Breaking News

Globalfoundries to Buy IBM's Chip Unit; IBM Sees Pretax Charge $4.7 Billion
Tweet TWEET

UNITED UTILITIES GROUP PLC: Half-yearly Report

United Utilities Group PLC 
28 November 2012 
HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2012 
£m                                            Six months ended               
                                                                        
(Continuing operations)           30 September 2012     30 September 2011    
                                                                        
Underlying operating profit*            315.7                 324.2          
                                                                        
Underlying profit before                189.7                 184.9         
taxation*                                                                    
                                                                        
Underlying profit after                 142.2                 135.9         
taxation*                                                                    
                                                                        
Underlying earnings per share*,         20.9                   19.9         
**(pence)                                                                    
Revenue                                 822.9                 792.7          
                                                                        
Operating profit                        315.1                 322.6          
                                                                        
Profit before taxation                  135.6                 124.4          
                                                                        
Profit after taxation                   153.9                 140.8          
                                                                        
Basic earnings per share**              22.6                   20.7         
(pence)                                                                      
                                                                        
Interim dividend per ordinary           11.44                 10.67         
share (pence)                                                                
*Underlying profit measures have been provided to give a more representative
view of business performance and are defined in the underlying profit measure
tables 
**Earnings per share and underlying earnings per share are explained in the
earnings per share section 
***Infrastructure renewals expenditure 
* Continued progress on customer service: further improvement in Ofwat SIM
scores 
* Strong operational performance on Ofwat's overall KPIs assessment 
* On track to meet regulatory outperformance targets 
* Effective delivery of capex programme: up 29% at £354m; expect to invest
around £750m in 2012/13 
* Underlying operating profit down £8m to £316m, reflecting higher IRE*** and
depreciation 
* Underlying profit before tax up £5m to £190m, benefiting from lower
underlying net finance expense 
* Robust financial position: RCV gearing in the middle of Ofwat's range and
pension surplus 
* Interim dividend of 11.44 pence per share, in line with policy 
Steve Mogford, Chief Executive Officer, said: 
"We have continued to deliver a better service to our customers and invest
substantially in our network. Our sustained focus on operational performance
across a broad front has seen us make a further improvement on Ofwat's service
incentive mechanism, building on a marked improvement last year, coupled with a
strong performance on Ofwat's overall KPIs assessment. Furthermore, we see
plenty of scope to deliver additional improvements for customers. 
"We are continuing to invest in our network for the benefit of our customers,
the environment and the local economy. Since the start of the regulatory period
in 2010, we have invested over £1.6 billion as we have sought to deliver a
smoother and more effective investment profile. In the first half of this year,
we have invested £354 million and now expect to invest around £750 million 
for
the full year. In addition, we are on track to meet our regulatory leakage
target for the seventh consecutive year. 
"United Utilities is committed to continued positive engagement to support the
progressive evolution of regulation in the water industry and we have submitted
proposals to Ofwat in respect of its recent licence modifications consultation.
We support the progression of retail competition for business customers and
have already assembled a strong team. We have won our first customer out of our
region and intend to pursue further opportunities as the market evolves. 
"The recent progress we have made reinforces our confidence in delivering our
2010-15 regulatory outperformance targets. Alongside our operational and
customer service improvements, we have delivered another good financial
performance despite a tough economic environment." 
For further information on the day, please contact: 
Gaynor Kenyon - Corporate Affairs Director             +44 (0) 7753 622282      
                                                                           
Darren Jameson - Head of Investor Relations            +44 (0) 7733 127707      
                                                                           
Ed Orlebar / Michelle Clarke - Tulchan Communications  +44 (0) 20 7353 4200     
A presentation to investors and analysts starts at 9.00 am on Wednesday 28
November 2012, at the Auditorium, Deutsche Bank, Winchester House, 1 Great
Winchester Street, London, EC2N 2DB. The presentation can be accessed via a
live listen in conference call facility by dialling: +44 (0) 20 7162 0025,
access code 925146. A recording of the call will be available for seven days
following Wednesday 28 November 2012 on +44 (0) 20 7031 4064, access code
925146. 
This results announcement and the associated presentation will be available on
the day at: http://corporate.unitedutilities.com/investors.aspx 
BUSINESS REVIEW 
KEY OPERATIONAL PROGRESS 
Operational performance and customer service are top priorities for United
Utilities (UU) and the company aims to deliver significant improvements in
these areas and outperform its regulatory contract. Our strong focus on
operational performance since the start of the 2010-15 regulatory period is
continuing to deliver a range of improvements, as outlined below: 
* Significant improvements in customer service - UU achieved the best
improvement in the industry on Ofwat's combined service incentive mechanism
(SIM) score in 2011/12, moving up five places to 16th position out of the 21
water companies. We are building on this improvement and have improved further
in the first half of 2012/13, moving up to joint 13th position on Ofwat's
qualitative SIM measure. Customer complaints to the Consumer Council for Water
(CCW) have continued to fall with zero complaints warranting investigation by
the CCW in the six months to 30 September 2012. 
* Strong operational performance rating - UU has performed well in Ofwat's
"Companies' key performance indicators 2011-12" report. Of the fifteen
assessments, UU was rated `Green' for eleven and `Amber' on four, with no areas
assessed as `Red' on the traffic light reporting matrix. This balance of
ratings would indicate a performance level above average, in respect of the ten
water and sewerage companies. 
* Capital delivery - We continue to drive more effective and efficient delivery
of our capital programme. This is reflected in an improvement in our Time:
Cost: Quality index (TCQi) score from around 50% 18 months ago to consistently
over 80%. UU has now invested over £1.6 billion in the first half of the
2010-15 regulatory period. This represents good progress at the mid-point of
the five year period, as management has sought to deliver a smoother investment
profile to support efficient delivery of outputs and reduce risk. 
* Leakage - We are on track to meet or outperform our regulatory leakage target
for the seventh consecutive year. 
* Regulatory outperformance - We have set clear targets for the 2010-15 period
and remain on track to deliver these targets: £300 million of financing
outperformance, which is already secured, at least £50 million of operating
expenditure outperformance and we expect to meet Ofwat's capital expenditure
allowance. We are on course to deliver cumulative operating expenditure
outperformance of at least £30 million by the end of 2012/13. 
* Corporate responsibility - UU has retained its `World Class' rating in the
Dow Jones Sustainability Index for the fifth consecutive year, attaining its
highest ever score. UU also has the highest platinum plus ranking in Business
in the Community's Corporate Responsibility Index. In addition, UU has been
awarded membership of the FTSE 350 Carbon Disclosure Leadership Index and is
the top UK utility company in this index by some distance. UU is one of only
four FTSE 100 companies to hold all three awards. 
* Retail competition for business customers - We are building our capability to
help ensure we are in a strong position as the industrial and commercial
competitive retail market evolves. We appointed Sue Amies-King from Aviva, in
the newly created role of Retail Director in June 2012, and recently recruited
Tony McHardy from Business Stream as Sales Director. We have now secured a
Scottish water supply licence and last month won our first business customer in
Scotland. We are actively pursuing further opportunities and are also
developing value-added services for business customers. 
Financial overview 
The group has delivered a good set of financial results for the six months
ended 30 September 2012. Revenue was up by £30 million to £823 million,
principally as a result of the impact of the regulated price increase for 2012/
13 of 5.8% nominal (0.6% real price increase plus 5.2% RPI inflation) partially
offset by reduced commercial volumes, alongside lower property sales
(associated with the water business). 
Infrastructure renewals expenditure was up £12 million, reflecting continued
progress on the capital investment programme and the impact of the transfer of
private sewers. This spend, alongside an expected increase in depreciation,
plus operating expenditure relating to private sewers, resulted in underlying
operating profit decreasing by £8 million to £316 million. 
Total regulatory capital investment in the half year, including £79 million of
infrastructure renewals expenditure, was £354 million, representing an 
increase
of 29% compared with the first half of last year. 
Underlying profit before taxation was up 3%, at £190 million. This was as a
result of a lower underlying net finance expense, reflecting lower RPI
inflation, which more than offset the reduction in underlying operating profit. 
Underlying profit after taxation was 5% higher than the first half of last
year, at £142 million, reflecting the reduction in the mainstream UK
corporation taxation rate. Reported profit after taxation benefited from a £53
million deferred taxation credit, which follows the UK government's changes to
reduce the mainstream corporation taxation rate. A similar credit of £50
million was recognised in the first half of 2011/12. 
UU has a robust capital structure and gearing (measured as group net debt to
regulatory capital value) as at 30 September 2012 was 60%, comfortably within
Ofwat's assumed range of 55% to 65%, supporting a solid investment grade credit
rating. United Utilities Water PLC (UUW) has a long-term credit rating of A3
from Moody's Investors Service with a stable outlook. 
The group benefits from headroom to cover its projected financing needs into
2014. This provides good flexibility in terms of when and how further debt
finance is raised to help fund the regulated capital expenditure programme.
Reflecting this robust financing position, in the first half of 2012/13, UU
accelerated approximately £65 million of previously agreed pension deficit
repair payments, providing a higher return for the group than could have been
achieved through short-term deposits. This completes early all previously
agreed pension deficit repair payments covering the 2010-15 regulatory period. 
In line with its policy, the board has declared an interim dividend of 11.44
pence per ordinary share. 
Outlook 
Our sustained focus on operational performance and customer service is
delivering results. We have improved further on Ofwat's service incentive
mechanism and have delivered a strong operational performance, as measured by
Ofwat's overall KPIs assessment. We are encouraged by the progress we have made
and believe there is plenty of scope for further improvement. In addition, we
are on track to meet our regulatory outperformance targets, with substantial
financing outperformance already secured. We have a robust capital structure
and intend to continue with our dividend policy of targeting 2% per annum
growth above the rate of RPI inflation through to at least 2015. We are
committed to continued positive engagement with government and regulators to
support the progressive evolution of the water industry, as we aim to achieve
the optimal outcome for all our stakeholders. 
OPERATIONAL PERFORMANCE 
UU aims to deliver long-term shareholder value by providing: 
* The best service to customers 
* At the lowest sustainable cost 
* In a responsible manner 
Best service to customers 
We delivered further improvements in our performance on Ofwat's service
incentive mechanism (SIM), reflecting our continuing strong focus on dealing
with customer enquiries. The number of customer complaints made to the Consumer
Council for Water (CCW) in the first half of 2012/13 has reduced by a further
12%, compared with the first half of 2011/12. We are pleased to report that the
total number of escalated complaints assessed by the CCW was zero in the six
months to 30 September 2012. This is the first time UU has achieved this since
the SIM measure was introduced. This has helped UU improve its SIM performance
further, as detailed in the KPIs section below. Our strong overall operational
performance, as measured by Ofwat's 2011/12 KPIs report, has also contributed
to improving customer satisfaction. 
UU continues to benefit from a robust water supply and demand balance and
reservoir levels are ahead of typical levels for this time of year. In
addition, UU continues to supply a high quality of drinking water, with a mean
zonal compliance water quality performance remaining well over 99.9%. 
We have a range of actions to help support the serviceability of our assets. We
are improving the robustness of our water treatment processes, refurbishing
service reservoir assets, continuing with our comprehensive mains cleaning
programme and are optimising water treatment to reduce discoloured water
events. To help reduce sewer flooding, the actions include incident based
targeting to focus on areas more likely to experience flooding, effective
intervention in cleaning and rehabilitation or refurbishment of sewers and
advising customers about items not suitable for sewer disposal. The plan
includes an improved approach to risk assessment to identify and reduce the
risk profile of the company's wastewater treatment works. 
Improving customer service remains a significant area of continued management
focus and we see plenty of opportunity to deliver further improvements. 
Key performance indicators: 
* Serviceability - Long-term stewardship of assets is critical and Ofwat
measures this through its serviceability assessment (Ofwat defines
serviceability as the capability of a system of assets to deliver a reference
level of service to customers and to the environment now and in the future). We
are currently assessed as `improving' for wastewater non-infrastructure assets
and `stable' for water infrastructure and water non-infrastructure assets. UU
is currently assessed by the regulator as `marginal' in respect of wastewater
infrastructure and the company is implementing an action plan to return this
asset class back to a `stable' rating. The aim is to hold at least a `stable'
rating for all four asset classes, which is aligned with Ofwat's target. 
* Service incentive mechanism (SIM) - UU made significant progress on Ofwat's
combined SIM assessment for 2011/12, moving up five places to 16th of the 21
water companies, compared with 2010/11. This represented the largest overall
SIM score improvement in the industry. Further progress has been made in the
first six months of 2012/13, with a half year quantitative score of 111 points,
representing a further 27% improvement compared with the first half of 2011/12.
On the qualitative measure, UU has improved its average 2011/12 score by 0.22
points to 4.40 points for the first six months of the year, moving up three
places to joint 13th. Our progress is encouraging, as we aim to move to the
first quartile in the medium-term. 
Lowest sustainable cost 
Our asset optimisation programme continues to progress well, providing the
benefits of increased and more effective use of operational site management to
optimise power and chemical use and the development of more combined heat and
power assets to improve energy efficiency. 
We are continuing to introduce a more proactive approach to asset and network
management, with the aim of improving our modelling and forecasting to enable
us to address more asset and network problems before they affect customers,
thereby reducing the level of reactive work and improving efficiency. 
UU has substantially locked in the cost of its power requirements through to
2014/15, via hedging, securing outperformance. Although power unit costs for
2012/13 onwards have been secured at higher levels than those for 2011/12, this
still delivers additional outperformance versus the regulatory contract. 
We are continuing to enhance our proactive approach to debt collection and are
implementing a detailed action plan. The North West faces a particularly tough
economic environment, with unemployment having increased at a faster rate than
any other UK region in 2011/12 resulting in an adverse impact on ability to pay
this year. Despite this, we have again delivered a good performance and
sustained bad debts at 2.2% of regulated revenue for the first half of 2012/13,
consistent with the 2011/12 full year position. 
The group placed its pension provision on a more sustainable footing in 2010
and has subsequently taken additional steps to de-risk the pension scheme
further, with UU now benefiting from a small pension surplus. Further details
on the group's pension provision are provided in the pensions section. 
The business is strongly focused on delivering its commitments efficiently and
on time and has a robust commercial capital delivery framework in place for the
2010-15 period. Regulatory capital investment in the half year, including £79
million of infrastructure renewals expenditure, was £354 million, an increase
of 29% compared with the first half of last year. Our Time: Cost: Quality index
(TCQi) score has been maintained at over 80% through the first half of the
year, consistent with 2011/12, despite the increased activity. The company's
long-term goal is to achieve over 90%. Following our good progress in the first
half of the year, we expect to deliver around £750 million of capital
investment in 2012/13. 
The ownership of and responsibility for private sewers was transferred to the
wastewater companies in England and Wales from 1 October 2011. In the first
half of 2012/13, activity levels and expenditure have been a little below
expectations and the mix of work has been weighted more towards capital
enhancement rather than opex. As a result, opex in the first half of the year
was £3 million and capex was £14 million, of which £6 million was IRE. There 
is
no change to UU's 2011-15 total cost estimate of £160 million at this stage,
but we will continue to review these cost estimates based on the levels and
type of workload and activity experienced and provide updated forecasts as
appropriate. 
Key performance indicators: 
* Financing outperformance - UU has secured over £300 million of financing
outperformance across the 2010-15 period, when compared with Ofwat's allowed
cost of debt of 3.6% real, based on an average RPI inflation rate of 2.5% per
annum. Should average RPI inflation outturn at 3.5% per annum across the
five-year period, this would increase financing outperformance to around £400
million, net of the impact of the pensions inflation funding mechanism. 
* Operating expenditure outperformance - The business is targeting total
operating expenditure outperformance over the 2010-15 period of at least £50
million, or approximately 2%, compared with the regulatory allowance. This is
in addition to the base operating expenditure efficiency targets set by Ofwat,
which equate to a total of approximately £150 million over the five years. UU
delivered cumulative operating expenditure outperformance of over £20 million
in the first two years of the regulatory period and is on track to increase
this to over £30 million across the first three years. 
* Capital expenditure outperformance - UU is continuing to deliver significant
efficiencies in the area of capital expenditure and expects to meet Ofwat's
allowance after adjusting, through the regulatory methodology, for the impact
of lower construction output prices. 
Responsible manner 
Sustainability is fundamental to the manner in which we undertake our business
and the group has for many years included corporate responsibility factors as a
strategic consideration in its decision making. This has contributed to UU
achieving its highest ever score in the 2011/12 Dow Jones Sustainability Index
assessment and retaining its `World Class' rating for the fifth consecutive
year. UU also holds the highest platinum plus ranking in Business in the
Community's Corporate Responsibility Index and was recently awarded membership
of the FTSE 350 Carbon Disclosure Leadership Index. UU is one of only four FTSE
100 companies to hold all three awards. 
UU's strong, year round, operational focus on leakage enabled it to meet its
regulatory leakage target for the sixth consecutive year in 2011/12 and the
group is performing well in the first half of this year. 
Environmental performance is a high priority for UU and we are pleased to
report the lowest number of major pollution incidents of the ten water and
wastewater companies, per kilometre of pipe for 2011/12, as assessed through
Ofwat's published KPIs.  Across Ofwat's six `Environmental Impact' KPIs, UU's
performance was above average, with three areas assessed as `Green', three as
`Amber' and no areas assessed as `Red', on the traffic light reporting matrix.
Recognising that environmental performance is wide-ranging, the company is
measuring itself against an Environment Agency (EA) composite measure as
detailed in the key performance indicators below. 
UU has a detailed carbon and renewable energy plan, which contributes to
sustainability through reducing emissions and reducing costs. We are on track
to meet our target of a 21% reduction in carbon emissions by 2015 (measured
from a 2005/06 baseline). UU has consistently generated around 100 GWh of
renewable electricity annually for the past three years, principally from
sludge processing. 
Construction is well underway on UU's £200 million plant expansion to its
existing wastewater treatment works in Liverpool, serving over half a million
customers. This project will deliver both environmental benefits and growth in
the company's regulatory capital value, as well as contributing to the local
economy. 
The company's health and safety improvement programme has helped reduce further
employee accident frequency rates through the first half of the year. Health
and safety will continue to be a significant area of focus for the company, as
we strive for continuous improvement. 
Key performance indicators: 
* Leakage - UU met its economic level of leakage rolling target for the sixth
consecutive year in 2011/12, with a performance of 453 megalitres per day
versus the regulatory target of 464 megalitres per day, and the company is on
course to meet its 2012/13 target. The aim is to meet our regulatory leakage
target each year. 
* Environmental performance - The EA is introducing a revised environmental
performance measure, which is due to be published shortly. UU's good
performance on Ofwat's KPIs, within the `Environmental Impact' category, should
positively impact the EA's overall assessment on this revised measure. UU was
positioned seventh out of the ten water and sewerage companies for 2010/11 on
the EA's previous composite measure. UU aims to move to the first quartile in
the medium-term. 
* Corporate responsibility - UU has a strong focus on corporate responsibility
and is the only UK water company to have a `World Class' rating as measured by
the Dow Jones Sustainability Index, achieving our highest ever score in 2011/
12. The group aims to retain this `World Class' rating each year. 
Political and regulatory developments 
UU is actively involved in political and regulatory developments that relate to
the UK water sector and has a proactive programme to regularly engage with the
key parties. Retaining investor confidence in the sector is of paramount
importance. 
Draft Water Bill 
The UK Government published a draft Water Bill in July 2012. This proposes the
introduction of both retail competition and wholesale, or upstream,
competition. The UK Government is considering the responses it has received
from various interested parties to the draft Water Bill and the pre-legislative
scrutiny period is expected to close by the end of the 2012 calendar year. UU
supports the introduction of retail competition for industrial and commercial
customers, but has responded to the Efra Select Committee that it has concerns
with the upstream proposals. As currently drafted, it is questionable to what
extent these proposals are consistent with commitments to protect the existing
regulatory capital value (RCV), to secure continued investor confidence needed
to support future investment and to allow customers to continue to benefit from
low cost RCV funding in the long term. 
Licence modifications 
Ofwat issued proposals to modify company licences under `Section 13' of the
Water Industry Act on 26 October 2012. UU responded on 23 November 2012 and
announced that, after careful consideration, the board of United Utilities
Water PLC (UUW) has concluded that it is unable to accept Ofwat's `Section 13'
licence modification proposals because it believes that, in their current form,
they are not in the best interests of customers, investors and wider
stakeholders. To aid further constructive dialogue, UUW has submitted
alternative proposals to Ofwat for its consideration. 
UUW's principal concern is that the extent of flexibility in Ofwat's current
licence proposals would create unnecessary and prolonged uncertainty for
investors, with the potential for this uncertainty to impact customer bills. 
UUW is committed to continued positive engagement with Ofwat to support the
progressive evolution of regulation in the water industry. The company's
proposals include the licence changes necessary to facilitate the forthcoming
price review in 2014 and the development of retail competition for business
customers. UUW also recognises that additional licence amendments may be
required to accommodate specific changes to the regulatory regime in
preparation for 2020 and beyond and will actively engage in helping to ensure
that the benefits of such developments are fully evaluated and understood. 
2014 price review 
Ofwat published its statement of principles for the 2014 price review (PR14) in
May 2012, followed by retail and wholesale price control consultations. UU has
submitted its responses to Ofwat in respect of both of these consultations. On
the matter of retail price controls, we believe it is essential that the
regulator continues to take account of regional socio-economic conditions,
addresses reporting inconsistencies between companies, allows for inflation and
makes adjustments to reflect the number of customers who receive only a water
or wastewater service. A framework consultation for PR14 is expected to be
published by the regulator in December 2012. 
FINANCIAL PERFORMANCE 
Revenue 
UU has delivered a good set of financial results for the six month period ended
30 September 2012. Revenue increased by £30 million to £823 million,
principally reflecting a 5.8% nominal (0.6% real price increase plus 5.2% RPI
inflation) regulated price increase, partially offset by reduced commercial
volumes and lower property sales. Commercial volumes continued to be impacted
by the tough economic climate, with a large rise in unemployment in the North
West during 2011/12. The impact of meter switching and reduced domestic
consumption was in line with our expectations, however, this was offset by
additional revenue derived from new property connections. We would expect to
recover the majority of any regulated revenue shortfall through the regulatory
methodology. 
Operating profit 
Underlying operating profit decreased by 3% to £316 million, primarily as a
result of an increase in depreciation alongside higher infrastructure renewals
expenditure and other operating costs, both of which are impacted by the
transfer of private sewers, largely offset by the increase in revenue. Reported
operating profit decreased by 2% to £315 million. 
Investment income and finance expense 
Investment income and finance expense of £180 million was £19 million lower
than the first half of 2011/12, principally reflecting a £13 million fall in
the underlying net finance expense and a £7 million decrease in fair value
losses on debt and derivative instruments. The £49 million net fair value loss
in the period is largely due to losses on the regulatory swap portfolio
resulting from a further decrease in sterling interest rates during the period.
The group uses these swaps to fix interest rates on a substantial proportion of
its debt to better match the financing cash flows allowed by the regulator at
each price review. The group has continued to benefit from fixing the majority
of its remaining debt for the 2010-15 financial period, providing a net
effective nominal interest rate of approximately 5%. 
The underlying net finance expense of £126 million was £13 million lower than
the first six months of last year, principally reflecting lower RPI inflation
in respect of the group's index-linked debt. The indexation of the principal on
index-linked debt amounted to a net charge in the income statement of £43
million, compared with a net charge of £57 million in the corresponding period
last year. The group had approximately £2.7 billion of index-linked debt as at
30 September 2012. The lower RPI indexation charge contributed to the group's
average underlying interest rate of 5.0% being lower than the rate of 5.8% for
the first six months of 2011/12. 
Profit before taxation 
Underlying profit before taxation was £190 million, £5 million higher than 
the
first half of last year as the £8 million decrease in underlying operating
profit was more than offset by the £13 million reduction in underlying finance
expense. This underlying measure adjusts for the impact of one-off items,
principally from restructuring and reorganisation within the business, and fair
value movements in respect of debt and derivative instruments. Reported profit
before taxation increased by £11 million to £136 million, primarily as a 
result
of the increase in underlying profit before tax and a decrease in net fair
value losses on debt and derivative instruments. 
Taxation 
The current taxation charge was £33 million in the half year and the current
taxation effective rate was 24%, compared with 27% in the corresponding period
last year. 
The group has recognised a net deferred taxation credit of £51 million in the
first half of 2012/13, which primarily relates to a £53 million credit in
respect of the change substantively enacted by the UK government on 3 July 2012
to reduce the mainstream rate of corporation taxation from 24% to 23% with
effect from 1 April 2013.  A net deferred taxation credit of £50 million was
also recognised in the first half of 2011/12, reflecting a similar 1% staged
reduction in the rate of corporation taxation. 
An overall taxation credit of £18 million has been recognised for the six
months ended 30 September 2012.  Excluding the deferred taxation impact of the
future reduction in the corporation taxation rate, the total taxation charge
would have been £35 million or 25% compared with a £33 million charge or 27% 
in
the first half of last year. This reduction is principally due to the decrease
in the mainstream rate of corporation taxation from 26% for 2011/12 to the
current rate of 24%. 
The group made cash taxation payments during the half year of £17 million. 
This
was lower than the group's net taxation payment of £29 million in the first
half of last year primarily due to the high levels of pension contributions
made in 2011/12 which reduced the cash tax paid in the first half of 2012/13. 
Profit after taxation 
Underlying profit after taxation of £142 million was £6 million higher than 
the
first half of last year, reflecting the increase in underlying profit before
taxation and a lower underlying taxation charge. Reported profit after taxation
was £154 million compared with £141 million last year. 
Earnings per share 
Underlying earnings per share increased from 19.9 pence to 20.9 pence. This
underlying measure is derived from underlying profit after taxation. This
includes the adjustments for the deferred taxation credits in both the first
half of 2012/13 and 2011/12, associated with the reductions in the corporation
taxation rate. Basic earnings per share increased from 20.7 pence to 22.6
pence. 
Dividend per share 
The board has declared an interim dividend of 11.44 pence per ordinary share in
respect of the six months ended 30 September 2012. This is an increase of 7.2%,
compared with the interim dividend relating to the previous year, in line with
group's dividend policy of targeting a growth rate of RPI+2% per annum through
to at least 2015. The inflationary increase of 5.2% is based on the RPI element
included within the allowed regulated price increase for the 2012/13 financial
year (i.e. the movement in RPI between November 2010 and November 2011). 
The interim dividend is expected to be paid on 1 February 2013 to shareholders
on the register at the close of business on 21 December 2012. The ex-dividend
date is 19 December 2012. 
Cash flow 
Net cash generated from continuing operating activities for the six months
ended 30 September 2012 was £265 million, compared with £212 million in the
first half of last year. This is predominantly due to a reduction in the
accelerated pension deficit repair payments between the two six monthly
periods. The group's net capital expenditure was £294 million, principally in
the regulated water and wastewater investment programmes. This excludes
infrastructure renewals expenditure which is treated as an operating cost under
International Financial Reporting Standards. 
Net debt including derivatives at 30 September 2012 was £5,323 million,
compared with £5,076 million at 31 March 2012. This expected increase reflects
expenditure on the regulatory capital expenditure programmes and payments of
dividends, interest and taxation, alongside the accelerated pension deficit
repair payment, partly offset by operating cash flows. 
Debt financing and interest rate management 
Gearing (measured as group net debt divided by UUW's regulatory capital value
adjusted for actual capital expenditure) marginally increased to 60% at 30
September 2012, compared with 59% at 31 March 2012, and remains comfortably
within Ofwat's 55% to 65% assumed gearing range. The group now has a small
pensions surplus of £39 million, on an IFRS basis, compared with a deficit of 
£
92 million as at 31 March 2012. Taking account of this small surplus, and
treating it as cash, gearing remains at 60%. 
At 30 September 2012, United Utilities Water PLC had long-term credit ratings
of A3/BBB+ and United Utilities PLC had long-term credit ratings of Baa1/BBB-from Moody's Investors Service and Standard & Poor's Ratings Services
respectively. The split rating reflects differing methodologies used by the
credit rating agencies. 
Cash and short-term deposits at 30 September 2012 amounted to £153 million.
Between March 2011 and March 2012, the group's financing headroom position was
enhanced by drawing down £400 million of index-linked loan facilities with the
European Investment Bank. There were no further debt issuances in the first
half of 2012/13, although the group also renewed £50 million of existing bank
facilities in the period. UU has headroom to cover its projected financing
needs into 2014. 
The group has access to the international debt capital markets through its €7
billion euro medium-term note programme which provides for the periodic
issuance by United Utilities PLC and United Utilities Water PLC of debt
instruments on terms and conditions determined at the time the instruments are
issued. The programme does not represent a funding commitment, with funding
dependent on the successful issue of the debt securities. 
Long-term borrowings are structured or hedged to match assets and earnings,
which are largely in sterling, indexed to UK retail price inflation and subject
to regulatory price reviews every five years. 
Very long-term sterling inflation index-linked debt is the group's preferred
form of funding as this provides a natural hedge to assets and earnings. At 30
September 2012, approximately 51% of the group's net debt was in index-linked
form, representing around 31% of UUW's regulatory capital value, with an
average real interest rate of 1.7%. The long-term nature of this funding also
provides a good match to the company's long-life infrastructure assets and is a
key contributor to the group's average term debt maturity profile which is
approximately 25 years. 
Where nominal debt is raised in a currency other than sterling and/or with a
fixed interest rate, to manage exposure to long-term interest rates, the debt
is generally swapped to create a floating rate sterling liability for the term
of the liability. To manage exposure to medium-term interest rates, the group
fixed interest costs for a substantial proportion of the group's debt for the
duration of the 2010-15 regulatory period at around the time of the price
review. 
Following the 2009 price review, the group re-assessed its interest rate
hedging policy with a view to further reducing regulatory risk. To help address
the uncertainty as to how Ofwat may approach the setting of the cost of debt
allowance at the next price review in 2014, UU revised its interest rate
management strategy to extend its fixed interest rate hedge out to a ten year
maturity on a reducing balance basis. The intention is that the effective
interest rate, on the group's nominal debt, in any given year will, over time,
be a ten-year rolling average interest rate. UU believes that this revised
interest rate hedging policy, which provides for a longer fixing of interest
rates, will put the company in a more flexible position to respond to whatever
approach Ofwat adopts to the industry cost of debt in future. 
Liquidity 
Short-term liquidity requirements are met from the group's normal operating
cash flow and its short-term bank deposits and supported by committed but
undrawn credit facilities. In addition to its €7 billion euro medium-term 
note
programme, the group has a €2 billion euro-commercial paper programme, both 
of
which do not represent funding commitments. 
In line with the board's treasury policy, UU aims to maintain a robust headroom
position. Available headroom at 30 September 2012 was £414 million based on
cash, short-term deposits and medium-term committed bank facilities, net of
short-term debt. This headroom is sufficient to cover the group's projected
financing needs into 2014. 
UU believes that it operates a prudent approach to managing banking
counterparty risk. Counterparty risk, in relation to both cash deposits and
derivatives, is controlled through the use of counterparty credit limits. UU's
cash is held in the form of short-term (generally no longer than three months)
money market deposits with prime commercial banks. 
UU operates a bilateral, rather than a syndicated, approach to its core
relationship banking facilities. This approach spreads maturities more evenly
over a longer time period, thereby reducing refinancing risk and providing the
benefit of several renewal points rather than a large single refinancing
requirement. 
Pensions 
As at 30 September 2012, the group had an IAS 19 net retirement benefit, or
pension, surplus of £39 million, compared with a net pension deficit of £92
million at 31 March 2012. This £131 million positive movement principally
reflects payments of £65 million in respect of accelerated, previously agreed,
deficit repair contributions, payments under the inflation funding mechanism
and the favourable impact of a fall in inflation. This was partly offset by a
fall in interest rates, the impact of which was tempered through positive
investment returns due to the group's interest rate hedge. Following the
accelerated deficit repair contributions paid in the period, the group has now
completed all scheduled deficit repair payments through to March 2015. 
The group has sought to adopt a more sustainable approach to the delivery of
pension provision and prior to the start of the 2010-15 regulatory period
amended the terms of its defined benefit pension schemes. UU stated previously
that it would continue to evaluate its pensions investment strategy to de-risk
further its pension provision and introduced an inflation funding mechanism,
which facilitates a move to a lower risk investment strategy. This allowed UU
to reduce the allocation of its pension assets to 25% in equities and other
high risk assets, down from 48% at 31 March 2010. In addition, UU has adopted
the use of more prudent longevity assumptions. Over the last two financial
years, the group also progressively increased its interest rate hedge and since
30 September 2012 has extended this further to around 75% of the pension scheme
liabilities. Although any additional payments under the inflation funding
mechanism would reduce financing outperformance, there would be a positive
benefit to the pensions surplus or deficit position. 
From an accounting perspective, IAS 19 treats the inflation funding mechanism
as a schedule of contributions rather than a pension scheme asset. This means
that the liabilities position can change to reflect a change in market
expectations of long-term inflation, without a commensurate movement in assets.
The change in inflation has decreased the present value of the liabilities
during the six months to 30 September 2012. This accounting treatment means
that there is likely to be a degree of volatility in future IAS 19 pension
valuations. 
Further detail is provided in note 7 ("Retirement benefit surplus/(obligations)
") of these condensed consolidated financial statements. 
Underlying profit 
In considering the underlying results for the period, the directors have
adjusted for the items outlined in the table below to provide a more
representative view of business performance. Reported operating profit and
profit before taxation from continuing operations are reconciled to underlying
operating profit, underlying profit before taxation and underlying profit after
taxation (non-GAAP measures) as follows: 
Continuing operations                                                          
                                                Six months      Six months 
Operating profit                                         ended           ended 


                                                  30 September    30 September 
                                                          2012            2011


                                                        £m              
£m 
                                                                          
Operating profit per published results                   315.1           322.6 
                                                                          
One-off items*                                             0.6             1.6 


                                                                              
                                                         -----           -----


                                                                          
Underlying operating profit                              315.7           324.2 


                                                                              
                                                         -----           -----


                                                                          
Net finance expense                                                            
                                                        £m              
£m 
                                                                          
Finance expense                                        (180.8)         (199.9) 
                                                                          
Investment income                                          1.3             1.7 


                                                                              
                                                         -----           -----


                                                                          
Net finance expense per published results              (179.5)         (198.2) 
                                                                          
Net fair value losses on debt and derivative              49.4            55.9
instruments                                                                    
                                                                          
Adjustment for interest on swaps and debt                  3.0             3.8
under fair value option                                                        
                                                                          
Adjustment for net pension interest expense                6.5             3.2 
                                                                          
Adjustment for capitalised borrowing costs               (5.4)           (4.0) 
                                                                          
Underlying net finance expense                         (126.0)         (139.3) 


                                                                              
                                                         -----           -----


                                                                          
Profit before taxation                                                         
                                                        £m              
£m 
                                                                          
Profit before taxation per published results             135.6           124.4 
                                                                          
One-off items*                                             0.6             1.6 
                                                                          
Net fair value losses on debt and derivative              49.4            55.9
instruments                                                                    
                                                                          
Adjustment for interest on swaps and debt                  3.0             3.8
under fair value option                                                        
                                                                          
Adjustment for net pension interest expense                6.5             3.2 
                                                                          
Adjustment for capitalised borrowing costs               (5.4)           (4.0) 


                                                                              
                                                         -----           -----


                                                                          
Underlying profit before taxation                        189.7           184.9 


                                                                              
                                                         -----           -----


                                                                          
Profit after taxation                                                          
                                                        £m              
£m 
                                                                          
Underlying profit before taxation                        189.7           184.9 
                                                                          
Reported taxation                                         18.3            16.4 
                                                                          
Deferred taxation credit - change in taxation           (52.8)          (49.7)
rate                                                                           
                                                                          
Taxation in respect of adjustments to                   (13.0)          (15.7)
underlying profit before taxation                                              


                                                                              
                                                         -----           -----


                                                                          
Underlying profit after taxation                         142.2           135.9 
                                                                           


                                                         -----           -----

* Principally relates to restructuring costs within the business


PRINCIPAL RISKS AND UNCERTAINTIES

We manage risk through our corporate risk management framework. As part of this
we maintain a process that regularly assesses the nature and magnitude of
internal and external risks. Mitigation measures are used in a prioritised
manner to reduce exposure and ensure resilience. The executive reviews
significant risks so that the board can determine the nature and extent of
those risks it is willing to take in achieving our strategic objectives. The
audit and risk committee regularly reviews the framework's effectiveness and
the group's compliance with it.

The group's anticipated principal risks and uncertainties over the second half
of the financial year and beyond remain as stated in its 2012 Annual Report and
Financial Statements, with two additions: the recent RPI methodology
consultation initiated by the UK Office for National Statistics; and the
infraction hearing decision regarding the UK's implementation of the Urban
Waste Water Treatment Directive in respect of combined sewer overflows, the
details of which are outlined below.  The principal risks and uncertainties are
set out in full on pages 26-32 of the 2012 Annual Report and Financial
Statements, namely (a) government market reform agenda; (b) future price limits
- average cost to serve; (c) future price limits - licence modifications; (d)
capital investment programmes; (e) service incentive mechanism; (f)
serviceability assessment; (g) pension scheme obligations; (h) failure to
comply with applicable law or regulations; (i) events, service interruptions,
systems failures, water shortages or contamination of water supplies; and (j)
material litigation. An update in respect of "(c) price limits - licence
modifications" has been provided in the political and regulatory developments
section of this half year report.

The UK Office for National Statistics initiated a consultation in October 2012
in respect of the methodology for calculating RPI inflation. The options being
considered range from no change to a change which would likely lower the value
of RPI, compared with the current methodology, and align the formulae to that
of CPI inflation. UU has contributed to the consultation process, which runs
through to the end of November 2012. The water industry is awaiting the outcome
of this consultation and any subsequent decisions by the UK Government in
respect of whether any potential changes are considered to be `fundamental'.
There remains much uncertainty as to the possible outcome and implications.
Depending on the outcome, which is expected in early 2013, this may impact
growth in the RCV and revenue, alongside implications for operating costs,
finance expense and pensions. Any possible changes in RPI are likely to ensue
before the next regulatory price review in 2014, providing Ofwat with the
opportunity to consider and respond to the potential impact on the water
industry.

On 18 October 2012 the European Commission delivered its verdict and found the
UK to have failed to implement correctly the Urban Waste Water Treatment
Directive for the Whitburn and the London test cases, in respect of combined
sewer overflows. The water industry is now awaiting the UK Government's
response to this outcome. Should material additional capital expenditure be
required, UU would expect this to be reflected in future regulatory price
determinations. UU will engage with its regulators and stakeholders as
appropriate.

There has been no change to the nature of related party transactions in the
first six months of the financial year which has materially affected the
financial position or performance of UU.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This financial report 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 financial report and
the company undertakes no obligation to update these forward-looking
statements. Nothing in this financial report should be construed as a profit
forecast.

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

Consolidated income statement                                                  
                                                                               
                                                                               
                                            Six months    Six months Year ended
                                                 ended         ended   31 March
                                          30 September  30 September       2012
                                                  2012          2011           
                                                                               


                                                £m            £m         
£m 
                                                                           
Continuing operations                                                           


                                                                               
                                                 -----         -----      -----


                                                                           
Revenue                                          822.9         792.7    1,564.9 


                                                                               
                                                 -----         -----      -----


                                                                           
Employee benefits expense:                                                      
                                                                           
- excluding restructuring costs                 (69.7)        (66.0)    (135.4) 
                                                                           
- restructuring costs                            (0.6)         (1.6)      (2.6) 


                                                                               
                                                 -----         -----      -----


                                                                           
Total employee benefits expense                 (70.3)        (67.6)    (138.0) 
                                                                           
Other operating costs                          (199.8)       (192.2)    (388.0) 
                                                                           
Other income                                       1.3           2.7        4.8 
                                                                           
Depreciation and amortisation expense          (160.2)       (146.6)    (297.8) 
                                                                           
Infrastructure renewals expenditure             (78.8)        (66.4)    (154.4) 


                                                                               
                                                 -----         -----      -----


                                                                           
Total operating expenses                       (507.8)       (470.1)    (973.4) 


                                                                               
                                                 -----         -----      -----


                                                                           
Operating profit                                 315.1         322.6      591.5 
                                                                           
Investment income                                  1.3           1.7        4.4 
                                                                           
Finance expense (note 3)                       (180.8)       (199.9)    (315.5) 


                                                                               
                                                 -----         -----      -----


                                                                           
Investment income and finance expense          (179.5)       (198.2)    (311.1) 


                                                                               
                                                 -----         -----      -----


                                                                           
Profit before taxation                           135.6         124.4      280.4 
                                                                           
Current taxation charge                         (32.6)        (34.0)     (45.5) 
                                                                           
Deferred taxation (charge)/credit                (1.9)           0.7     (28.1) 
                                                                           
Deferred taxation credit - change in              52.8          49.7      104.6
taxation rate                                                                   


                                                                               
                                                 -----         -----      -----


                                                                           
Taxation (note 4)                                 18.3          16.4       31.0 


                                                                               
                                                 -----         -----      -----


                                                                           
Profit after taxation from continuing            153.9         140.8      311.4
operations                                                                      
                                                                           
Discontinued operations                                                         
                                                                           
Profit after taxation from discontinued            3.0           0.9        5.1
operations                                                                      


                                                                               
                                                 -----         -----      -----


                                                                           
Profit after taxation                            156.9         141.7      316.5 


                                                                               
                                                 -----         -----      -----


                                                                           
Earnings per share                                                              
                                                                           
from continuing and discontinued                                               
operations (note 5)                                                             
                                                                           
Basic                                            23.0p         20.8p      46.4p 
                                                                           
Diluted                                          23.0p         20.8p      46.4p 
                                                                           
Earnings per share                                                              
                                                                           
from continuing operations (note 5)                                             
                                                                           
Basic                                            22.6p         20.7p      45.7p 
                                                                           
Diluted                                          22.5p         20.7p      45.6p 
                                                                           
Dividend per ordinary share (note 6)            11.44p        10.67p     32.01p 


                                                                               

Consolidated statement of comprehensive income
                                                                               
                                            Six months    Six months Year ended
                                                 ended         ended   31 March
                                          30 September  30 September       2012
                                                  2012          2011           
                                                                               


                                                £m            £m         
£m 
                                                                           
Profit after taxation                            156.9         141.7      316.5 
                                                                           
Other comprehensive income                                                      
                                                                           
Actuarial gains/(losses) on defined                                            
benefit pension schemes                           62.2          98.8     (24.3) 
                                                                           
(note 7)                                                                        
                                                                           
Taxation on items taken directly to             (15.1)        (24.7)        4.4
equity (note 4)                                                                 
                                                                           
Foreign exchange adjustments                     (1.7)         (1.1)      (1.9) 


                                                                               
                                                 -----         -----      -----


                                                                           
Total comprehensive income                       202.3         214.7      294.7 
                                                                            


                                                 -----         -----      -----

Consolidated statement of financial                                            
position                                  30 September  30 September   31 March
                                                  2012          2011       2012


                                                £m            £m         
£m 
                                                                           
ASSETS                                                                          
                                                                           
Non-current assets                                                              
                                                                           
Property, plant and equipment                  8,785.4       8,380.9    8,644.5 
                                                                           
Goodwill                                           4.7           5.0        5.0 
                                                                           
Other intangible assets                           90.9          90.5       89.5 
                                                                           
Investments                                        4.5           3.4        3.3 
                                                                           
Trade and other receivables                        1.2           4.5        1.1 
                                                                           
Retirement benefit surplus (note 7)               39.3          27.9          - 
                                                                           
Derivative financial instruments                 612.8         646.4      567.5 


                                                                               
                                                 -----         -----      -----
                                                                               
                                               9,538.8       9,158.6    9,310.9
                                                                               
                                                 -----         -----      -----


                                                                           
Current assets                                                                  
                                                                           
Inventories                                       47.7          46.8       47.4 
                                                                           
Trade and other receivables                      360.8         342.6      301.4 
                                                                           
Cash and short-term deposits                     152.5         325.2      321.2 
                                                                           
Derivative financial instruments                  99.7           3.8       49.9 


                                                                               
                                                 -----         -----      -----
                                                                               
                                                 660.7         718.4      719.9
                                                                               
                                                 -----         -----      -----


                                                                           
Total assets                                  10,199.5       9,877.0   10,030.8 


                                                                               
                                                 -----         -----      -----


                                                                           
LIABILITIES                                                                     
                                                                           
Non-current liabilities                                                         
                                                                           
Trade and other payables                       (397.0)       (281.9)    (378.0) 
                                                                           
Borrowings                                   (5,821.2)     (5,513.2)  (5,728.1) 
                                                                           
Retirement benefit obligations (note 7)              -             -     (92.0) 
                                                                           
Deferred taxation liabilities                (1,211.5)     (1,284.8)  (1,245.2) 
                                                                           
Provisions                                       (2.5)         (6.8)      (4.0) 
                                                                           
Derivative financial instruments               (207.2)       (152.6)    (159.7) 


                                                                               
                                                 -----         -----      -----
                                                                               
                                             (7,639.4)     (7,239.3)  (7,607.0)
                                                                               
                                                 -----         -----      -----


                                                                           
Current liabilities                                                             
                                                                           
Trade and other payables                       (481.2)       (490.9)    (447.6) 
                                                                           
Borrowings                                     (158.1)       (319.9)    (127.1) 
                                                                           
Current income taxation liabilities             (91.5)        (58.2)     (78.1) 
                                                                           
Provisions                                       (6.4)        (12.1)      (6.3) 
                                                                           
Derivative financial instruments                 (1.3)             -      (0.1) 


                                                                               
                                                 -----         -----      -----
                                                                               
                                               (738.5)       (881.1)    (659.2)
                                                                               
                                                 -----         -----      -----


                                                                           
Total liabilities                            (8,377.9)     (8,120.4)  (8,266.2) 


                                                                               
                                                 -----         -----      -----


                                                                           
Total net assets                               1,821.6       1,756.6    1,764.6 


                                                                               
                                                 -----         -----      -----


                                                                           
EQUITY                                                                          
                                                                           
Share capital                                    499.8         499.8      499.8 
                                                                           
Share premium account                              2.9           2.3        2.4 
                                                                           
Revaluation reserve                              158.8         158.8      158.8 
                                                                           
Cumulative exchange reserve                      (6.7)         (4.2)      (5.0) 
                                                                           
Merger reserve                                   329.7         329.7      329.7 
                                                                           
Retained earnings                                837.1         770.2      778.9 


                                                                               
                                                 -----         -----      -----


                                                                           
Shareholders' equity                           1,821.6       1,756.6    1,764.6 
                                                                            


                                                 -----         -----      -----

Consolidated statement of changes in equity                                     
               


                                               
Six months ended 30 September 2012                                               


                                     
                                                                                
                                                                                
                                                  


                      Share   Share Revaluation Cumulative  Merger Retained 
  Total 


                        capital premium     reserve   exchange reserve earnings 
       
                                account                reserve                  
       
                                                                                
       


                         £m      £m          £m         £m      £m     
  £m      £m 
                                                                             
   
At 1 April 2012           499.8     2.4       158.8      (5.0)   329.7    778.9 
1,764.6 
                                                                             
   
Profit after taxation         -       -           -          -       -    156.9 
  156.9 
                                                                             
   
Other comprehensive                                                              
   
income                                                                           


       
                                                                                


   
Actuarial gains on            -       -           -          -       -     62.2  
62.2
defined benefit pension                                                          
   
schemes (note 7)                                                                 


       
                                                                                


   
Taxation on items taken       -       -           -          -       -   (15.1) 
 (15.1)
directly to equity                                                               
   
(note 4)                                                                         


       
                                                                                


   
Foreign exchange              -       -           -      (1.7)       -        - 
  (1.7)
adjustments                                                                      


       
                                                                                
       


                       ----    ----        ----       ----    ----     ----  
---- 
                                                                             
   
Total comprehensive           -       -           -      (1.7)       -    204.0 
  202.3
(expense)/income for                                                             
   
the period                                                                       


       
                                                                                
       


                       ----    ----        ----       ----    ----     ----  
---- 
                                                                             
   
Transactions with                                                                
   
owners                                                                           


       
                                                                                


   
Dividends (note 6)            -       -           -          -       -  (145.5) 
(145.5) 
                                                                             
   
New share capital             -     0.5           -          -       -        -  
0.5
issued                                                                           


       
                                                                                


   
Equity-settled                -       -           -          -       -      0.7  
0.7
share-based payments                                                             


       
                                                                                


   
Exercise of share             -       -           -          -       -    (1.0) 
  (1.0)
options - purchase of                                                            
   
shares                                                                           


       
                                                                                
       


                       ----    ----        ----       ----    ----     ----  
---- 
                                                                             
   
At 30 September 2012      499.8     2.9       158.8      (6.7)   329.7    837.1 
1,821.6 


                                                                                
       


                       ----    ----        ----       ----    ----     ----  
---- 
Six months ended 30 September 2011                                               


                     
                                                                  
                                                                                
       


                      Share   Share Revaluation Cumulative  Merger Retained 
  Total 


                        capital premium     reserve   exchange reserve earnings 
       
                                account                reserve                  
       
                                                                                
       


                         £m      £m          £m         £m      £m     
  £m      £m 
                                                                             
   
At 1 April 2011           499.8     1.3       158.8      (3.1)   329.7    691.0 
1,677.5 
                                                                             
   
Profit after taxation         -       -           -          -       -    141.7 
  141.7 
                                                                             
   
Other comprehensive                                                              
   
income                                                                           


       
                                                                                


   
Actuarial gains on            -       -           -          -       -     98.8  
98.8
defined benefit pension                                                          
   
schemes (note 7)                                                                 


       
                                                                                


   
Taxation on items taken       -       -           -          -       -   (24.7) 
 (24.7)
directly to equity                                                               
   
(note 4)                                                                         


       
                                                                                


   
Foreign exchange              -       -           -      (1.1)       -        - 
  (1.1)
adjustments                                                                      


       
                                                                                
       


                       ----    ----        ----       ----    ----     ----  
---- 
                                                                             
   
Total comprehensive           -       -           -      (1.1)       -    215.8 
  214.7
(expense)/income for                                                             
   
the period                                                                       


       
                                                                                
       


                       ----    ----        ----       ----    ----     ----  
---- 
                                                                             
   
Transactions with                                                                
   
owners                                                                           


       
                                                                                


   
Dividends (note 6)            -       -           -          -       -  (136.3) 
(136.3) 
                                                                             
   
New share capital             -     1.0           -          -       -        -  
1.0
issued                                                                           


       
                                                                                


   
Equity-settled                -       -           -          -       -      0.6  
0.6
share-based payments                                                             


       
                                                                                


   
Exercise of share             -       -           -          -       -    (0.9) 
  (0.9)
options - purchase of                                                            
   
shares                                                                           


       
                                                                                
       


                       ----    ----        ----       ----    ----     ----  
---- 
                                                                             
   
At 30 September 2011      499.8     2.3       158.8      (4.2)   329.7    770.2 
1,756.6 


                                                                                
       


                       ----    ----        ----       ----    ----     ----  
---- 
Consolidated statement of changes in equity                                      
                       
                                                                         
Year ended 31 March 2012              


                                                        
                                                                               


                     Share   Share Revaluation Cumulative  Merger Retained  
 Total 


                       capital premium     reserve   exchange reserve earnings  
      
                               account                reserve                   
      
                                                                                
      


                        £m      £m          £m         £m      £m      
 £m      £m 
                                                                             
  
At 1 April 2011          499.8     1.3       158.8      (3.1)   329.7    691.0 
1,677.5 
                                                                             
  
Profit after taxation        -       -           -          -       -    316.5  
 316.5 
                                                                             
  
Other comprehensive                                                              
  
income                                                                           


      
                                                                                


  
Actuarial losses on          -       -           -          -       -   (24.3)  
(24.3)
defined benefit                                                                  
  
pension schemes (note                                                            
  
7)                                                                               


      
                                                                                


  
Taxation on items            -       -           -          -       -      4.4   
4.4
taken directly to                                                                
  
equity (note 4)                                                                  


      
                                                                                


  
Foreign exchange             -       -           -      (1.9)       -        -  
 (1.9)
adjustments                                                                      


      
                                                                                
      


                      ----    ----        ----       ----    ----     ----  
  ---- 
                                                                             
  
Total comprehensive          -       -           -      (1.9)       -    296.6  
 294.7
(expense)/income for                                                             
  
the year                                                                         


      
                                                                                
      


                      ----    ----        ----       ----    ----     ----  
  ---- 
                                                                             
  
Transactions with                                                                
  
owners                                                                           


      
                                                                                


  
Dividends (note 6)           -       -           -          -       -  (209.0) 
(209.0) 
                                                                             
  
New share capital            -     1.1           -          -       -        -   
1.1
issued                                                                           


      
                                                                                


  
Equity-settled               -       -           -          -       -      1.2   
1.2
share-based payments                                                             


      
                                                                                


  
Exercise of share            -       -           -          -       -    (0.9)  
 (0.9)
options - purchase of                                                            
  
shares                                                                           


      
                                                                                
      


                      ----    ----        ----       ----    ----     ----  
  ---- 
                                                                             
  
At 31 March 2012         499.8     2.4       158.8      (5.0)   329.7    778.9 
1,764.6 


                                                                                
      


                      ----    ----        ----       ----    ----     ----  
  ---- 
                                                                             


      

Consolidated statement of cash flows                   Re-presented*           
                                           Six months     Six months Year ended
                                                ended          ended   31 March
                                         30 September   30 September       2012
                                                 2012           2011           
                                                                               


                                               £m             £m         
£m 
                                                                           
Operating activities                                                            
                                                                           
Cash generated from continuing                  347.5          306.5      727.4
operations                                                                      
                                                                           
Interest paid                                  (66.6)         (67.0)    (167.2) 
                                                                           
Interest received and similar income              1.3            1.6        4.4 
                                                                           
Tax paid                                       (17.1)         (29.0)     (39.8) 
                                                                           
Tax received                                        -              -       35.0 


                                                                               
                                                -----          -----      -----


                                                                           
Net cash generated from operating                                              
activities (continuing operations)              265.1          212.1      559.8 


                                                                               
                                                -----          -----      -----


                                                                           
Investing activities                                                            
                                                                           
Proceeds from disposal of discontinued              -              -        3.5
operations                                                                      
                                                                           
Transaction costs, deferred                         -              -        2.0
consideration and cash disposed                                                 


                                                                               
                                                -----          -----      -----


                                                                           
Proceeds from disposal of discontinued                                         
operations net of transaction costs,                -              -        5.5
deferred consideration and cash                                                
disposed                                                                        
                                                                           
Purchase of property, plant and               (285.4)        (216.5)    (502.2)
equipment                                                                       
                                                                           
Purchase of other intangible assets            (14.8)          (8.1)     (17.3) 
                                                                           
Proceeds from sale of property, plant             0.7            0.6        4.8
and equipment                                                                   
                                                                           
Grants and contributions received                 5.6            6.1       13.0 
                                                                           
Purchase of investments                         (1.1)          (1.1)      (2.2) 


                                                                               
                                                -----          -----      -----


                                                                           
Net cash used in investing activities         (295.0)        (219.0)    (498.4)
(continuing operations)                                                         


                                                                               
                                                -----          -----      -----
                                                                               


                                                                           
Financing activities                                                            
                                                                           
Proceeds from issue of ordinary shares            0.5            1.0        1.1 
                                                                           
Proceeds from borrowings                         26.3          222.2      446.3 
                                                                           
Repayment of borrowings                        (31.2)          (5.8)    (231.7) 
                                                                           
Exercise of share options - purchase            (1.0)          (0.9)      (0.9)
of shares                                                                       
                                                                           
Dividends paid to equity holders of           (145.5)        (136.3)    (209.0)
the company                                                                     


                                                                               
                                                -----          -----      -----


                                                                           
Net cash (used in)/generated from                                              
financing activities (continuing              (150.9)           80.2        5.8
operations)                                                                     


                                                                               
                                                -----          -----      -----


                                                                           
Effects of exchange rate changes                (0.3)            0.2        0.5
(continuing operations)                                                         


                                                                               
                                                -----          -----      -----


                                                                           
Net (decrease)/increase in cash and           (181.1)           73.5       67.7
cash equivalents                                                                


                                                                               
                                                -----          -----      -----


                                                                           
Cash and cash equivalents at beginning          312.1          244.4      244.4
of the period                                                                   


                                                                               
                                                -----          -----      -----


                                                                           
Cash and cash equivalents at end of             131.0          317.9      312.1
the period                                                                      
                                                                            


                                                -----          -----      -----

*The comparatives for the six months ended 30 September 2011 have been
re-presented to show grants and contributions received of £6.1 million
separately within investing activities (previously included within increase in
trade and other payables as part of cash generated from operating activities)
to be consistent with the presentation adopted at 31 March 2012.


Cash generated from continuing operations                                       
       
                                                                     
                                                                               
                                                       Re-presented*           
                                            Six months    Six months Year ended
                                                 ended         ended   31 March
                                          30 September  30 September       2012
                                                  2012          2011           
                                                                               


                                                £m            £m         
£m 
                                                                           
Operating profit                                 315.1         322.6      591.5 
                                                                           
Adjustments for:                                                                
                                                                           
Depreciation of property, plant and              148.4         135.2      278.0
equipment                                                                       
                                                                           
Amortisation of other intangible assets           11.8          11.4       19.8 
                                                                           
Loss on disposal of property, plant and            2.2           1.5        5.5
equipment                                                                       
                                                                           
Loss on disposal of other intangible               2.7             -        2.6
assets                                                                          
                                                                           
Amortisation of deferred grants and              (3.5)         (3.4)      (6.9)
contributions                                                                   
                                                                           
Equity-settled share-based payments                0.7           0.6        1.2
charge                                                                          
                                                                           
Other non-cash movements                         (0.8)         (0.4)      (0.1) 
                                                                           
Changes in working capital:                                                     
                                                                           
(Increase)/decrease in inventories               (0.3)           0.8      (0.1) 
                                                                           
Increase in trade and other receivables         (59.8)        (50.3)      (8.2) 
                                                                           
Increase/(decrease) in trade and other             8.0          20.6     (26.5)
payables                                                                        
                                                                           
Decrease in provisions and retirement           (77.0)       (132.1)    (129.4)
benefit obligations                                                             


                                                                               
                                                 -----         -----      -----


                                                                           
Cash generated from continuing                   347.5         306.5      727.4
operations                                                                      
                                                                            


                                                 -----         -----      -----

*The comparatives for the six months ended 30 September 2011 have been
re-presented to show amortisation of deferred grants and contributions
separately (previously included within increase in trade and other payables)
along with the reclassification of grants and contributions received which were
previously included in increase in trade and other payables, now shown
separately on the consolidated statement of cash flows within investing
activities. This presentation is consistent with that adopted in the March 2012
financial statements.

NOTES

1. Basis of preparation and accounting policies

The condensed consolidated financial statements for the six months ended 30
September 2012 have been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Services Authority and International
Accounting Standard 34 `Interim Financial Reporting' (IAS 34).

The accounting policies, presentation and methods of computation are consistent
with those set out in the audited consolidated financial statements of United
Utilities Group PLC for the year ended 31 March 2012, which are prepared in
accordance with International Financial Reporting Standards (IFRSs) as adopted
by the European Union (EU).
The adoption of the following amendment to standards that are mandatory for the
period commencing 1 April 2012, has not had a material impact on the group's
financial statements.

`Amendments to IFRS 7 Financial Instruments'

This amendment introduces new disclosure requirements about transfers of
financial assets which will impact the group only if it enters into any
relevant transactions in the future.

The group has updated the valuation of its defined benefit pension schemes in
the half yearly financial statements due to continued volatility in the
financial markets.

The condensed consolidated financial statements do not include all of the
information and disclosures required for full annual financial statements, do
not comprise statutory accounts within the meaning of section 434 of the
Companies Act 2006 and should be read in conjunction with the group's annual
report and financial statements for the year ended 31 March 2012.

The comparative figures for the year ended 31 March 2012 do not comprise the
group's statutory accounts for that financial year. Those accounts have been
reported upon by the group's auditor and delivered to the registrar of
companies. The report of the auditor was unqualified and did not include a
reference to any matters to which the auditor drew attention by way of emphasis
without qualifying their report and did not contain a statement under section
498(2) or (3) of the Companies Act 2006.

Going concern

The directors have a reasonable expectation that the group has adequate
resources available to it to continue in operational existence for the
foreseeable future and have therefore continued to adopt the going concern
policy in preparing the financial statements.  This conclusion is based upon,
amongst other matters, a review of the group's financial projections together
with a review of the cash and committed borrowing facilities available to the
group.

2. Segmental reporting

The board of directors of United Utilities Group PLC (the board) is provided
with information on a single segment basis for the purposes of assessing
performance and allocating resources. The board reviews revenue, underlying
operating profit, operating profit, assets and liabilities at a consolidated
level. In light of this, the group has a single segment for financial reporting
purposes and therefore no further detailed segmental information is provided in
this note.

3. Finance expense

Continuing operations                    Six months     Six months Year ended
                                              ended          ended   31 March
                                       30 September   30 September       2012
                                               2012           2011         £m
                                                 £m             £m           


                                                                         
Interest payable                            (124.9)        (140.8)    (269.0) 
                                                                         
Net fair value losses on debt and            (49.4)         (55.9)     (43.2)
derivative instruments                                                        


                                                                             
                                              -----          -----      -----
                                                                             
                                            (174.3)        (196.7)    (312.2)


                                                                         
Expected return on pension schemes'            47.7           48.4      100.5
assets                                                                        
                                                                         
Interest cost on pension schemes'            (54.2)         (51.6)    (103.8)
obligations                                                                   


                                                                             
                                              -----          -----      -----


                                                                         
Net pension interest expense (note            (6.5)          (3.2)      (3.3)
7)                                                                            


                                                                             
                                              -----          -----      -----
                                                                             
                                            (180.8)        (199.9)    (315.5)
                                                                             
                                              -----          -----      -----

The group has fixed interest costs for a substantial proportion of the group's
net debt for the duration of the regulatory pricing period and has hedged
currency exposures for the term of each relevant debt instrument. The group has
hedged its position through the use of interest rate and cross currency swap
contracts where applicable. The underlying net finance expense for the
continuing group of £126.0 million (30 September 2011: £139.3 million, 31 
March
2012: £267.1 million) is derived as shown in the table below.

Continuing operations                                                        
                                         Six months     Six months Year ended
                                              ended          ended   31 March
                                       30 September   30 September       2012
                                               2012           2011         £m
                                                 £m             £m           


                                                                         
Finance expense                             (180.8)        (199.9)    (315.5) 
                                                                         
Net fair value losses on debt and              49.4           55.9       43.2
derivative instruments                                                        
                                                                         
Interest on swaps and debt under                3.0            3.8        7.2
fair value option                                                             
                                                                         
Investment income                               1.3            1.7        4.4 
                                                                         
Adjustment for capitalised borrowing          (5.4)          (4.0)      (9.7)
costs                                                                         
                                                                         
Adjustment for net pension interest             6.5            3.2        3.3
expense (note 7)                                                              


                                                                             
                                              -----          -----      -----


                                                                         
Underlying net finance expense              (126.0)        (139.3)    (267.1) 
                                                                          


                                              -----          -----      -----

4. Taxation

Continuing operations                    Six months     Six months Year ended
                                              ended          ended   31 March
                                       30 September   30 September       2012
                                               2012           2011         £m
                                                 £m             £m           


                                                                         
Current taxation                                                              
                                                                         
UK corporation taxation                        31.3           32.7       60.1 
                                                                         
Foreign taxation                                1.3            1.3        1.3 
                                                                         
Adjustments in respect of prior                   -              -     (15.9)
years                                                                         


                                                                             
                                              -----          -----      -----
                                                                             
                                               32.6           34.0       45.5
                                                                             
                                              -----          -----      -----


                                                                         
Deferred taxation                                                             
                                                                         
Current period                                  1.9          (0.7)       12.6 
                                                                         
Adjustments in respect of prior                   -              -       15.5
years                                                                         


                                                                             
                                              -----          -----      -----
                                                                             
                                                1.9          (0.7)       28.1


                                                                         
Change in taxation rate                      (52.8)         (49.7)    (104.6) 


                                                                             
                                              -----          -----      -----


                                                                         
Total deferred taxation credit for           (50.9)         (50.4)     (76.5)
the period                                                                    


                                                                             
                                              -----          -----      -----
                                                                             
                                              -----          -----      -----


                                                                         
Total taxation credit for the period         (18.3)         (16.4)     (31.0) 
                                                                          


                                              -----          -----      -----

The deferred taxation credit for the period ended 30 September 2012 includes a
credit of £52.8 million to reflect the change enacted on 3 July 2012 to reduce
the mainstream corporation tax rate from 24 per cent to 23 per cent effective
from 1 April 2013. A related deferred taxation charge of £0.9 million is
included within items taken directly to equity.

The deferred taxation credit for the period ended 30 September 2011 includes a
credit of £49.7 million to reflect the change enacted on 5 July 2011 to reduce
the mainstream rate of corporation tax from 26 per cent to 25 per cent
effective from 1 April 2012.

The deferred taxation credit for the year ended 31 March 2012 includes a credit
of £104.6 million to reflect the change enacted on 5 July 2011 to reduce the
mainstream rate of corporation tax from 26 per cent to 25 per cent and the
subsequent change enacted on 26 March 2012 to reduce the mainstream rate of
corporation tax further to 24 per cent effective from 1 April 2012. A related
deferred taxation charge of £3.9 million is included within items taken
directly to equity. 

There will be a further reduction in the mainstream rate of corporation tax to
22 per cent by 1 April 2014. The total deferred taxation credit in respect of
this further reduction is expected to be in the region of £50.0 million.

Taxation on items taken directly to equity

The taxation charge/(credit) relating to items taken directly to equity is as
follows:

Continuing operations                    Six months     Six months Year ended
                                              ended          ended   31 March
                                       30 September   30 September       2012
                                               2012           2011         £m
                                                 £m             £m           


                                                                         
Current taxation                                                              
                                                                         
Relating to other pension movements           (2.1)         (17.5)     (33.1) 


                                                                             
                                              -----          -----      -----


                                                                         
Deferred taxation                                                             
                                                                         
On actuarial gains/(losses) on                                               
defined benefit pension schemes                14.3           24.7      (5.8) 
                                                                         
Relating to other pension movements             2.0           17.5       30.6 
                                                                         
Change in taxation rate                         0.9              -        3.9 


                                                                             
                                              -----          -----      -----
                                                                             
                                               17.2           42.2       28.7
                                                                             
                                              -----          -----      -----
                                                                             
                                              -----          -----      -----


                                                                         
Total taxation on items taken                  15.1           24.7      (4.4)
directly to equity                                                            
                                                                          


                                              -----          -----      -----

5. Earnings per share

Basic and diluted earnings per share are calculated by dividing profit after
taxation by the following weighted average number of shares in issue:
                                                            Basic     Diluted
                                                          million     million


                                                                         
Six months ended 30 September 2012                          681.8       682.6 
                                                                         
Six months ended 30 September 2011                          681.7       682.1 
                                                                         
Year ended 31 March 2012                                    681.8       682.2 
The difference between the weighted average number of shares used in the basic
and diluted earnings per share calculations arises due to the group's operation
of share-based payment compensation arrangements. The difference 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 current and prior periods are
as follows: 


                                         Six months      Six months  Year ended
                                              ended           ended    31 March
                                       30 September    30 September        2012
                                               2012            2011            


                                                                           
From continuing and discontinued                                               
operations                                                                      
                                                                           
Basic                                         23.0p           20.8p       46.4p 
                                                                           
Diluted                                       23.0p           20.8p       46.4p 
                                                                           
From continuing operations                                                      
                                                                           
Basic                                         22.6p           20.7p       45.7p 
                                                                           
Diluted                                       22.5p           20.7p       45.6p 


                                         Six months      Six months  Year ended
                                              ended           ended    31 March
                                       30 September    30 September        2012
                                               2012            2011            
                                                                               


                                             £m              £m          
£m 
                                                                           
Profit after taxation - continuing                                             
and discontinued operations                   156.9           141.7       316.5 
                                                                           
Adjustment for profit after                                                    
taxation from discontinued                    (3.0)           (0.9)       (5.1)
operations                                                                      


                                                                               
                                              -----           -----       -----


                                                                           
Profit after taxation - continuing            153.9           140.8       311.4
operations                                                                      
                                                                            


                                              -----           -----       -----

6. Dividends
                                          Six months      Six months Year ended
                                               ended           ended   31 March
                                        30 September    30 September       2012


                                            2012            2011         
£m 
                                              £m              £m           
                                                                             
Dividends relating to the period                                               
comprise:                                                                       
                                                                           
Interim dividend                                78.0            72.7       72.7 
                                                                           
Final dividend                                     -               -      145.5 


                                                                               
                                               -----           -----      -----
                                                                               
                                                78.0            72.7      218.2
                                                                               
                                               -----           -----      -----
                                         Six months      Six months  Year ended
                                              ended           ended    31 March
                                       30 September    30 September        2012


                                           2012            2011          
£m 
                                             £m              £m            
                                                                             
Dividends deducted from shareholders' equity                                   
comprise:                                                                       
                                                                           
Interim dividend                                  -               -        72.7 
                                                                           
Final dividend                                145.5           136.3       136.3 


                                                                               
                                              -----           -----       -----
                                                                               
                                              145.5           136.3       209.0
                                                                               
                                              -----           -----       -----

The interim dividends for the six months ended 30 September 2012 and 30
September 2011 and the final dividend for the year ended 31 March 2012 have not
been included as liabilities in the consolidated financial statements at 30
September 2012, 30 September 2011 and 31 March 2012 respectively.

The interim dividend of 11.44 pence per ordinary share (2012: interim dividend
of 10.67 pence per ordinary share; final dividend of 21.34 pence per ordinary
share) is expected to be paid on 1 February 2013 to shareholders on the
register at the close of business on 21 December 2012. The ex-dividend date for
the interim dividend is 19 December 2012.

7. Retirement benefit surplus/(obligations)

The main financial assumptions used by the company's actuary to calculate the
defined benefit obligations of the United Utilities Pension Scheme (UUPS) and
the United Utilities Group PLC section of the Electricity Supply Pension Scheme
(ESPS) were as follows:


                                Six months ended  Six months ended Year 
ended 
                                    30 September      30 September   31 
March 
                                            2012              2011       
2012 
                                             %pa               %pa        
%pa      
                                                                           
Discount rate                                   4.40              5.20       
5.00 
                                                                           
Expected return on assets - UUPS                4.45              5.65       
4.45 
                                                                           
Expected return on assets - ESPS                5.00              6.10       
5.00 
                                                                           
Pensionable salary growth and                   2.85              3.10       
3.25
pension increases                                                               
                                                                           
Price inflation                                 2.85              3.10       
3.25 
The net pension expense before taxation for continuing operations in the income
statement in respect of the defined benefit schemes is summarised as follows: 
                                Six months ended  Six months ended Year 
ended 
                                    30 September      30 September   31 
March 
                                            2012              2011       
2012 
                                              £m                £m        
 £m   
                                                                           
Continuing operations                                                           
                                                                           
Current service cost                           (8.0)             (6.7)     
(13.3) 
                                                                           
Curtailments/settlements and past                  -             (1.6)      
(5.4)
service costs                                                                   
                                                                            
                                           -----             -----      ----
- 
                                                                           
Pension expense charged to operating           (8.0)             (8.3)     
(18.7)
profit                                                                          
                                                                            
                                           -----             -----      ----
- 
                                                                           
Expected return on schemes' assets              47.7              48.4      
100.5 
                                                                           
Interest on schemes' obligations              (54.2)            (51.6)    
(103.8) 
                                                                            
                                           -----             -----      ----
- 
                                                                           
Net pension interest expense charged                                           
to finance expense (note 3)                    (6.5)             (3.2)      
(3.3) 
                                                                            
                                           -----             -----      ----
- 
                                                                           
Net pension expense charged before            (14.5)            (11.5)     
(22.0)
taxation                                                                        
                                                                            
                                           -----             -----      ----
- 
The reconciliation of the opening and closing net pension surplus/(obligations)
included in the statement of financial position is as follows: 
                                Six months ended  Six months ended Year 
ended 
                                    30 September      30 September   31 
March 
                                            2012              2011       
2012 
                                              £m                £m        
 £m  


                                          
               


                                                                            
At the start of the period                   (92.0)            (195.0)    
(195.0) 
                                                                         
Expense recognised in the income             (14.5)             (11.5)     
(22.0)
statement - continuing operations                                             
                                                                         
Expense recognised in the income                  -              (0.4)      
(0.4)
statement - discontinued operations                                           
                                                                         
Contributions paid                             83.6              136.0      
149.7 
                                                                         
Actuarial gains/(losses) gross of              62.2               98.8     
(24.3)
taxation                                                                      
                                                                          
                                          -----              -----      ----
- 
                                                                         
At the end of the period                       39.3               27.9     
(92.0) 
                                                                          
                                          -----              -----      ----
- 


                                                                             

The closing surplus/(obligations) at each reporting date are analysed as
follows:
                                       30 September   30 September    31 March
                                               2012           2011        2012


                                             £m             £m          
£m 
                                                                          
Present value of defined benefit          (2,313.3)      (1,950.7)   (2,205.0)
obligations                                                                    
                                                                          
Fair value of schemes' assets               2,352.6        1,978.6     2,113.0 


                                                                              
                                              -----          -----       -----


                                                                          
Net retirement benefit surplus/                39.3           27.9      (92.0)
(obligations)                                                                  
                                                                           
                                          -----          -----       ----- 
8. Related party transactions 
Transactions between the company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed in this
note. 
The following trading transactions were carried out with the group's joint
ventures: 
                                Six months ended  Six months ended Year 
ended 
                                    30 September      30 September   31 
March 
                                            2012              2011       
2012 
                                              £m                £m        
 £m                             
                                                                           
Group                                                                           
                                                                           
Sales of services                                0.5               0.3        
1.1 
                                                                           
Purchases of goods and services                  0.4               0.2        
0.3 
                                                                            
                                           -----             -----      ----
- 
Amounts owed by the group's joint ventures are as follows: 


                                        30 September    30 September   31 March
                                                2012            2011       2012


                                              £m              £m         
£m 
                                                                           
Group                                                                           
                                                                           
Amounts owed by related parties                  1.1             1.4        1.0 
                                                                            


                                               -----           -----      -----

Sales of services to related parties were on the group's normal trading terms.

The amounts outstanding are unsecured and will be settled in accordance with
normal credit terms. The group has issued guarantees of £5.0 million (30
September 2011: £5.5 million; 31 March 2012: £5.4 million) in support of its
joint ventures.

No provision has been made for doubtful receivables in respect of the amounts
owed by related parties (30 September 2011: £0.1 million; 31 March 2012: 
£nil).

9. Contingent liabilities

As at 30 September 2012, the group has entered into performance guarantees and
has provided letters of credit where a financial limit has been specified of £
85.3 million (30 September 2011: £87.4 million; 31 March 2012: £85.2 
million).

10. Changes in circumstances significantly affecting the fair value of
financial assets and financial liabilities

From 1 April 2012 to 30 September 2012 market interest rates have fallen
significantly, increasing the fair value of the group's borrowings and
derivative assets.

The group's borrowings have a carrying amount of £5,979.3 million (31 March
2012: £5,855.2 million). The fair value of these borrowings is £5,962.2 
million
(31 March 2012: £5,830.3 million). The group's derivatives measured at fair
value are a net asset of £504.0 million (31 March 2012: £457.6 million).

11. Events after the reporting period

There were no events arising after the reporting date that required recognition
or disclosure in the financial statements for the six months ended 30 September
2012.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The half yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half yearly financial report in accordance with the Disclosure and Transparency
Rules of the United Kingdom's Financial Services Authority.

Responsibility statement

We confirm that to the best of our knowledge:

  * the condensed set of financial statements has been prepared in accordance
    with IAS 34 Interim Financial Reporting as adopted by the EU; and
      * the interim management report includes a fair review of the information
    required by:
      * DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of
    important events during the first six months of the current financial year
    and their impact on the condensed set of financial statements; and a
    description of principal risks and uncertainties for the remaining six
    months of the year; and
      * DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
    transactions that have taken place in the first six months of the current
    financial year and that have materially affected the financial position or
    performance of the entity during that period; and any changes in the
    related party transactions described in the last annual report that could
    do so.


The directors of United Utilities Group PLC at the date of this announcement
are listed below: 
Dr John McAdam 
Steve Mogford 
Russ Houlden 
Dr Catherine Bell CB 
Paul Heiden 
Nick Salmon 
Sara Weller 
Brian May (appointed 1 September 2012) 
This responsibility statement was approved by the board and signed on its
behalf by: 
………………………..                              
……………………….          
Steve Mogford                            Russ Houlden 
27 November 2012                         27 November 2012                   
Chief Executive Officer                  Chief Financial Officer 
INDEPENDENT REVIEW REPORT TO UNITED UTILITIES GROUP PLC 
Introduction 
We have been engaged by the company to review the condensed set of financial
statements in the half yearly financial report for the six months ended 30
September 2012 which comprises the consolidated income statement, the
consolidated statement of comprehensive income, the consolidated statement of
financial position, the consolidated statement of changes in equity, the
consolidated statement of cash flows and the related explanatory notes. We have
read the other information contained in the half yearly financial report and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements. 
This report is made solely to the company in accordance with the terms of our
engagement to assist the company in meeting the requirements of the Disclosure
and Transparency Rules ("the DTR") of the UK's Financial Services Authority
("the UK FSA"). Our review has been undertaken so that we might state to the
company those matters we are required to state to it in this report and for no
other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company for our review work, for
this report, or for the conclusions we have reached. 
Directors' responsibilities 
The half yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half yearly financial report in accordance with the DTR of the UK FSA. 
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with IFRSs as adopted by the EU. The condensed set of
financial statements included in this half-yearly financial report has been
prepared in accordance with IAS 34 Interim Financial Reporting as adopted by
the EU. 
Our responsibility 
Our responsibility is to express to the company a conclusion on the condensed
set of financial statements in the half yearly financial report based on our
review. 
Scope of review 
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 Review of Interim Financial Information
Performed by the Independent Auditor of the Entity issued by the Auditing
Practices Board for use in the UK. A review of interim financial information
consists of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK and Ireland) and consequently does
not enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express an
audit opinion. 
Conclusion 
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half yearly
financial report for the six months ended 30 September 2012 is not prepared, in
all material respects, in accordance with IAS 34 as adopted by the EU and the
DTR of the UK FSA. 
John Luke 
for and on behalf of KPMG Audit Plc 
Chartered Accountants
St James' Square
Manchester
M2 6DS 
27 November 2012 
END 
-0- Nov/28/2012 07:00 GMT
 
 
Press spacebar to pause and continue. Press esc to stop.