IFRS presentation to analysts and investors - About United Utilities

Summary• Overall impact on profit before tax in 2004/05 is not material• Whilst earnings are affected by an increase in reported deferred tax, there isno impact on the group’s cash flow position or financing arrangements• A potential increase in volatility to the income statement is anticipated,primarily due to derivatives recognised at fair value• Net assets fall from £3,119m to £2,144m, primarily due to deferred tax andpensions adjustments• No effect on regulatory asset base or allowed returns• No impact on payment of dividends to shareholders– United Utilities PLC parent company retained earnings largely unaffected– dividend policy unaffected6The overall impact of IFRS on 2004/05 profit before tax is not material.Earnings are largely unaffected on a pre-deferred tax basis.Whilst earnings will be affected by the requirement to provide in full for deferredtax, this is a non-cash adjustment which means that there will be no impact onthe group’s cash flow position or financing arrangements.We expect an increase in volatility to the income statement, primarily due toderivatives being recognised at fair value.Net assets fall from £3.1 billion to £2.1 billion, primarily due to deferred tax andpensions adjustments, which we’ll cover later in the presentation.However, there will be no effect on our regulatory asset base or allowed returnsand no impact on payment of dividends to our shareholders. The United UtilitiesPLC parent company retained earnings, from which we pay dividends, arelargely unaffected.Our dividend policy remains unchanged, that is, a target of increasing dividendsin line with inflation for the next five years.