         2007        
                                                                 £m           £m
                                                                       
                                                              -----        -----
                                                                                
Profit before taxation per published results                  478.3        502.3
                                                                                
                                                              -----        -----
                                                                                
Operating profit adjustments (see above)                       14.0       (11.5)
                                                                                
Fair value losses / (gains) on debt and derivative             42.7       (26.0)
instruments                                                                     
                                                                                
Interest on swaps and interest on debt under fair value      (41.7)       (57.3)
option                                                                          
                                                                                
Interest associated with cash proceeds from UUE sale****     (17.7)            -
                                                                                
                                                              -----        -----
                                                                                
                                                              -----        -----
                                                                                
Underlying profit before taxation                             475.6        407.5
                                                                                
                                                              -----        -----

Notes

***During the prior year, the group's regulated and non-regulated activities
benefited from one-off credits worth £27.6 million and £3.0 million
respectively. These credits were in respect of settlement of claims made by the
group against contractors and the end of the statutory period of potential
claims against the group. Although such claims are a regular occurrence in the
ongoing business of United Utilities, these particular claims were unusual in
size.

****The interest associated with the cash proceeds from the sale of UUE has
been deducted to provide a more representative view of underlying performance.
Since the group intends to return £1.5 billion to shareholders later in the
year, the cash proceeds from the sale are expected to result in a short-term
net debt and interest reduction.

£1.5 billion return of value to shareholders

As a result of the sale of UUE and the review the group's capital structure,
outlined in its half year results published on 29 November 2007, the Board
intends to return to shareholders a total of £1.5 billion or 170 pence per
share. This substantial total return is analysed in the table below.

Proposed return of value to shareholders             £m        Pence per share#
                                                                               
Net equity proceeds from sale##                     1,050            119       
                                                                               
Additional return to create more efficient           450              51       
capital structure                                                              
                                                                               
Total proposed return via B share scheme            1,500            170       

# Based on 880 million ordinary shares in issue at the time the sale was agreed

## £1,782 million sale price less UUE net debt of £686 million at fair value at
the date of disposal, including United Utilities' group debt apportioned to the
electricity business, and transaction costs of £46 million

The proposed return of value will be in the form of a redeemable B share scheme
providing shareholders (other than shareholders in certain overseas
jurisdictions) with a choice of receiving the return as capital or income and
the option to spread the return over two financial years.

In order to implement the B share scheme and increase the group's distributable
reserves, the company intends to propose a change to its corporate structure.
The proposed change, which is subject to court and shareholder approval,
involves a scheme of arrangement to introduce a new parent company above United
Utilities PLC. The reserves created by the implementation of the new structure
will be available for the proposed return of value and the declaration of
future dividends.


The scheme of arrangement will involve the new parent company acquiring all of
the shares in United Utilities PLC and issuing new shares. This will comprise
the issue of new ordinary shares and redeemable B shares to facilitate the
return of value. The number of new ordinary shares issued will be reduced from
the existing number of ordinary shares, commensurate with the return of value,
with a view to aiding comparability of share price and earnings per share
before and after the return of value. Following the implementation of the new
structure, United Utilities' shareholders will hold shares in the new parent
company equivalent to their previous percentage holding in United Utilities
PLC. The new structure will be implemented at the same time as the return of
value.

The necessary steps to achieve the above corporate restructuring are expected
to be completed during the summer, enabling the return of value to take place
in August 2008.

Indicative return timetable

6 June 2008          Circular expected to be posted to shareholders      
                                                                         
June/July 2008       Court meeting and general meeting for scheme of     
                     arrangement to create new parent company            
                                                                         
25 July 2008         Annual general meeting (AGM)                        
                                                                         
July/August 2008     Issue of redeemable B shares, listing of new parent 
                     company and issue of new parent company ordinary    
                     shares                                              
                                                                         
8 August 2008        Payment of 2007/08 final dividend under current     
                     policy                                              
                                                                         
August 2008          Return of value - first option to redeem B shares   
                                                                         
February 2009        Payment of 2008/09 interim dividend under new policy
                                                                         
April 2009           Return of value - all remaining B shares redeemed   

The circular, which will detail the process and timetable for the return of
value and the creation of the new parent company, is expected to be issued on 6
June. The creation of the new parent company will require court approval and
shareholder approval at a general meeting. Details of the general meeting will
be contained in the circular.

Consolidated income statement                                            
                                                                         
                                                             Re-presented
                                                  Year ended   Year ended
                                                    31 March     31 March
                                                        2008         2007
                                                          £m           £m 
                                                                        
Continuing operations                                                    
                                                                         
Revenue                                              2,362.9      1,986.7
                                                                         
                                                       -----        -----
                                                                         
Other income                                            21.3          8.9
                                                                         
Employee benefits expense                            (317.5)      (254.1)
                                                                         
Depreciation and amortisation expense                (248.2)      (221.3)
                                                                         
Infrastructure renewals expenditure                  (120.1)      (101.2)
                                                                         
Other operating costs                              (1,035.2)      (776.9)
                                                                         
                                                       -----        -----
                                                                         
Total operating expenses                           (1,699.7)    (1,344.6)
                                                                         
                                                       -----        -----
                                                                         
Operating profit                                       663.2        642.1
                                                                         
Investment income (note 2)                             146.7        118.3
                                                                         
Finance expense (note 3)                             (331.6)      (258.1)
                                                                         
                                                       -----        -----
                                                                         
Investment income and finance expense                (184.9)      (139.8)
                                                                         
                                                       -----        -----
                                                                         
Profit before taxation                                 478.3        502.3
                                                                         
Taxation (note 4)                                     (62.0)      (143.9)
                                                                         
                                                       -----        -----
                                                                         
Profit for the year from continuing operations         416.3        358.4
                                                                         
Discontinued operations                                                  
                                                                         
Profit for the period from discontinued                492.9         75.1
operations (note 5)                                                      
                                                                         
                                                       -----        -----
                                                                         
Profit for the year                                    909.2        433.5
                                                                         
                                                       -----        -----
                                                                         
Earnings per share from continuing and                                   
discontinued operations (note 6)                                         
                                                                         
Basic                                                 103.3p        49.4p
                                                                         
Diluted                                               103.2p        49.2p
                                                                         
Earnings per share from continuing operations                            
(note 6)                                                                 
                                                                         
Basic                                                  47.3p        40.9p
                                                                         
Diluted                                                47.3p        40.7p
                                                                         
Dividend per ordinary share (note 7)                  46.67p       44.93p


Consolidated balance sheet                                    Re-presented
                                                     31 March     31 March
                                                         2008         2007
                                                           £m           £m
                                                                          
ASSETS                                                                    
                                                                          
Non-current assets                                                        
                                                                          
Property, plant and equipment                         7,591.8      8,894.6
                                                                          
Goodwill                                                  2.3          5.0
                                                                          
Other intangible assets                                  85.3        115.5
                                                                          
Investments                                             155.5        202.4
                                                                          
Trade and other receivables                              28.2         21.6
                                                                          
Retirement benefit surplus                                  -         61.3
                                                                          
Derivative financial instruments                         44.3         15.2
                                                                          
                                                        -----        -----
                                                                          
                                                      7,907.4      9,315.6
                                                                          
                                                        -----        -----
                                                                          
Current assets                                                            
                                                                          
Inventories                                              63.3         62.8
                                                                          
Trade and other receivables                             456.2        418.2
                                                                          
Cash and short-term deposits                          1,810.5      2,403.3
                                                                          
Derivative financial instruments                         99.0         61.0
                                                                          
                                                        -----        -----
                                                                          
                                                      2,429.0      2,945.3
                                                                          
                                                        -----        -----
                                                                          
Total assets                                         10,336.4     12,260.9
                                                                          
                                                        -----        -----
                                                                          
LIABILITIES                                                               
                                                                          
Non-current liabilities                                                   
                                                                          
Trade and other payables                              (125.5)      (414.3)
                                                                          
Borrowings                                          (3,788.9)    (4,854.9)
                                                                          
Retirement benefit obligations                        (101.2)            -
                                                                          
Deferred tax liabilities                            (1,164.0)    (1,550.5)
                                                                          
Provisions                                             (18.7)       (30.4)
                                                                          
Derivative financial instruments                       (53.2)      (173.5)
                                                                          
                                                        -----        -----
                                                                          
                                                    (5,251.5)    (7,023.6)
                                                                          
                                                        -----        -----
                                                                          
Current liabilities                                                       
                                                                          
Trade and other payables                              (771.9)      (749.2)
                                                                          
Borrowings                                            (878.4)    (1,509.5)
                                                                          
Current income tax liabilities                         (66.9)      (168.0)
                                                                          
Provisions                                             (21.0)        (8.5)
                                                                          
Derivative financial instruments                      (136.7)       (67.3)
                                                                          
                                                        -----        -----
                                                                          
                                                    (1,874.9)    (2,502.5)
                                                                          
                                                        -----        -----
                                                                          
Total liabilities                                   (7,126.4)    (9,526.1)
                                                                          
                                                        -----        -----
                                                                          
Total net assets                                      3,210.0      2,734.8
                                                                          
                                                        -----        -----
                                                                          
EQUITY                                                                    
                                                                          
Capital and reserves attributable to equity                               
holders of the company                                                    
                                                                          
Share capital                                           881.6        879.8
                                                                          
Share premium account                                 1,429.3      1,421.9
                                                                          
Revaluation reserve                                     158.8        158.8
                                                                          
Treasury shares                                         (0.3)        (0.3)
                                                                          
Cumulative exchange reserve                               7.6        (4.2)
                                                                          
Other reserves                                           58.1         24.3
                                                                          
Retained earnings                                       674.9        254.5
                                                                          
                                                        -----        -----
                                                                          
Shareholders' equity                                  3,210.0      2,734.8
                                                                          
                                                        -----        -----

Consolidated cashflow statement                              Re-presented
                                                  Year ended   Year ended
                                                    31 March     31 March
                                                        2008         2007
                                                          £m           £m    
                                                                         
Operating activities                                                     
                                                                         
Cash generated from operations                         876.9        810.8
                                                                         
Interest paid                                        (299.9)      (341.8)
                                                                         
Interest received and similar income                   119.1         99.8
                                                                         
Tax paid                                              (98.6)       (17.8)
                                                                         
                                                       -----        -----
                                                                         
Net cash generated from operating activities           597.5        551.0
(continuing operations)                                                  
                                                                         
Net cash generated from operating activities            99.5        204.3
(discontinued operations)                                                
                                                                         
                                                       -----        -----
                                                                         
                                                       697.0        755.3
                                                                         
Investing activities                                                     
                                                                         
Disposal of investments                                  0.6            -
                                                                         
Disposal of associated company                          75.8            -
                                                                         
Disposal of subsidiaries                             1,152.7        206.4
                                                                         
Net cash outflow from group reorganisation            (15.0)            -
                                                                         
Purchase of property, plant and equipment            (644.5)      (548.5)
                                                                         
Purchase of other intangible assets                   (25.3)        (5.0)
                                                                         
Proceeds from sale of property, plant and               15.0         27.0
equipment                                                                
                                                                         
                                                       -----        -----
                                                                         
Net cash generated from/(used in) investing            559.3      (320.1)
activities (continuing operations)                                       
                                                                         
Net cash used in investing activities                (161.0)      (125.1)
(discontinued operations)                                                
                                                                         
                                                       -----        -----
                                                                         
                                                       398.3      (445.2)
                                                                         
Financing activities                                                     
                                                                         
Proceeds from issue of ordinary shares                   9.2         18.5
                                                                         
Cash (used in)/proceeds from structured              (170.1)         81.4
financing                                                                
                                                                         
Proceeds from borrowings                             1,068.9      1,600.8
                                                                         
Repayment of borrowings                            (2,297.2)      (821.0)
                                                                         
Dividends paid to equity holders of the company      (400.4)      (387.3)
                                                                         
Dividends received from discontinued operations        100.0         36.0
                                                                         
                                                       -----        -----
                                                                         
Net cash (used in)/generated from financing        (1,689.6)        528.4
activities (continuing operations)                                       
                                                                         
Net cash (used in)/generated from financing          (190.1)         51.9
activities (discontinued operations)                                     
                                                                         
                                                       -----        -----
                                                                         
                                                   (1,879.7)        580.3
                                                                         
Effects of exchange rate changes (continuing           148.9          6.4
operations)                                                              
                                                                         
                                                       -----        -----
                                                                         
Net (decrease)/increase in cash and cash             (383.9)        765.7
equivalents (continuing operations)                                      
                                                                         
Net (decrease)/increase in cash and cash             (251.6)        131.1
equivalents (discontinued operations)                                    
                                                                         
                                                       -----        -----
                                                                         
                                                     (635.5)        896.8
                                                                         
                                                       -----        -----
                                                                         
Cash and cash equivalents at beginning of the        2,340.7      1,443.9
year                                                                     
                                                                         
                                                       -----        -----
                                                                         
Cash and cash equivalents at end of the year         1,705.2      2,340.7
                                                                         
                                                       -----        -----

Consolidated statement of recognised income and   Year ended   Year ended
expense                                             31 March     31 March
                                                        2008         2007
                                                          £m           £m   
                                                                         
Actuarial (losses)/gains on defined benefit          (126.4)         46.5
pension schemes                                                          
                                                                         
Revaluation of investments                              34.9          8.9
                                                                         
Fair value (losses)/gains on cashflow hedges           (1.5)          2.8
                                                                         
Foreign exchange adjustments                            11.8        (6.4)
                                                                         
Tax on items taken directly to equity                   35.8       (14.8)
                                                                         
                                                       -----        -----
                                                                         
Net (expense)/income recognised directly in           (45.4)         37.0
equity                                                                   
                                                                         
Profit for the year                                    909.2        433.5
                                                                         
                                                       -----        -----
                                                                         
Total recognised income and expense for the            863.8        470.5
year                                                                     
                                                                         
                                                       -----        -----

Reconciliation of movements in consolidated       Year ended   Year ended
equity                                              31 March     31 March
                                                        2008         2007
                                                          £m           £m    
                                                                     
Total net income recognised for the year               863.8        470.5
                                                                         
Dividends                                            (400.4)      (387.3)
                                                                         
New share capital issued                                 9.2         18.5
                                                                         
Other movements                                          2.6          2.2
                                                                         
                                                       -----        -----
                                                                         
Net increase in equity for the year                    475.2        103.9
                                                                         
Opening equity attributable to equity holders        2,734.8      2,630.9
of the company*****                                                      
                                                                         
                                                       -----        -----
                                                                         
Closing equity attributable to equity holders        3,210.0      2,734.8
of the company                                                           
                                                                         
                                                       -----        -----

***** £2,630.9 million in respect of the opening balance for the year ended 31
March 2007 includes £1.7 million in relation to minority interests

Cash generated from continuing operations                                
                                                                         
                                                             Re-presented
                                                  Year ended   Year ended
                                                    31 March     31 March
                                                        2008         2007
                                                          £m           £m    
                                                                         
Profit before taxation from continuing                 478.3        502.3
operations                                                               
                                                                         
Adjustment for investment income and finance           184.9        139.8
expense                                                                  
                                                                         
                                                       -----        -----
                                                                         
Operating profit from continuing operations            663.2        642.1
                                                                         
Adjustments for:                                                         
                                                                         
Depreciation of property, plant and equipment          226.0        213.8
                                                                         
Amortisation of other intangible assets                 22.2          7.5
                                                                         
Profit on disposal of property, plant and              (5.7)        (3.4)
equipment                                                                
                                                                         
Equity-settled share-based payments charge               2.6          3.9
                                                                         
Other non-cash movements                                 3.9            -
                                                                         
Changes in working capital:                                              
                                                                         
(Increase)/decrease in inventories                     (4.1)          4.0
                                                                         
Increase in trade and other receivables               (81.3)       (66.6)
                                                                         
Increase in provisions and payables                     50.1          9.5
                                                                         
                                                       -----        -----
                                                                         
Cash generated from continuing operations              876.9        810.8
                                                                         
                                                       -----        -----

Segmental analysis by class of business                                  
                                                                         
Continuing operations                                        Re-presented
                                                  Year ended   Year ended                  
                                                    31 March     31 March 
                                                        2008         2007 
Revenue                                                   £m           £m
                                                                         
Regulated activities                                 1,416.3      1,320.8
                                                                         
Non-regulated activities                               949.2        729.2
                                                                         
Other activities                                        41.3         53.0
                                                                         
                                                       -----        -----
                                                                         
                                                     2,406.8      2,103.0
                                                                         
Inter-segment revenue                                 (43.9)      (116.3)
                                                                         
                                                       -----        -----
                                                                         
External revenue                                     2,362.9      1,986.7
                                                                         
                                                       -----        -----

Continuing operations                                        Re-presented
                                                  Year ended   Year ended
                                                    31 March     31 March
                                                        2008         2007
                                                                         
Operating profit/(loss)                                   £m           £m
                                                                         
Regulated activities                                   611.6        581.0
                                                                         
Non-regulated activities                                50.6         62.6
                                                                         
Other activities                                         1.0        (1.5)
                                                                         
                                                       -----        -----
                                                                         
                                                       663.2        642.1
                                                                         
                                                       -----        -----

For management purposes, the group is organised into two principal operating
divisions, being regulated and non-regulated activities. These divisions form
the basis on which the above primary segment information is reported.

The regulated activities segment previously included the results of United
Utilities Electricity (UUE). Following the sale of UUE, which principally
comprised the group's electricity distribution assets, on 19 December 2007, the
results of this business are treated as discontinued and are not included in
the continuing operations regulated activities segment (see note 5). The
regulated segment therefore only includes the regulated results of United
Utilities Water PLC.

The non-regulated activities segment previously included the contribution from
the group's industrial liquid waste and facilities management operations.
Following the sale of these operations on 26 October 2007 and 22 February 2008
respectively, these non-regulated activities are also treated as discontinued
(see note 5). The non-regulated continuing operations segment therefore relates
to the group's utility outsourcing contracts in the United Kingdom and
overseas.

In April 2007, the operations and maintenance of UUE's assets was outsourced
under an Asset Services Agreement to United Utilities Electricity Services
Limited (UUES), a newly incorporated group company. UUES' results from this
date are reported within continuing operations as part of the non-regulated
activities segment. The results of UUE, including those for the year ended 31
March 2007, when UUE operated its own assets, have been reported in full as
discontinued.

In addition, the other activities segment previously included some residual
activities associated with UUE, but not related to regulated electricity
distribution. These residual activities were sold, along with UUE, and hence
have been treated as discontinued and are no longer included in the continuing
operations other activities segment. The other activities segment therefore
includes the results of United Utilities Property Solutions Limited, the parent
company and other group holding companies.

NOTES

1. Basis of preparation

The results for the year ended 31 March 2008 have been prepared on the basis of
accounting policies consistent with those set out in the annual report to
shareholders for the year ended 31 March 2007.

The financial information set out in this statement relating to the year ended
31 March 2008 does not constitute statutory accounts for that period as defined
in section 240 of the Companies Act 1985. Statutory accounts for 2008 will be
delivered to the Registrar of Companies following the company's annual general
meeting. The auditors have reported on those accounts; their report is
unqualified and does not contain a statement under either section 237(2) or (3)
of the Companies Act 1985.

The financial information set out in this statement relating to the year ended
31 March 2007 does not constitute statutory accounts for that period. Full
statutory accounts of United Utilities PLC in respect of that financial period
which received an unqualified audit opinion and did not contain a statement
under either section 237(2) or (3) of the Companies Act 1985, have been
delivered to the Registrar of Companies.

The group adopted IFRS 7 `Financial Instruments: Disclosures' during the year
ended 31 March 2008 and accordingly the comparative results for the year ended
31 March 2007 have been re-presented to reflect the revised disclosure
requirements.

The comparative results for the year ended 31 March 2007 have been re-presented
to reflect the disclosure of United Utilities Electricity, the group's
industrial liquid waste and facilities management operations and its associate
within discontinued operations (see note 5).

The comparatives for the year ended 31 March 2007 have also been re-presented
to reflect the removal of the category for current asset investments from the
balance sheet. Properties previously held as current asset investments are now
classified as inventories as the directors' believe this provides a fairer
presentation of the nature of these assets.

The comparatives for the year ended 31 March 2007 have also been re-presented
to incorporate within equity a category for other reserves to include
revaluation of investments and fair value gains/(losses) on cash flow hedges
and the associated tax on these items. The amounts were previously disclosed
within retained earnings but are now classified within other reserves as the
directors believe this provides a fairer presentation of these items.

The comparatives have been re-presented for retirement benefits to reflect the
group's participation in the Northern Gas Networks Pension scheme. The group
recorded a related deferred tax asset and investment offsetting the impact on
net assets at 31 March 2007 to £nil.

2. Investment income

                                                               Re-presented            
                                                  Year ended     Year ended
                                               31 March 2008  31 March 2007
                                                          £m             £m
                                                                           
Interest receivable on short-term bank                  67.8           69.8
deposits held at amortised cost                                            
                                                                           
Foreign exchange gains on forward contracts             55.4           30.9
                                                                           
                                                       -----          -----
                                                                           
                                                       123.2          100.7
                                                                           
Expected return on pension schemes' assets             128.6           92.5
                                                                           
Interest cost on pension schemes' obligations        (105.1)         (74.9)
                                                                           
                                                       -----          -----
                                                                           
Net pension interest income                             23.5           17.6
                                                                           
                                                       -----          -----
                                                                           
                                                       146.7          118.3
                                                                           
                                                       -----          -----

3. Finance expense

                                                                Re-presented
                                                  Year ended      Year ended
                                               31 March 2008   31 March 2007
                                                          £m              £m
                                                                            
Interest payable                                     (288.9)         (284.1)
                                                                            
Fair value (losses)/gains on debt and                 (42.7)            26.0
derivative instruments                                                      
                                                                            
                                                       -----           -----
                                                                            
                                                     (331.6)         (258.1)
                                                                            
                                                       -----           -----

As previously reported, the group follows a policy of economic hedging its
interest rate and currency exposures, with particular regard to the five-year
regulatory period. Including the interest element of swaps and interest on debt
under the fair value option within interest payable, as opposed to within fair
value (losses)/gains, and adjusting for the reclassification of interest income
and expenditure associated with the group's defined benefit pension schemes,
would give an economic underlying cost of net borrowings of £207.4 million
(2007: £240.7 million):

                                                               Re-presented
                                                   Year ended    Year ended
                                                31 March 2008 31 March 2007
                                                           £m            £m
                                                                           
Finance expense                                       (331.6)       (258.1)
                                                                           
Fair value losses/(gains)                                42.7        (26.0)
                                                                           
Add back interest on swaps and debt under fair         (41.7)        (57.3)
value option                                                               
                                                                           
                                                        -----         -----
                                                                           
Underlying interest payable                           (330.6)       (341.4)
                                                                           
Investment income                                       146.7         118.3
                                                                           
Adjustment for net pension interest income             (23.5)        (17.6)
                                                                           
                                                        -----         -----
                                                                           
Underlying cost of net borrowings                     (207.4)       (240.7)
                                                                           
                                                        -----         -----

4. Taxation

                                                               Re-presented
                                                   Year ended    Year ended
                                                31 March 2008 31 March 2007
                                                           £m            £m
                                                                           
Current taxation:                                                          
                                                                           
UK corporation tax                                    (108.9)        (84.6)
                                                                           
Foreign tax                                             (2.7)         (3.1)
                                                                           
Prior year adjustments                                   23.0          34.1
                                                                           
                                                        -----         -----
                                                                           
                                                       (88.6)        (53.6)
                                                                           
Deferred taxation:                                                         
                                                                           
Current year                                           (37.5)        (73.0)
                                                                           
Prior year adjustments                                 (17.6)        (17.3)
                                                                           
Change in taxation rate                                  81.7             -
                                                                           
                                                        -----         -----
                                                                           
                                                         26.6        (90.3)
                                                                           
                                                        -----         -----
                                                                           
                                                       (62.0)       (143.9)
                                                                           
                                                        -----         -----

5. Discontinued operations

In line with its declared strategy of concentrating on its core skills of
managing water, wastewater, electricity and gas networks, the group completed
the disposal of United Utilities Electricity (UUE) to North West Electricity
Networks Limited on 19 December 2007 for a total enterprise value of £1,782
million.

The group continues to seek opportunities to grow its non-regulated business by
applying its core skills where it identifies opportunities to generate
additional shareholder value with little impact on the risk profile of the
group.  In addition to the UK utility outsourcing market, United Utilities is
currently focusing business development resources on specific opportunities in
the UK municipal solid waste treatment market, Australia and the
fast-developing Gulf region. In line with this strategy, the group sold its
industrial liquid waste and facilities management operations and made its final
exit from the telecoms sector during the year. On 26 October 2007, the

group sold its industrial liquid waste operations to Group Tradebe for
consideration of £3.7 million and on 22 February 2008, the group completed the
sale of its facilities management operations to Europa Facility Holdings
Limited for consideration of £9.0 million.

The group sold its 22.63 per cent stake in THUS Group plc on 19 June 2007 for
consideration of £75.8 million, which completed United Utilities' exit from the
telecoms sector. The sale is treated as an adjustment to consideration arising
on the disposal of Your Communications and, as such, both the loss on disposal
and the group's share of THUS' results prior to the disposal are disclosed
within discontinued operations.

On 26 March 2007, the group sold the Vertex business to a consortium of
US-based private equity firms.

The results of UUE, the group's industrial liquid waste and facilities
management operations and its share of results from its associate have been
disclosed, along with the profit/(loss) on disposal, as discontinued operations
in the group's financial statements. The detailed trading results and the
profit/(loss) on disposal of each discontinued operation are shown below.
Cashflows in relation to discontinued operations are separately disclosed in
the group's cashflow statement.

There is no tax charged on the profits resulting from the disposal of the
discontinued operations during the year ended 31 March 2008 as these were tax
exempt sales of shares.

                                                   Year ended   Year ended
                                                     31 March     31 March
                                                         2008         2007
                                                           £m           £m
                                                                          
United Utilities Electricity                            493.0        118.5
                                                                          
Industrial liquid waste                                 (5.0)          1.7
                                                                          
Facilities management                                    10.4          3.4
                                                                          
Telecoms (including loss on disposal of THUS            (5.5)         18.7
Group plc shares of £10.0 million)                                        
                                                                          
Vertex                                                      -       (67.2)
                                                                          
                                                        -----        -----
                                                                          
Profit for the year from discontinued operations        492.9         75.1
                                                                          
                                                        -----        -----

United Utilities Electricity

                                                 Period ended    Year ended
                                                  19 December      31 March 
                                                         2007          2007
                                                           £m            £m        
                                                                           
Total external revenue                                  223.7         315.4
                                                                           
Depreciation and amortisation                          (10.0)        (64.2)
                                                                           
Other operating expenses                               (60.4)        (72.3)
                                                                           
                                                        -----         -----
                                                                           
Operating profit                                        153.3         178.9
                                                                           
Investment income and finance expense                  (17.1)        (31.2)
                                                                           
                                                        -----         -----
                                                                           
Profit before taxation                                  136.2         147.7
                                                                           
Taxation on profit                                     (14.4)        (29.2)
                                                                           
                                                        -----         -----
                                                                           
Profit for the period/year from discontinued            121.8         118.5
operations                                                                 
                                                                           
                                                        -----         -----
                                                                           
Profit on disposal of discontinued operations           371.2              
                                                                           
                                                        -----              
                                                                           
Total profit for the period from discontinued           493.0              
operations                                                                 
                                                                           
                                                        -----              

Industrial liquid waste

                                                  Period ended   Year ended
                                                    26 October     31 March
                                                          2007         2007
                                                            £m           £m
                                                                           
Total external revenue                                     5.3         16.0
                                                                           
Depreciation and amortisation                            (0.2)        (2.4)
                                                                           
Other operating expenses                                 (5.2)       (11.5)
                                                                           
                                                         -----        -----
                                                                           
Operating (loss)/profit                                  (0.1)          2.1
                                                                           
Investment income and finance expense                        -          0.3
                                                                           
                                                         -----        -----                                                                           
(Loss)/profit before taxation                            (0.1)          2.4
                                                                           
Taxation on (loss)/profit                                    -        (0.7)
                                                                           
                                                         -----        -----
                                                                           
(Loss)/profit for the period/year from                   (0.1)          1.7
discontinued operations                                                    
                                                                           
                                                         -----        -----
                                                                           
Loss on disposal of discontinued operations              (4.9)             
                                                                           
                                                         -----             
                                                                           
Total loss for the period from discontinued              (5.0)             
operations                                                                 
                                                                           
                                                         -----             

Facilities management

                                                 Period ended    Year ended
                                                  22 February      31 March 
                                                         2008          2007 
                                                           £m            £m                 
Revenue                                                                    
                                                                           
External sales                                            5.7           4.9
                                                                           
Intra-group sales                                        21.6          38.4
                                                                           
                                                        -----         -----
                                                                           
Total revenue                                            27.3          43.3
                                                                           
Depreciation and amortisation                           (0.1)         (0.6)
                                                                           
Other operating expenses                               (26.4)        (38.3)
                                                                           
                                                        -----         -----
                                                                           
Operating profit                                          0.8           4.4
                                                                           
Investment income and finance expense                     0.5           0.5
                                                                           
                                                        -----         -----
                                                                           
Profit before taxation*                                   1.3           4.9
                                                                           
Taxation on profit                                          -         (1.5)
                                                                           
                                                        -----         -----
                                                                           
Profit for the period/year from discontinued              1.3           3.4
operations                                                                 
                                                                           
                                                        -----         -----
                                                                           
Profit on disposal of discontinued operations             9.1              
                                                                           
                                                        -----              
                                                                           
Total profit for the period from discontinued            10.4              
operations                                                                 
                                                                           
                                                        -----              

* Profit before taxation includes profit generated from intercompany trading of
£0.2 million in the period ended 22 February 2008 and £4.1 million in the year
ended 31 March 2007.

Vertex

                                                               Period ended
                                                              26 March 2007
                                                                         £m
                                                                           
Revenue                                                                    
                                                                           
External sales                                                        303.4
                                                                           
Intra-group sales                                                      89.5
                                                                           
                                                                      -----
                                                                           
Total revenue                                                         392.9
                                                                           
Depreciation and amortisation                                        (14.2)
                                                                           
Other operating expenses                                            (363.7)
                                                                           
                                                                      -----
                                                                           
Operating profit                                                       15.0
                                                                           
Investment income and finance expense                                   4.2
                                                                           
                                                                      -----
                                                                           
Profit before taxation*                                                19.2
                                                                           
Taxation on profit                                                    (5.9)
                                                                           
                                                                      -----
                                                                           
Profit for the period from discontinued operations                     13.3
                                                                           
                                                                      -----
                                                                           
Loss on disposal of discontinued operations before taxation          (65.1)
and assumption of deferred contingent consideration                        
                                                                           
Assumption of deferred contingent consideration                      (13.5)
                                                                           
                                                                      -----
                                                                           
Loss on disposal of discontinued operations before taxation          (78.6)
                                                                           
Taxation on loss on disposal of discontinued operations               (1.9)
                                                                           
                                                                      -----
                                                                           
Total loss for the period from discontinued operations               (67.2)
                                                                           
                                                                      -----

* Profit before taxation for the period ended 26 March 2007 includes profit
generated from intercompany trading of £8.7 million.

6. Earnings per share

Basic earnings per share and diluted earnings per share have been calculated by
dividing profit for the year by the following weighted average number of shares
in issue:

                                                        Basic       Diluted
                                                      million       million
                                                                           
Year ended 31 March 2008                                880.4         880.6
                                                                           
Year ended 31 March 2007                                876.8         880.6

The difference between the weighted average number of shares used in the basic
and the diluted earnings per share calculations represents those ordinary
shares deemed to have been issued for no consideration on the conversion of all
potential dilutive ordinary shares in accordance with IAS 33 `Earnings per
Share'.

The basic and diluted earnings per share for the year are as follows:

                                                               Re-presented
                                                   Year ended    Year ended
                                                     31 March      31 March 
                                                         2008          2007          
                                                                           
From continuing and discontinued operations                                
                                                                           
Basic                                                  103.3p         49.4p
                                                                           
Diluted                                                103.2p         49.2p
                                                                           
From continuing operations                                                 
                                                                           
Basic                                                   47.3p         40.9p
                                                                           
Diluted                                                 47.3p         40.7p
                                                                           

7. Dividends

                                                   Year ended    Year ended
                                                     31 March      31 March 
                                                         2008          2007  
                                                           £m            £m          
                                                                           
Dividends relating to the year comprise:                                   
                                                                           
Interim dividend                                        133.8         128.3
                                                                           
Final dividend                                          277.4         266.6
                                                                           
                                                        -----         -----
                                                                           
                                                        411.2         394.9
                                                                           
                                                        -----         -----

                                                   Year ended    Year ended
                                                     31 March      31 March 
                                                         2008          2007  
                                                           £m            £m         
                                                                           
Dividends deducted from shareholders' equity:                              
                                                                           
Final dividend                                          266.6         259.0
                                                                           
Interim dividend                                        133.8         128.3
                                                                           
                                                        -----         -----
                                                                           
                                                        400.4         387.3
                                                                           
                                                        -----         -----

The final dividend of 31.47 pence per ordinary share (2007: final dividend of
30.30 pence per ordinary share) will be paid on 8 August 2008 to shareholders
on the register at the close of business on 27 June 2008. The ex-dividend date
for the final dividend is 25 June 2008.

The interim dividend of 15.20 pence per ordinary share (2007: interim dividend
of 14.63 pence per ordinary share) was paid on 11 February 2008 to shareholders
on the register at the close of business on 21 December 2007.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This preliminary results statement contains certain forward-looking statements
with respect to the operations, performance and financial condition of the
group. By their nature, these statements involve uncertainty since future
events and circumstances can cause results and developments to differ
materially from those anticipated. The forward-looking statements reflect
knowledge and information available at the date of preparation of this
preliminary results statement and the company undertakes no obligation to
update these forward-looking statements. Nothing in this preliminary results
statement should be construed as a profit forecast.

Certain regulatory performance data contained in this announcement is subject
to regulatory audit.


                                                                                                   

a d v e r t i s e m e n t