Trading Statement

United Utilities Group PLC

26 March 2009

                        UNITED UTILITIES TRADING UPDATE                        

United Utilities Group PLC today issues an update on trading for the year
ending 31 March 2009. The company will announce its full year results on 28 May
2009.

Commenting on the group's trading position, Philip Green, Chief Executive,
said:

"The group is on track to deliver results in line with our expectations for the
year ending 31 March 2009. We also continue to benefit from a robust financing
position and have headroom to cover our projected financing needs through to
mid-2011.

"United Utilities Water submitted its draft business plan for the 2010-15
period to Ofwat in August as part of the 2009 water price review process and we
will submit the final business plan next month. The capital investment
programme contained within the final plan will aim to safeguard existing
standards of service, address new, higher quality standards and make provision
for the challenge of climate change, whilst maintaining the affordability of
customer bills."

Regulated activities

The regulated business is expected to deliver good underlying operating profit
growth, for the year ending 31 March 2009, despite reduced water demand, as
indicated previously, and ongoing cost pressures in areas such as power and bad
debts. This profit growth is primarily a result of allowed price rises to help
fund major investment in the company's assets on behalf of its customers and
the environment.

High levels of capital expenditure continued in 2008/09 and spend is expected
to total over £700 million for the year, including infrastructure renewals
expenditure. The company's business improvement initiatives are progressing
well and United Utilities Water remains broadly on track to deliver its
regulatory efficiency targets across the 2005-10 period.

The business continues to focus on improving operational performance and is on
course to meet its 2008/09 regulatory leakage target of 465 megalitres per day,
for the third consecutive year. This is despite unfavourable winter weather
which has made the target more challenging. Customer satisfaction, in response
to enquiries, continues to improve.

United Utilities Water submitted its draft business plan for the 2010-15 period
to Ofwat in August 2008, as part of the 2009 water price review process, and
will submit its final business plan in April 2009. The company will propose a
level of capital expenditure in its final business plan which it believes
represents an appropriate balance between safeguarding existing standards of
service, addressing new, higher quality standards and making provision for the
challenge of climate change, whilst maintaining the affordability of customer
bills.

The draft business plan was based on the requirement for a 4.7% return (fully
post-tax, real). This return was consistent with the cost of capital range of
4.4% to 4.9% published by NERA Economic Consulting (NERA) in June 2008. NERA
has recently updated this research* and concluded that a higher cost of capital
in the range of 4.6% to 5.1% (fully post-tax, real) would be appropriate for
the UK water industry. As indicated previously, United Utilities Water intends
to reassess its financing costs ahead of its final business plan submission in
light of the prevailing financial market conditions and will consider NERA's
findings in this reassessment.

Non-regulated activities

Good underlying operating profit growth is expected in the non-regulated
business compared with the prior year. This partly reflects the planned
increase in activity on the Scottish Water contract and a benefit from foreign
exchange rate movements. The business continues to benefit from a strong order
book worth over £6 billion in revenue, which provides long-term income streams
for the group.

The group continues to pursue asset-light growth opportunities based on its
core skills. In December, United Utilities was selected as preferred bidder for
a municipal solid waste treatment contract in Derbyshire, via a joint venture
with Interserve. The contract is due to commence in April 2010 with an expected
duration of 27 years. Last month, United Utilities was also selected as
preferred bidder for a 20-year desalination operations and maintenance contract
in Adelaide, through its joint venture with Acciona Agua. It is expected that
this contract will commence in mid-2011.

Other activities

United Utilities Property Solutions is expected to make a small operating
profit for the year, reflecting the slowdown in the UK property market. As
indicated previously, given the nature of this business, profits are unlikely
to follow a smooth profile. As a result, other activities, which include
central costs, are expected to make a small underlying operating loss for the
year ending 31 March 2009.

Other financial

The group continues to benefit from a robust financing position and has
headroom to cover its projected financing needs through to mid-2011. The
average term to maturity of the group's long-term debt portfolio is over 30
years, which helps reduce refinancing risk. During the period, United Utilities
Water PLC (A3, stable; A-, stable) drew down a 12-year, £400 million loan
facility from the European Investment Bank. In addition, United Utilities Water
PLC recently issued a £375 million, 6.125%, 7-year bond and earlier this month
agreed the sale of £275 million, 5.75%, 13-year bonds. In total, the company
has raised over £1 billion of term funding in the current financial year.

The Board continues to target an investment grade credit rating of A3 for
United Utilities Water PLC, which it believes best mirrors regulatory
assumptions and is an appropriate investment grade rating to allow the company
to raise finance to fund its substantial capital investment programmes.

Borrowings, net of cash and short term deposits and derivatives, at the year
end are expected to show a modest increase compared with the position at 30
September 2008, subject to no material further fair value movements. This
principally reflects expenditure on the regulatory capital investment
programmes, payment of the 2008/09 interim dividend and payments of interest
and tax, partly offset by operational cash flows.

As outlined previously, the company recognised a one-off deferred tax charge in
2008/09 relating to the abolition of industrial buildings allowances, with
effect from April 2008. This one-off adjustment of £214 million, which has
already been recognised and published in the company's half yearly financial
report, will therefore result in a significant increase in the effective tax
rate for the year ending 31 March 2009, compared with the prior year. However,
the cash impact will be spread over a period of approximately 20 years.
Excluding the impact of the abolition of industrial buildings allowances, the
tax rate for the year is expected to be around 28%. This reflects the full
provision for deferred tax.

One-off costs in the order of £10 million are expected in 2008/09, of which £
6.5 million was recognised in the first half of the financial year. These costs
principally relate to the capital restructuring associated with the £1.5
billion return to shareholders and restructuring within the business.

United Utilities' contacts:

Philip Green, Chief Executive                            [phone]    
                                                                               
Tim Weller, Chief Financial Officer                      [phone]    
                                                                               
Gaynor Kenyon, Communications Director                   [phone]    
                                                                               
Darren Jameson, Head of Investor Relations               [phone]    
                                                                               
David Trenchard / Tom Murray, Tulchan Communications     [phone]  

This announcement is also available at: http://www.unitedutilities.com

Notes

* NERA Economic Consulting: "Cost of Capital for PR09 - A Final Report for
Water UK", January 2009.