REG - United Utilities Grp - Preliminary Results
Today 07:02
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RNS Number : 4770C United Utilities Group PLC 30 April 2026
30 April 2026: United Utilities Group PLC today announces its preliminary,
unaudited full year results for the year to 31 March 2026, alongside a
strategic update available here
(https://www.unitedutilities.com/corporate/investors/financial-news/latest-financial-news/)
.
Louise Beardmore, Chief Executive Officer, said:
"Our BIG North West upgrade is now well underway, marking the most significant
transformation of our region's water and wastewater infrastructure in more
than a century. One year into our five‑year AMP8 programme, we are
delivering at pace and at scale - strengthening the resilience and quality of
our services, protecting and enhancing the environment, and supporting
sustainable economic growth and thousands of new jobs across the North West.
"We already have more than 1,000 projects live across the region, supported by
over 100 supply chain partners, and we have delivered our year one regulatory
commitments on time. Operationally, we are making real progress on the issues
that matter most, including significant reductions in storm overflow spills
and sewer flooding, alongside strong customer service performance.
"Building on this platform, today we are announcing a plan for additional
investment in our region(1) - including proposals for new water and wastewater
infrastructure critical to the development of homes, data centres and clean
energy. We expect it could create a further 4,000 jobs across our supply
chain, on top of the 30,000 supported by our existing AMP8 programme. This
focused, disciplined and well-funded plan will help us accelerate delivery of
the transformation in infrastructure and services that the North West expects
and deserves."
Key financials - year ended 31 March
Reported Underlying(2,3,4)
£m 2026 2025 % change 2026 2025 % change
Revenue 2,616.3 2,145.2 +22.0% 2,576.4 2,145.2 +20.1%
EBITDA 1,599.9 1,096.4 +45.9% 1,560.0 1,250.6 +24.7%
Operating profit 1,099.4 631.5 +74.1% 1,059.5 785.7 +34.8%
Profit before tax 779.0 355.0 +119.4% 738.0 513.6 +43.7%
Profit after tax 586.8 264.7 +121.7% 730.0 513.3 +42.2%
EPS (pence) 86.1 38.8 +121.7% 107.1 75.3 +42.2%
2026 2025 % change
DPS (pence) 53.66 51.85 +3.5%
Net regulatory capex (£m) 1,525.1 1082.7 +40.9%
RCV(5) (£m) 16,527 15,367 +7.5%
Net debt (£m) 9,943 9,346 +6.4%
RCV gearing(6) (%) 60% 60% 0%
Regulatory return(7) (%) 13.0% 4.4% +8.6%
Operational highlights
● Great start to the first year of the AMP, our supply chain is mobilised and
delivering efficiently at scale, with over 1,000 live projects and year one
regulatory commitments met
● Driving down spills, achieving a 23% reduction in the number of spills and a
27% reduction in duration since the prior year
● Significant reduction in sewer flooding, with 42% fewer internal flooding
incidents and 25% fewer external sewer flooding cases year-on-year
● Zero category 1 pollutions, the most serious form of pollution
● Year-on-year improvement, with over 80% of our key performance metrics
improved since 2024/25
● Improving customer service, achieving 4.5 out of 5 and Excellent in our
Trustpilot score, and above the median on all regulatory customer service
measures
● Guiding to ODI reward in AMP8, with FY26 performance in line with management
expectations at ~£35 million net penalty
● Committed and engaged colleagues, with levels of employee engagement at 90%
significantly higher than the UK high performance average, and a rating of 4.6
out of 5 on Glassdoor as an employer in the region
Financial highlights
● Underlying operating profit of £1,060m, +35% on the prior year, driven by
higher allowed revenues, partially offset by higher underlying operating costs
● Underlying EPS of 107.1p, up from 75.3p, and slightly ahead of guidance,
reflecting a £274m increase to underlying operating profit, and higher net
finance expense
● Financially resilient, with gearing at 60% in the middle of our 55-65% range,
supporting solid credit ratings with Moody's, Fitch and S&P
● Capital investment of £1,525m, with asset base growth of 7.5% to £16.5bn
● Regulatory return of 13.0%, ahead of guidance reflecting profiling of
financing outperformance being weighted towards the start of the AMP
● Liquidity extending to the second half of FY28, supported by additional £1.5
billion of debt capital
● Recommended final dividend of 35.78p, in line with policy
Upgraded financial framework reflecting today's announcement
● Targeting regulatory returns of 10-11% in AMP8, an increase of 100bps
outperformance compared with prior guidance
● Capital investment increasing from c.£9 billion to c.£11.5 billion in AMP8
● Asset base compound annual growth rate of around 10%(8), up from around 7%
previously
● Maintain dividend growth in line with CPIH(9)
● Maintain gearing within target range of 55-65%, supported by a c.£800 million
equity raise
Enquiries
Investors and Analysts
Chris Laybutt - Investor Relations and Clean Energy Strategy Director +44 7769 556 858
Jenny Platt - Investor Relations Manager +44 7733 064 907
Media
Andrew Ward - Corporate Affairs Director +44 734 168 3924
Graeme Wilson / Louise Male - Teneo Communications +44 207 260 2700
Preliminary full year results presentation and strategic update webcast -
Thursday 30 April 2026
We will host a presentation and Q&A session with management at
8:00am(BST), which can be accessed using the details provided below. A replay
will be available on the company website.
https://teams.microsoft.com/meet/360160455663116?p=tcTOMJf34cDlau2b2r
(https://teams.microsoft.com/meet/360160455663116?p=tcTOMJf34cDlau2b2r)
Meeting ID:360 160 455 663 116, Passcode: tv7it6Wu
Notes
(1) See separate strategic update announcement
(2) Underlying measures are reconciled to reported measures per the items
outlined later in this document
(3) Prior year comparatives have been re-presented with unaudited pro forma
adjustments to reflect the estimated impact of changes in accounting approach
in 2025/26 had they been applied in the prior year. In particular, the change
in estimation technique for the measurement of inflation-linked debt is
estimated to have had a positive impact on net finance expense of £23 million
if applied in 2024/25, and that the adoption of a more granular approach to
the capitalisation of IRE is estimated to have had a positive impact on
operating profit of £152 million if applied in 2024/25.
(4) Underlying EPS for 2026 includes positive 3p impact of change in
estimation technique for the measurement of inflation-linked debt introduced
in 2025/26 and positive 37p impact of higher capitalisation of IRE.
(5) United Utilities Water Limited's adjusted RCV (adjusted for actual spend,
timing differences and including expected value of AMP8 ex-post adjustment
mechanisms).
(6) RCV gearing calculated as group net debt including loan receivable from
joint venture/United Utilities Water Limited's adjusted RCV (adjusted for
actual spend, timing differences and including expected value of AMP8 ex-post
adjustment mechanisms).
(7)Regulatory return is the return on regulatory equity comprising the base
return, outperformance and inflation as per Table 1F of the Ofwat Annual
Performance Report.
(8) From the 2024/25 baseline of £15,367 million assuming CPIH inflation of
c.3.0% on average in AMP8
(9) Target dividend growth in line with CPIH based on FY26 DPS of 53.66 pence
OPERATIONAL REVIEW
Efficient delivery at scale - the BIG North West upgrade
Our AMP8 capital delivery is progressing to plan. We have successfully
recruited over 1,300 new colleagues to join United Utilities whilst at the
same time onboarding over 100 suppliers to help us deliver our ambitious
programme. The scaling-up of our activity has not impacted its quality, with
the Capital Programme Delivery Incentive (CPDI), our measure of effective,
efficient and quality delivery of the capital programme, hitting 100%. We have
achieved our year one regulatory outcomes with our spend in line with expected
profile.
As AMP8 scales up, our award-winning approach to standardisation, Project
Blueprint, is playing a vital role in keeping us within cost and quality
allowances while accelerating delivery for customers and communities. By
standardising designs, bulk-purchasing materials and embedding more efficient
maintenance regimes, we are cutting cost and time across multiple projects.
This approach allows us to identify repeatable solutions, streamline design,
and secure critical components early.
Continuous improvement across our operations
We are pleased to report a strong start to the year, with the majority of our
operational performance measures improving year-on-year. We met our stretching
targets for both internal and external sewer flooding - two of the outcomes
customers value most. Long-term investment in dynamic network management is
supporting this improved performance, despite last year's stormy weather, with
internal sewer flooding down 42% and external flooding down 25%.
While the UK overall experienced a relatively dry year, the North West still
saw above average rainfall. Despite this, our spills performance improved,
with activations falling 23% and duration falling 27% versus the prior year.
We remain firmly on track to deliver a 60% reduction in spills by 2030.
We also made strong progress on smart metering, installing more than 200,000
meters during the year. This marks the first phase of a sustained rollout
across the region. Smart meters are a critical enabler of better network
insight, helping us identify losses earlier, improve water efficiency and
support longterm demand management.
Due to the current geo-political environment, energy markets remain volatile.
We continue to benefit from our disciplined and prudent energy hedging. Our
hedging levels remain above policy minimums, reflecting proactive execution
during the benign market conditions experienced in the third and fourth
quarters. We are fully hedged for Summer 2026 and over 90% hedged for Winter
2026/27. In addition, the regulatory true-up mechanism introduced for AMP8
provides further protection against any potential future commodity price
movements.
Future areas of focus
We are delivering strong all round performance, while staying focused on the
areas where we can go further. One of these is total pollution incidents -
importantly, we recorded no category 1 pollutions, the most serious form of
pollution. Despite a reduction in category 2 and 3 pollution incidents
compared with the previous year, we expect an overall penalty for FY26 for
this measure. Industry reporting rules have changed, meaning incidents
previously excluded, such as those caused by extreme weather and power supply
interruption, are now counted. Around 21% of our 2025 incidents were linked to
named storms, including 12% during Storm Éowyn. We remain fully committed to
driving pollution down and are confident in our Pollution Incident Reduction
Plan, which focuses on strengthening asset resilience, boosting customer
engagement on responsible waste disposal and deepening partnerships to tackle
wider pollution drivers.
Leakage is another key area of focus. This year we fixed more leaks than ever
and replaced over 150 km of mains, more than in the previous five years
combined, supporting long term leakage reduction and fewer supply
interruptions. Our in year leakage performance is the best the North West has
ever seen. Despite this progress, we expect to miss our regulatory three year
rolling average target, reflecting the impact of prior years and the time it
takes for the rolling methodology to capture improvements. We are confident
that the investment and momentum built in year one will continue to strengthen
performance as we move through the AMP.
Prioritising customers
Delivering a high quality service every time customers contact us is central
to building trust. We are proud that every caller speaks directly to our North
West-based customer service team, whose strong service culture is reflected in
our Trustpilot score of 4.5 (Excellent) out of 5. We remain above the median
and 'in reward' for our regulatory customer service measures. While
performance is strong, our ambition is higher: to deliver a consistently
leading customer experience, benchmarked not just within the water sector but
against the best service providers in any industry.
With bills rising this year, we strengthened our sector leading affordability
support. Our ambition to help one in six customers is progressing well, with
over 422,000 customers now receiving support. Working with partners such as
the Department for Work and Pensions, we have proactively moved 180,000
customers onto better tariffs without them needing to get in touch. We know
how important this support is, and we are proud to be among the first in the
sector to achieve the Martin Lewis Money and Mental Health accreditation.
We are equally committed to accessibility. More than 580,000 customers are now
registered for priority services, enabling us to tailor support for those who
need it most. We are leading the sector both in the breadth of services
offered and the number of customers enrolled, working closely with outreach
partners to ensure our services flex and adapt to meet the needs of every
community we serve.
A great place to work
Our 7,000 colleagues are at the forefront of the BIG North West upgrade,
delivering for customers across the five counties. Given the size and scale of
our investment programme, health and safety remains a top priority. Over the
year, we have further strengthened our Home, Safe and Well programme, which
underpins our approach to occupational health and safety. The increased focus,
awareness and capability delivered through these initiatives has resulted in
meaningful improvements in safety performance. Our Lost Time Injury Rate
(LTIR) reduced by 30% during the year, reflecting the collective commitment of
our people to continuous improvement. These initiatives will remain central to
our approach throughout AMP8 as we work towards sustained, long‑term
improvements in keeping colleagues safe.
Engaged, committed colleagues are central to our success. This year, 86% of
employees took part in our engagement survey, and we are proud to report an
outstanding 90% engagement score - well above global utilities and UK high
performance benchmarks. Our strong culture is also reflected in our Glassdoor
rating of 4.6 out of 5. The strength of our brand as an employer is critical
to ensure we retain and attract the talent that we need to deliver our
ambitious plans.
Looking ahead - unlocking growth in the new economy
Today we submitted to Ofwat our plans for additional investment to support
housing growth, the new economy and proactive asset replacement. This £1.4
billion programme reinforces our role as an enabler of the country's broader
growth ambitions through the construction of essential infrastructure. We
expect our investment could support a further 4,000 jobs across our supply
chain, on top of the 30,000 supported by our existing AMP8 programme.
The investment programme sets out how we will deliver the vital water
infrastructure required for thousands of new homes across the region, unlock
capacity for data centre expansion and facilitate decarbonisation. We have
also outlined further investment in our assets to strengthen the resilience
and reliability of our networks, treatment works, and services.
It is a proposal which will enable an additional £17 billion of economic
value in the North West and £31 billion nationally by 2050(1). It will
support housing growth that our region needs, and help to turbocharge the UK's
digital economy. We expect Ofwat's draft decisions in August, with final
decisions due in December.
Plans for a further c.£1.2 billion of investment are expected to be submitted
for approval through subsequent submissions in 2027 and 2028 and transitional
investment into AMP9, taking total incremental investment to c.£2.5 billion
and total AMP8 capital investment to c.£11.5 billion.
( )
(1) As per Hynet North West estimates: HyNet_NW-Vision-Document-2020_FINAL.pdf
(https://hynet.co.uk/wp-content/uploads/2020/10/HyNet_NW-Vision-Document-2020_FINAL.pdf)
FINANCIAL FRAMEWORK
We have upgraded our five-year financial framework to reflect the accelerated
investment and equity raise announced today. Our financial framework captures
anticipated performance in the five years to 31 March 2030. This period aligns
with the AMP8 regulatory period.
Regulatory return
The regulatory return is the return generated on actual regulatory equity,
calculated using average actual gearing applied to the regulatory capital
value (RCV), as per Table 1F - Financial Flows of the Ofwat Annual Performance
Report. It encompasses the base return, outperformance, and the uplift to our
regulatory asset base from inflation. We are targeting regulatory returns of
10-11% in AMP8, an increase of 100bps outperformance compared with prior
guidance.
Capital investment and regulated asset growth
Our capital programme for the five years to March 2030 (AMP8) is significantly
larger than previous regulatory periods, due to long-term investment drivers.
We expect capital investment to be c.£11.5 billion, up from prior guidance of
c.£9 billion, supporting a c.10% compound growth in the asset base between
2025 and 2030.
Dividend policy
The group maintains a dividend policy to target a growth rate of CPIH
inflation each year, having increased the dividend at least in line with
inflation for the past 15 years. The annual increase in the dividend is based
on the CPIH element included within allowed regulated revenue for the current
financial year. This is calculated using the CPIH annual rate from the
November prior (i.e. the 2025/26 dividend is equal to the 2024/25 dividend
indexed for the movement in CPIH between November 2023 and November 2024).
Balance sheet
The board has maintained a target gearing range of 55-65% net debt to
regulated capital value. As at
31 March 2026, our gearing is comfortably within this range at 60%.
FY27 OUTLOOK AND GUIDANCE
Underlying revenue
Revenue is expected to increase to between £2.7 billion and £2.8 billion in
2026/27. This figure includes pass-through items of c.£110m relating to the
Haweswater Aqueduct Resilience Programme (HARP) (£70m, FY26: nil) and HS2
diversions income (£40m, FY26: £40m).
Underlying operating costs
Underlying operating costs are expected to increase by around £100 million
relating to growth in the asset base and price increases, including business
rates.
Depreciation
Increasing by £50 million - £60 million due to continued growth in our asset
base.
Underlying finance expense
Underlying net finance expense is expected to be lower year-on-year.
Underlying tax
Full expensing expected to continue, resulting in a negligible current tax
charge.
Capital expenditure
Capex in 2026/27 is expected to be around £2 billion.
Asset base growth
Our asset base in 2026/27 is expected to increase by around 10%, assuming CPIH
inflation of 3.6%.
ODIs(1)
We are forecasting a customer ODI penalty for 2026/27, with year-on-year
improvement.
Dividend
Our dividend continues to grow in line with CPIH, resulting in a dividend per
share of 55.54 pence.
(1) The final position will be confirmed once Ofwat's Outturn Adjustment
Mechanism (OAM) is finalised later in the year.
FINANCIAL REVIEW
Key financials (£m) - year ended 31 March
Reported Underlying(1,2,3)
2026 2025 % change 2026 2025 % change
Revenue 2,616.3 2,145.2 +22.0% 2,576.4 2,145.2 +20.1%
Operating expenses (978.3) (857.7) +14.1% (978.3) (857.0) +14.2%
Infrastructure renewals expenditure(2) (38.1) (191.1) -80.1% (38.1) (37.6) +1.3%
EBITDA 1,599.9 1,096.4 +45.9% 1,560.0 1,250.6 +24.7%
Depreciation and amortisation (500.5) (464.9) +7.7% (500.5) (464.9) +7.7%
Operating profit 1,099.4 631.5 +74.1% 1,059.5 785.7 +34.8%
Net finance expense (315.8) (265.7) +18.8% (316.9) (261.3) +21.3%
Share of (losses)/profits of JVs (4.6) (10.8) -57.4% (4.6) (10.8) -57.4%
Profit before tax 779.0 355.0 +119.4% 738.0 513.6 +43.7%
Tax charge (192.2) (90.3) +112.8% (8.0) (0.3) +nm%
Profit after tax 586.8 264.7 +121.7% 730.0 513.3 +42.2%
EPS (pence) 86.1 38.8 +121.7% 107.1 75.3 +42.2%
( )
2026 2025 % change
DPS (pence) 53.66 51.85 +3.5%
Net regulatory capex (£m) 1,525.1 1082.7 +40.9%
RCV(4) (£m) 16,527 15,367 +7.5%
Net debt (£m) 9,943 9,346 +6.4%
RCV gearing(5) (%) 60% 60% 0%
Regulatory return(6) (%) 13.0% 4.4% +8.6%
( )
Notes
(1) Underlying measures are reconciled to reported measures per the items
outlined later in this document.
(2) Prior year comparatives have been re-presented with unaudited pro forma
adjustments to reflect the estimated impact of changes in accounting approach
in 2025/26 had they been applied in the prior year. In particular, the change
in estimation technique for the measurement of inflation-linked debt is
estimated to have had a positive impact on net finance expense of £23 million
if applied in 2024/25, and that the adoption of a more granular approach to
the capitalisation of IRE is estimated to have had a positive impact on
operating profit of £152 million if applied in 2024/25.
(3) Underlying EPS for 2026 includes positive 3p impact of change in
estimation technique for the measurement of inflation-linked debt introduced
in 2025/26 and positive 37p impact of higher capitalisation of IRE.
(4) United Utilities Water Limited's adjusted RCV (adjusted for actual spend,
timing differences and including expected value of AMP8 ex-post adjustment
mechanisms).
(5) RCV gearing calculated as group net debt including loan receivable from
joint venture/United Utilities Water Limited's adjusted RCV (adjusted for
actual spend, timing differences and including expected value of AMP8 ex-post
adjustment mechanisms).
(6) Regulatory return is the return on regulatory equity comprising the base
return, outperformance and inflation as per Table 1F of the Ofwat Annual
Performance Report.
( )
We have delivered strong financial performance this year. Underlying revenue
increased 20% in line with allowances set out in our PR24 Final Determination.
This revenue increase, partially offset by higher operating costs reflecting
growth in our asset base and price increases in the year, resulted in an
underlying operating profit of £1,060 million, a 35% increase compared with
the prior year. Underlying EPS at 107.1 pence has increased 42% largely
reflecting the big step up in revenue allowances in the first year of the AMP,
with increases in revenue allowances over subsequent years expected to be
lower, consistent with the typical regulatory approach to setting prices.
Underlying net finance expense increased as a result of increased debt to fund
the AMP8 capital programme, resulting in an underlying profit after tax of
£730 million and underlying earnings per share of 107.1 pence. Reported
profit after tax was at £587 million, with reported earnings per share of
86.1 pence. Adjusted items between underlying and reported are set out later
in this document.
Our balance sheet remains strong, with RCV gearing at 60%, in the middle of
our target range of 55-65%, supporting robust credit ratings.
Revenue
£m
Underlying - Year to 31 March 2025 2,145.2
Regulatory revenue impact 446.8
Other impacts (15.6)
Underlying - Year to 31 March 2026 2,576.4
Adjusted items* 39.9
Reported - Year to 31 March 2026 2,616.3
* Adjusted items are set out later in this document.
Revenue was up £471 million at £2,616 million, with £447 million
attributable to regulatory adjustments. Adjustments include a c.23% real
increase in allowed wholesale revenues as set out in our PR24 Final
Determination as well as a 3.5% CPIH-linked increase to the revenue cap.
Other revenue impacts largely reflect variances in consumption. Reported
revenue included £40 million of revenue allowed by Ofwat for recovery in AMP8
related to diversions activity to accommodate the now-aborted northern leg of
HS2, which will be returned to customers over the course of AMP9. The £40
million of revenue recognised in relation to this diversions activity has been
adjusted for in arriving at underlying revenue.
Operating profit
£m
Underlying - Year to 31 March 2025* 785.7
Revenue increase 431.2
Growth in the asset base (64.7)
Price increases (51.5)
Bad debt charge (12.5)
Other (28.7)
Underlying operating profit - Year to 31 March 2026 1,059.5
Adjusted items* 39.9
Reported - Year to 31 March 2026 1,099.4
* Adjusted items are set out on later in this document.
Underlying operating profit at £1,060 million was £274 million higher than
last year, reflecting the increase in revenue, partially offset by higher
operating costs than the prior year. Operating costs have increased primarily
due to expenditure associated with growth in our underlying asset base, as
well as price increases across regulatory fees, power and chemicals.
Reported operating profit was higher than underlying operating profit,
reflecting the adjustment to revenue detailed above.
Our comprehensive affordability schemes, combined with effective credit
collection practices and utilisation of technology, have meant that current
year cash collection has been encouraging. Our bad debt position at 1.8% of
statutory revenue is in line with management expectations.
Profit before tax
£m
Underlying - Year to 31 March 2025* 513.6
Underlying operating profit increase 273.8
Underlying net finance expense increase (55.6)
Share of JVs losses decrease 6.2
Underlying profit before tax - Year to 31 March 2026 738.0
Adjusted items * 41.0
Reported - Year to 31 March 2026 779.0
* Adjusted items are set out on later in this document.
Underlying profit before tax is £738 million compared with £514 million
underlying profit before tax last year. The £224 million increase reflects
the £274 million increase in underlying operating profit and a £6 million
reduction in the share of losses of joint ventures, partially offset by a £56
million increase in underlying net finance expense.
Reported profit before tax is £41 million higher at £779million, reflecting
adjustments outlined later in this document.
Net finance expense
£m
Underlying - Year to 31 March 2025* 261.3
Increase in non-cash indexation on debt and derivatives 15.7
Increase in net interest payable on debt, derivatives and cash 50.8
Increase in capitalised interest (6.9)
Increase in pension interest income (4.6)
Other 0.6
Underlying net finance expense - Year to 31 March 2026 316.9
Adjusted items * (1.1)
Reported - Year to 31 March 2026 315.8
* Adjusted items are set out later in this document.
The underlying net finance expense of £317 million was £56 million higher
than in the prior year mainly due to the increase in debt to fund the AMP8
capital programme, and a £16 million increase in non-cash interest expense on
our debt and derivative portfolio, taking into account higher inflation
incurred in the year and a rise in future indications of inflation. This is
partially offset by an increase in capitalised interest and pension interest
income.
Cash interest expense has increased by £67 million, primarily reflecting the
increase in debt to fund the AMP8 capital programme.
Reported net finance expense is £1 million lower than underlying net finance
expense, reflecting adjustments outlined later in this document.
Profit after tax and earnings per share
PAT Earnings per share
£m Pence/share
Underlying - Year to 31 March 2025* 513.3 75.3
Underlying profit before tax increase 224.4
Tax charge increase (7.7)
Underlying profit after tax - Year to 31 March 2026 730.0 107.1
Adjusted items * (143.2)
Reported - Year to 31 March 2026 586.8 86.1
* Adjusted items are set out later in this document.
The underlying profit after tax of £730 million was £217 million higher than
the prior year, reflecting the increase to underlying profit before tax,
partially offset by £8 million increase to the current tax charge.
Reported profit after tax was lower at £587 million with reported earnings
per share at 86.1 pence. Adjusted items between underlying and reported set
out later in this document.
Tax
For the year to 31 March 2026 2025
£m £m
Current tax 8.0 0.3
Deferred tax 184.2 90.0
Effective tax rate 24.7% 25.4%
Tax adjustments taken to other comprehensive income 4.3 8.1
We continue to be fully committed to paying our fair share of tax and acting
in an open and transparent manner in relation to our tax affairs and are
delighted to have been accredited with the Fair Tax Mark again in 2025 for the
seventh year running.
In addition the group has made further contributions to the public finances of
around £290 million, in the form of business rates, employer's national
insurance contributions, environmental taxes, other regulatory service fees
such as water abstraction charges as well as employment taxes on behalf of our
6,800 strong workforce.
The key reconciling item to the headline rate of corporation tax continues to
be allowable tax deductions on capital investment, these being deductions put
in place by successive governments to encourage such investment and thus
reflecting responsible corporate behaviour in relation to taxation.
The current tax charge of £8m reflects a £4m prior year adjustment to
management's estimate of the most likely amount that will be received in
relation to Research and Development allowances available on certain capital
projects that remain under enquiry and consortium relief totaling £4 million
in relation to the years ended 31 March 2024 and 31 March 2025 claimed from
the group's joint venture, Water Plus.
In the period, there were £4.3 million of tax adjustments taken to other
comprehensive income, primarily relating to remeasurement movements on the
group's defined benefit pension schemes and on hedge effectiveness.
An overall prior year net deferred tax credit of £6.5m has been the most
significant factor in reducing the effective tax rate below the standard rate
of tax of 25% along with reductions of tax sensitive items.
Dividend per share
The Board has proposed a final dividend of 35.78 pence per ordinary share in
respect of the year ended 31 March 2026. This is an increase of 3.5% compared
with the dividend last year, in line with the group's dividend policy of
targeting a growth rate of CPIH inflation each year. The 3.5% increase is
based on the CPIH element included within allowed regulated revenue for the
2025/26 financial year (i.e. the movement in CPIH between November 2023 and
November 2024).
The final dividend is expected to be paid on 3 August 2026 to shareholders on
the register at the close of business on 26 June 2026. The ex-dividend date
for the interim dividend is 25 June 2026.
A dividend reinvestment plan (DRIP) is provided by Equiniti Financial Services
Limited. The DRIP enables the company's shareholders to elect to have their
cash dividend payments used to purchase the company's shares. More information
can be found at www.shareview.co.uk/info/drip
(https://urldefense.com/v3/__http:/www.shareview.co.uk/info/drip__;!!FvJKb9TgAvphWVQ!ZQcXqVPW7-CX6Mu2eJ844HadQqtQxFVhRWSvtDb2G_pkAJ6eNPrgzFZFKed_52ajmgKBNPFW-6xBGoefNhMz9Hbe1mP4vZAU_wSb$)
. The closing date for DRIP elections is 13 July 2026.
The ISIN for UUG is GB00B39J2M42 and the TIDM is UU.
Cash flow
Net cash generated from operating activities for the year was £1,382 million,
£464 million higher than in the prior year, principally due to increased
revenue. This is partially offset by higher net interest paid on debt and
derivatives as a result of higher debt associated with the AMP8 capital
programme. The net cash generated from continuing operating activities
supports the dividends paid of £358 million and partially funds some of the
group's net capital expenditure of £1,499 million, with the balance being
funded by net borrowings and cash and cash equivalents.
Pensions
As at 31 March 2026, the group had an IAS 19 net pension surplus of £311
million, compared with a surplus of £302 million at 31 March 2025. This is
driven largely by interest earned on the surplus and is partially offset by a
remeasurement loss of £8 million due to updates to the mortality projections
and actual inflation over the year being higher than assumed at the prior
reporting period. The remeasurement loss is more than offset by the net
pension income credited to the income statement before tax of £11m.
Further detail on pensions is provided in note 12 ('Retirement benefit
surplus') of these condensed consolidated financial statements.
Financing
Net debt £m
At 31 March 2025 9,345.5
Cash generated from operations (1,602.1)
Net capital expenditure 1,499.0
Dividends 357.6
Indexation 154.2
Interest 236.3
Fair value movements (78.3)
Exchange rate movements on bonds and term borrowings 45.1
Repayment of loans by joint ventures (21.0)
Other 6.9
At 31 March 2026 9,943.2
Net debt at 31 March 2026 was £9,943 million, compared with £9,346 million
at 31 March 2025. This comprises gross borrowings with a carrying value of
£11,491 million, net derivative liabilities hedging specific debt instruments
of £95 million and cumulative indexation on inflation swaps of £151 million
and is net of cash and bank deposits of £1,794 million.
Gearing, measured as group net debt including a £50 million loan receivable
from joint venture divided by UUW's adjusted RCV (adjusted for actual spend,
timing differences and including full expected value of AMP8 ex-post
adjustment mechanisms) of £16.5 billion, was 60% at 31 March 2026.
Cost of debt
As at 31 March 2026, the group had approximately £3.3 billion of RPI-linked
instruments and £0.5 billion of CPI or CPIH-linked instruments held as debt.
Including swaps, the group has RPI-linked debt exposure of £3.2 billion at an
average real rate of 1.5%, and £1.4 billion of CPI or CPIH-linked debt
exposure at an average real rate of -0.6%.
Debt issuances during the prior and current financial year contributed to the
group's average effective interest rate of 4.2% being higher than the rate of
3.8% last year. More information on this can be found later in this document.
The group has fixed the interest rates on its non index-linked debt in line
with its 10-year reducing balance basis at an average effective nominal
interest rate of 4.1% for the current financial year.
Credit ratings
UUW's senior unsecured debt obligations are rated Baa1 with Moody's Investors
Service Ltd (Moody's), A- with Fitch Ratings Ltd (Fitch) and BBB+ with S&P
Global Ratings UK Limited (S&P). United Utilities PLC's senior unsecured
debt obligations are rated Baa2 with Moody's, BBB+ with Fitch and BBB- with
S&P. All ratings are on a stable outlook.
Debt financing
The group has access to the international debt capital markets through its
£12 billion medium-term note (MTN) programme.
In the year to 31 March 2026, we raised c£1.0 billion of term funding. This
consisted of a £100m term loan from a relationship bank with a 5+1+1 year
maturity and c£900 million in the public bond markets, including a EUR500m
10-year green public bond issued in August, a EUR100m tap of our existing EUR
3.75% bond due 2034 in September, a £300m 14-year public bond issued in
December and a EUR100m tap of our existing EUR 3.75% bond due 2035 in March.
In addition, £400 million of committed facilities were executed, renewed
and/or increased with relationship banks. Subsequent to the year end a EUR150m
tap of our existing EUR 3.5% bond due 2033 was issued in April. The term debt
raised in AMP8 so far has typically outperformed the Ofwat debt index
mechanism by c80bps providing a sustained benefit across all five years of the
AMP.
In March 2026, with the written consent of the noteholder, we amended three of
our RPI-linked notes to adopt updated replacement 'fallback' provisions (which
are applicable upon cessation of, or fundamental changes to RPI, and now
effectively follow index-linked gilts) and we took the opportunity to shorten
the maturity on two of those notes from 2056 to 2047. In addition, in March
2026 the group's sustainable finance framework was updated.
Interest rate management
Long-term sterling inflation index-linked debt provides a natural hedge to
assets and earnings under the regulatory model. At 31 March 2026,
approximately 32% of the group's net debt was in RPI-linked form, representing
around 19% of UUW's regulatory capital value (RCV), with an average real
interest rate of 1.5%. A further 14% of the group's net debt was in CPI or
CPIH-linked form, representing around 8% of UUW's RCV, with an average real
rate of -0.6%. 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 around 14 years.
Across AMP8 we expect to move from having around half of our net debt in
index-linked form to around a third. This reflects a balanced assessment
across a range of factors, and will happen progressively over the period.
Where nominal debt is raised in a currency other than sterling and/or with a
fixed interest rate, the debt is generally swapped to create a floating rate
sterling liability for the term of the debt. To manage exposure to medium-term
interest rates, the group fixes underlying interest costs on nominal debt out
to ten years on a reducing balance basis.
Liquidity
Short-term liquidity requirements are met from the group's normal operating
cash flows, cash and bank deposits primarily sourced from pre-funding in the
debt capital markets, supported by committed but undrawn credit facilities.
Our MTN programme and investment grade credit ratings support our ability to
replenish liquidity over time.
At 31 March 2026, we had liquidity to cover projected needs through to the
second half of FY28, comprising cash and bank deposits, plus committed undrawn
revolving credit facilities. This gives us flexibility in terms of when and
how further debt finance is raised to help refinance maturing debt and support
the delivery of our ongoing capital investment programme.
Regulatory return
The regulatory return for 2025/26 was 13.0%. In addition to the base return of
5.2% (including our five basis point business plan reward), we delivered net
outperformance of 2.4%, comprising:
Financing outperformance
We earned financing outperformance this year of 3.1%. We have consistently
issued debt at efficient rates that compare favourably with the industry
average and sector debt indexation mechanism, thanks to our strong balance
sheet and credit ratings, along with our leading treasury management, clear
and transparent financial risk management policies, and ability to act swiftly
to access pockets of opportunity as they arise.
Customer outcome delivery incentives (ODIs)
In 2025/26 we incurred a net customer ODI penalty of around £35m, or 0.5 as a
percentage on returns. With the introduction of new measures in AMP8 we expect
performance to be progressive, resulting in a net reward across the AMP.
Customer ODI rewards and penalties are applied to revenues with a two-year
lag. As such, the penalty incurred this year will be reflected as a reduction
to revenues in 2027/28.
In 2025/26 PCDs had a 0.02% impact on returns. We are on track to deliver
against the PCDs set out in the Final Determination over the remainder of AMP8
and remain focused on efficient delivery.
Totex performance
The totex impact on returns in 2025/26 is -0.1%, representing costs not
subject to cost sharing.
Retail performance
The retail impact on returns of -0.2% reflects the additional investment that
we've made to improve customer service and support cash collection and
affordability as we support customers through bill increases.
After accounting for the impact of our actual gearing of 1.7%, as well as
inflation of 3.8%, our regulatory return is 13.0% in 2025/26.
Underlying profit
The underlying profit measures in the following table represent alternative
performance measures (APMs) as defined by the European Securities and Markets
Authority (ESMA). These measures are linked to the group's financial
performance as reported in accordance with UK-adopted international accounting
standards and the requirements of the Companies Act 2006 in the group's
consolidated income statement, which can be found later in this document. As
such, they represent non-GAAP measures.
These APMs can assist in providing a representative view of business
performance, and may not be directly comparable with similarly titled measures
presented by other companies. The group determines adjusted items in the
calculation of its underlying measures against a framework which considers
significance by reference to profit before tax, in addition to other
qualitative factors such as whether the item is deemed to be within the normal
course of business, its assessed frequency of reoccurrence and its volatility,
which is either outside the control of management and/or not representative of
current year performance.
In addition, a reconciliation of the group's average effective interest rate
has been presented, together with a prior period comparison. In arriving at
net finance expense used in calculating the group's effective interest rate,
underlying net finance expense is adjusted to add back net pension interest
income and capitalised borrowing costs in order to provide a view of the
group's cost of debt that is better aligned to the return on capital it earns
through revenue.
Adjusted item Rationale
Adjustments not expected to recur
Prior year comparatives (unaudited pro forma adjustments) Prior year comparatives have been re-presented with unaudited pro forma
adjustments to reflect the approximate impact of changes in accounting
approach in 2025/26 based on estimates of their effect had they been applied
in the prior year. In particular, it is estimated that the change in
estimation technique for the measurement of inflation-linked debt would have
had a positive impact on net finance expense of £23 million if applied in
2024/25, and that the adoption of a more granular approach to the
capitalisation of IRE would have had a positive impact on operating profit
of an estimated £152 million if applied in 2024/25 using assumptions derived
from the more granular data available in 2025/26. While these accounting
changes have been adopted prospectively from 1 April 2025, prior year figures
have been re-presented as pro forma adjustments for ease of comparison to
2025/26 figures and forward looking financial guidance on a like-for-like
basis.
Consistently applied presentational adjustments
High Speed Two (HS2) income Management adjusts to exclude the revenue allowed by Ofwat for recovery in
AMP8 related to diversions activity that will no longer take place following
the cancellation of the northern leg of HS2. This adjustment will recur in
each of the remaining years of AMP8. The revenue allowance to be recovered in
AMP8 will be offset by negative adjustments to the revenue allowed by Ofwat
for recovery in AMP9, resulting in a neutral position over time. Adjustments
in arriving at underlying operating profit will therefore also be required
during AMP9.
Fair value (gains)/losses on debt and derivative instruments, excluding Fair value movements on debt and derivative instruments can be both very
interest on derivatives and debt under fair value option significant and volatile from one period to the next, and are, therefore,
excluded in arriving at underlying net finance expense as they are determined
by macro-economic factors, which are outside of the control of management and
relate to instruments that are purely held for funding and hedging purposes
(not for trading purposes). Included within fair value movement on debt and
derivatives is interest on derivatives and debt under fair value option. In
making this adjustment it is appropriate to add back interest on derivatives
and debt under fair value option to provide a view of the group's cost of
debt, which is better aligned to the return on capital it earns through
revenue. Taking these factors into account, management believes it is useful
to adjust for these fair value movements to provide a more representative view
of performance.
Deferred tax adjustment Management adjusts to exclude the impact of deferred tax in order to provide a
more representative view of the group's profit after tax and tax charge for
the year given that the regulatory model allows for cash tax to be recovered
through revenues, with future revenues allowing for cash tax including the
unwinding of any deferred tax balance as it becomes current. By making this
adjustment, the group's underlying tax charge does not include tax that will
be recovered through revenues in future periods, thus reducing the impact of
timing differences.
Tax in respect of adjustments to underlying profit/ (loss) before tax Management adjusts for the tax impacts of the above adjusted items to provide
a more representative view of current year performance.
Underlying profit Year ended Year ended
31 March 31 March
2026 2025
£m £m
Operating profit per published results 1,099.4 631.5
Adjustments:
HS2 revenue (39.9) -
Fleetwood outfall pipe fracture - 2.3
More granular approach to IRE capitalisation - 151.9
Underlying operating profit 1,059.5 785.7
Net finance expense
Finance expense (415.7) (371.9)
Investment income 99.9 106.2
Net finance expense per published results (315.8) (265.7)
Adjustments:
Fair value losses/(gains) on debt and derivative instruments, excluding (1.1) (18.7)
interest on derivatives and debt under fair value option
Change in estimation technique for measuring index-linked debt - 23.1
Underlying net finance expense (316.9) (261.3)
Share of (losses)/profits of joint ventures (4.6) (10.8)
Profit before tax per published results 779.0 355.0
Adjustments:
In respect of operating profit (39.9) 154.2
In respect of net finance expense (1.1) 4.4
Underlying profit before tax 738.0 513.6
Profit after tax per published results 586.8 264.7
Adjustments:
In respect of profit before tax (41.0) 158.6
Deferred tax adjustment 184.2 90.0
Underlying profit after tax 730.0 513.3
Earnings per share
£m £m
Profit after tax per published results (a) 586.8 264.7
Underlying profit after tax (b) 730.0 513.3
Weighted average number of shares in issue, in millions (c) 681.9 681.9
Earnings per share per published results, in pence (a/c) 86.1p 38.8p
Underlying earnings per share, in pence (b/c) 107.1p 75.3p
Dividend per share, in pence 53.66p 51.85p
In arriving at net finance expense used in calculating the group's effective
interest rate, management adjusts underlying net finance expense to add back
pension income and capitalised borrowing costs in order to provide a view of
the group's cost of debt that is better aligned to the return on capital it
earns through revenue.
Year ended Year ended
Average effective interest rate Year ended Year ended
31 March 31 March
2026 2025(1)
£m £m
Underlying net finance expense (316.9) (261.3)
Adjustments:
Net pension interest income (17.5) (12.9)
Adjustment for capitalised borrowing costs (75.4) (68.5)
Net finance expense for effective interest rate (409.8) (342.7)
Average notional net debt(2) (9,683) (8,964)
Average effective interest rate 4.2% 3.8%
Effective interest rate on index-linked debt 4.2% 4.1%
Effective interest rate on other debt 4.1% 3.8%
( )
Notes
(1) Prior year comparatives have been represented with an unaudited pro forma
adjustment to reflect the estimated impact of the change in estimation
technique for the measurement of inflation-linked debt. The change in approach
is estimated to have a positive impact on net finance expense of £23 million
if applied in 2024/25.
(2) Notional net debt is calculated as the principal amount of debt to be
repaid, net of cash and bank deposits, taking: the face value issued of any
nominal sterling debt, the inflation accreted principal on the group's index
linked debt, and the sterling principal amount of the cross currency swaps
relating to the group's foreign currency debt.
Regulatory Return
UUW's regulatory return
Year ended
31 March 2026
Base return 5.2%
Financing performance 3.1%
Customer ODI performance (0.5)%
Totex performance (0.1)%
Retail performance (0.2)%
RoRE 7.5%
Impact of gearing 1.7%
Inflation 3.8%
Regulatory return 13.0%
PRINCIPAL RISKS AND UNCERTAINTIES
Our approach to risk management
Our approach to risk management, including how we identify and assess risk,
the oversight and governance process and focus on continual improvement
remains largely unchanged from last year as described in our Annual Report.
Risk profile
A key feature of the business risk profile is inherent risk areas. These are
categories of risk that are based on the value chain of the company,
reflecting the interrelationship of the primary (water service, wastewater
service, bioresources and retail and revenue), and supportive activities or
areas of responsibility such as finance, technology and data, and health and
safety where value can be gained, preserved or lost. As a result, the inherent
risk areas support the identification and/or gap analysis of all types of
risks, facilitate analysis of correlation and interdependency, and provide the
platform for determining risk appetite and tolerance, which in turn helps us
to articulate our direction and priorities to support decision-making around
risk and resilience. Underpinning the inherent risk areas are approximately
100 event-based risks, which are inherent to the company's objectives and
obligations, and cover core elements of the production lines, systems,
networks and activities across the business.
Each event-based risk remains dynamic by reflecting new and emerging
circumstances relative to the ever-changing external threats and internal
vulnerabilities.
We have identified a number of common causal and consequence themes that
relate to multiple risks. This allows us to understand correlating risk,
enabling us to take a holistic view of the strengths, weaknesses and gaps in
our controls, and to consider the short, medium and long-term implications of
risks materialising. Categorisation indicates seven causal themes and six
consequence themes:
● Causal themes: asset health; climate change/extreme weather; culture;
demographic change; economic conditions; legislative and regulatory change;
third party assets and service; and technology and data.
● Consequence themes: environmental impact; investors; non-compliance; people;
service delivery; and suppliers.
Our principal risks
In January 2024, the FRC published a revised UK Corporate Governance Code (the
code), with the most significant change being in respect of Provision 29 which
relates to the board monitoring the risk management and internal control
framework. In accordance with the revised code, the board will make a
declaration of the effectiveness of material controls from financial year
2026/27, which will supplement the existing annual assessment of risk
management and internal control systems. In preparation for the material
controls declaration we have, as reported in last year's Annual Report,
renewed our definition of which event-based risks, individually or
collectively, are to be considered as a principal risk:
● Material impact risks - risks, which in the maximum worst case, have severe
one-off financial and non-financial impacts; and
● Significant long-term risks - risks with significant exposure (likelihood of
occurrence of the event multiplied by the most likely financial impact over
the long-term after consideration of the current control environment).
Our principal risks therefore represent those risks which, in a remote but
plausible scenario, could initiate corporate failure (material impact risks)
and those risks which are likely to have a significant long-term impact on
company value if they were to crystallise. As our definition of material
impact risks highlights those risks that have the most significant impact (if
they crystallise in the worst case), it naturally identifies risks which place
significant reliance on mitigating controls. Therefore, our future material
controls declaration will be in respect of the key controls which mitigate our
material impact risks.
A. Strategic aqueduct
failure
Material impact & Long-term risk
Risk exposure: We own and operate nine aqueducts, which transfer water from
major treatment works and large service reservoirs to the wider network. Asset
deterioration and damage (caused by third party or natural event) are key risk
factors to water supply and/or quality relative to large proportions of our
customer base. The Haweswater Aqueduct is the most significant asset of this
type and currently has the lowest level of resilience.
Control/mitigation: We are committed to delivering a resilient supply of
water. Material controls are:
● Rehabilitation/restoration: The Large Diameter Trunk Mains (LDTM) inspections
regime, along with existing asset maintenance programmes, are structured and
reviewed periodically to identify where major rehabilitation or restoration
programmes are required. The programmes are centrally governed and delivered
to ensure the successful rehabilitation and restoration of strategic
aqueducts, reducing the likelihood and impact of structural failure. Current
initiatives include the Haweswater Aqueduct Resilience Programme and Vyrnwy
Aqueduct Modernisation Programme.
● Aqueduct loss contingency plans: Plans to outline response of total loss of
supply (in the event of breach) or restrictions on use (in the event of a
water quality event) are developed, maintained and periodically exercised to
enable the rapid deployment of resources and engagement with external agencies
to maintain community function.
Other controls include protective easements, inspections, and monitoring of
flow, pressure and turbidity via sensors and alarms.
Governance: Water quality first board, Water price control, Ofwat Liaison
Committee (HARP), HARP Delivery Board.
Assurance: Engineering team technical reviews; Assurance team reviews; and
cyclical internal audits.
B. Treatment and transportation of wastewater
Material impact & Long-term risk
Risk exposure: We own and operate network and treatment assets to collect and
treat wastewater before it is safely returned to the environment. Risk factors
to the hydraulic and operational capacity include: population growth; extreme
weather (amplified by climate change); increased surface runoff due to
residential and commercial developments; improper or harmful use of the sewer
systems; and inherent asset health issues. Consequential failure, now subject
to tightening legislation, can result in unpermitted storm or emergency
overflow activations, sewer flooding and environmental damage.
Control/mitigation: We focus on providing reliable and resilient wastewater
services. Material controls are:
● Maintenance: Proactive and reactive inspection, servicing, repair and
replacement activities are planned, prioritised and completed across
wastewater assets to maintain operational reliability and reduce the
likelihood of asset failure and environmental impact.
● Licence to operate: Mandatory training, certification and competence
requirements for wastewater operations are defined, delivered and routinely
refreshed to ensure staff maintain the necessary skills and qualifications to
safely and effectively operate the wastewater processes and assets.
● Power resilience: Power resilience plans and assets are maintained for
critical wastewater sites to ensure continuity of treatment and transportation
during power interruptions and outages.
Other controls include customer awareness, trade effluent management,
monitoring of sensors and alarms and emergency response. In addition, our
Better Rivers programme focuses on improving river water quality and reducing
spills from storm and emergency overflow operation.
Governance: Wastewater Price control; Flood committee; and Pollution
committee.
Assurance: Assurance team reviews; and cyclical internal audits.
C.
Cyber
Material impact & Long-term risk
Risk exposure: As we continue to develop our digital capability, we become
more reliant on connected technology, not only in the way we operate, but also
the way in which we communicate with our customers and the wider community.
Cyber incidents continue to grow in all industries with a constantly changing
threat landscape. The potential for data and technology assets to be
compromised is a key risk to business processes and operations.
Control/mitigation: We employ a multi-layer control environment. Material
controls are:
● Infrastructure access controls: Perimeter and internal firewalls, supported by
intrusion detection systems, are centrally configured, monitored and routinely
updated to restrict unauthorised access and detect malicious activity across
the corporate and operational technology networks.
● System access controls: System, data and internet access is restricted through
centrally managed authentication, authorisation and usage controls, ensuring
users are granted only the permissions required for their role and preventing
unauthorised or inappropriate access across information and operational
technology (IT and OT) environments.
● Point protection: Anti-malware suite and mail gateway service which includes
malware detection, transmission protocols, and endpoint actions.
● Monitoring and response: The Security Operations Centre continuously monitors
security events, analyses threat activity and coordinates timely incident
response actions to detect, contain and mitigate cyber threats across the
organisation's IT and OT environments. UU also operates a comprehensive Cyber
Security Incident Response plan with associated training and exercising.
Other controls include security awareness training and business continuity
plans.
Governance: Security steering group, NIS governance board, Group audit and
risk board (GARB).
Assurance: Security team reviews; annual internal audit; and external reviews.
D. Water availability
Material
impact & Long-term risk
Risk exposure: Water availability is a long-term risk for the UK relative to
climate change and increased demand from population growth and increasing
industrial usage. It is one of the most sensitive risks to climate change with
lower than average rainfall and changing seasons affecting water resources,
while extended periods of hot weather increases evaporation and demand. Both
the environment and the capacity to supply water can be affected with the
potential for water use restrictions to be implemented. Changing environmental
legislation on abstraction and compensation is also a factor.
Control/mitigation: We are committed to the sustainability and resilience of
water resources. Material controls are:
● Strategy: A central water resources planning team develops, maintains and
periodically reviews the Water Resources Management Plan to ensure long‑term
supply and demand strategy reflects climate and demographic change and
provides a resilient approach to water availability.
● Production planning: Production planning teams proactively balance water
availability and treatment / production capacity against forecast demand by
reviewing supply forecasts, operational constraints and risk indicators to
ensure sustainable and resilient system operation.
● Contingency plan: The statutory Drought Plan is maintained, periodically
reviewed and enacted when required to set out the operational and
customer‑facing actions the organisation will take to manage water shortages
and protect system resilience during drought conditions.
Other controls include abstraction and leakage management, and water
efficiency programmes.
Governance: Water quality first board; and Water price control
Assurance: Assurance team reviews; and internal audits.
E. Financial risk
Material impact risk
Risk exposure: We are inherently exposed to liquidity, market, credit and
capital risk due to our debt financing, cash and derivative holdings, defined
benefit pension scheme and a significant annual commodity spend, notably
energy. Risk factors include market fluctuations, cost or revenue shocks,
process or system errors or failures (internal or counterparty), and company
or sector poor performance. Impacts can be conflated and range significantly
relating to revenue, the group's Regulatory Capital Value, the cost of debt,
the cost of goods and services, with the most material impact being insolvency
associated with remote risks such as counterparty failures or a breach of
covenants.
Control/mitigation: We have a robust and prudent approach to financial risk
management. Material controls are:
● Approved limits: Approved parameters for funding, liquidity, interest
rate, inflation and electricity price commodity exposures, along with
credit rating and financial ratio tolerance levels, are centrally defined in
Treasury policies, monitored and reported to ensure treasury and financing
activities remain within the organisation's financial risk appetite.
● Control of work: Financial transactions are governed by an established control
framework incorporating authorisation limits, defined transaction parameters,
segregation of duties and supervisory review to ensure activities are executed
in line with approved financial and operational standards and limits.
● Licence to operate: Mandatory training, certification and competency
requirements for financial and treasury activities are defined, delivered and
routinely refreshed to ensure staff maintain the skills and authorisations
necessary to operate within regulatory, market and internal control
expectations.
Other controls include company business planning and monitoring of both
internal and counterparty performance. The banking resolution regime also
provides protection in the event of bank failures.
Governance: Operational compliance review; Executive performance meeting;
Quarterly Treasury MI Pack; and Treasury committee.
Assurance: External audit; and cyclical internal audit.
F. Dam failure
Material impact risk
Risk exposure: We own and operate a fleet of over 100 dams and service
reservoirs, many of which fall under statutory regulations due to their
significant capacity. The integrity of all dams is fundamental to water
availability, and the safety of society and property downstream. Flood damage,
overtopping, earthquake or erosion could, in remote circumstances, result in
an uncontrolled release of a significant volume of water with catastrophic
implications.
Control/mitigation: We focus on maintaining extremely low probabilities of
individual dam failure. Material controls are:
● Portfolio Risk Assessment (PRA): A Portfolio Risk Assessment is periodically
undertaken to evaluate individual dams against societal risk criteria,
enabling consistent prioritisation of safety interventions across the dam
portfolio.
● Inspections: Catchment teams and Supervising Engineers conduct regular
inspections and monitoring of dam structures and associated assets to identify
emerging defects and compliance issues, ensuring timely escalation and
intervention to maintain dam safety.
● Remedial work: Remedial works identified through Portfolio Risk Assessments or
statutory 'In the Interest of Safety' requirements are prioritised, designed
and delivered to address identified dam safety risks and ensure continued
compliance with regulatory obligations.
Other controls include ground maintenance to manage vegetation and erosion,
and contingency plans.
Governance: Dam safety group.
Assurance: Assurance team reviews; cyclical internal audits; and Panel
engineer inspections.
G. Physical security
Material impact risk
Risk exposure: The water industry is classed as one of 13 'Critical National
Infrastructure' (CNI) sectors which are defined as facilities, systems, sites,
information, people, networks and processes, necessary for a country to
function and upon which daily life depends. Within this definition, a number
of specific UU assets are assigned a CNI or 'National Infrastructure' (NI)
designation which in a remote, but significant security incident (such as a
terrorist attack) could be compromised, leading to severe economic and social
consequences.
Control/mitigation: We employ a multi-layered approach in accordance with the
Security and Emergency Measures Direction (SEMD) of the Water Industry Act.
Material controls are:
● Physical access controls: Physical access to sites is controlled through
gates, fencing, security guards, CCTV and electronic access control systems to
prevent unauthorised entry and protect critical assets.
● Monitoring and response: Security alarms and site alerts are continuously
monitored by the Integrated Control Centre, which initiates timely
investigation and response to any unauthorised access or security events.
Other controls include the physical hardening of assets based on priority and
operational site inspections.
Governance: Security steering group.
Assurance: Security team reviews; Assurance team reviews; cyclical internal
audits; and external reviews.
H. Failure to treat water
Material impact risk
Risk exposure: Threats to water treatment include asset health, process
failure and the contamination (natural, chemical or biological) of raw water.
Climate change is a key factor of raw water contamination due to intensifying
catchment erosion and runoff, more frequent wildfires and increasing algal
bloom which can produce taste and odour problems. Failure to treat water can
lead to non-compliance with regulatory standards, rejection of water by
consumers for aesthetics or, in extreme cases, public health issues.
Control/mitigation: We are committed to providing wholesome drinking water.
Material controls are:
● Sampling and testing: Water Quality teams perform scheduled sampling and
accredited laboratory testing across the network, with results recorded and
reviewed in the Water Quality Management System to ensure compliance and
detect any treatment issues.
● Sensors and alarms: Automated sensors continuously monitor water quality and
treatment parameters, triggering system‑generated alarms for operational
teams to investigate and address any deviations from acceptable limits.
● Maintenance: Operational and Engineering teams carry out scheduled and
reactive inspection, servicing, repair and replacement of treatment and
network assets, ensuring issues are identified and resolved to maintain asset
performance and regulatory compliance.
● Licence to operate: Mandatory training, certification and competence
requirements for water operations are defined, delivered and routinely
refreshed to ensure staff maintain the necessary skills and qualifications to
safely and effectively operate the water processes and assets.
● Power resilience: Power resilience plans and assets are maintained for
critical water sites to ensure continuity of water treatment during power
interruptions and outages.
● Chemical resilience: Chemical resilience plans (including stock levels,
alternative supply routes, and contingency actions) are maintained and
periodically reviewed to ensure critical treatment sites can continue
operating during chemical supply interruptions.
Other controls include an end-to-end risk assessment process, contingency
plans, and the monitoring of the regulatory position on emerging contaminants.
Governance: Water quality first board; and Water price control.
Assurance: Scientific service team reviews; Assurance team reviews; cyclical
internal audits; and external evaluations.
I. Health and safety
Material impact risk
Risk exposure: Our activities inherently include exposure to chemical,
biological and physical hazards, with the most material impact being a major
incident at one of our process plants (two of which fall under the Control of
Major Accident Hazard (COMAH) regulations). An unintentional release of
chemicals, energy, or other potentially dangerous materials (including steam)
could result in fire, explosion, and toxic releases, which in the worst case,
results in multiple casualties and serious damage to our assets, adjacent
infrastructure/buildings and the environment.
Control/mitigation: We continue to build a strong health and safety culture
and are committed to improving health and safety performance, with process
safety being a primary area of focus. Material controls are:
● Control of work and change: A management system to ensure activities are
safely undertaken, with key components including the management of change
through risk assessment, implementation of protections such as isolation, and
authorisation and permit to work.
● Maintenance: Scheduled and reactive inspection, servicing, repair and
replacement of safety‑critical equipment and assets to ensure they remain
fully functional and compliant with health and safety requirements.
● Licence to operate: Staff and contractors complete and maintain all required
training, licences and competency assessments, with compliance tracked and
evidenced through the corporate learning and authorisation systems to ensure
safe and legally compliant operation.
Other controls include monitoring through sensors and alarms and
emergency/contingency plans.
Governance: Process safety board; and Executive health & safety committee.
Assurance: H&S team reviews; Assurance team reviews; and cyclical internal
audit.
J. Misstatement of reported information
Material impact risk
Risk exposure: We are bound by legislation and regulation to provide statutory
financial accounts and regulatory reports to demonstrate financial health,
performance, compliance with legal and regulatory requirements, and provide
information to stakeholders for their ongoing interest and/or investment in
the company. Failure to provide accurate and/or complete information is
reputationally damaging and, depending on the nature of any misstatement or
misreport, could accrue significant penalties.
Control/mitigation: We are committed to reporting in an open, compliant and
transparent way. Material controls are:
● Financial controls: Financial control procedures (including journal processing
controls, control accounts and analytical review) to ensure the accuracy,
completeness and validity of reported financial information in accordance with
accounting and reporting standards.
● Regulatory reporting framework: Application of a defined regulatory reporting
framework that sets out reporting criteria, accountabilities, data capture
requirements, governance, and assurance processes to ensure reported
information is accurate, complete and compliant with reporting requirements.
Other controls include accounting policies, schedules, risk assessment and
management of queries.
Governance: Executive performance meetings; Audit committee; Compliance
committee.
Assurance: Financial control team review; Regulation and compliance team
review; internal audits; and external audit.
K. Fraud
Material impact risk
Risk exposure: The scale of UU's operations presents multiple opportunities
for fraud to be perpetrated from inside and outside of the company,
potentially impacting us, our stakeholders and third parties. Fraud can be
committed by individuals or groups with examples including false
representation, unauthorised disclosure of personal information, the supply of
inferior products / false invoices and misuse or theft of company property.
The Economic Crime and Corporate Transparency Act 2023 (ECCTA) introduced a
new corporate offence for failure to prevent fraud, which can carry an
unlimited fine. The most material fraud risks relate to treasury operations,
cyber crime and reporting.
Control/mitigation: We are committed to preventing fraud. Material controls
are:
● Control of work: Financial transactions are governed by an established control
framework incorporating authorisation limits, defined transaction parameters,
segregation of duties and supervisory review to ensure activities are executed
in line with approved financial and operational standards and limits.
● System access controls: System, data and internet access is restricted through
centrally managed authentication, authorisation and usage controls, ensuring
users are granted only the permissions required for their role and preventing
unauthorised or inappropriate access across information and operational
technology (IT and OT) environments.
● Financial controls: Financial control procedures (including journal processing
controls, control accounts and analytical review) to ensure the accuracy,
completeness and validity of reported financial information in accordance with
accounting and reporting standards.
Other controls include fraud awareness training, whistleblowing process for
the confidential reporting and investigation of fraud, and fraud risk
assessment.
Governance: Security steering group; Whistleblowing committee; Audit
committee; and Group board.
Assurance: Departmental review; cyclical internal audit; and external review.
L. Recycling of
biosolids
Long-term
risk
Risk exposure: Wastewater treatment generates significant quantities of
sludge, which is subsequently treated to produce biosolids, the majority of
which are recycled to agriculture as the most practical environmental option.
A reduction in the landbank could have significant implications to strategy,
operations, and cost, with a total loss of the land bank being the worst-case
scenario. Threats include: the quality of biosolids; changes in public or
political perception; changes in regulations associated with emerging
contaminants and climate change; and/or the willingness of farmers or
landowners to receive biosolids.
Control/mitigation: Treatment, sampling and testing ensures that quality
standards are met, and we work closely with farmers, landowners and
contractors to ensure compliance with regulations (notably the Biosolids
Assurance Scheme (BAS)). We are also investing in our sludge treatment assets
to ensure capacity, reliability and environmental compliance is upheld. In
addition, we continue to work closely with regulators to influence policy. We
are also developing contingency plans should regulation change in the near
term, with a notified item included in the final determination enabling an
interim determination (IDOK) if significant investment is required to develop
alternative disposal outlets before 2030.
Governance: Bioresource team review of BAS compliance; and Executive
performance meetings.
Assurance: Assurance team reviews; cyclical internal audit; and external BAS
audits.
M. Programme delivery
Long-term risk
Risk exposure: The capital programme involves significant investment in the
development and improvement of point and linear assets through a series of
projects to improve water supply and wastewater services. Delivery to time,
cost and quality is under constant challenge due to ongoing exposure to
natural hazards and the capacity and capability of third parties, partners and
internal resource. This risk is amplified by the significant scale of the
capital programme across this and future asset management periods (AMPs)
coupled with challenging cost allowances and performance commitments.
Control/mitigation: Our capital programme operating model involves multiple
construction and design partners, and a large supplier base, providing both
efficiency and resilience. With strong emphasis placed on safety and the
environment, we adopt a supplier relationship management framework to manage
contracts and performance, a runway approach for project allocation, and
category management for the supply of products and materials. Performance is
measured through our capital programme delivery incentive and monitoring
delivery of performance commitments. For operations a transformation programme
is in development with five clear areas of focus within an agreed
prioritisation framework.
Governance: Project management office; Capital investment committee; and
Executive performance meetings.
Assurance: Assurance team reviews; and cyclical internal audit.
Material litigation
The group robustly defends litigation where appropriate and seeks to minimise
its exposure by establishing provisions and seeking recovery wherever
possible. Litigation of a material nature is regularly reported to the group
board. While our directors remain of the opinion that the likelihood of a
material adverse impact on the group's financial position is remote, based on
the facts currently known to us and the provisions in our financial
statements, the following two cases are worthy of note:
● As reported in previous years, in February 2009, United Utilities
International Limited (UUIL) was served with notice of a multiparty 'class
action' in Argentina related to the issuance and payment default of a US$230
million bond by Inversora Eléctrica de Buenos Aires S.A. (IEBA), an Argentine
project company set up to purchase one of the Argentine electricity
distribution networks that was privatised in 1997. UUIL had a 45% shareholding
in IEBA, which it sold in 2005. The claim is for a non-quantified amount of
unspecified damages and purports to be pursued on behalf of unidentified
consumer bondholders in IEBA. The claim has not advanced procedurally in the
last year and the proceedings remain in the evidentiary stage. UUIL will
vigorously resist the proceedings given the robust defences that UUIL has been
advised that it has on procedural and substantive grounds.
● Collective proceedings in the Competition Appeal Tribunal ('CAT') were issued
on 8 December 2023 against UUW and United Utilities Group PLC on behalf of
approximately 5.6 million domestic customers following an application by the
Proposed Class Representative (PCR), Professor Carolyn Roberts. The PCR
alleges that customers have collectively paid an overcharge for sewerage
services during the claim period (which runs from 1 April 2020 and may
continue into the early years of the PR24 period) as a result of UUW allegedly
abusing a dominant position by providing misleading information to regulatory
bodies. The estimated total aggregate amount the PCR is claiming against UUW
(including interest) is at least £141 million. . Separate letters before
action were issued on 20 December 2024 in relation to similar claims in
respect of non-household customers, however it is not clear how these will
proceed following the CAT and Court of Appeal's decision not to certify the
claims brought in respect of domestic customers. On 7 March 2025, the CAT
unanimously concluded that claims could not proceed on the basis that the
claims brought forward are excluded by section 18(8) of the Water Industry Act
1991. This conclusion was upheld by a majority decision of the Court of Appeal
on 5 March 2026. Having subsequently been refused permission to appeal by the
Court of Appeal, on 9 April 2026 the PCR applied directly to the Supreme Court
for permission to appeal, the outcome of which application is expected later
this year. UUW believes the claim is without merit and will robustly defend
it, should the certification decision be overturned on appeal.
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. These forward-looking statements include without limitation
any projections or guidance relating to the results of operations and
financial conditions of the group as well as plans and objectives for future
operations, expected future revenues, financing plans, expected expenditure
and any strategic initiatives relating to the group, as well as discussions of
our business plan and our assumptions, expectations, objectives and resilience
with respect to climate scenarios. 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.
This announcement contains inside information, disclosed in accordance with
the Market Abuse Regulation which came into effect on 3 July 2016 and for UK
Regulatory purposes the person responsible for making the announcement is
Simon Gardiner, Company Secretary.
LEI 2138002IEYQAOC88ZJ59
Classification - Preliminary, unaudited full year results
Unaudited consolidated income statement
Year ended Year ended
31 March 31 March
2026 2025
£m £m
Revenue (note 3) 2,616.3 2,145.2
Other income 23.3 17.5
Staff costs (260.9) (224.1)
Other operating costs (note 4) (707.4) (630.6)
Allowance for expected credit losses - trade and other receivables (33.3) (20.5)
Depreciation of property, plant and equipment (471.4) (435.7)
Amortisation of intangible assets (29.1) (29.2)
Infrastructure renewals expenditure (38.1) (191.1)
Total operating expenses (1,516.9) (1,513.7)
Operating profit 1,099.4 631.5
Investment income (note 5) 99.9 106.2
Finance expense (note 6) (415.7) (371.9)
Investment income and finance expense (315.8) (265.7)
Share of losses of joint venture (note 11) (4.6) (10.8)
Profit before tax 779.0 355.0
Current tax charge (8.0) (0.4)
Deferred tax charge (184.2) (89.9)
Tax (note 7) (192.2) (90.3)
Profit after tax 586.8 264.7
Earnings per share (note 8)
Basic 86.1p 38.8p
Diluted 85.8p 38.7p
Dividend per ordinary share (note 9) 53.66p 51.85p
All of the results shown above relate to continuing operations.
Unaudited consolidated statement of comprehensive income
Year ended Year ended
31 March 31 March
2026 2025
£m £m
Profit after tax 586.8 264.7
Other comprehensive income
Items that may be reclassified to profit or loss in subsequent periods:
Cash flow hedges - effective portion of fair value movements 4.0 8.6
Tax on items that may be reclassified to profit or loss (1.0) (2.2)
Reclassification of items recorded in other comprehensive income to profit or 21.8 (1.3)
loss
Tax reclassified to income statement (5.5) 0.3
19.3 5.4
Items that will not be reclassified to profit or loss in subsequent periods:
Remeasurement (losses)/gains on defined benefit pension schemes (note 12) (7.9) 18.6
Change in credit assumption for debt reported at fair value through profit and (3.1) 1.9
loss
Cost of hedging - cross currency basis spread adjustment 2.7 3.6
Tax on items recorded in other comprehensive income 2.2 (6.0)
(6.1) 18.1
Total comprehensive income 600.0 288.2
Unaudited consolidated statement of financial position
31 March 31 March
2026 2025
£m £m
ASSETS
Non-current assets
Property, plant and equipment 15,084.0 13,873.0
Intangible assets 119.9 105.8
Interests in joint ventures (note 11) - 1.6
Trade and other receivables 54.6 73.6
Retirement benefit surplus (note 12) 310.9 302.3
Derivative financial instruments 334.0 329.3
15,903.4 14,685.6
Current assets
Inventories - properties held for resale 2.9 2.7
Inventories - other 6.2 21.9
Trade and other receivables 333.3 282.0
Current tax asset 73.2 93.3
Cash and cash equivalents 1,794.3 1,672.6
Derivative financial instruments 13.7 11.4
2,223.6 2,083.9
Total assets 18,127.0 16,769.5
LIABILITIES
Non-current liabilities
Trade and other payables (1,168.5) (1,063.8)
Borrowings (note 13) (11,325.7) (10,326.5)
Deferred tax liabilities (2,216.9) (2,028.4)
Derivative financial instruments (302.4) (275.0)
(15,013.5) (13,693.7)
Current liabilities
Trade and other payables (682.7) (577.2)
Borrowings (note 13) (164.9) (462.1)
Provisions (17.5) (19.0)
Derivative financial instruments (7.0) (17.6)
(872.1) (1,075.9)
Total liabilities (15,885.6) (14,769.6)
Total net assets 2,241.4 1,999.9
EQUITY
Share capital 499.8 499.8
Share premium account 2.9 2.9
Other reserves (note 16) 340.5 319.2
Retained earnings 1,398.2 1,178.0
Shareholders' equity 2,241.4 1,999.9
Unaudited consolidated statement of changes in equity
Year ended 31 March 2026
Share capital Share premium account ((1))Other reserves Retained earnings Total
£m £m £m £m £m
At 1 April 2025 499.8 2.9 319.2 1,178.0 1,999.9
Profit after tax - - - 586.8 586.8
Other comprehensive income
Remeasurement gains on defined benefit pension schemes (note 12) - - - (7.9) (7.9)
Change in credit assumption for debt reported at fair value through profit or - - - (3.1) (3.1)
loss
Cash flow hedges - effective portion of fair value movements - - 4.0 - 4.0
Cost of hedging - cross-currency basis spread adjustment - - 2.7 - 2.7
Tax on items recorded within other comprehensive income (note 7) - - (1.7) 2.9 1.2
Reclassification of items recorded in other comprehensive income to profit or - - 21.8 - 21.8
loss
Tax reclassified to income statement - - (5.5) - (5.5)
Total comprehensive income - - 21.3 578.7 600.0
Dividends (note 9) - - - (357.6) (357.6)
Equity-settled share-based payments - - - 4.5 4.5
Purchase of shares to satisfy exercise of share options - - - (5.8) (5.8)
Proceeds from share forfeitures 0.4 0.4
At 31 March 2026 499.8 2.9 340.5 1,398.2 2,241.4
Year ended 31 March 2025
Share capital Share premium account ((1))Other reserves Retained earnings Total
£m £m £m £m £m
At 1 April 2024 499.8 2.9 311.1 1,242.3 2,056.1
Profit after tax - - - 264.7 264.7
Other comprehensive income
Remeasurement gains on defined benefit pension schemes (note 12) - - - 18.6 18.6
Change in credit assumption for debt reported at fair value through profit or - - - 1.9 1.9
loss
Cash flow hedges - effective portion of fair value movements - - 8.6 - 8.6
Cost of hedging - cross-currency basis spread adjustment - - 3.6 - 3.6
Tax on items recorded within other comprehensive income (note 7) - - (3.1) (5.1) (8.2)
Reclassification of items recorded in other comprehensive income to profit or - - (1.3) - (1.3)
loss
Tax reclassified to income statement - - 0.3 - 0.3
Total comprehensive income - - 8.1 280.1 288.2
Dividends (note 9) - - - (344.1) (344.1)
Equity-settled share-based payments - - - 4.7 4.7
Purchase of shares to satisfy exercise of share options - - - (5.0) (5.0)
At 31 March 2025 499.8 2.9 319.2 1,178.0 1,999.9
((1))Other reserves comprise the group's capital redemption reserve, merger
reserve, cost of hedging reserve, and cash flow hedging reserve. Further
detail of movements in these reserves is included in note 16.
Unaudited consolidated statement of cash flows
Year ended Year ended
31 March 31 March
2026 2025
£m £m
Operating activities
Cash generated from operations (note 14) 1,602.2 1,082.7
Interest paid (322.1) (263.5)
Interest received and similar income 85.7 92.5
Tax received 16.1 6.4
Net cash generated from operating activities 1,381.9 918.1
Investing activities
Purchase of property, plant and equipment (1,492.1) (988.5)
Purchase of intangible assets (42.9) (9.5)
Grants and contributions received 35.2 9.2
Proceeds from disposal of property, plant and equipment 0.8 1.1
Repayment of loans to joint ventures (note 19) 21.0 0.5
Placement of deposits with maturity greater than three months (504.0) (768.7)
Receipt of deposits with maturity greater than three months 504.0 768.7
Net cash used in investing activities (1,478.0) (987.2)
Financing activities
Proceeds from borrowings net of issuance costs 1,017.6 1,339.3
Repayment of borrowings (433.2) (631.4)
Dividends paid to equity holders of the company (note 9) (357.6) (344.1)
Purchase of shares to satisfy exercise of share options (5.8) (5.0)
Proceeds from share forfeitures 0.4 -
Net cash generated from financing activities 221.4 358.8
Net increase in cash and cash equivalents 125.3 289.7
Cash and cash equivalents at beginning of the year 1,669.0 1,379.3
Cash and cash equivalents at end of the year 1,794.3 1,669.0
NOTES
1. Basis of preparation and accounting policies
The unaudited condensed consolidated financial statements for the year ended
31 March 2026 have been prepared on the basis of the same accounting
principles as those used in the group's Annual Report and Financial statements
for the year ended 31 March 2025, as filed with the Registrar of Companies for
England and Wales, and should be read in conjunction with this filing.
The unaudited condensed consolidated financial statements were approved by the
Board on 29 April 2026. They do not include all of the information and
disclosures required for full annual financial statements and do not comprise
statutory accounts within the meaning of section 434 of the Companies Act
2006.
The comparative figures for the year ended 31 March 2025 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 for England and Wales. 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.
The unaudited condensed consolidated financial statements have been prepared
in accordance with the recognition and measurement criteria of UK-adopted
international accounting standards and IFRS Accounting Standards (IFRSs) as
issued by the International Accounting Standards Board (IASB). This
preliminary announcement does not contain sufficient information to constitute
full financial statements in compliance with those standards. They have been
prepared on the going concern basis under the historical cost convention,
except for the revaluation of financial instruments, accounting for the
transfer of assets from customers and the revaluation of infrastructure assets
to fair value on transition to IFRS. The statutory accounts for 2026 will be
finalised on the basis of the financial information presented by the directors
in this preliminary announcement and will be delivered to the registrar of
companies in due course.
Except as documented below with regards to changes in accounting estimates and
the presentation of financial liabilities that had not settled at the
reporting date, the accounting policies, presentation and methods of
computation are consistent with those applied in the audited financial
statement of United Utilities Group PLC for the year ended 31 March 2025.
Going concern
The unaudited condensed consolidated financial statements have been prepared
on the going concern basis as the directors have a reasonable expectation that
the group has adequate resources for a period of at least 12 months from the
date of the approval of the financial statements and that there are no
material uncertainties to disclose.
In assessing the appropriateness of the going concern basis of accounting, the
directors have reviewed the resources available to the group in the form of
cash and committed facilities as well as consideration of the group's capital
adequacy, along with a baseline plan that incorporates latest views of the
current economic climate. The directors have considered the magnitude of
potential impacts resulting from uncertain future events or changes in
conditions, and the likely effectiveness of mitigating actions that the
directors would consider undertaking. The baseline position has been subjected
to a number of severe, but plausible, downside scenarios in order to assess
the group's ability to operate within the amounts and terms (including
relevant covenants) of existing facilities. These scenarios consider the
potential impacts of increased costs, including: a significant one-off totex
impact of £400 million arising in the assessment period; debt being
refinanced as it matures at 1 per cent above the forward projections of
interest rates; incurring significant outcome delivery incentive ('ODI')
penalties; and the impact of various downside scenarios materialising on a
combined basis. Mitigating actions were considered to include deferral of
capital expenditure; a reduction or suspension of discretionary totex spend;
the close out of derivative assets; and the deferral or suspension of dividend
payments.
Consequently, the directors are satisfied that the group will have sufficient
funds to continue to meet its liabilities as they fall due for at least 12
months from the date of approval of the financial statements, and that the
severe but plausible downside scenarios indicate that the group will be able
to operate within the amounts and terms (including relevant covenants) of
existing facilities. The unaudited condensed consolidated financial statements
have, therefore, been prepared on a going concern basis.
Material changes to accounting estimates
Capitalisation of Infrastructure Renewals Expenditure ('IRE')
All Infrastructure Renewal Expenditure ('IRE'), being expenditure incurred in
maintaining the operating capability of the group's water and wastewater
infrastructure network assets in accordance with defined standards of service,
has historically been recognised as an expense in the income statement in the
year in which the expenditure is incurred. This historic treatment was based
on such expenditure comprising repairs or servicing of the network
infrastructure when considered as a small number of large components in the
absence of information that could be used to account for replacement of
individual smaller components within the network on a one-for-one basis.
Developments in the availability and granularity of asset data, along with
advances in data analytic capabilities, means that IRE activities can now be
identified at the individual smaller component level. Therefore, to the extent
that IRE includes expenditure on the replacement of assets and the recognition
criteria of IAS 16 'Property, Plant and Equipment' are met at the component
level, the cost of the replacement part is now capitalised as part of the cost
of the infrastructure asset, with the carrying value of the component that has
been replaced being simultaneously derecognised. IRE activities that do not
result in an asset replacement continue to be expensed as incurred.
Following the change in approach to capitalisation of IRE, management have
reviewed the useful economic lives of infrastructure assets, which resulted in
the reduction of the useful lives for certain categories of infrastructure
assets. Given the long-lived nature of these assets, this did not materially
affect the depreciation charge in the period.
This change in approach reflects a change in the application of judgement as
to the level at which assets can be recognised and derecognised within the
scope of the group's existing accounting policies for property, plant and
equipment. It is not considered to be a change in accounting policy as defined
within IAS 8 'Accounting Policies, Changes in Accounting Estimates and
Errors', and therefore this change in accounting has been applied
prospectively from 1 April 2025 with no restatement of prior year information.
This has resulted in IRE additions of £249.7 million within Property, Plant
and Equipment that would previously have been expensed in the period.
Application of the effective interest rate ('EIR') in accounting for
floating-rate debt
Floating-rate financial liabilities are accounted for in accordance with IFRS
9 'Financial instruments' with the group measuring these liabilities at
amortised cost using the effective interest rate method. Expectations of
future cash flows used to measure these liabilities are subject to periodic
re-estimation to reflect movements in market rates of interest and the
effective interest rate is adjusted to incorporate these movements. Judgement
is required in determining the most appropriate method for estimating the
effective interest rate.
Historically, the group has adjusted the effective interest rate for
floating-rate instruments for changes in reference rates of interest during
the period. Particularly for index-linked debt, given recent periods of
unusually high and low inflation, this measurement technique has resulted in
significant income statement volatility. During the year the group has revised
the measurement technique used, so that the effective interest rate is now
determined with reference to both movements in market rates of interest during
the period and expectations of future changes in these rates. The group
considers that this technique provides more useful information regarding the
effect of changes in market rates of interest, particularly inflation, on the
debt over time and presents a more faithful representation of expected future
cash flows.
The group continues to apply its existing accounting policy of measuring these
floating-rate financial liabilities at amortised cost, and the revised
approach is a change in the estimation of the effective interest rate used by
incorporating forward-looking information. This change is therefore a change
in accounting estimate in accordance with IAS 8 'Accounting Policies, Changes
in Accounting Estimates and Errors', and has been applied prospectively from 1
April 2025. This has resulted in a reduction of £23.4 million of finance
expense in the period compared with applying the previous approach.
Adoption of new and revised standards
There were no new standards, interpretations and amendments, effective for the
year ended 31 March 2026, that were relevant to the group or have a material
impact on the group's financial statements, or that were not early adopted in
previous years.
Future accounting developments
Certain new accounting standards, amendments to accounting standards and
interpretations have been published that are not mandatory for the 31 March
2026 reporting period. These standards, amendments or interpretations are not
expected to have a material impact on the financial statements in the
following reporting period and on foreseeable future transactions. The group
monitors developments across financial reporting standards and the status of
adoption in the UK in assessing the extent to which these developments are
likely to impact the financial statements in future periods. Relevant future
accounting developments are detailed below.
Amendments to IFRS 9 and IFRS 7- Amendments to the Classification and
Measurement of Financial Instruments
In May 2024, the IASB published amendments relating to the classification and
measurement of financial instruments. These amendments are effective for
reporting periods beginning on or after 1 January 2026 with early adoption
permitted. The amendments most relevant to the group allow for an accounting
policy choice to derecognise certain financial liabilities settled using an
electronic payment system before the settlement date, where the electronic
payment system meets specific criteria.
The accounting policy choice has not been adopted within the group financial
statements. Financial liabilities continue to be derecognised upon settlement,
rather than initiation, of electronic payments, which reflects operational
management of the group's liquidity position. Management has, however, amended
the presentation of these financial liabilities which had not settled at the
reporting date. Previously these balances were presented as 'book overdrafts'
within current borrowings, however these have been prospectively recognised
within trade and other payables, reflecting that it is the financial liability
to the creditor, rather than the clearing bank, that has not been extinguished
at the reporting date. At £3.6 million, these book overdrafts were not
material at 31 March 2025 and accordingly prior year comparatives have not
been re-presented.
IFRS 18 'Presentation and Disclosure in Financial Statements'
In April 2024, the IASB issued IFRS 18 'Presentation and Disclosure in
Financial Statements', effective for annual reporting periods beginning on or
after 1 January 2027. The standard will replace IAS 1 'Presentation of
Financial Statements' and does not change the measurement bases of the
financial statements. There are three sets of new requirements relating to the
structure of the income statement, management-defined performance measures and
the aggregation and disaggregation of financial information. Management have
commenced an impact assessment in readiness for implementation.
Update on critical accounting judgements and key sources of estimation
uncertainty
The group discloses a number of critical accounting judgements and key sources
of estimation uncertainty in its annual reports and financial statements. For
the unaudited condensed consolidated financial statements for the year ended
31 March 2026, the area most impacted by developments during the year relates
to the change in estimation technique for floating-rate debt, particularly for
index-linked liabilities.
Judgements and estimates have been kept under review during the year to 31
March 2026 in order to ensure that they reflect the most up-to-date
information available, including changes in the broader economic outlook,
particularly continued inflationary pressures across most industries and
sectors. An update on the judgements and estimates most impacted by
developments during the year is as follows:
Accounting estimate - Effective interest rate ('EIR') for measuring
floating-rate debt: The group has issued various SONIA-linked and
inflation-linked debt instruments, which are included in its borrowings. These
are accounted for as floating-rate financial liabilities measured at amortised
cost in accordance with IFRS 9. The measurement of these financial liabilities
is dependent upon the effective interest rate ('EIR') which is adjusted
periodically for the re-estimation of future cashflows, reflecting expected
movements in observable market variables incorporated within the interest
rates.
This re-estimation of future cashflows incorporates incurred experience and
market expectations of future changes in these reference rates of interest and
is therefore subject to estimation uncertainty. The change in estimation
technique is expected to reduce year-on-year volatility of the finance expense
arising on these financial liabilities, particularly the inflation-linked debt
which forms a significant component of the borrowings of the group and is
long-dated in nature with an average weighted duration of 15 years.
Inflation remains volatile in the short-term, with uncertainty remaining as to
the effect of ongoing global events, particularly in relation to increases in
energy and fuel prices. However, the re-estimation of future cashflows
incorporates expectations of changes in rates of interest across the life of
the debt instruments and is therefore less exposed to short-term changes.
The single equivalent inflation assumption, weighted by RPI- and CPI-linked
liabilities, derived from the UK Government gilt breakeven inflation curve as
at 31 March 2026 for a 15 year duration was 3.07%. Actual rates of inflation
may differ from the assumptions used due to changing market and economic
conditions and, as such, this represents a key source of estimation
uncertainty. An increase/decrease in the inflation assumption of 1 per cent
would have resulted in a £30.6 million increase/decrease in the finance
expense in the period.
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 group's performance is measured
against financial and operational key performance indicators ('KPIs'), with
operational KPIs aligned to the group's purpose and financial KPIs focused on
profitability and financial sustainability. The board reviews revenue,
operating profit and gearing, along with operational drivers, at a
consolidated level. In light of this, the group has a single segment for
financial reporting purposes.
3. Revenue (unaudited)
2026 2025
£m £m
Wholesale water charges 1,073.9 897.7
Wholesale wastewater charges 1,362.6 1,113.7
Household retail charges 136.0 90.5
Other 43.8 43.3
2,616.3 2,145.2
In accordance with IFRS 15, revenue has been disaggregated based on what is
recognised in relation to the core services of supplying clean water and the
removal and treatment of wastewater. Each of these services is deemed to give
rise to a distinct performance obligation under the contract with customers,
although following the same pattern of transfer to the customer who
simultaneously receives and consumes both of these services over time.
Other revenues comprise a number of smaller non-core income streams, including
property sales and income from activities, typically performed opposite
property developers, which impact the group's capital network assets. This
includes diversion works to relocate water and wastewater assets, and
activities that facilitate the creation of an authorised connection through
which properties can obtain water and wastewater services.
4. Other operating costs (unaudited)
2026 2025
£m £m
Power 182.7 154.5
Materials 160.3 144.1
Hired and contracted services 147.4 133.5
Property rates 93.3 89.9
Regulatory fees 53.4 44.8
Insurance 17.8 14.5
Accrued Ofwat innovation and water efficiency scheme costs 14.3 8.0
Loss on disposal of property, plant and equipment 0.3 4.0
Other expenses 37.9 37.3
707.4 630.6
The group's operating costs have increased by around £77 million compared
with the prior year. This is due largely to inflationary pressures across the
cost base (particularly impacting power and materials), higher regulatory
fees, and increased expenditure associated with the expansionary impact of
delivering UUW's AMP8 business plan, which has also resulted in increased
headcount and staff costs. In addition, higher costs were incurred during the
year in ensuring that the group's network has remained resilient and that
supply has been safeguarded during what was a particularly dry spring and
summer in 2025.
Research and development expenditure for the year ended 31 March 2026, was
£0.5 million (2025: £0.6 million). In addition, £11.3 million (2025: £8.0
million) of costs have been accrued during the year by United Utilities Water
Limited in relation to the Innovation in Water Challenge scheme operated by
Ofwat, which has continued for AMP8. These expenses offset amounts recognised
in revenue during each year intended to fund innovation projects across
England and Wales as part of an industry-wide scheme to promote innovation in
the sector. The amounts accrued will either be spent on innovation projects
that the group successfully bids for, or will be transferred to other
successful water companies in accordance with the scheme rules.
Similarly, Ofwat has introduced the industry-wide Water Efficiency Fund (WEF)
for AMP8, focused on improving and promoting water efficiency, including
innovation in this space. This operates in a similar way to the Innovation in
Water Challenge. £3.0 million of costs have been accrued in respect of this,
which offset amounts recognised in revenue to fund them.
5. Investment income (unaudited)
2026 2025
£m £m
Interest receivable 82.4 93.3
Net pension interest income (note 12) 17.5 12.9
99.9 106.2
6. Finance expense
(unaudited)
2026 2025
£m £m
Interest payable 393.9 372.3
Net fair value losses/(gains) on debt and derivative instruments 21.8 (0.4)
415.7 371.9
Interest payable is stated net of £75.4 million (2025: £68.5 million)
borrowing costs capitalised in the cost of qualifying assets within property,
plant and equipment and intangible assets during the year. This has been
calculated by applying an average capitalisation rate of 5.1 per cent (2025:
5.4 per cent) to expenditure on such assets as prescribed by IAS 23 'Borrowing
Costs'.
Interest payable includes a £133.7 million (2025: £142.2 million) non-cash
inflation expense reflecting movements in inflation expectations in relation
to the group's index-linked debt. As described in further detail in the basis
of preparation, the current year expense reflects a change in how the EIR used
to measure index-linked debt (which is the most material component of
floating-rate debt impacted by this change) is estimated.
Net fair value losses on debt and derivative instruments includes £2.4
million income (2025: £1.3 million income) due to net interest on derivatives
and debt under fair value option, and £20.5 million expense (2025: £19.6
million expense) due to non-cash inflation uplift on the group's index-linked
derivatives.
Underlying finance expense, which forms part of the group's alternative
performance measures ('APMs') is calculated by adjusting net finance expense
and investment income of £315.8 million (2025: £265.7 million) reported in
the Consolidated Income Statement to exclude the £21.8 million of fair value
losses (2025: £0.4 million of fair value gains) in the above table, but
include £2.4 million expense (2025: £1.3 million income) due to net interest
on derivatives and debt under fair value option, and £20.5 million (2025:
£19.6 million) expense due to non-cash inflation uplift on index-linked
derivatives.
7. Tax (unaudited)
The total effective tax rate for the year was 24.6 per cent compared to 25.4
per cent in the prior year.
The split of the total tax charge between current and deferred tax was due to
ongoing timing differences in relation to tax deductions on capital investment
and unrealised gains and losses on treasury derivatives.
The current tax charge of £8.0 million for the year ended 31 March 2026
reflects a £4.0 million adjustment to management's estimate of the most
likely amount that will be received in relation to Research and Development
allowances available on certain capital projects that remain under enquiry and
are yet to be agreed with tax authorities, and consortium relief totalling
£4.0 million in relation to the years ended 31 March 2024 and 31 March 2025
claimed from the group's joint venture, Water Plus. Except for these items,
the current tax charge for the period would have been nil, mainly reflecting
the impact of the capital allowances "first year allowances" affecting the
group's eligible plant and machinery additions. It is predominantly the impact
of these first year allowances that has driven a significant increase in the
deferred tax charge for the year, reflecting the step-up in the scale and
scope of the group's capital programme during the year.
The current tax asset recognised in the statement of financial position
reflects the amount of tax expected to be recoverable based on judgements made
regarding the application of tax law, and the current status of negotiations
with, and enquiries from, tax authorities.
The tax adjustments taken to other comprehensive income primarily relate to
remeasurement movements on the group's defined benefit pension schemes and on
hedging effectiveness.
8. Earnings per share (unaudited)
Basic and diluted earnings per share are calculated by dividing profit after
tax by the weighted average number of shares in issue during the year.
2026 2025
£m £m
Profit after tax attributable to equity holders of the company 586.8 264.7
Weighted average number of shares in issue in millions
Basic 681.9 681.9
Diluted 683.6 683.6
Earnings per share in pence
Basic 86.1 38.8
Diluted 85.8 38.7
9. Dividends (unaudited)
2026 2025
£m £m
Dividends relating to the year comprise:
Interim dividend at 17.88 pence per share (2025: 17.28 pence per share) 121.9 117.8
Proposed final dividend at 35.78 pence per share (2025: 34.57 pence per share) 244.0 235.7
365.9 353.5
Dividends deducted from shareholders' equity comprise:
Interim dividend at 17.88 pence per share (2025: 17.28 pence per share) 121.9 117.8
Final dividend paid at 34.57 pence per share (2025: 33.19 pence per share) 235.7 226.3
357.6 344.1
The proposed final dividends for the years ended 31 March 2026 and 31 March
2025 were subject to approval by equity holders of United Utilities Group PLC
as at the reporting dates, and therefore have not been included as liabilities
in the consolidated financial statements as at 31 March 2026 and 31 March 2025
respectively.
The proposed final dividend of 35.78 pence per ordinary share (2025: 34.57
pence per ordinary share) is expected to be paid on 3 August 2026 to
shareholders on the register at the close of business on 26 June 2026. The
ex-dividend date for the final dividend is 25 June 2026.
The interim dividend of 17.88 pence per ordinary share (2025: 17.28 pence per
ordinary share) was paid on 2 February 2026 to shareholders on the register
at the close of business on 19 December 2025.
10. Property, plant and equipment (unaudited)
The net book value of property, plant and equipment has increased
significantly during the year, rising from £13,873.0 million as at 31 March
2025 to £15,084.0 million as at 31 March 2026. This reflects the significant
step-up in the scale of UUW's capital programme for AMP8, with additions of
£1,683.4 million (2025: £1,269.3 million) recorded for the year of which
£1,675.9 million (2025: £1,243.9 million) relates to owned fixed assets and
£7.5 million (2025: £25.4 million) relates to right-of-use assets leased by
the group.
Additions to owned fixed assets during the year includes £249.7 million
(2025: nil) of infrastructure asset additions in relation to infrastructure
renewal expenditure that would historically have been treated as an expense in
the income statement. Further detail of this accounting change is provided in
the basis of preparation note above.
The additions to owned property, plant and equipment of £1,675.9 million
reflected in the consolidated statement of financial position compares with
purchases of property, plant and equipment recorded in the consolidated
statement of cash flows of £1,492.1 million. This £183.8 million difference
comprises £165.3 million of non-cash additions including transfers of assets
from customers and capitalised borrowing costs (see note 6), and £18.5
million of timing differences between when additions are recognised in the
consolidated statement of financial position compared with when cash payments
for capital expenditure are made.
11. Interests in joint ventures (unaudited)
2026 2025
£m £m
Joint ventures at the start of the year 1.6 12.4
Add: zero-coupon loan notes converted into equity investments 12.5 -
Less: Historic share of losses of joint venture allocated to zero-coupon loan (9.5) -
notes
Less: Share of losses of joint ventures for the year (4.6) (10.8)
Joint ventures at the end of the year - 1.6
The group's interests in joint ventures comprises its 50 per cent interest in
Water Plus Group Limited ('Water Plus'), which is jointly owned and controlled
by the group and Severn Trent PLC under a joint venture agreement.
In March 2026, the group redeemed the entirety of the outstanding balance of
zero-coupon loan notes issued to Water Plus, which were due to mature in March
2027 and had previously been recorded as a related-party receivable. This
redemption was in the form of a subscription of additional share capital in
the joint venture Water Plus, resulting in a net addition of £3.0 million to
interests in joint ventures comprising the redemption of the face value of the
loan notes of £12.5 million, less historic losses of £9.5 million allocated
against the loan notes which were previously deemed to be a long-term
interest that, in substance, formed part of the group's net investment in
Water Plus. Following the allocation of the group's recognised share of Water
Plus losses of £4.6 million for the year ended 31 March 2026 the carrying
value of the group's net investment in the joint venture as at 31 March 2026
was reduced to nil.
The group's total share of Water Plus losses for the year ended 31 March 2026
was £5.2 million, of which £4.6 million has been recognised in the income
statement and £0.6 million is unrecognised due to the carrying amount of the
group's investment in the joint venture being reduced to nil during the year
through application of the equity method.
Any future share of Water Plus profits will be recognised in the income
statement only after being allocated against any accumulated unrecognised
share of losses such that the accumulated unrecognised share of losses is
reduced to nil.
Details of transactions between the group and its joint ventures are disclosed
in note 19.
12. Retirement benefit surplus (unaudited)
The main financial assumptions used by the company's actuary to calculate the
defined benefit surplus of the United Utilities Pension Scheme ('UUPS') and
the United Utilities PLC Group of the Electricity Supply Pension Scheme
('ESPS') were as follows:
2026 2025
%pa %pa
Discount rate 6.05 5.70
Pension increases 3.35 3.20
Pensionable salary growth (pre-1 April 2018 service):
ESPS 3.35 3.20
UUPS 3.35 3.20
Pensionable salary growth (post-1 April2018 service):
ESPS 3.35 3.20
UUPS 2.90 2.75
Price inflation - RPI 3.35 3.20
Price inflation - CPI((1)) 2.90 2.75
Note:
((1)) The CPI price inflation assumption represents a single weighted average
rate derived from an assumption of 2.45 per cent pre-2030 and 3.15 per cent
post-2030 (2025: 2.30 per cent pre-2030 and 3.00 per cent post-2030).
The discount rate is consistent with a high quality corporate bond rate, with
6.05 per cent being equivalent to gilt yields of 5.40 per cent + 65bps in
respect of credit spread (2025: 5.70 per cent being equivalent to gilt yields
of 5.10 per cent + 60bps in respect of credit spread).
The IAS 19 remeasurement loss of £7.9 million (2025: gain of £18.6 million)
reported in the statement of changes in equity has largely resulted from
changes in financial and demographic assumptions, predominantly due to actual
inflation over the year being higher than assumed and updates to the mortality
projections.
In line with previous reporting periods, mortality assumptions continue to be
based on the latest available Continuous Mortality Investigation's ('CMI')
mortality tables. As at 31 March 2026, mortality assumptions are based on
adjusted SAPS 4 CMI2025 base tables inclusive of a 1.25% p.a. rate of
improvement, initial adjustment (A) parameter of 0.25%, a "half-life" (H)
parameter of 1, and an adjustment to the "advanced parameters" to model lower
improvements in life expectancy at older ages than the core model.
The net pension income before tax in the income statement in respect of the
defined benefit schemes is summarised as follows:
2026 2025
£m £m
Current service cost 2.5 2.5
Past service cost 0.1 -
Administrative expenses 3.9 4.0
Pension expense charged to operating profit 6.5 6.5
Net pension interest credited to investment income (note 5) (17.5) (12.9)
Net pension income credited to the income statement before tax (11.0) (6.4)
The reconciliation of the opening and closing net pension surplus included in
the statement of financial position is as follows:
2026 2025
£m £m
At the start of the year 302.3 268.0
Net income recognised in the income statement 11.0 6.4
Contributions 5.5 9.3
Remeasurement (losses)/gains gross of tax (7.9) 18.6
At the end of the year 310.9 302.3
The closing surplus at each reporting date is analysed as follows:
2026 2025
£m £m
Fair value of schemes' assets 2,288.5 2,308.6
Present value of defined benefit obligations (1,977.6) (2,006.3)
Net retirement benefit surplus 310.9 302.3
Over the year to 31 March 2026, the balance sheet surplus has increased from
£302.3m to £310.9m. This increase is driven largely by interest accrued on
the surplus over the period; an increase in the discount rate and updating the
inflation risk premium; and credit spreads widening over the year which (all
else equal) reduces the uninsured DBO by a greater extent than the invested
assets which are not all invested in corporate bond linked assets. This is
partially offset by other factors, in particular, proposed updates to the
mortality projections which increases the uninsured DBO; changes in market
conditions expected to reduce the buy-in asset value; and actual inflation
over the year being higher than assumed at the prior reporting period.
The latest finalised funding valuation was carried out during the prior year,
as at 31 March 2024, and determined that the schemes were fully funded on a
low-dependency basis without any funding deficit that requires additional
contributions from the group over and above those related to current service
and expenses.
The results of the latest funding valuation at 31 March 2024 have been used to
inform the group's best estimate assumptions to use in calculating the defined
benefit pension obligation reported on an IAS 19 basis at 31 March 2026. The
results of the funding valuation have been adjusted to take account of
experience over the period, changes in market conditions, and differences in
the financial and demographic assumptions. The present value of the defined
benefit obligation, and the related current service costs, were measured using
the projected unit credit method.
Member data used in arriving at the liability figure included within the
overall IAS 19 surplus has been based on the finalised actuarial valuations as
at 31 March 2024 for both UUPS and ESPS. As part of each actuarial valuation,
and more frequently as required by the trustees, member data is reassessed for
completeness and accuracy and to ensure it reflects any relevant changes to
benefits entitled by each member.
Defined contribution schemes
During the year, the group made £38.6 million (2025: £36.7 million) of
contributions to defined contribution schemes, which are included in employee
benefits expense.
13. Borrowings (unaudited)
New borrowings raised during the year ended 31 March 2026, all of which were
issued under the Euro Medium-Term Note Programme, were as follows:
● On 7 August 2025, the group issued EUR500 million fixed rate notes, due August
2035. On issue, the EUR bond was immediately swapped to £432.5 million of
principal outstanding.
● On 25 September 2025, the group issued EUR100 million fixed rate notes as a
fungible increase to the EUR650 million notes due May 2034. On issue, the EUR
bond was immediately swapped to £86.8 million of principal outstanding.
● On 28 October 2025, the group executed a term loan facility for £100 million,
for a five-year term (with two extension options of one year each). This loan
was drawn down on 10 November 2025.
● On 8 December 2025, the group issued £300 Million fixed rate notes due
December 2039.
● On 2 March 2026, the group issued EUR100 million fixed rate notes as a
fungible increase to the EUR500 million notes due August 2035. On issue, the
EUR bond was immediately swapped to £87.4 million of principal outstanding.
On 10 April 2026, the group issued EUR150 million fixed rate notes as a
fungible increase to the EUR650 million bond due February 2033. On issue, the
EUR bond was immediately swapped to £130.7 million of principal outstanding.
As the notes were issued during April 2026, they do not form part of the
borrowings balance as at 31 March 2026.
During the year, extensions to nine existing undrawn committed borrowing
facilities were approved, and a further two new facilities were approved, with
amounts available under these facilities totalling £440 million. There was a
£100 million decrease to one facility during the period.
During the year, the terms and conditions of three RPI-linked notes were
amended to revise certain RPI fallback provisions and shorten the maturity
dates of two of the notes. The modifications are classified as non-substantial
based on application of IFRS 9 'Financial Instruments'. Borrowings amended
during the year ended 31 March 2026 were as follows:
● £50 million 1.397 per cent index-linked notes due February 2046
● £35 million 1.3805 per cent index-linked notes originally due November 2056,
now due November 2047
● £25 million 1.591 per cent index-linked notes originally due September 2056,
now due September 2047.
There were no modifications during the year ended 31 March 2025.
Borrowings at 31 March 2026 include £88.5 million in relation to lease
liabilities (2025: £83.2 million), of which £82.0 million (2025: £78.0
million) was classified as non-current and £6.5 million (2025: £5.2 million)
as current.
As at 31 March 2026, there were £761.9 million of borrowings with a single
counterparty that are subject to compliance with financial covenants in
respect of the level of gearing and interest cover of United Utilities Water
Limited, a subsidiary of the group. Compliance with these covenants is
monitored by the group on a quarterly basis and reported to the counterparty
annually. The group was compliant with these financial covenants at the
reporting date.
14. Cash generated from operations (unaudited)
2026 2025
£m £m
Operating profit 1,099.4 631.5
Adjustments for:
Depreciation of property, plant and equipment 471.4 435.7
Amortisation of intangible assets 29.1 29.2
Loss on disposal of property, plant and equipment 0.3 4.0
Amortisation of deferred grants and contributions (20.9) (19.8)
Equity-settled share-based payments charge 4.5 4.7
Pension contributions paid less pension expense charged to operating profit 1.0 (3.0)
Changes in working capital:
Decrease/(Increase) in inventories 15.5 (3.1)
Increase in trade and other receivables (58.7) (54.7)
Increase in trade and other payables 62.1 52.7
(Decrease)/increase in provisions (1.5) 5.5
Cash generated from operations 1,602.2 1,082.7
15. Net debt (unaudited)
Net debt at the end of each period comprised:
31 March 31 March
2026 2025
£m £m
Borrowings 11,490.6 10,788.6
Derivative financial instruments (liabilities) 309.4 292.6
Derivative financial instruments (assets) (347.7) (340.7)
Cash and cash equivalents (1,794.3) (1,672.6)
Net debt - as agreed to statement of financial position 9,658.0 9,067.9
Adjustments to exclude the fair value of:
Interest rate derivatives fixing future nominal interest rates 183.5 178.0
Inflation derivatives fixing future real interest rates 103.6 126.9
Electricity derivatives fixing future electricity costs (1.9) (27.3)
Net debt - as adjusted to align to the group's definition 9,943.2 9,345.5
The group defines net debt as the sum of borrowings and derivative financial
instruments, net of cash and bank deposits, and adjusted to exclude the value
of derivatives that are not hedging specific debt instruments. In presenting
net debt in this way, the group aims to give a fair reflection of the net debt
amount the group is contractually obliged to repay - consistent with the
approach taken by credit rating agencies - and the regulatory economics of the
group's arrangements. As the value of derivatives that are not hedging
specific debt instruments is excluded from the group's definition of net debt,
fair value movements associated with these derivatives are not included in the
above reconciliation from the opening to closing net debt position.
16. Other reserves (unaudited)
Year ended 31 March 2026
Capital redemption reserve Merger reserve Cost of hedging reserve Cash flow hedge reserve Total
£m £m £m £m £m
At 1 April 2025 1,033.3 (703.6) 11.4 (21.9) 319.2
Changes in fair value recognised in other comprehensive income - - 2.7 4.0 6.7
Amounts reclassified from other comprehensive income to profit and loss - - - 21.8 21.8
Tax on items recorded within other comprehensive income - - (0.7) (6.5) (7.2)
At 31 March 2026 1,033.3 (703.6) 13.4 (2.6) 340.5
Year ended 31 March 2025
Capital redemption reserve Merger reserve Cost of hedging reserve Cash flow hedge reserve Total
£m £m £m £m £m
At 1 April 2024 1,033.3 (703.6) 8.7 (27.3) 311.1
Changes in fair value recognised in other comprehensive income - - 3.6 8.6 12.2
Amounts reclassified from other comprehensive income to profit and loss - - - (1.3) (1.3)
Tax on items recorded within other comprehensive income - - (0.9) (1.9) (2.8)
At 31 March 2025 1,033.3 (703.6) 11.4 (21.9) 319.2
The capital redemption reserve arose as a result of a return of capital to
shareholders following the reverse acquisition of United Utilities PLC by
United Utilities Group PLC in the year ended 31 March 2009. The merger reserve
arose in the same year on consolidation and represents the capital adjustment
to reserves required to effect the reverse acquisition.
The group recognises the cost of hedging reserve as a separate component of
equity. This reserve reflects accumulated fair value movements on
cross-currency swaps resulting from changes in the foreign currency basis
spread, which represents a liquidity charge inherent in foreign exchange
contracts for exchanging currencies and is excluded from the designation of
cross-currency swaps as hedging instruments.
The group designates a number of swaps hedging non-financial risks in cash
flow hedge relationships in order to give a more representative view of
operating costs. Fair value movements relating to the effective part of these
swaps are recognised in other comprehensive income and accumulated in the cash
flow hedging reserve.
17. Contingent liabilities (unaudited)
Ofwat and Environment Agency investigations
As at 31 March 2026, UUW remains subject to the enforcement case opened by
Ofwat in 2024, along with the other water and wastewater companies in England
and Wales that have not yet had their investigations concluded. If a company
is found to have breached its legal obligations this could result in a
financial penalty of up to 10 per cent of relevant wastewater turnover (which
in UUW's case would be around £100 million), and/or a requirement to rectify
any obligations deemed to be required as a consequence of those findings. To
date, Ofwat has issued penalties to one company and agreed enforcement
packages with six companies, with values ranging from 5 per cent to 9 per cent
of relevant wastewater turnover.
UUW has received and responded to notices under s203 of the Water Industry Act
1991 and continues to fully co-operate with Ofwat through the investigation
process. Ofwat has stated that while it has concerns with the sector that it
must investigate, the opening of enforcement cases does not automatically
imply that companies have breached their legal obligations or that a financial
penalty will necessarily follow. Accordingly, the group considers that there
was only a possible obligation as at the reporting date and so no provision
has been recognised in the statement of financial position in respect of this
matter. UUW has not been given a firm indication of the expected timeframe for
the conclusion of Ofwat's ongoing investigation, or any subsequent action.
Similarly, the Environment Agency has made a number of data requests and
undertaken site visits as part of its ongoing industry-wide investigation,
with which the group continues to fully comply. This investigation is focused
on environmental permit compliance at wastewater treatment works and
wastewater networks, with the Environment Agency having a number of
enforcement options open to it if it concludes that companies have breached
their permit conditions and/or illegally polluted the environment. These
include the potential for criminal prosecution and unlimited fines. As with
the Ofwat investigation, this remains ongoing. It is currently unclear when
this matter will be resolved. As with the Ofwat investigation, the group
considers that there was only a possible obligation as at the reporting date
and so no provision has been recognised in the statement of financial position
in respect of this matter.
Prof Carolyn Roberts collective action
As disclosed in the group's financial results for the year ended 31 March
2025, collective proceedings in the Competition Appeal Tribunal ('CAT') were
issued on 8 December 2023 against United Utilities Water Limited ('UUW') and
United Utilities Group PLC on behalf of approximately 5.6 million domestic
customers following an application by the Proposed Class Representative
('PCR'), Professor Carolyn Roberts. The PCR alleges that customers have
collectively paid an overcharge for sewerage services during the claim period
as a result of UUW allegedly abusing a dominant position by providing
misleading information to regulatory bodies. The estimated total aggregate
amount the PCR is claiming against UUW (including interest) for household
customers is at least £141 million. Separate letters before action were
issued on 20 December 2024 in relation to similar claims in respect of
non-household customers, however it is not clear how these will proceed
following the CAT and Court of Appeal's decision not to certify the claims
brought in respect of domestic customers.
On 7 March 2025, the CAT unanimously concluded that claims could not proceed
on the basis that the claims brought forward are excluded by section 18(8) of
the Water Industry Act 1991. Subsequently, the PCR was granted permission by
the Court of Appeal to appeal this decision. The hearing took place in early
2026 where the Court of Appeal rejected the PCR's appeal and concluded that
CAT's original decision should not be overturned. Following this, the PCR has
applied to the Supreme Court to appeal the decision made by the Court of
Appeal. The outcome of this request is not yet known. UUW believes the claim
is without merit and will robustly defend it, should the certification
decision be overturned on appeal.
18. Financial and other commitments (unaudited)
The group has credit support guarantees as well as general performance
commitments and potential liabilities under contract that may give rise to
financial outflow. The group has determined that the possibility of any
outflow arising in respect of these potential liabilities is remote and, as
such, there are no material financial liabilities to be disclosed in this
regard (2025: none).
At 31 March 2026, there were commitments for future capital and infrastructure
renewals expenditure contracted, but not provided for, of £481.1 million
(2025: £125.3 million).
31 March 31 March
2026 2025
£m £m
Property, plant and equipment 467.5 112.0
Intangible assets 9.9 0.7
Infrastructure renewals expenditure 3.7 12.6
Total commitments contracted but not provided for 481.1 125.3
19. Related party transactions (unaudited)
The related party transactions with the group's joint ventures during the
period and amounts outstanding at the period end date were as follows:
2026 2025
£m £m
Sales of services 378.7 338.8
Charitable contributions advanced to related parties 0.2 0.2
Purchases of goods and services 0.9 1.5
Interest income and fees recognised on loans to related parties 4.7 5.9
Amounts owed by related parties 86.0 101.0
Amounts owed to related parties 4.0 -
Sales of services to related parties mainly represent non-household wholesale
charges to Water Plus that were billed and accrued during the period. These
transactions were on market credit terms in respect of non-household wholesale
charges, which are governed by the wholesale charging rules issued by Ofwat.
Charitable contributions advanced to related parties during the year relate to
amounts paid to Rivington Heritage Trust, a charitable company limited by
guarantee for which United Utilities Water is one of three guarantors.
At 31 March 2026, amounts owed by joint ventures, as recorded within trade and
other receivables in the statement of financial position, were £86.0 million
(2025: £101.0 million), comprising £35.6 million (2025: £27.4 million) of
trade balances, which are unsecured and represent the amounts that are
expected to be settled in accordance with normal credit terms, and £50.4
million (2025: £73.6 million) relating to loans.
Included within these loans receivable were the following amounts owed by
Water Plus:
● £50.4 million (2025: £71.4 million) outstanding on a £95.0 million
revolving credit facility provided by United Utilities PLC, with a maturity
date of December 2029 with the option for a further 2 years of extension,
bearing a floating rate interest rate of the Bank of England base rate plus a
credit margin. This balance comprises £54.0 million outstanding, net of a
£3.6 million allowance for expected credit losses (2025: £75.0 million net
of a £3.6 million allowance for expected credit losses); and
● £nil (2025: £2.2 million) receivable in relation to a £12.5 million
unsecured zero-coupon loan note held by United Utilities PLC, which had a
maturity date of 28 March 2027 but was redeemed on 19 March 2026 in the form
of a subscription for £12.5 million of additional share capital in Water Plus
(see note 11). As at 31 March 2025, the £2.2 million carrying value of the
receivable comprised £11.7 million fair value of amounts owed in relation to
the loan note, net of £9.5 million of the group's share of joint venture
losses relating to historic periods that were allocated against the loan note
as it was deemed to be part of the group's long-term interest in Water Plus.
The £11.7 million fair value of the receivable represented the present value
of the £12.5 million payable at maturity discounted using an appropriate
market rate of interest at the inception of the loan, and £0.8 million
recorded as an equity contribution to Water plus recognised within interests
in joint ventures.
During the year, United Utilities PLC provided guarantees in support of Water
Plus in respect of certain amounts owed to wholesalers. The aggregate limit of
these guarantees was £50.7 million, of which £27.0 million related to
guarantees to United Utilities Water Limited.
At 31 March 2026, amounts owed to related parties were £4.0 million (2025:
£nil) being amounts due to Water Plus for the surrender of consortium relief
tax losses.
20. Events after the reporting period (unaudited)
Other than in respect of the issuance of EUR150 million fixed rate notes on 10
April 2026 as described in note 13, there have been no material events
subsequent to 31 March 2026 that either require adjustment to the amounts
disclosed in the unaudited condensed consolidated financial statements or
disclosure on the basis that they could materially affect users' understanding
of the unaudited condensed consolidated financial statements.
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