£1.5 billion return to shareholders

As a result of the sale of United Utilities Electricity and review of its capital structure, United Utilities previously announced its intention to return to shareholders 170 pence per share (approximately £1.5 billion in aggregate). The return was implemented through a scheme of arrangement involving the introduction of a new holding company, United Utilities Group PLC and the subsequent United Utilities Group Reduction of Capital (the "Proposals").

On 6 June 2008 United Utilities PLC posted a scheme circular to shareholders regarding the Proposals.  A Prospectus relating to United Utilities Group PLC was also published on 6 June 2008, in connection with the admission to the Official List and admission to trading on the London Stock Exchange of ordinary shares of United Utilities Group PLC. 

As part of the Proposals each Shareholder received 17 United Utilities Group Ordinary Shares for every 22 United Utilities Shares, together with one B share of 170 pence for each United Utilities Share.

The Proposals were subject to Court approval and the approval of Shareholders.  The Court Meeting was to seek the approval of Shareholders for the Scheme.  The General Meeting, held immediately after the Court Meeting, enabled Shareholders to vote on various matters required to implement the Scheme.  Both meetings were held on 1 July 2008. 

On 24 July 2008 the Court sanctioned the scheme of arrangement to establish United Utilities Group PLC as the holding company of United Utilities PLC.

Timetable of principal events

Although the Prospectus was not sent to shareholders it can be viewed on United Utilities' website (www.unitedutilities.com/prospectus) or, on request, a copy can be obtained free of charge from United Utilities' Registrars by telephone on 0871 384 2898 (or from outside the UK on +44 121 415 0269).  

Notice was given that United Utilities PLC, conditional upon the Scheme becoming effective, cancelled its listing of ordinary shares from 8:00 a.m. on Monday 28 July 2008 at which time dealings in United Utilities Group Ordinary Shares commenced on the London Stock Exchange.

Copies of the Circular and Prospectus were submitted to the UK Listing Authority and were available for inspection at the Document Viewing Facility, which is situated at the following address: Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS.

If you are a Shareholder and have questions about the Proposals, the contents of the Circular or the completion and return of your Forms of Proxy or the Form of Election, please call Equiniti Limited, United Utilities' Registrars, on 0871 384 2898 (or, if you are calling from outside the United Kingdom, +44 121 415 0269) between 9:00 a.m. and 5:00 p.m. Monday to Friday (excluding public holidays). 

Notes

1. Terms used but not defined herein have the meanings given to them in the scheme circular posted to shareholders.
   
2. Calls to the shareholder helpline run by United Utilities' Registrars, Equiniti Limited, on 0871 384 2898 (or, if you are calling from outside the United Kingdom, +44 121 415 0269) between 9:00 a.m. and 5:00 p.m. Monday to Friday (excluding public holidays).  Calls to this number are charged at 8p per minute from a BT landline.  Other telephony provider costs may vary.  Please note that calls to these numbers may be monitored or recorded, and no advice on the Proposals can be given.
   
3. The Proposals in summary are:-
   
   • A scheme of arrangement whereby all ordinary shares in United Utilities PLC will be cancelled in return for the issue to shareholders of ordinary shares and B shares in United Utilities Group PLC, the new holding company. 
     
   • Each shareholder will receive 17 United Utilities Group ordinary shares for every 22 United Utilities ordinary shares currently held, together with one B share for each United Utilities share currently held.
     
   • This will be followed by a reduction in capital of United Utilities Group to create distributable reserves.
   • Shareholders (other than US shareholders, holders of United Utilities ADRs and certain other Restricted Overseas Shareholders) will have three choices as to how to receive their Return of Capital:
     
        (i)    Initial B Share Redemption: an initial 170 pence redemption per B Share; 
        (ii)   B Share Dividend: a single dividend of 170 pence per B Share; or
        (iii)  Final B Share Redemption: retention of B Shares until they are redeemed on 14 April 2009 for 170 pence per B Share.
     
   • United Utilities Group ordinary shares will be listed on the London Stock Exchange in the same way as the existing United Utilities shares (which will be de-listed).  The B shares will not be listed.
     
4. No United Utilities Group Ordinary Shares or B Shares have been marketed to, nor are any available for purchase by, the public in the United Kingdom or elsewhere in connection with the Admission.  This document does not constitute an offer or form part of any offer or invitation to purchase, subscribe for, sell or issue, or a solicitation of any offer to purchase, subscribe for, sell or issue United Utilities Group Ordinary Shares, B Shares or any other securities in United Utilities or United Utilities Group.  This document does not constitute a prospectus equivalent document.
   
5. Overseas Shareholders may be affected by the laws of other jurisdictions in relation to the Proposals or the distribution of this document.  Persons into whose possession this document comes should inform themselves about and observe any applicable restrictions and legal, exchange control or regulatory requirements in relation to the Proposals, the distribution of this document and the Prospectus. Any failure to comply with such restrictions or requirements may constitute a violation of the securities laws of any such jurisdiction.
   
6. INFORMATION FOR US SHAREHOLDERS
   Neither the United Utilities Group Ordinary Shares nor the B Shares will be, and are not required to be, registered with the US Securities and Exchange Commission under the US Securities Act of 1933, as amended, in reliance of the exemption from registration provided by Section 3(a)(10) thereof.  Neither the SEC nor any other US federal or state securities commission or regulatory authority has approved or disapproved the United Utilities Group Ordinary Shares or the B Shares or passed an opinion on the adequacy of this document.  Any representation to the contrary is a criminal offence in the United States.
   
   In the United States, this document is being furnished to Shareholders solely to explain the Proposals and to describe the action recommended to be taken by Shareholders in relation to the Court Meeting and the General Meeting.  This document is personal to each Shareholder and does not constitute an offer to any other person or to the public generally to subscribe for or otherwise acquire United Utilities Group Ordinary Shares or B Shares. 
   
   This document is not an offer of securities for sale in the United States.  Neither the United Utilities Group Ordinary Shares nor the B Shares to be issued to Shareholders in connection with the Scheme have been, will be, nor are required to be, registered with the SEC under the US Securities Act, in reliance upon the exemption from the registration requirements of the US Securities Act provided by Section 3(a)(10) of that act.  For the purpose of qualifying for the exemption from the registration requirements of the US Securities Act provided by Section 3(a)(10) of that act with respect to the United Utilities Group Ordinary Shares and the B Shares issued pursuant to the Scheme, United Utilities will advise the Court that it will rely on Section 3(a)(10) exemption based on the Court's sanctioning of the Scheme, which will be relied upon by United Utilities as an approval of the Scheme following a hearing on its fairness to Shareholders at which hearing all such Shareholders will be entitled to attend in person or through counsel to support or oppose the sanctioning of the Scheme and with respect to which notification has been or will be given to all such Shareholders. 
   
7. United Utilities PLC has received advice in relation to the Proposals from Deutsche Bank AG, London Branch and JPMorgan Cazenove Limited.  Deutsche Bank, which is authorised under German Banking Law (competent authority: BaFin-Federal Financial Supervising Authority) and with respect to UK commodity derivatives business by the Financial Services Authority and regulated by the Financial Services Authority for the conduct of UK business and JPMorgan Cazenove, which is authorised and regulated by the Financial Services Authority in the United Kingdom, are jointly acting as sponsors and financial advisers for United Utilities and United Utilities Group and no-one else in connection with the Proposals and will not be responsible to anyone other than United Utilities and United Utilities Group for providing protections afforded to clients of Deutsche Bank and JPMorgan Cazenove respectively or providing advice in relation to the Proposals or any other matters described in this document.