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Securities and Exchange Commission
  Washington, D.C. 20549

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FORM 20-F

| | Registration statement pursuant to Section
      12(b) or (g) of the Securities Exchange Act of 1934                                    
| | ----------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                         
| | or                                                                                                                                      
| |                                                                                                                                         
| | Annual report pursuant to Section 13
      or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended
      31 March 2003
| |                                                                                                                                         
| | or                                                                                                                                      
| |                                                                                                                                         
| | Transition report pursuant to Section
      13 or 15(d) of the Securities Exchange Act of 1934                                          



Commission file number: 82-1-14744

United Utilities
  PLC(Exact name of Registrant as specified in its
  charter)

|                                                                                       |                                                              
|-------------------------------------------------------------------------------------- | -------------------------------------------------------------
|England                                                                                | Dawson House, Great
      Sankey, Warrington WA5 3LW, England
|(Jurisdiction
      of incorporation or organisation)                                  | (Address of principal executive
      offices)               
|                                                                                       |                                                              
|                                                                                       |                                                              
|                                                                                       |                                                              
|Securities registered
      or to be registered pursuant to Section 12 (b) of the Act:

|                                                  |  |                                                  
|------------------------------------------------- |  | -------------------------------------------------
|Title of each
        class                       |  | Name
        of each exchange on which registered
|American Depositary Shares                        |  | New York Stock Exchange                          
|each of which represents2
        Ordinary Shares |  |                                                  
|                                                  |  |                                                  
|Ordinary
        Shares of £1 each                |  | New York Stock Exchange*                         



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Securities registered or to be registered
  pursuant to Section 12(g) of the Act: None.

Securities for which there is a reporting
  obligation pursuant to Section 15(d) of the Act:None.

Indicate the number of outstanding shares of
  each of the issuers classes of capital or common stock as of the close
  of the period covered by the Annual Report.

Ordinary Shares of £1 each
  556,526,651 (as of 31 March 2003).

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Indicate by check mark whether the Registrant
  (1) has filed all reports required to be filed by Section 13 or 15(d) of the
  Securities Exchange Act of 1934 during the preceding 12 months (or for such
  shorter period that the Registrant was required to file such reports) and (2)
  has been subject to such filing requirements for the past 90 days.

YesNo

Indicate by check mark which financial statement
  item the Registrant has elected to follow.

Item 17Item 18





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In this report references to company
  or United Utilities are to United Utilities PLC, either alone or
  together with its consolidated subsidiaries, as the context requires. References
  to group are to United Utilities PLC together with its consolidated
  subsidiaries. References to United Utilities Electricity are to
  United Utilities Electricity PLC, to Your Communications are to
  Your Communications Group Limited and subsidiaries, to United Utilities
  Contract Solutions are to United Utilities Contract Solutions Holdings
  Limited, to United Utilities Green Energy are to United Utilities
  Green Energy Limited, to United Utilities Australia are to United
  Utilities Australia Pty Limited, to United Utilities Networks are
  to United Utilities Networks Limited and, up until 31 March 2003, the metering
  and connections activities of United Utilities Water and United Utilities Electricity,
  to United Utilities Customer Sales are to United Utilities Customer
  Sales Limited and the customer relationship activities of United Utilities Water,
  to United Utilities Service Delivery are to United Utilities Service
  Delivery PLC and to the regulated activities of United Utilities Water and United
  Utilities Electricity, and to United Utilities Water are to United
  Utilities Water PLC, which are all wholly owned subsidiaries of the company.
  References to Vertex are to Vertex Data Science Limited which is
  85.6% owned by the company.

References to the 2003 annual report
  to shareholders are to the United Utilities PLC annual report & accounts
  2003. Excerpts of the 2003 annual report to shareholders are incorporated by
  reference herein.

References are also made to specific terms
  which bear the following meanings:

| | Megawatt (MW)       |  | a megawatt is a unit of power
      equal to one million watts.                                  
|- | --------------------- | - | -------------------------------------------------------------------------------------------------
| | Gigawatt (GW)       |  | a gigawatt is a unit of power equal to
      one billion (one thousand million) watts.           
| | Gigawatt-hour (GWh) |  | one gigawatt-hour represents one hour of
      electricity consumption at a constant rate of 1GW.
| | Kilowatt (kW)       |  | a kilowatt is a unit of power equal to
      one thousand watts.                                 
| | Kilolitre           |  | one kilolitre equals one thousand litres.                                                        
| | Megalitre (Ml)      |  | one megalitre equals one million litres.                                                         

The companys registered office is located
  at Dawson House, Great Sankey, Warrington WA5 3LW, England and its telephone
  number is 00-44-1925-237000. The website address is www.unitedutilities.com

The companys financial year ends on 31
  March of each year. Unless the context otherwise requires, references in this
  report to financial year or year are to the twelve months
  ended on 31 March of that year. Unless otherwise indicated, the financial information
  contained in this report has been prepared in accordance with accounting principles
  generally accepted in the United Kingdom (UK GAAP). Item 17 contains reconciliations
  from UK GAAP of net income, shareholders equity and financial position
  to accounting principles generally accepted in the United States of America
  (US GAAP). Unless otherwise indicated, a reference in this report to consolidated
  financial statements is to the audited consolidated financial statements
  of the company (together with accompanying notes) prepared at the end of each
  financial year, and can be found on pages 46 to 74 of the 2003 annual report
  to shareholders. Unless otherwise indicated, financial information for the group
  included in this report is presented on a consolidated basis and references
  to turnover (revenue) with respect to a business segment are to
  the gross turnover of such a segment (i.e. including share of joint ventures).

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
  STATEMENTS

This report contains certain forward-looking
  statements with respect to the financial condition, results of operations and
  business of the company.

Statements that are not historical facts, including
  statements about the companys beliefs and expectations, are forward-looking
  statements. Words such as expects, anticipates, intends,
  plans, believes, seeks, estimates,
  potential, reasonably possible, targets
  and variations of these words and similar expressions are intended to identify
  forward-looking statements within the meaning of the US Private Securities Litigation
  Reform Act 1995. These statements are based on current plans, estimates and
  projections, and therefore investors should not rely on them. Forward-looking
  statements speak only as of the date they are made, and the company undertakes
  no obligation to update publicly any of them in light of new information or
  future events.

The company may also make written and/or oral
  forward-looking statements in its periodic reports to the Securities and Exchange
  Commission on Forms 6-K, in the annual report to shareholders, in proxy statements,
  in offering circulars and prospectuses, in press releases and other written
  materials and in oral statements made by officers, directors or employees to
  third parties, including financial analysts.

Forward-looking statements involve inherent
  risks and uncertainties. The company cautions investors that a number of important
  factors could cause actual results to differ materially from those anticipated
  or implied in any forward-looking statements. These factors include: (i) the
  effect of, and changes in, regulation and government policy; (ii) the effects
  of competition and price pressures; (iii) the ability of the company to achieve
  cost savings and operational synergies; (iv) the ability of the company to service
  its future operations and capital requirements; (v) the timely development and
  acceptance of new products and services by the company; (vi) the effect of technological
  changes; and (vii) the companys success at managing the risks of the foregoing.
  The company cautions that the foregoing list of important factors does not address
  all the factors that could cause results to differ materially.

2United
  Utilities Annual Report on Form 20-F 2003

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ITEM 1  IDENTITY OF DIRECTORS, SENIOR MANAGEMENT
  AND ADVISORS

Not applicable.

ITEM 2  OFFER STATISTICS AND
  EXPECTED TIMETABLE

Not applicable.

ITEM 3  KEY INFORMATION

SELECTED FINANCIAL DATA

The selected financial data set out below was
  extracted or derived from the consolidated financial statements. The selected
  financial data should be read in conjunction with, and are qualified in their
  entirety by reference to, such consolidated financial statements and their accompanying
  notes, together with the Operating review and the Financial
  review on pages 4 to 19 and 26 to 29, respectively, of the 2003 annual
  report to shareholders, incorporated by reference herein. The selected financial
  data for the years ended 31 March 2003, 2002 and 2001 and as of 31 March 2003
  and 2002 as well as other information included elsewhere in this document are
  extracted from the 2003 annual report to shareholders and the groups historical
  consolidated financial statements and related notes.

United Utilities prepares its consolidated
  financial statements in accordance with UK GAAP, which differs in certain respects
  from US GAAP. Included in this document, as listed in the index in item 17,
  is a description of the significant differences between UK GAAP and US GAAP
  applicable to United Utilities and reconciliations of profit after taxation
  (or net income) and equity shareholders funds (or shareholders equity)
  and the financial position under UK GAAP and those under US GAAP.

Under UK GAAP, United Utilities accounting
  policy with respect to telecommunications network capacity sales has been changed
  as described in note 1(a) to the consolidated financial statements. Consequently,
  the results under UK GAAP shown below for the financial years 2002, 2001, 2000
  and 1999 have been restated. The telecommunications network capacity sales change
  in accounting policy results in a UK GAAP policy that is aligned to US GAAP.
  Under UK GAAP, the group has adopted UITF 34 Pre-contract costs,
  the application of which is reflected in the current and prior year reported
  results as described in note 1(a) to the consolidated financial statements.
  The UK GAAP accounting policy for Pre-contract costs is aligned
  to US GAAP.

The discontinued operations within the selected
  financial data relate to the sale of the energy supply business in August 2000.

United Utilities Annual Report
  on Form 20-F 2003      3

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Selected Consolidated Financial DataAmounts in accordance with UK GAAP

|                                                                     |      |                                                                           | (1)  |         |      | Restated | (2)  | Restated | (2)  | Restated | (2)  | Restated | (2)
|-------------------------------------------------------------------- | ---- | ------------------------------------------------------------------------- | ---- | ------- | ---- | -------- | ---- | -------- | ---- | -------- | ---- | -------- | ---
|                                                                     |      | 2003                                                                      | 2003 |         | 2002 |          | 2001 |          | 2000 |          | 1999 |         
|                                                                     |      | $                                                                         |      | £       |      | £        |      | £        |      | £        |      | £        |    
|Financial year ended
      31 March                                  |      | (in
        millions, except for information given per share and per ADS) |     
|                                                                     |      |                                                                           |      |         |      |          |      |          |     
|Consolidated income statement data                                   |      |                                                                           |      |         |      |          |      |          |      |          |      |          |    
|Group turnover from continuing operations                            |      | 2,968.5                                                                   |      | 1,878.8 |      | 1,786.2  |      | 1,490.9  |      | 1,564.3  |      | 1,458.4  |    
|                                                                     |      |                                                                           |      |         |      |          |      |          |      |          |      |          |    
|Group turnover from discontinued operations(3)                       |      |                                                                          |      |        |      |         |      | 201.5    |      | 792.0    |      | 818.5    |    
|                                                                     |      |                                                                           |      |         |      |          |      |          |      |          |      |          |    
|Total group turnover                                                 |      | 2,968.5                                                                   |      | 1,878.8 |      | 1,786.2  |      | 1,692.4  |      | 2,356.3  |      | 2,276.9  |    
|                                                                     |      |                                                                           |      |         |      |          |      |          |      |          |      |          |    
|Exceptional items(4)                                                 |      | 7.4                                                                       |      | 4.7     |      | (11.9    | )    | 174.6    |      | (31.0    | )    | (31.9    | )  
|                                                                     |      |                                                                           |      |         |      |          |      |          |      |          |      |          |    
|Net interest payable                                                 |      | 365.6                                                                     |      | 231.4   |      | 230.6    |      | 220.3    |      | 206.0    |      | 203.2    |    
|                                                                     |      |                                                                           |      |         |      |          |      |          |      |          |      |          |    
|Profit before tax                                                    |      | 517.5                                                                     |      | 327.5   |      | 302.8    |      | 477.7    |      | 457.0    |      | 455.9    |    
|                                                                     |      |                                                                           |      |         |      |          |      |          |      |          |      |          |    
|Profit after tax and minority interests                              |      | 438.9                                                                     |      | 277.8   |      | 261.8    |      | 341.3    |      | 364.9    |      | 292.3    |    
|                                                                     |      |                                                                           |      |         |      |          |      |          |      |          |      |          |    
|Dividends                                                            |      | (418.4                                                                    | )    | (264.8  | )    | (260.9   | )    | (254.9   | )    | (248.8   | )    | (243.6   | )  
|                                                                     |      |                                                                           |      |         |      |          |      |          |      |          |      |          |    
|Basic earnings per share                                             |      | $0.79                                                                     |      | 50.0    | p    | 47.3     | p    | 61.9     | p    | 66.3     | p    | 53.4     | p  
|                                                                     |      |                                                                           |      |         |      |          |      |          |      |          |      |          |    
|Diluted earnings per share                                           |      | $0.79                                                                     |      | 49.8    | p    | 47.2     | p    | 61.6     | p    | 65.9     | p    | 52.8     | p  
|                                                                     |      |                                                                           |      |         |      |          |      |          |      |          |      |          |    
|Dividend per share                                                   |      | $0.75                                                                     |      | 47.6    | p    | 47.0     | p    | 46.1     | p    | 45.2     | p    | 44.3     | p  
|                                                                     |      |                                                                           |      |         |      |          |      |          |      |          |      |          |    
|Dividend per ADS(6)                                                  |      | $1.50                                                                     |      | 95.2    | p    | 94.0     | p    | 92.2     | p    | 90.4     | p    | 88.6     | p  
|                                                                     |      |                                                                           |      |         |      |          |      |          |      |          |      |          |    
|Average number of ordinary shares in issue
       basic (million)   |      |                                                                           |      | 556.1   |      | 553.5    |      | 551.1    |      | 550.2    |      | 547.2    |    
|                                                                     |      |                                                                           |      |         |      |          |      |          |      |          |      |          |    
|Average number of ordinary shares in issue
       diluted (million) |      |                                                                           |      | 557.6   |      | 555.2    |      | 553.7    |      | 553.6    |      | 554.1    |    
|                                                                     |      |                                                                           |      |         |      |          |      |          |      |          |      |          |    
|                                                                     |      |                                                                           |      |         |      |          |      |          |      |          |      |          |    
|As at
      31 March                                                 |      |                                                                           |      |         |      | Restated |      | Restated |      | Restated |      | Restated |    
|2003                                                                 | 2003 | 2002                                                                      | 2001 | 2000    | 1999
|$m                                                                   | £m   | £m                                                                        | £m   | £m      | £m  
|                                                                     |      |                                                                           |      |         |      |          |      |          |      |          |      |          |    
|Consolidated balance sheet data                                      |      |                                                                           |      |         |      |          |      |          |      |          |      |          |    
|Total assets                                                         |      | 13,257.8                                                                  |      | 8,391.0 |      | 7,665.5  |      | 7,485.7  |      | 6,888.8  |      | 6,633.1  |    
|                                                                     |      |                                                                           |      |         |      |          |      |          |      |          |      |          |    
|Long-term obligations                                                |      | 6,961.8                                                                   |      | 4,406.2 |      | 3,772.5  |      | 3,335.5  |      | 2,760.0  |      | 2,623.9  |    
|                                                                     |      |                                                                           |      |         |      |          |      |          |      |          |      |          |    
|Equity shareholders funds                                           |      | 4,003.1                                                                   |      | 2,533.6 |      | 2,519.2  |      | 2,583.0  |      | 2,354.8  |      | 2,238.3  |    
|                                                                     |      |                                                                           |      |         |      |          |      |          |      |          |      |          |    
|Share capital and share premium                                      |      | 1,944.7                                                                   |      | 1,230.8 |      | 1,227.5  |      | 1,209.5  |      | 1,195.6  |      | 1,192.0  |    
|                                                                     |      |                                                                           |      |         |      |          |      |          |      |          |      |          |    
|                                                                     |      |                                                                           |      |         |      |          |      |          |      |          |      |          |    
|Financial
      year                                                 |      |                                                                           |      |         |      | Restated |      | Restated |      | Restated |      | Restated |    
|2003                                                                 | 2003 | 2002                                                                      | 2001 | 2000    | 1999
|                                                                     |      |                                                                           |      |         |      |          |      |          |      |          |      |          |    
|Other financial data                                                 |      |                                                                           |      |         |      |          |      |          |      |          |      |          |    
|Adjusted basic earnings per share(7)                                 |      | $0.77                                                                     |      | 48.8    | p    | 50.9     | p    | 40.3     | p    | 60.8     | p    | 51.7     | p  
|                                                                     |      |                                                                           |      |         |      |          |      |          |      |          |      |          |    
|Adjusted diluted earnings per share(7)                               |      | $0.77                                                                     |      | 48.6    | p    | 50.7     | p    | 40.1     | p    | 60.4     | p    | 51.0     | p  
|                                                                     |      |                                                                           |      |         |      |          |      |          |      |          |      |          |    
|Ratio of earnings to fixed charges(8)                                |      |                                                                           |      | 2.4     | x    | 2.3      | x    | 3.2      | x    | 3.4      | x    | 3.4      | x  
|                                                                     |      |                                                                           |      |         |      |          |      |          |      |          |      |          |    
|Interest cover(9)                                                    |      |                                                                           |      | 2.4     | x    | 2.3      | x    | 3.2      | x    | 3.2      | x    | 3.2      | x  
|                                                                     |      |                                                                           |      |         |      |          |      |          |      |          |      |          |    
|Adjusted interest cover(10)                                          |      |                                                                           |      | 2.4     | x    | 2.4      | x    | 2.3      | x    | 3.0      | x    | 3.1      | x  
|                                                                     |      |                                                                           |      |         |      |          |      |          |      |          |      |          |    
|Net leverage(11)                                                     |      |                                                                           |      | 57.1    | %    | 54.9     | %    | 52.1     | %    | 54.6     | %    | 51.6     | %  
|                                                                     |      |                                                                           |      |         |      |          |      |          |      |          |      |          |    

4      United
  Utilities Annual Report on Form 20-F 2003

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Selected Consolidated Financial
  DataAmounts in accordance with US
  GAAP

|Financial
      year ended 31 March                                          | 2003    | (1) | 2003    |                                                               | 2002    |   | 2001    |   | 2000    |   | 1999    | 
|---------------------------------------------------------------------------- | ------- | --- | ------- | ------------------------------------------------------------- | ------- | - | ------- | - | ------- | - | ------- | 
|$                                                                            |         | £   |         | £                                                             |         | £ |         | £ |         | £ |        
|                                                                             |         |     |         | (in
        millions, except for information given per share) |         |   |        
|                                                                             |        
|Consolidated income statement
      data                                     |         |     |         |                                                               |         |   |         |   |         |   |         | 
|Group turnover(12)                                                           | 2,903.9 |     | 1,837.9 |                                                               | 1,786.2 |   | 1,692.4 |   | 2,356.3 |   | 2,276.9 | 
|                                                                             |        
|Operating profit from continuing operations
      before interest and tax(5) | 787.0   |     | 498.1   |                                                               | 463.1   |   | 422.5   |   | 524.3   |   | 521.5   | 
|                                                                             |        
|Profit on disposal of businesses                                             |        |     |        |                                                               |        |   | 167.0   |   |        |   |        | 
|                                                                             |        
|Profit before tax from continuing operations                                 | 844.7   |     | 534.6   |                                                               | 252.8   |   | 261.8   |   | 387.1   |   | 390.0   | 
|                                                                             |        
|Profit after tax and minority interests
      from                           |         |     |         |                                                               |         |   |         |   |         |   |         | 
|continuing operations(13)                                                    | 656.8   |     | 415.7   |                                                               | 150.2   |   | 72.6    |   | 372.8   |   | 232.7   | 
|                                                                             |        
|Profit after tax and minority interests
      from                           |         |     |         |                                                               |         |   |         |   |         |   |         | 
|discontinued operations(3)                                                   |        |     |        |                                                               |        |   | 125.2   |   | 43.6    |   | 29.2    | 
|                                                                             |        
|Profit after tax and minority interests                                      | 656.8   |     | 415.7   |                                                               | 150.2   |   | 197.8   |   | 416.4   |   | 261.9   | 
|                                                                             |        
|Basic earnings per share from continuing
      operations(14)                | $1.18   |     | 74.8    | p                                                             | 27.1    | p | 13.2    | p | 67.8    | p | 42.5p   | 
|                                                                             |        
|Basic earnings per share from discontinued
      operations(14)              |        |     |        |                                                               |        |   | 22.7    | p | 7.9     | p | 5.4p    | 
|                                                                             |        
|Basic earnings per share                                                     | $1.18   |     | 74.8    | p                                                             | 27.1    | p | 35.9    | p | 75.7    | p | 47.9p   | 
|                                                                             |        
|Diluted earnings per share from continuing
      operations                  | $1.18   |     | 74.5    | p                                                             | 27.1    | p | 13.1    | p | 67.4    | p | 42.3p   | 
|                                                                             |        
|Diluted earnings per share from discontinued
      operations                |        |     |        |                                                               |        |   | 22.7    | p | 7.9     | p | 5.3p    | 
|                                                                             |        
|Diluted earnings per share                                                   | $1.18   |     | 74.5    | p                                                             | 27.1    | p | 35.8    | p | 75.3    | p | 47.6p   | 
|                                                                             |        
|Average number of ordinary shares in issue
       diluted (million)         |         |     | 558.2   |                                                               | 555.2   |   | 552.3   |   | 553.0   |   | 550.5   | 
|                                                                             |        

|As
      at 31 March                  | 2003$m   | (1) | 2003£m  |  | 2002£m  |   | 2001£m  |   | 2000£m  |  | 1999£m  | 
|------------------------------------- | -------- | --- | ------- |  | ------- | - | ------- | - | ------- |  | ------- | 
|                                      |         
|Consolidated balance sheet
      data |          |     |         |  |         |   |         |   |         |  |         | 
|Total assets                          | 15,375.3 |     | 9,731.2 |  | 8,814.7 |   | 8,445.3 |   | 7,942.2 |  | 7,712.9 | 
|                                      |         
|Long-term obligations                 | 8,830.0  |     | 5,588.6 |  | 4,652.0 |   | 3,895.0 |   | 3,226.5 |  | 3,173.6 | 
|                                      |         
|Shareholders equity                  | 4,510.6  |     | 2,854.8 |  | 2,920.1 |   | 3,077.0 |   | 3,090.1 |  | 2,916.0 | 
|                                      |         
|Capital stock                         | 879.3    |     | 556.5   |  | 555.9   |   | 552.9   |   | 550.5   |  | 549.9   | 
|                                      |         
|Financial year                        |          |     | 2003    |  | 2002    |   | 2001    |   | 2000    |  | 1999    | 
|                                      |         
|Other financial data                  |          |     |         |  |         |   |         |   |         |  |         | 
|Ratio of earnings to fixed charges(8) |          |     | 3.1x    |  | 2.0     | x | 3.0     | x | 3.3x    |  | 3.1x    | 
|                                      |         
|                                     

|(1) | US dollar amounts have been
      translated from sterling at the rate of £1.00 = $1.58, the Noon Buying
      Rate on 31 March 2003. These translations are not representations that pounds
      have been, could have been, or can in the future be converted into US dollars
      at this or any other rate of exchange and are solely for the convenience
      of the reader.                                                                                                                                                                                                                                                                                                                                                                  
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Under UK GAAP, the group has
      changed its accounting policy with respect to telecommunications network
      capacity sales, as described in note 1(a) to the consolidated financial
      statements. Consequently the results under UK GAAP have been restated. The
      telecommunications network capacity sales change in accounting policy results
      in a UK GAAP policy that is aligned to US GAAP. Under UK GAAP, the group
      has adopted UITF 34 Pre-contract costs, the application of which
      is reflected in the current and prior year reported results as described
      in note 1(a) of the consolidated financial statements. The UK GAAP accounting
      policy for Pre-contract costs is aligned to US GAAP.
|(3) | Discontinued operations relate
      to the sale of the energy supply business in August 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(4) | Exceptional items, which are
      disclosed separately under UK GAAP in accordance with FRS3 Reporting Financial
      Performance, comprise:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

|Financial year                                                  | 2003
      
      $m | (1) | 2003
      £m |   | 2002
      £m |   | 2001
      £m |   | 2000
      £m |   | 1999
      £m |  
|--------------------------------------------------------------- | -------------------- | --- | ------------- | - | ------------- | - | ------------- | - | ------------- | - | ------------- | -
|                                                                |                     
|UK GAAP                                                         |                      |     |               |   |               |   |               |   |               |   |               |  
|Business restructuring                                          | (6.0                 | )   | (3.8          | ) | (11.9         | ) | (16.6         | ) | (21.5         | ) |              |  
|                                                                |                     
|Withdrawal from infrastructure management
      in the Americas | 53.7                 |     | 34.0          |   |              |   |              |   |              |   |              |  
|                                                                |                     
|FRS11 adjustment to carrying value of telecoms
      assets     | (40.3                | )   | (25.5         | ) |              |   |              |   |              |   |              |  
|                                                                |                     
|Year 2000 costs                                                 |                     |     |              |   |              |   |              |   | (9.5          | ) | (31.9         | )
|                                                                |                     
|Profit on disposal of the energy supply
      business          |                     |     |              |   |              |   | 191.2         |   |              |   |              |  
|                                                                |                     
|                                                                | 7.4                  |     | 4.7           |   | (11.9         | ) | 174.6         |   | (31.0         | ) | (31.9         | )
|                                                                |                     

United Utilities Annual Report
  on Form 20-F 2003     5

---






|(5) | Operating profit from continuing
      operations before interest and tax is statedafterthe items from continuing operations
      scheduled below. The following table sets out the US GAAP equivalent to
      UK GAAP exceptional items (i.e. the restructuring charges, the profit on
      disposal of the energy supply business, withdrawal from infrastructure management
      in the Americas, adjustment to the value of telecommunications assets and
      Year 2000 costs) from continuing and discontinued operations:
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|   | Financial
      year                                            | 2003  | (1) | 2003  |   | 2002  |   | 2001  |   | 2000  |   | 1999  |  
|-- | --------------------------------------------------------------- | ----- | --- | ----- | - | ----- | - | ----- | - | ----- | - | ----- | -
|$m |                                                                 | £m    |     | £m    |   | £m    |   | £m    |   | £m    |  
|   |                                                                 |       |     |       |   |       |   |       |   |       |   |       |  
|   | US GAAP                                                         |       |     |       |   |       |   |       |   |       |   |       |  
|   | Continuing operations                                           |       |     |       |   |       |   |       |   |       |   |       |  
|   |                                                                 |       |     |       |   |       |   |       |   |       |   |       |  
|   | Business restructuring                                          | (6.0  | )   | (3.8  | ) | (11.9 | ) | (16.6 | ) | (21.5 | ) |      |  
|   |                                                                 |       |     |       |   |       |   |       |   |       |   |       |  
|   | Withdrawal from infrastructure management
      in the Americas | (6.8  | )   | (4.3  | ) |      |   |      |   |      |   |      |  
|   |                                                                 |       |     |       |   |       |   |       |   |       |   |       |  
|   | Year 2000 costs                                                 |      |     |      |   |      |   |      |   | (7.1  | ) | (26.5 | )
|   |                                                                 |       |     |       |   |       |   |       |   |       |   |       |  
|   | Currency translation adjustment                                 | (10.7 | )   | (6.8  | ) | (41.3 | ) |      |   |      |   |      |  
|   |                                                                 |       |     |       |   |       |   |       |   |       |   |       |  
|   |                                                                 | (23.5 | )   | (14.9 | ) | (53.2 | ) | (16.6 | ) | (28.6 | ) | (26.5 | )
|   |                                                                 |       |     |       |   |       |   |       |   |       |   |       |  
|   | Discontinued operations                                         |       |     |       |   |       |   |       |   |       |   |       |  
|   |                                                                 |       |     |       |   |       |   |       |   |       |   |       |  
|   | Profit on disposal of the energy supply
      business          |      |     |      |   |      |   | 167.0 |   |      |   |      |  
|   |                                                                 |       |     |       |   |       |   |       |   |       |   |       |  
|   | Year 2000 costs                                                 |      |     |      |   |      |   |      |   | (2.4  | ) | (5.4  | )
|   |                                                                 |       |     |       |   |       |   |       |   |       |   |       |  
|   |                                                                 |      |     |      |   |      |   | 167.0 |   | (2.4  | ) | (5.4  | )
|   |                                                                 |       |     |       |   |       |   |       |   |       |   |       |  

|     | The amounts for business
      restructuring and Year 2000 costs are the same under UK and US GAAP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|     | For the withdrawal from infrastructure
      management in the Americas, the reduction under US GAAP of £38.3 million
      relates to the provision at 31 March 2002 reflecting the groups share
      of net liabilities in IEBA, the Argentine utility. In the year ended 31
      March 2003, the group concluded it no longer had a participating interest
      and therefore ceased to account for the investment as a joint venture, with
      the resulting release of the £38.3 million (restated for UITF 34 Pre-contract
      costs) share of liabilities included within provisions under UK GAAP. Under
      US GAAP, no share of liabilities was recorded at 31 March 2002 as an investor
      should discontinue recording losses of an investment when the investment
      has been reduced to zero unless the investor has an obligation or commitment
      to fund these liabilities.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|     | The currency translation
      adjustments under US GAAP relate to Argentina. Under UK GAAP, currency translation
      adjustments on net borrowings used to finance foreign investments are taken
      to the statement of total recognised gains and losses to offset the foreign
      exchange exposure. Under US GAAP, this offset is not available since the
      group elected not to designate derivative instruments as hedges in the year
      ended 31 March 2002. In the year ended 31 March 2003, there is no currency
      translation adjustment resulting from the investment in IEBA since the investment
      had been reduced to zero at 31 March 2002.                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|     | The reduction under US GAAP
      on profit on disposal of the energy supply business in August 2000 of £24.2
      million relates to a £36.0 million difference in the onerous contract
      provisions released on disposal due to the application of discounting under
      UK GAAP offset by £11.8 million due to the lower carrying value of
      goodwill under US GAAP which had been amortised. Under UK GAAP, goodwill
      had previously been written off to reserves, but on disposal it is included
      in the profit and loss account as a realised cost of disposal.                                                                                                                                                                                                                                                                                                                     
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|     | Under UK GAAP, the group
      has performed an impairment review within its telecommunications business
      in accordance with FRS 11. This resulted in an exceptional adjustment to
      value of £25.5 million representing tangible asset of £14.6
      million, intangible assets of £8.6 million and goodwill of £2.3
      million. Under US GAAP, there was no indication of impairment of tangible
      or intangible assets in the telecommunications business on an undiscounted
      cash flow basis in accordance with SFAS 144. In addition, no impairment
      of goodwill under SFAS 142 was required.                                                                                                                                                                                                                                                                                  
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(6)  | Calculated based on a ratio
      of two ordinary shares to one ADS.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(7)  | Adjustments are made to profit
      to eliminate exceptional items, discontinued operations and goodwill amortisation
      in calculating adjusted earnings per share. A detailed calculation under
      UK GAAP is shown in note 10 to the consolidated financial statements and
      adjusted earnings per share is presented on the face of the profit and loss
      account. This adjusted measure has been included to provide information
      on the underlying business performance.                                                                                                                                                                                                                                                                                                                                                                                                             
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(8)  | For the purposes of calculating
      the ratio of earnings to fixed charges, earnings consists of
      profit on ordinary activities before tax before adjustment for minority
      interests in consolidated subsidiaries and profits or losses from joint
      ventures plus fixed charges, and amortisation of capitalised interest less
      capitalised interest and minority interests. Fixed charges consists
      of interest expensed and capitalised plus amortised premiums, discounts
      and capitalised expenses related to indebtedness and the interest portion
      in rent expense.                                                                                                                                                                                                                                                                                             
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(9)  | Interest cover is calculated
      as the number of times the interest charge for the period is covered by
      profit before interest and tax.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(10) | Adjusted interest cover is
      calculated as the number of times the interest charge for the period is
      covered by profit from continuing operations before non-operating items,
      goodwill amortisation, exceptional items, interest and tax. This measure
      has been included to provide information on the ability of the underlying
      business to finance its operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(11) | Net leverage is defined as
      net debt (loans, finance leases and overdrafts less cash at bank and in
      hand and managed funds and short-term investments) as a percentage of net
      debt plus equity shareholders funds.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(12) | The difference between group
      turnover in 2003 under US GAAP of £1,837.9 million and group turnover
      under UK GAAP of £1,878.8 million is due to the revenue recognition
      difference between UK and US GAAP of £40.9 million as shown in note
      36(m) of the summary of differences between UK and US GAAP included as listed
      in the index in item 17.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(13) | The increase in profit after
      tax in 2003 under US GAAP is principally due to the gain on the movement
      of the fair value of derivative instruments of £198.3 million arising
      from reduced interest rates, compared with a charge of £41.6 million
      in 2002. This UK to US GAAP adjustment, along with other adjustments is
      shown in the reconciliations of net income and shareholders equity
      between UK and US GAAP included as listed in the index in item 17.                                                                                                                                                                                                                                                                                                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(14) | For the purposes of calculating
      basic earnings per share, the weighted average number of shares in issue
      under US GAAP is the same as under UK GAAP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

6United
  Utilities Annual Report on Form 20-F 2003

---






EXCHANGE RATESIn this report, unless otherwise specified
  or unless the context requires otherwise, all references to pound,
  sterling, pounds sterling, £, p
  and pence are to the lawful currency of the United Kingdom of Great
  Britain and Northern Ireland (United Kingdom or UK).
  The company publishes its consolidated financial statements in sterling. In
  this report, all references to US dollars, US$ and $
  are to the lawful currency of the United States of America (United States
  or US). Amounts stated in US dollars, unless otherwise indicated,
  have been translated from sterling at an assumed rate solely for convenience,
  and should not be construed as representations that the sterling amounts actually
  represent such US dollar amounts or could be converted into US dollars at the
  rate indicated or any other rate. Unless otherwise indicated, such US dollar
  amounts have been translated from sterling at the rate of £1.00 = $1.58,
  the noon buying rate in the City of New York for cable transfers in pounds sterling
  as certified for customs purposes by the Federal Reserve Bank of New York (Noon
  Buying Rate) on 31 March 2003. The Noon Buying Rate on 31 March 2003 differs
  from the actual rates used in the preparation of the companys consolidated
  financial statements, and US dollar amounts used in this report may differ from
  the actual US dollar amounts that were translated into sterling in the preparation
  of such financial statements.

The following table sets out, for the financial
  year indicated, certain information concerning the Noon Buying Rate for pounds
  sterling and US dollars per £1.00:

|Financial
        year | High                                                                                                |  | Low   |  | Average | (1) | Period end | 
|---------------------- | --------------------------------------------------------------------------------------------------- |  | ----- |  | ------- | --- | ---------- | 
|                       |                                                                                                     |  |       |  |         |     |            | 
|1999                   | $1.72                                                                                               |  | $1.59 |  | $1.65   |     | $1.61      | 
|                       |                                                                                                     |  |       |  |         |     |            | 
|2000                   | $1.68                                                                                               |  | $1.55 |  | $1.61   |     | $1.59      | 
|                       |                                                                                                     |  |       |  |         |     |            | 
|2001                   | $1.60                                                                                               |  | $1.40 |  | $1.47   |     | $1.42      | 
|                       |                                                                                                     |  |       |  |         |     |            | 
|2002                   | $1.48                                                                                               |  | $1.37 |  | $1.43   |     | $1.42      | 
|                       |                                                                                                     |  |       |  |         |     |            | 
|2003                   | $1.65                                                                                               |  | $1.43 |  | $1.55   |     | $1.58      | 
|                       |                                                                                                     |  |       |  |         |     |            | 
|(1)                    | The average of the Noon Buying Rate on
      the last day of each month during the relevant period. |  |       |  |         |     |            | 

|Month    | High  |  | Low   | 
|-------- | ----- |  | ----- | 
|         |       |  |       | 
|2002     |       |  |       | 
|         |       |  |       | 
|December | $1.61 |  | $1.56 | 
|         |       |  |       | 
|2003     |       |  |       | 
|         |       |  |       | 
|January  | $1.65 |  | $1.60 | 
|         |       |  |       | 
|February | $1.65 |  | $1.57 | 
|         |       |  |       | 
|March    | $1.61 |  | $1.56 | 
|         |       |  |       | 
|April    | $1.60 |  | $1.55 | 
|         |       |  |       | 
|May      | $1.65 |  | $1.59 | 
|         |       |  |       | 

On 5 June 2003, the Noon Buying Rate was US$1.66
  per £1.00.

RISK FACTORSIn addition to the risks identified
  in other information included and incorporated by reference into this report,
  investors should consider the following risks. There may be additional risks
  that the group does not currently know of, or that are currently deemed immaterial
  based on information currently available. The groups business, financial
  condition or results of operations could be materially affected by any of these
  risks, resulting in a decline in the trading price of the groups ordinary
  shares or ADSs. The group operates an internal control system to evaluate and
  manage risks as described in the section Internal control system 
  evaluating and managing risk on page 36 of the 2003 annual report to shareholders
  incorporated by reference herein.

Turnover of the groups regulated
  businesses are controlled by regulators which could adversely affect profitabilityThe turnover of the groups
  water, wastewater and electricity distribution businesses (the regulated businesses)
  are determined by price limits established every five years by the respective
  regulators (the Director General of Water Services regulates the wastewater
  and water business ( the water regulator) and the Gas and Electricity
  Markets Authority, is responsible for regulating the electricity distribution
  business (the electricity regulator), collectively referred to as
  the regulators in this section on Risk factors). Preparations
  are currently ongoing, including dialogue with the regulators, for the forthcoming
  price reviews for the five-year period commencing on 1 April 2005. Final determinations/proposals
  by the regulators are expected by late 2004. This is a critical process for
  the group. The outcome of the next, and future, price review processes will
  impact the groups future turnover and profitability.

Failure to deliver the capital investment
  programmes could adversely affect profitabilityUnited Utilities regulated
  businesses require significant capital expenditure for additions to, or replacement
  of, plant and equipment for their wastewater, water and electricity distribution
  facilities and networks. The price limits set by the respective regulators take
  into account the level of capital expenditure expected to be incurred and the
  associated funding costs, in the five-year price review period. Historically,
  the group has financed the expenditures from cash flows from operations and
  debt financing. Management believes that the group will have sufficient cash
  flow from operations, available drawings under its credit facilities, and other
  debt financing to enable it to deliver the capital investment programme required
  by the regulators. In setting price limits the regulators have a duty to ensure
  that a company can finance its functions. However, there can be no assurance
  that cash flows from operations will not decline or that additional debt financing
  or other sources of capital would be available to meet these requirements.

If the group is unable to secure the anticipated
  capital efficiencies associated with the capital programme or the programme
  falls behind schedule for other reasons, the groups profitability may
  suffer. The regulators may factor such failure into future price reviews. In
  addition, the groups ability to meet regulatory and environmental performance
  standards could be adversely affected by such failure, which may result in fines
  or other sanctions by the regulators.

United Utilities Annual Report
  on Form 20-F 2003      7

---






Failure to deliver operating cost savings
  implicit in the regulatory reviews could adversely affect profitabilityOperating cost savings to be achieved during
  the current five-year regulatory period are implicit in the regulatory reviews.
  Although the group is on target to deliver operating cost savings of £480
  million, should operational performance deteriorate the groups profitability
  would suffer and the regulators may factor this performance into future price
  reviews.

Environmental regulations could increase
  the groups costs and adversely affect profitabilityVarious government environmental protection and
  health and safety laws and regulations govern United Utilities wastewater,
  water and electricity distribution businesses. These laws and regulations establish,
  amongst other things, standards for drinking water, discharges into the environment
  and quality of electricity supply which affect the groups operations.
  In addition, the group is required to obtain various environmental permissions
  from regulatory agencies for its operations. The group endeavours to comply
  with all regulatory standards. However, historically the group has not been
  in total compliance and cannot guarantee in the future that it will be in total
  compliance at all times with these laws and regulations. On the occasions that
  the group has failed to comply, it has been fined or otherwise sanctioned by
  the regulators.

Environmental laws and regulations are complex
  and change frequently. These laws, and their enforcement, have tended to become
  more stringent over time. Whilst the group has budgeted for future capital and
  operating expenditures to achieve and maintain compliance with current and known
  future changes in laws and regulations, it is possible that new or stricter
  standards could be imposed that will raise the groups operating costs
  by requiring changes or modifications to the assets in order to comply with
  any new environmental laws and regulations. Although these costs may be recoverable
  in part through the regulatory process in setting appropriate future price limits,
  there can be no assurance of this. Therefore, the group cannot guarantee that
  the costs of complying with, or discharging its liabilities under, current and
  future environmental and health and safety laws will not adversely affect its
  profitability or financial position.

Contamination to water supplies could
  adversely affect profitabilityWater supplies may be subject to contamination,
  including contamination from the development of naturally occurring compounds
  and pollution resulting from man-made sources. In the event that United Utilities
  water supply is contaminated and it is unable to substitute water supply from
  an uncontaminated water source, or to adequately treat the contaminated water
  source in a cost-effective manner, there may be an adverse effect on its operating
  results or financial position. It may be possible that some of these costs may
  be partly recoverable through future price reviews. The group could also be
  held liable for human exposure to hazardous substances in its water supplies
  or other environmental damage. The group maintains insurance policies in relation
  to liabilities likely to be associated with these risks, although there can
  be no assurance that all costs of any such claims would be covered or that coverage
  will continue to be available in the future.

Non-recovery of customer debt could
  adversely affect profitabilityUnited Utilities Customer Sales business
  manages the billing, cash collection and debt management activities for 2.9
  million domestic and business wastewater and water customers. The Water Industry
  Act 1999 prohibits the disconnection of a water supply for non-payment and the
  limiting of a supply with the intention of enforcing payment for certain premises
  including private dwellings. Non-recovery of debt is therefore a risk to the
  group and may cause the groups profitability to suffer, although allowance
  is made by the water regulator in the price limits for a proportion of debt
  deemed to be irrecoverable. Although new and existing strategies continue to
  be implemented to reduce cash collection risks, including collection agreements
  with local authorities and revised processes to monitor changes in tenancy,
  there can be no assurance that the group will not suffer losses from the groups
  inability to fully recover its debts.

The risks associated with trading in
  foreign countries could adversely affect the profitability of the groupWhile the groups operations are concentrated
  in the United Kingdom, the business also operates in other markets, in particular
  central and eastern Europe, and Australia. Operations in foreign countries are
  subject to political, economic and other uncertainties, including:

| | exchange controls and currency
      exchange risk;                                                                                                                                                                                  
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                      
| | taxation policies, including
      royalty and tax increases, retrospective tax claims and currency repatriation
      restrictions;                                                                                                 
|  |                                                                                                                                                                                                                                      
| | nationalisation, re-negotiations
      or modification of existing contracts;                                                                                                                                                        
|  |                                                                                                                                                                                                                                      
| | rapidly developing regulatory
      frameworks leading to the possibility of political interference;                                                                                                                                 
|  |                                                                                                                                                                                                                                      
| | the risk of war, civil unrest,
      acts of terrorism or border disputes;                                                                                                                                                           
|  |                                                                                                                                                                                                                                      
| | laws and policies of the United
      Kingdom affecting foreign trade, taxation and investment; and                                                                                                                                  
|  |                                                                                                                                                                                                                                      
| | the possibility of being subject
      to the jurisdiction of foreign courts in connection with legal disputes
      and the possible inability to subject foreign persons to the jurisdiction
      of courts in the United Kingdom.

The group seeks to mitigate these risks by,
  amongst other things, focusing its international operations in areas where management
  believes that the existing government is favourably disposed towards foreign
  operators, but cannot give assurances that the current situation will not change
  in ways which have an adverse impact on its business. The principal focus for
  international operations is European Union accession countries where the environmental
  legislation is well understood.

Withdrawal of UK governmental support
  for renewable energy generation projects could lead to the group restricting
  its involvement in new renewable energy projectsAn element of the groups growth strategy
  is to develop and operate renewable energy generation projects. In February
  2003, the UK government confirmed its commitment to renewable energy in the
  Energy White Paper by setting an aspiration that 20 per cent of the UKs
  electricity sales should come from renewable sources by 2020. At present, the
  groups renewable operations are predominantly small-scale hydro generation
  and landfill gas schemes. The group intends to expand its project range to include
  both onshore and offshore wind capabilities in future years. Its ability to
  implement this strategy is influenced by continuing UK government support for
  green energy projects and associated financial incentives, combined with obtaining
  the necessary planning consents to develop the projects. The group continues
  to liaise with the UK government and the electricity regulator to assist in
  the development of strategies to incentivise electricity suppliers, distributors
  and generators to achieve the Energy White Paper target. Failure to obtain the
  necessary planning consents may result in the group restricting its involvement
  in new renewable green energy projects.

8United
  Utilities Annual Report on Form 20-F 2003

---






Rapid growth in business process outsourcing
  exposes the group to execution risk, which could adversely affect profitabilityThrough Vertex, the groups activities in
  business process outsourcing are expanding into new markets and territories
  and achieving increased segmental operating profit margins (2003: 6.1 per cent,
  2002: 5.0 per cent, 2001: 3.6 per cent) and an increased percentage of sales
  external to the group. This rapid growth exposes the business process outsourcing
  business to new business and transaction risks and, potentially, the risk of
  overtrading, whereby Vertex is unable to operate all its contracts to the standard
  required by its clients due to a lack of resources and suitably qualified personnel.
  Overtrading could lead to a loss of customers which, in turn, may cause profitability
  to suffer. During this growth phase, Vertex is also dependent on a small number
  of major contracts which account for a significant proportion of its turnover.
  One such contract was with TXU Europe, which went into administration in late
  2002. The business and certain assets of TXU Europe were acquired by Powergen
  Retail Limited. Powergen and Vertex have recently signed a memorandum of understanding,
  and based on this good progress is being made towards finalising a new contract.

Growth in the infrastructure management
  sector exposes the group to execution riskThe infrastructure management business is expanding
  into new markets. For example, it has recently been named as one of the preferred
  bidders to partner with Scottish Water to deliver its £1.8 billion capital
  programme. The delivery of that contract and others, both existing and future,
  will be achieved by exploiting the groups core infrastructure management
  skills. This growth exposes the business to new business and transition risks
  and, potentially, the risk of overtrading, any of which could lead to a loss
  of customers which, in turn, may cause profitability to suffer. It also exposes
  the licensed multi-utility operations business to the risk of dilution of its
  resources, which may cause that business to fail to achieve business plan targets,
  including profit targets.

Deficits in pension schemes may require
  the group to make additional contributions to the scheme which would reduce
  profitabilityThe group participates in a number of pension
  schemes, principally in the UK. The principal schemes are funded defined benefit
  schemes and the assets of the schemes are held in trust funds independent of
  group finances. As a consequence of the downturn in the equity markets and the
  lower interest rates at 31 March 2003, the schemes were estimated to have a
  combined post-tax deficit of £298.1 million. Consequently, the groups
  contributions to the schemes have been increased with effect from 1 April 2003
  as discussed in note 25 of the consolidated financial statements. Should long-term
  investment returns remain lower than the rate assumed by the actuaries in their
  pension scheme valuations, or interest rates reduce further leading to an increased
  deficit, the profitability of the group may be further adversely affected as
  the group will be required to increase its contributions to eliminate this under-funding.

Weak conditions in the telecommunications
  industry could continue and cause further losses in the groups telecommunications
  businessThe year ended 31 March 2003 has been characterised
  by sales growth diminishing in the telecommunications industry. Within this
  difficult environment, Your Communications continues to incur losses. There
  is a risk that the over-capacity in the telecommunications market may continue
  to impose price pressures for some time, leading to operating losses being incurred
  in the medium-term.

United Utilities Annual Report
  on Form 20-F 2003      9

---






ITEM 4  INFORMATION ON THE COMPANY

|UNITED UTILITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|The company was
      incorporated and registered in England and Wales on 1 April 1989 to provide
      wastewater and water services in north west England through its wholly owned
      subsidiary, United Utilities Water. In November 1995, the company acquired
      United Utilities Electricity, the distributor and, at that time, supplier
      of electricity in north west England, to form a multi-utility group. In
      August 2000, the company sold the electricity and gas supply businesses,
      and as a result it no longer has any significant exposure to the competitive
      generation and supply market.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|United Utilities
      PLC is a public limited company (with registration number 2366616), whose
      ordinary shares are listed on both the London Stock Exchange and the New
      York Stock Exchange (in the form of ADRs). Its registered office is at Dawson
      House, Great Sankey, Warrington WA5 3LW, England, telephone number: 00-44-1925-237000.                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|United Utilities
      PLC is the ultimate holding company of United Utilities Water and United
      Utilities Electricity. United Utilities Water and United Utilities Electricity
      are the regulated monopoly companies which own and operate the networks
      and associated infrastructure assets used to:                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|for homes and
      businesses in north west England, a region with a population of some 7 million.
      In the financial year ended 2003, United Utilities derived almost 90 per
      cent of its profit from continuing operations before non-operating items,
      goodwill amortisation, exceptional items, interest and tax from these regulated
      monopoly activities.                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|United Utilities
      strategy is to reduce costs in its regulated monopoly businesses, by exploiting
      the advantages of the common geography of its three utility networks, and
      to increase revenue in its two developing support services businesses, by
      seeking to exploit its core skills of infrastructure management and business
      process management by providing these services to others.                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|United Utilities
      also owns Your Communications, a telecommunications business.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|The group reports
      its results through four business segments. References to segmental operating
      profit/losses are defined as the profit from continuing operations before
      non-operating items, goodwill amortisation, exceptional items, interest
      and tax for a segment as shown in note 2 of the consolidated financial statements.
      Profit from continuing operations before non-operating items, goodwill amortisation,
      exceptional items, interest and tax is reconciled to profit before interest
      and tax in item 5.                                                                       

|                                         |         |    |                   |                                  |                            |  |                   | 
|---------------------------------------- | ------- | -- | ----------------- | -------------------------------- | -------------------------- |  | ----------------- | 
|                                         |         |    | Turnover          | Segmental
      operating profit | Net operating
      assets
|                                         |         |    |                   |                                  |                           
|Financial
      year ended 31 March 2003 |         |    | per cent
      of |                                  |                            |  | per cent
      of | 
|£m                                       | group   | £m | group             | £m                               | group                     
|                                         |         |    |                   |                                  |                            |  |                   | 
|Licensed multi-utility operations        | 1,230.1 |    | 58.7              |                                  | 502.8                      |  | 89.5              | 
|                                         |         |    |                   |                                  |                            |  |                   | 

Licensed multi-utility operations comprise
  the regulated monopoly activities of United Utilities Water (wastewater and
  water) and United Utilities Electricity (electricity distribution). These companies
  own the respective infrastructure network assets representing almost 95 per
  cent of the groups net operating assets at 31 March 2003. The businesses
  are capital intensive and are subject to both economic and environmental regulation.
  These businesses generate almost 90 per cent of the groups profit from
  continuing operations before non-operating items, goodwill amortisation, exceptional
  items, interest and tax, of which approximately three-is derived from wastewater
  and water and approximately one quarter from electricity distribution. Management
  of these businesses is divided on a functional basis; United Utilities Service
  Delivery manages the operation of the wastewater, water and electricity network
  assets, and United Utilities Customer Sales manages the customer relationship
  activities involved in supplying wastewater and water services.

|                          |  |       |  |      |  |      |  |      |  |      |  |     | 
|------------------------- |  | ----- |  | ---- |  | ---- |  | ---- |  | ---- |  | --- | 
|Infrastructure management |  | 397.1 |  | 18.9 |  | 58.8 |  | 10.5 |  | 82.8 |  | 1.2 | 
|                          |  |       |  |      |  |      |  |      |  |      |  |     | 

United Utilities Contract Solutions manages
  the groups infrastructure management business, previously known as asset
  management services. It seeks to exploit United Utilities infrastructure
  management skills by providing a service to clients in managing their infrastructure
  assets. As a result, these activities employ only a limited amount of capital,
  representing 1.2 per cent of the groups net operating assets at 31 March
  2003. In addition it owns the groups interest in non-regulated utility
  assets.

|                             |  |       |  |      |  |      |  |     |  |       |  |     | 
|---------------------------- |  | ----- |  | ---- |  | ---- |  | --- |  | ----- |  | --- | 
|Business process outsourcing |  | 307.6 |  | 14.7 |  | 18.8 |  | 3.3 |  | 121.6 |  | 1.8 | 
|                             |  |       |  |      |  |      |  |     |  |       |  |     | 

Vertex manages the groups business process
  outsourcing activities, previously known as customer management outsourcing.
  It seeks to exploit United Utilities customer management skills by providing
  a service to manage its clients customers under contract. These activities
  employ only a limited amount of capital, representing 1.8 per cent of the groups
  net operating assets at 31 March 2003.

|                   |  |       |  |     |  |        |  |       |  |       |  |     | 
|------------------ |  | ----- |  | --- |  | ------ |  | ----- |  | ----- |  | --- | 
|Telecommunications |  | 161.7 |  | 7.7 |  | (19.5) |  | (3.5) |  | 197.1 |  | 2.9 | 
|                   |  |       |  |     |  |        |  |       |  |       |  |     | 

Your Communications manages the groups
  telecommunications activities. These encompass the provision of voice, basic
  and advanced data communication services to the public sector, and small and
  medium-sized corporate customers, predominantly in central and northern England.
  Construction of the network infrastructure is now complete. These activities
  employ only a limited amount of capital, representing 2.9 per cent of the groups
  net operating assets at 31 March 2003.

Note:Financial
  data for the year ended 31 March 2003 has been extracted from note 2 of the
  consolidated financial statements, using the definitions set out therein. Full
  analysis for the last three years is contained within the note. Percentages
  are calculated based on the gross totals disclosed in note 2. In the above table,
  segmental operating profit as a per cent of group is calculated based on segmental
  operating profit/losses divided by consolidated profit from continuing operations
  before non-operating items, goodwill amortisation, exceptional items, interest
  and tax. Turnover and per cent of group turnover are stated before inter-business
  eliminations.

10United
  Utilities Annual Report on Form 20-F 2003

---






LICENSED MULTI-UTILITY OPERATIONS

United Utilities Service Deliverymanages the operation of the licensed
  wastewater and water network assets owned by United Utilities Water, and the
  electricity distribution assets owned by United Utilities Electricity, in north
  west England. These businesses involve the removal and treatment of wastewater
  from, and the treatment and distribution of around 2 billion litres of water
  a day to 2.9 million homes and businesses, and the annual distribution of approximately
  25,400 GWh of electricity to more than 2 million consumer premises.

These activities are:

| | Capital intensive At privatisation in 1989,
      the wastewater and water infrastructure inherited by United Utilities Water
      was in need of substantial repair and replacement. Further improvements
      have been required in order to comply with applicable UK and European Union
      environmental and drinking water quality regulations. Capital expenditure
      relating to wastewater and water in the financial year 2003 was £590.6
      million (2002: £401.7 million, 2001: £372.7 million) with 45.4
      per cent relating to the wastewater network (including sludge treatment
      and disposal), 47.0 per cent to the water network, and 7.6 per cent to quality
      and efficiency. Capital expenditure for the financial year 2003 relating
      to electricity distribution was £122.3 million (2002: £104.4
      million, 2001: £110.9 million), 32.1 per cent was load related (enabling
      new connections to be made to the network and increasing the amount of electricity
      able to be carried), 60.8 per cent was non-load related (for example replacing
      assets due to statutory obligations, the replacement of faulty or ageing
      equipment) and 7.1 per cent was non-operational (such as information technology
      spend).
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | Subject to economic
      regulation In general, these
      businesses are monopolies and are subject to incentive-based economic regulation
      which imposes caps on increases in customer prices, rewards efficiency and
      high standards of customer service and penalises inefficiency and poor standards
      of customer service. The economic regulation of wastewater and water, and
      economic regulation of electricity distribution are described in more detail
      below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | Subject to environmental
      regulations In the five-year
      period to 31 March 2005 the group plans to spend £1.9 billion on environmental
      improvements across north west England. During the financial year ended
      31 March 2003, the group made environmental improvements costing £532.0
      million, including £178.0 million on improving standards for wastewater
      and water treatment works and £64.0 million on resolving unsatisfactory
      sewer outflows. The environmental regulation of wastewater and water, and
      the environmental regulation of electricity distribution, are described
      in more detail below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

The group cannot increase demand for its licensed
  multi-utility operations within its licensed area and, as detailed below, the
  groups licensed multi-utility businesses are restricted in their ability
  to increase prices. The principal strategy for these businesses is to control
  costs and exploit the advantages of owning and operating three utility networks
  with a common geography.

Wastewater collection, treatment and disposal
  operationsIn accordance with its licence, United Utilities
  Water is responsible for the collection, treatment and disposal of domestic
  wastewater, trade effluent (non-domestic wastewater) and surface water in north
  west England. Surface water, mainly from groundwater infiltration and highway
  drainage, forms a major part of the wastewater which United Utilities Water
  must treat. Where practicable, separate sewers are provided for wastewater and
  surface water, in order that uncontaminated surface water may be piped directly
  to a watercourse.

United Utilities Waters wastewater treatment
  works provide a range of treatments. These include primary, secondary and tertiary
  treatment involving a number of physical, chemical and biological processes.
  Treated liquid final effluent is discharged into rivers, estuaries or via sea
  outfalls. A by-product of the treatment of wastewater is sewage sludge. Sewage
  sludge is also treated by a range of physical, chemical and biological processes.
  Currently, around two thirds of the end product is recycled to agricultural
  land as a soil conditioner or used in land reclamation and one third is incinerated
  or disposed to landfill. However, due to the government designating nitrate
  vulnerable zones (i.e. zones that are subject to restrictions on the amount
  of nitrogen that can be applied to agricultural land) over 55 per cent of England,
  the amount of end product that is recycled to agricultural land is likely to
  decrease quite significantly in the short to medium-term, while the amount of
  end product that is incinerated is expected to increase.

United Utilities Waters wastewater operations
  involve owning and managing assets which include:

| | 39,910 kilometres of sewers;             
|- | -----------------------------------------
| | 1,735 pumping stations;                  
| | 200 storage tanks;                       
| | 3,255 combined sewer overflows;          
| | 600 wastewater treatment works;
      and
| | 78 sludge treatment facilities.          

During the financial year ended 31 March 2003,
  a further 13.7 kilometres of sewers were refurbished, 27.2 kilometres of sewers
  were replaced, and 175 unsatisfactory overflows closed or improved to help improve
  river water quality.

Water supply operations, treatment and
  distributionUnited Utilities Water obtains water from various
  sources including reservoirs, rivers and aquifers. United Utilities Water enjoys
  the advantage of having the majority of its direct reservoirs in the uplands
  of the Lake District, an area of north west England which enjoys a higher than
  average annual rainfall for England, and the Pennine hills on the eastern edge
  of north west England, while the major population centres it serves are in the
  lowlands of Greater Manchester, Lancashire and Cheshire. Merseyside, the other
  major population centre served by United Utilities Water, receives its water
  supply principally from the River Dee and Lake Vyrnwy in north Wales. A large
  proportion of water supplied by United Utilities Water flows freely by gravity
  and does not need to be pumped. However, the nature of the water catchments,
  being peaty moorlands or coal measure strata, leads to the need for improved
  treatment to satisfy all regulatory and quality standards.

All water supplied receives treatment with
  the objective of meeting the appropriate standards enforced by the Drinking
  Water Inspectorate, the government regulator of drinking water quality in England
  and Wales. The type of treatment varies from disinfection only, for some borehole
  sources, to more complex processes using coagulation, clarification and filtration
  and activated carbon absorption and ozonation for certain waters. United Utilities
  Water also employs a number of new treatment processes including membrane microfiltration.
  United Utilities Water monitors water quality by analysing samples regularly
  for both microbiological and chemical parameters. In the calendar year 2002,
  the business continued to improve quality, with 99.81 per cent of drinking water
  samples meeting the quality standards at customers taps compared with
  99.78 per cent the previous year.

The treated water is delivered to the end customer
  through a network of aqueducts, trunk and distribution mains, service reservoirs
  and water towers.

United Utilities Annual Report
  on Form 20-F 2003      11

---






These operations involve United Utilities Water
  owning and managing assets which include:

| | 192 raw water impounding reservoirs;                                
|- | --------------------------------------------------------------------
| | 1,203 kilometres of raw water
      aqueducts;                      
| | 155 water treatment works;                                          
| | 1,144 kilometres of treated
      water aqueducts;                  
| | 473 service reservoirs and
      water towers storing treated water;
| | 609 pumping stations; and                                           
| | 39,455 kilometres of trunk
      and distribution mains.            

Key outputs from the capital investment programme
  during the financial year ended 31 March 2003 included the refurbishment of
  a further 920 kilometres of old water mains and the cleaning of 659 kilometres
  of mains. Some 19,500 properties were given new water supply pipes to replace
  old lead pipes. Water meters were also installed in around 35,200 domestic properties
  under the free meter scheme.

Economic regulation of wastewater and
  waterThe UK government awarded licences for the provision
  of wastewater services and water supply in 1989. The licences continue in force
  for an indefinite period, subject to potential termination rights as set out
  below. United Utilities, through its subsidiary United Utilities Water, holds
  the licence for an area of north west England comprising 2.9 million homes and
  businesses.

The Water Industry Act 1991 (the Water
  Act) requires companies engaged in water supply or wastewater services
  in England and Wales to be licensed. Economic regulation pursuant to these licences
  is the responsibility of the Director General of Water Services (the water
  regulator), supported by the Office of Water Services (Ofwat).
  The water regulator also exercises powers under competition legislation, most
  significantly the Competition Act 1998.

The water regulator is an independent public
  servant appointed for a fixed term by the Secretary of State for Environment,
  Food and Rural Affairs. This is in contrast to regulators in some states of
  the United States who hold public office and are required to stand for public
  election. The current water regulator, Philip Fletcher, was appointed to the
  post on 1 August 2000 for a fixed term of five years. Ofwat is a non-ministerial
  government department.

The water regulator must comply with the statutory
  duties laid down in the Water Act. He may receive guidance from the UK government
  in areas such as social and environmental policy. He is required to carry out
  his statutory duties and, in the performance of these duties, is required to
  exercise judgement. He is not subject to direction about what those judgements
  should be and is independent of government ministers. He may only be removed
  from post for incapacity or misbehaviour.

The primary duties of the water regulator are
  to carry out his powers and duties in the manner he considers best calculated
  to ensure that:

| | the functions of a water and
      sewerage company, as specified in the Water Act, are properly carried out;
      and           
|- | ----------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                   
| | companies are able to finance
      their functions, in particular by securing a reasonable rate of return on
      their capital.

The secondary duties of the water regulator
  are, subject to his primary duties, to carry out his powers and duties in the
  manner he considers best calculated to ensure that:

| | the interests of customers
      are protected;                   
|- | ------------------------------------------------------------------
|  |                                                                   
| | companies are encouraged to
      operate efficiently; and        
|  |                                                                   
| | a framework exists to facilitate
      competition where possible.

The licences impose conditions on licensees
  which the water regulator enforces. Licence conditions can be modified by the
  water regulator with the licensees agreement or following reference by
  the water regulator to the Competition Commission on public interest grounds.
  The licence may be terminated on 25 years notice, with more immediate
  revocation in certain specified circumstances (including, for example, failure
  to comply with an enforcement order made by the water regulator).

In practice, many regulatory issues arising
  between licensees and the water regulator are settled without the need to resort
  to formal proceedings. However, where the water regulator is satisfied that
  a licensee is in breach of the conditions of its licence, he has powers to secure
  compliance by means of an enforcement order. Failure to comply with an enforcement
  order can lead to revocation of the licence. Alternatively, where actual or
  likely contravention of an enforcement order (or of a licensees principal
  statutory duty under the Water Act) is so serious as to make it inappropriate
  for the licensee to continue to hold its licence, the water regulator may, with
  the Secretary of States consent, apply to the High Court for the appointment
  of a special administrator to run the company until arrangements can be made
  for a new company to carry on the licensed activities. A special administrator
  may also be appointed where the licensee is, or is likely to be, unable to pay
  its debts.

United Utilities Waters licence restricts
  its conduct in a number of ways. These restrictions include prohibitions on
  discrimination between customers, restrictions on the declaration and payment
  of dividends, and on cross-subsidies between United Utilities Water and associated
  companies. Any transactions between United Utilities Water and an associated
  company are required to be at arms length. Any such transactions
  would undergo a process of market-testing, or involve the associate being paid
  prices no greater than the cost incurred in providing the goods and services
  plus a reasonable return on any capital employed.

In February 2003, the UK government published
  legislative proposals under the Water Bill. As currently drafted, these are
  intended to update the framework for licensing relating to the abstraction of
  raw water, promote greater water conservation and planning for the future by
  water companies, and help to build a more stable and transparent regulatory
  environment. The Water Bill proposes to increase competition in the water industry
  in England and Wales, by including the licensing of new entrants into the market
  for production (water abstraction and treatment) and retail activities, and
  provision for competitors to share the current networks operated by the incumbent
  water companies. Competition for non-domestic users is proposed for consumers
  with an annual consumption of not less than 50 megalitres compared with the
  current threshold of 100 megalitres, which has applied since August 2000.

United Utilities Water has developed and published
  policies which allow other companies access to its water networks in order to
  supply customers and to self-lay new water mains and service pipes. These policies
  are, in general, compliant with guidance provided by Ofwat and aim to minimise
  the risk of infringement of the Competition Act 1998.

12United
  Utilities Annual Report on Form 20-F 2003

---






Following a general move away from having single
  heads of regulatory bodies, the Water Bill includes provisions to establish
  a regulatory board to be known as the Water Services Regulation Authority (the
  water authority) which will replace the water regulator. The existing
  duties and functions of the water regulator will be transferred to the water
  authority with the existing water regulator expected to assume the role of chairman
  of the regulatory board. The chairman will continue to be appointed for a fixed
  term and may only be removed from his post for incapacity or misbehaviour. The
  existing secondary duty of the water regulator to ensure that the interests
  of customers are protected will become a primary duty for the water authority.
  A new independent Consumer Council for Water will be established to replace
  the water regulators Customer Service Committees. To promote regulatory
  consistency the UK government has stated its intention not to implement either
  the water authority or the Consumer Council for Water until after completion
  of the next periodic review of water and wastewater charges in 2005.

The water regulator regulates wastewater and
  water charges by capping the average increase in charges which a company can
  impose in any year. The water regulator conducts a periodic review and sets
  price caps every five years. This price cap is set by reference to inflation
  as measured by the retail price index in the UK (RPI) plus an adjustment factor
  known as K which is specific for each company and which can vary
  for each year of the review period. The size of a companys K
  factor (which can be positive, negative or zero) reflects the scale of its capital
  investment programme, its cost of capital, its operational and environmental
  obligations together with the scope for it to improve its efficiency. The last
  periodic review took effect in April 2000 and covered the period until March
  2005. For the remainder of this current review period United Utilities Waters
  prices are able to increase, in real terms (that is, in addition to the general
  movement in prices as measured by the index of retail prices), by up to 4.0
  per cent in 2003/04; and 4.5 per cent in 2004/05.

Unlike rate of return economic
  regulation, such as exists in many states of the United States, price
  cap regulation in the UK is performance based.

Companies are incentivised to be efficient
  both in terms of their operating costs and in the implementation of their capital
  expenditure programme. The benefit of any efficiency savings achieved through
  effective management is retained by the companies for a period of five years,
  after which time the benefit is passed to customers. The cost of any under-performance
  due to poor management is borne by the companies. Companies are also incentivised
  to provide a high quality of service and penalised if they provide a poor quality
  of service by means of an adjustment to the K factor at the subsequent
  price review.

In November 2002, Ofwat released its new financial
  model, Aquarius 3, together with a rule book, which will be used
  to calculate the K factors in determining prices for the next review
  period and beyond. (The model is available from Ofwat on the payment of a fee.)

Unexpected costs or savings arising from changes
  in certain regulatory assumptions during a review period are recorded and agreed
  by the company and the water regulator. This process, known as logging
  up and down, allows prices to be adjusted up or down at the next periodic
  review to compensate for the unexpected change. In addition, where the change
  is material, the company can request, and the water regulator can instigate,
  a re-setting of its price limit during the five-year period, known as an interim
  determination of K. Furthermore, companies licences include a shipwreck
  clause which allows companies price limits to be revised when events beyond
  their control have a significant effect on their costs or revenues. This clause
  was originally asymmetric, providing companies with protection from adverse
  effects. In 1994 it was modified to make it symmetric, whereby should the company
  benefit to a substantial effect from an event which was not attributable to
  prudent management action, it could lead to an adjustment to price limits. At
  the time United Utilities Water opted for the clause to be removed, but has
  recently requested that it be reinstated in its licence.

The price caps for the next periodic review,
  covering the period 2005 to 2010, will be determined by the water regulator
  in November 2004. Following a consultation process, Ofwat published its approach
  to the next price review, in a document entitled Setting water and sewerage
  price limits for 2005-10: Framework and approach. In summarising the approach
  the water regulator commented that it was too early to forecast what the effect
  of the next price review would be on customers bills. The water regulator
  identified that the scale of each licensees capital expenditure programme,
  the need to ensure that companies could raise money from the markets and the
  scope for efficiency would all have an important bearing. He confirmed that
  he intends to seek to ensure that customers face no higher burden than is necessary,
  but acknowledged that it would be unwise, in the light of likely pressures on
  most companies, for customers to expect real term reductions in bills from the
  new price limits.

If United Utilities Water does not accept the
  proposals when the water regulator announces the final determination in November
  2004, the water regulator must refer the matter to the Competition Commission
  for determination.

Environmental regulation of wastewater
  and waterThe wastewater and water industry in the UK is
  subject to substantial domestic and European Union regulation, placing significant
  statutory obligations on United Utilities Water with regard, amongst others,
  to the quality of treated water. European examples include the Drinking Water
  Directive, the Bathing Water Directive and the Urban Wastewater Treatment Directive.

European Union directives in the field of water
  and wastewater are implemented by applicable UK laws and regulations, including
  the Water Supply (Water Quality) Regulations, the Water Act 1989, the Water
  Industry Act 1991, the Water Resources Act 1991, the Control of Pollution Act
  1974 and the Environmental Protection Act 1990.

All water and wastewater companies have a general
  duty to exercise their powers to conserve and enhance natural beauty and to
  promote the efficient use of water. Environmental regulation is the responsibility
  of the Secretary of State for Environment, Food and Rural Affairs together with:

| | the Environment Agency, which
      is responsible for conserving and redistributing water resources and securing
      the proper uses of those resources, including licensing of water abstraction.
      The Environment Agency is also responsible for the regulation of discharges
      to controlled waters, including discharges from wastewater treatment works;                                                                                                                                                                                                                                                 
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | the Drinking Water Inspectorate,
      which enforces drinking water quality standards; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | English Nature, which is responsible
      for the protection of designated sites for nature conservation e.g. Sites
      of Special Scientific Interest. United Utilities has 19,000 hectares of
      such sites in its ownership. There is a statutory requirement to manage
      these sites to conserve or improve biodiversity. As a result of new UK government
      targets to improve the quality of these sites, English Nature is seeking
      improvements to approximately 50 per cent of the sites within United Utilities
      ownership. Funding will be sought through the periodic review process.

United Utilities Annual Report
  on Form 20-F 2003      13

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United Utilities Water expects regulatory regimes
  in the field of water and wastewater to continue to evolve and tighten. Examples
  of such regulatory and legislative developments include the following:

| | The Water Supply (Water Quality)
      Regulations 2000, which transpose into UK legislation the Drinking Water
      Directive and, in particular, introduce more stringent lead standards (25
      micrograms per litre from 25 December 2003 and 10 micrograms per litre on
      and after 25 December 2013) which will oblige water undertakers to carry
      out improvements to treatment works and distribution systems;                                                                                                                                                                       
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | The Water Framework Directive,
      which must be transposed into UK legislation by December 2003 and which
      requires the UK government to establish comprehensive river management plans
      and to implement measures necessary to prevent deterioration in the ecological
      status of water bodies and achieve good water status by December 2015 at
      the latest. The Directive is likely to impact upon sewerage undertakers
      by requiring improvements in point source discharges; and                                                                                        
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | The Water Bill which, if enacted,
      will make significant changes to the abstraction licensing system. The Water
      Bill proposes: placing water undertakers under a duty to promote water conservation
      when carrying out their functions; making new abstraction licences time
      limited; requiring water undertakers to publish drought plans; reducing
      the time period after which unused abstraction licences can be revoked or
      varied without compensation; and introducing a right to claim damages against
      abstractors whose abstraction causes loss or damage.

United Utilities Water is taking steps to achieve
  the more stringent lead standards required by the Water Supply (Water Quality)
  Regulations 2000 that come into effect on 25 December 2003 and 2013. In order
  to minimise lead levels, United Utilities Water installed additional phosphate
  dosing and pH control assets, at a cost of £17.0 million in the period
  1 April 2000 to 31 March 2003, and is currently optimising plumbosolvency control
  treatment. Despite these steps, in some water supply zones United Utilities
  Water will not achieve the two lead standards unless lead pipes are replaced.
  It expects to replace approximately 363,000 of its lead pipes by 2013 and predicts
  that this will enable it to achieve levels acceptable to the Drinking Water
  Inspectorate. Approximately 50,000 of these pipes are likely to be replaced
  during 2003/05 at an estimated cost of £20.0 million.

There are ongoing infringement proceedings
  between the European Commission and the United Kingdom regarding the implementation
  of the Urban

Wastewater Treatment Directive. The European
  Commission has sent a reasoned opinion to the United Kingdom for failure to
  correctly designate and to review sensitive and less sensitive areas. The reply
  given by the United Kingdom is under technical assessment. The European Commission
  believes that the United Kingdom has not taken all measures needed to reduce
  the nutrients in wastewater to remedy problems in sensitive areas. Depending
  on the outcome of these deliberations this could lead to the designation of
  some of the Irish Sea as a sensitive area. This in turn could lead to requirements
  being placed upon United Utilities Water to reduce the levels of some nutrients
  in discharges from many of its wastewater treatment facilities which feed into
  the Irish Sea.

Pursuant to the European Union Bathing Water
  Directive, the objective of which is to protect public health and the environment
  from faecal pollution at bathing waters, the Environment Agency samples and
  analyses certain designated bathing waters around the UK coast for the presence
  or absence of various bacteria. United Utilities Waters programme of wastewater
  network and treatment projects relating to its operational facilities to improve
  the quality of, and meet the required standards for, bathing waters in north
  west England continues. 19 wastewater treatment works already provide ultra-violet
  disinfection. A further six works need to be upgraded to enable them to provide
  ultra-violet disinfection. This is expected to happen between August 2003 and
  January 2005, at an estimated cost of £15.6 million.

The European Union Urban Wastewater Treatment
  Directive, which was transposed into English law by the Urban Wastewater Treatment
  Regulations, requires improvements in the treatment of wastewater discharges,
  in particular, the provision of secondary treatment. United Utilities Water
  continued to make progress towards satisfying the European Union Urban Wastewater
  Treatment Directive for wastewater treatment works serving agglomerations with
  a population equivalent of more than 2,000. All such works now provide secondary
  treatment, with the exception of two, one due for completion in 2004 and one
  that will close in late 2005.

There are proposals at the European level which,
  if progressed and adopted, will introduce a new Bathing Water Directive with
  more stringent microbiological standards, and will amend the Directive on the
  use of sewage sludge on agricultural land so as to introduce tighter limits
  for metals in sludge.

In addition, a recent decision of the English
  Court of Appeal in the case ofMarcic
  v Thames Water Utilities Limitedmay increase
  the likelihood of United Utilities Water being sued for damages in nuisance
  and for breach of the Human Rights Act 1998 when its sewers cause internal and/or
  external flooding to customers properties. Thames Water Utilities Limited
  is appealing to the House of Lords against the Court of Appeals decision.
  The appeal is expected to be heard in October 2003.

As part of the five-year periodic review of
  prices, the water regulator will take into consideration the capital investment
  programme that United Utilities will need to invest in order to comply with
  environmental legislation. See the previous section Economic regulation
  of wastewater and water.

Electricity distributionUnited Utilities Electricity owns the distribution
  network which carries electricity from the National Grid along power lines to
  consumers premises on behalf of the electricity supply companies who are
  its customers. The income derived from the distribution business depends in
  part on changes in the demand for electricity by consumers in north west England.
  Demand for electricity is affected by such factors as growth and movements in
  population, social trends, economic and business growth or decline, changes
  in the mix of energy sources used by consumers, weather conditions, energy efficiency
  measures and other factors. The electricity distribution business is a regulated
  business in which the average increase in charges which a company may impose
  in any year is capped by the electricity regulator (as described in more detail
  below). Accordingly, profit derived from the distribution business of United
  Utilities Electricity also depends on efficiency, achieved by reducing and controlling
  costs, and providing high standards of service.

United Utilities Electricity owns and manages
  assets which include:

| | 13,700 kilometres of overhead
      lines;                                    
|- | ------------------------------------------------------------------------------
| | 44,600 kilometres of underground
      cables; and                            
| | 17,700 ground mounted sub-stations
      and 16,600 pole mounted transformers.

Key performance measures for the business relate
  to quality of supply. Electricity supplies were available for 99.99 per cent
  of the time during the financial year ended 2003, sustaining the businesss
  high level of performance in managing the network to maintain constant supplies
  for consumers. All the key regulatory overall standard targets were achieved.

14United
  Utilities Annual Report on Form 20-F 2003

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The average number of interruptions per 100
  consumers was 66.5 compared with the regulatory target for the year of 56.4.
  The current years figures have been affected by a small number of high
  impact events. Plans are in place to improve performance to target levels. The
  average number of minutes for which consumers were without supply was 67.7 compared
  with the regulatory target for the year of 68.2 minutes.

Economic regulation of electricity
  distributionThe UK government awarded electricity licences
  in 1990. The licences continue in force for an indefinite period, subject to
  potential termination rights as set out below. United Utilities, through its
  subsidiary United Utilities Electricity, holds an electricity distribution licence
  which authorises it to distribute electricity throughout Great Britain. Under
  that licence United Utilities distributes electricity across its distribution
  system covering an area in north west England comprising over 2 million consumer
  premises.

The electricity industry in Great Britain is
  regulated under the Electricity Act 1989 (the Electricity Act) and
  the Utilities Act 2000 (the Utilities Act) by the Gas and Electricity
  Markets Authority (the electricity regulator). The electricity regulator
  governs and acts through the Office of Gas and Electricity Markets (Ofgem).
  The Electricity Act, as amended by the Utilities Act, requires all companies
  distributing electricity in Great Britain to be licensed unless they are covered
  by an exemption. Economic regulation pursuant to these licences is the responsibility
  of the electricity regulator. The electricity regulator also exercises powers
  under UK competition legislation, including the Competition Act 1998.

The electricity regulator comprises a board,
  led by a chairman who is an independent public servant appointed for a fixed
  term by the Secretary of State for the Department for Trade and Industry. This
  is in contrast to regulators in some states of the United States who hold public
  office and are required to stand for public election. The current chairman,
  Callum McCarthy, steps down from the post in October 2003 when he will be replaced
  by John Mogg. Ofgem is a non-ministerial government department.

The electricity regulator must comply with
  the statutory duties laid down in the Electricity Act as amended by the Utilities
  Act. In doing so the electricity regulator may receive guidance from the UK
  government in areas such as social and environmental policy. In complying with
  its statutory duties the electricity regulator is required to exercise judgement.
  The electricity regulator is not subject to direction as to what that judgement
  should be and is independent of government ministers. The chairman of the electricity
  regulator may only be removed from post for incapacity or misbehaviour.

The principal objective of the electricity
  regulator is to protect the interests of consumers wherever appropriate, by
  promoting effective competition. In carrying out this objective the electricity
  regulator is required to have regard to:

| | the need to secure that all
      reasonable demands for electricity are met; and  
|- | -----------------------------------------------------------------------------------
|  |                                                                                    
| | the need to secure that licence
      holders are able to finance their activities.

The licence contains various conditions regulating
  the conduct of the business. Licence conditions can be modified by the electricity
  regulator either with the agreement of the licensee (or, in the case of standard
  conditions, with the agreement of the requisite proportion of licensees) or
  following an investigation by the Competition Commission on public interest
  grounds. The licence can be terminated on 25 years notice given by the
  Secretary of State. The licence can also be revoked in certain circumstances,
  including where the licensee fails to comply with an enforcement order made
  by the electricity regulator.

In practice, many regulatory issues arising
  between licensees and the electricity regulator are settled without the need
  to resort to formal proceedings. However, where the electricity regulator is
  satisfied that a company is in breach of the terms of its licence, it has powers
  to secure compliance by means of an enforcement order. If a company does not
  comply with the order, the electricity regulator can revoke the licence.

The licence imposes restrictions. In particular,
  the disposal of any part of the distribution system is restricted; distribution
  businesses must provide services on non-discriminatory terms. Cross-subsidies
  to or from United Utilities Electricitys licensed business are prohibited
  and the board of directors of United Utilities Electricity must provide a certificate
  of compliance before declaring dividends or making distributions. In general,
  electricity distribution licences also contain strict provisions to maintain
  and ring-fence the financial and management resources of the licensed businesses.

The electricity regulator regulates electricity
  distribution charges by capping the average increase in charges which a company
  can impose in any year. The electricity regulator conducts a periodic review
  and sets price caps every five years. This price cap is set by reference to
  inflation as measured by the retail price index in the UK (RPI) plus an adjustment
  factor known as X which is specific for each company and which can
  vary for each year of the review period. The size of a companys X
  factor (which can be positive, negative or zero) reflects the scale of its capital
  investment programme, its cost of capital and its operational and environmental
  obligations together with scope for it to improve its efficiency. The last periodic
  review took effect in April 2000 and covered the period until March 2005. For
  the remainder of this current review period, United Utilities Electricitys
  revenue which is permitted under the price cap must reduce in real terms, after
  taking into account inflation, by at least 3.0 per cent in 2003/04 and 3.0 per
  cent in 2004/05.

Unlike rate of return economic
  regulation, such as exists in many states of the United States, price
  cap regulation in the UK is performance based. Companies are incentivised
  to be efficient both in terms of their operating costs and in the implementation
  of their capital expenditure programme. The benefit of any efficiency savings
  achieved through effective management is retained by the companies for a period
  of up to five years, after which time the benefit is passed to customers. The
  cost of any under-performance due to poor management is borne by the companies.
  Companies are also incentivised to provide a high quality of service and penalised
  if they provide a poor quality of service through the price review process,
  by means of an adjustment at the subsequent price review.

United Utilities Electricity is required to
  maintain certain standards relating to the quality of supply of electricity
  in its licence area. These standards, which comprise both guarantees at the
  individual customer level and overall standards based on company wide performance,
  are subject to monitoring and compliance audits. Failure to meet guaranteed
  standards will result in a prescribed compensation payment to the customer concerned.
  In addition, the electricity regulator is able to impose fines on companies
  who fail to achieve either the guaranteed or overall standards or who are in
  breach of other licence obligations.

The introduction by Ofgem of the new incentive
  scheme in April 2002 provided greater focus on three key areas of service: number
  of interruptions to customers supplies; length of these interruptions;
  and quality of telephone response provided to customers. The scheme, which runs
  until the start of the next price review period in April 2005, provides for
  penalties (capped at 2 per cent of annual revenues) for companies failing to
  meet pre-specified targets and the incentive of additional revenue in the final
  year of the scheme for companies which exceed their targets. Under this scheme
  United Utilities Electricity may be penalised for missing Ofgems customer
  interruptions target in 2002/03. The net effect of any penalties or rewards
  will be determined during the next price review process.

The price caps for the next periodic review,
  covering the period 2005 to 2010, will be determined by the electricity regulator
  in late 2004. Initial consultation by the electricity regulator is expected
  shortly.

United Utilities Annual Report
  on Form 20-F 2003      15

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If United Utilities Electricity does not accept
  the proposals when the electricity regulator announces the final proposal in
  late 2004, the electricity regulator can refer the matter to the Competition
  Commission for determination.

Environmental regulation of electricity
  distributionAll electricity companies have a general duty
  under the Electricity Act to take into account the conservation of natural features
  of beauty and other items of particular interest when they formulate proposals
  for development. United Utilities Electricity may be required to carry out an
  environmental assessment when it intends to lay cables, construct overhead lines
  or carry out any other development in connection with its licensed activities.

The possibility that electric and magnetic
  fields (EMFs) may cause adverse health effects has been a topic of debate and
  research for many years. Over the last 20 years, major research programmes throughout
  the world have explored whether EMFs have an adverse impact on health. A large
  epidemiological study  the UK Childhood Cancer Study  reported in
  December 1999 that there was no evidence that exposure to magnetic fields
  associated with the electricity supply in the UK increases risk for childhood
  leukemia, cancers of the nervous system, or any childhood cancer. International
  bodies such as the World Health Organisation and the International Agency for
  Research on Cancer and, in the United Kingdom, the National Radiological Protection
  Board (NRPB) have investigated this issue and have concluded that there is no
  established causal link between EMFs and ill health. The NRPB is the UK body
  with statutory responsibility for advising on EMFs.

In March 2001, the NRPB published a review
  of the state of the science and concluded for the vast majority of children
  in the UK there is now considerable evidence that the EMF levels to which they
  are exposed do not increase the risk of leukemia or other malignant disease.
  However, it also noted that the possibility remains that intense and prolonged
  exposure to magnetic fields can increase the risk of leukemia in children but
  the epidemiological evidence is currently not strong enough to justify a firm
  conclusion that such fields cause leukemia in children. In the spirit of the
  precautionary approach, the NRPB published in May 2003 a consultation document
  on how to limit exposure to EMFs and, in particular, on whether the UK should
  adopt the more stringent exposure guidelines of the International Commission
  on Non-Ionizing Radiation. United Utilities Electricity, in line with other
  Electricity Association member companies, carries out its activities in accordance
  with NRPB guidance. The Electricity Association is the trade association for
  electricity companies in the United Kingdom. The Electricity Association and
  its member companies are committed to responsible behaviour in the light of
  the scientific evidence, including considering any appropriate precautionary
  actions. United Utilities Electricity believes that present evidence does not
  justify any change in the electricity industrys operating practices, or
  the everyday utilisation of electricity by its customers, but United Utilities
  Electricity keeps this under review and looks to the NRPB and UK government
  for advice on the issue.

United Utilities Customer SalesThe business focuses on the customer relationship
  activities involved in supplying water, wastewater and related products and
  services to homes and businesses in north west England. It manages the sales,
  billing, cash collection and debt management activities and systems for 2.9
  million domestic and business customers and has responsibility for improving
  the quality of service and the range of services provided to these customers.
  United Utilities Customer Sales aim is to continuously improve the existing
  level of customer satisfaction, and to create value from its customer relationships.
  As the Water Act restricts the ability of a licensed utility to terminate services
  to customers for non-payment, customer relationship management is an important
  activity.

United Utilities Customer Sales has continued
  to develop its portfolio of services during the year by expanding the range
  of additional products and services offered to domestic customers, including
  piloting the provision of a fixed-line telephony service in conjunction with
  Your Communications.

At present, United Utilities Customer Sales
  supplies around 16 per cent of the UK large-user market (customers consuming
  more than 250 megalitres per annum). In the competitive industrial market, its
  activities include onsite treatment of wastewater and water at customers
  premises, advice on controlling leakage at customers premises and recycling
  of water. It also has responsibility for managing the ongoing relationships
  with these customers and for growing the customer base.

INFRASTRUCTURE MANAGEMENTUnited Utilities Contract Solutionshas three main businesses:

| | Operations Management which develops and operates
      contracts in selected markets based on the groups core infrastructure
      management skills;
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                         
| | Green Energy which develops and operates
      renewable energy generation projects; and                                                               
|  |                                                                                                                                                         
| | Network Services which provides a one-stop
      service in the multi-utility metering and connections market.                                         

Operations ManagementThe business develops and operates contracts
  in selected utility markets and serves over 10 million people in the UK and
  overseas. It has a focused approach to pursuing opportunities, with the objective
  of securing long-term operational sources of income and investment returns while
  limiting overall financial exposure. Prior to the approval of bids, a full risk
  analysis is carried out to assess the risks associated with a project and to
  ensure that they were mitigated to the appropriate extent, dependent on expected
  returns and the expected degree of control over the risk.

The main areas of activity include:

| | Wales
      The business secured a four-year, £450 million contract which started
      in April 2001 to operate and maintain Welsh Waters water and wastewater
      services to around 1.2 million homes and 100,000 business customers. Under
      the terms of the contract, 1,400 staff transferred to United Utilities.
      This contract makes United Utilities, as manager of its own and Welsh Waters
      assets, the largest water and wastewater asset manager in the UK.                                                                                                                     
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Scotland
      United Utilities Contract Solutions operates and maintains three wastewater
      schemes for Scottish Water under a public private partnership (which is
      in essence a partnership between the public and private sectors to develop
      public infrastructure).                                                                                                                                                                                                                                                                                                                         
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Australia
      During the year, United Utilities Australia, in various joint venture arrangements,
      progressed proposals to develop an additional water supply to Western Australias
      Goldfields region. It has recently signed a contract with the City of Onkaparinga
      Council to deliver an innovative wastewater and re-use scheme for a local
      wine-growing community, south of Adelaide, South Australia. United Utilities
      Australia was also appointed preferred bidder by the SA Water Corporation
      for a further wastewater scheme for Victor Harbor, South Australia.

16United
  Utilities Annual Report on Form 20-F 2003

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| | Poland
      Aqua SA supplies water and wastewater services to an area of southern Poland
      covering 15 municipalities with a total population of over 280,000. United
      Utilities and its joint venture partner own 33 per cent of the publicly
      listed stock of Aqua SA in equal proportions.                                                                                                                                                                                                                                                                                                                                                                                
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | Estonia
      United Utilities Contract Solutions acquired a shareholding, held equally
      with its joint venture partner, in AS Tallinna Vesi, which supplies water
      and wastewater services to 400,000 people in Tallinn, Estonia. AS Tallinna
      Vesi has a £500 million, 15-year contract to manage the citys
      water and wastewater operations.                                                                                                                                                                                                                                                                                                                        
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | Bulgaria
      Sofiska Voda AD operates a £700 million, 25-year concession for water
      and wastewater services in Sofia, Bulgaria, which commenced in October 2000.
      Serving 1.2 million people, Sofiska Voda AD is 79 per cent owned equally
      by United Utilities and its joint venture partner. Over 1,700 employees
      transferred from the previous operator. The concession has invested over
      US$40 million in the first two years of operation in the water and wastewater
      infrastructure of Sofia. Efficiencies are being introduced and the workforce
      has been reduced from 1,700 at takeover to 1,150 currently without labour
      disruption.
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | Philippines With its joint venture partners,
      United Utilities Contract Solutions was awarded a 25-year concession in
      1997 to operate a significant portion of the water and wastewater systems
      in Manila.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

The Operations Management business is affected
  by a variety of regulatory regimes and regulatory risks which are assumed to
  varying degrees by the client, the concession company and/or the operator. For
  those contracts where it is operator, United Utilities is not the licensed entity
  but it may be a direct or indirect investor in the licensed entity. Generally,
  the joint ventures have limited recourse to United Utilities. The business has
  performance bonds in place totalling £23.5 million, and in some cases
  there are bank letters of credit supporting equity commitments.

Item 11 discusses the impact of foreign currency
  fluctuations and the extent to which foreign currency net investments are hedged
  by currency borrowings.

Against the background of an increasing range
  of available opportunities, the groups aim is to focus on extending the
  current portfolio of contracts in the UK and other target areas, including Australia
  and central and eastern Europe. During the year, United Utilities completed
  its withdrawal from infrastructure management in the Americas by selling its
  50 per cent interest in US Water LLC and withdrawing from IEBA, the Argentine
  electricity utility, although it maintains a minority interest in IEBA. IEBA
  defaulted on its repayments to bondholders in September 2002. There is no recourse
  to the group in respect of these debts and the group has no further balance
  sheet exposure to IEBA.

On 13 May 2003, the Supplementation and
  Addition of the Water Act (the Supplementation Act) came into
  force in Bulgaria. A potential and unintended consequence of this Supplementation
  Act may be the termination of the groups concession in Bulgaria. The group
  is currently taking advice on the implications of the Supplementation Act and
  is liaising with the governmental and legislative authorities in Bulgaria. This
  new legislation would not be expected to have a material impact on the groups
  results.

Operations Management also includesUnited Utilities Industrial Limited,
  which is a provider of specialist water and wastewater services to industry
  in the UK. Wastewater is transported off-site for treatment at licensed facilities,
  which are financed, designed, built and operated for clients as required. United
  Utilities Industrial currently treats 38 million tonnes of wastewater a year.

Green EnergyUnited Utilities acquired Hyder plcs green
  energy business in December 2000. With five per cent of the green energy capacity
  in England and Wales, the business is well positioned to benefit from the UK
  governments commitment to promoting green energy. In its support for renewable
  energy initiatives, the UK government has set a target to increase the share
  of electricity generated from renewables from the current level of less than
  three per cent to over ten per cent by 2010/11. Furthermore, the Renewables
  Obligation Order 2002 requires electricity suppliers to ensure that an increasing
  proportion of the electricity they supply to consumers comes from a renewable
  source.

United Utilities Green Energy has contributed
  positively to the groups results from the date of acquisition. Management
  intends to retain and strengthen its market position by expanding its technology
  range to include wind, both onshore and offshore, and other proven green technologies.
  The target is to develop around 200MW of renewable generating capacity during
  the next five years.

United Utilities Green Energys current
  operations are predominantly small-scale hydro generation and landfill gas generation.
  The business is continuing to appraise and develop its offshore windfarm opportunity
  at Scarweather Sands off the south Wales coast, one of the 18 sites around the
  UK announced by the government in 2001 as potentially suitable for offshore
  wind generation. The public enquiry into the future development of the scheme
  at Scarweather Sands is likely to start later this year.

Network servicesUnited Utilities Networks operates predominantly
  in the rapidly developing multi-utility connections and metering markets.

The multi-utility connections business provides
  the service of connecting domestic, industrial and commercial sites to utility
  providers. In providing this service the multi-utility connections business
  designs and installs new water, electricity, gas and telecommunications connections
  infrastructure. The business has continued to secure work outside its traditional
  north west England operating area with £5.5 million of orders won in the
  last twelve months. In 2002, United Utilities Networks successfully completed
  the installation of a primary sub-station and new connections infrastructure
  for an industrial customer in eastern England, one of the first such installations
  to be completed by a connections provider other than the local distribution
  network operator.

In April 2003, the group acquired Connections
  Plus, from Lattice Energy Services, a business which provides gas connections
  services to industrial and commercial customers. The acquired business has annualised
  revenues of around £7 million.

United Utilities Networks metering business
  operates and manages a portfolio of 2.4 million electricity and water meters
  in north west England. In the financial year ended 31 March 2003, the operation
  installed over 35,000 new water meters and fitted in excess of 135,000 electricity
  meters and meter exchanges. Since winning two major metering contracts at the
  beginning of the 2002 financial year, the business has installed around 37,000
  water meters for Welsh Water and some 19,000 gas meters for British Gas Trading
  Limited. The Welsh Water contract, with a total contract value of £15
  million, has two further years to run. The five-year contract with a total contract
  value of £225 million with British Gas Trading, which commenced in November
  2002, involves the installation of gas and electricity meters until January
  2008. Rental income will then be earned on the meters installed, through a jointly
  held meter company, for up to 20 years after installation.

United Utilities Annual Report
  on Form 20-F 2003      17

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United Utilities Networks operates private
  gas networks under the authorisation of a gas transporters (GT) licence.
  The gas industry in Great Britain is regulated under the Gas Acts 1986 and 1995,
  and the Utilities Act 2000 by the Gas and Electricity Markets Authority acting
  through Ofgem. In addition to regulatory powers, Ofgem exercises powers under
  UK competition legislation, including the Competition Act 1998. The operation
  of pipelines for the conveyance of gas is regulated by licences. The Utilities
  Act provided for further competition between gas transporters by abolishing
  the geographical exclusivity previously attached to GT licences. Ofgem is currently
  undertaking a review of the regulation of independent GTs, covering their charging
  policies and the incentives on them, with the objective of reducing costs and
  improving quality of service. The GT licence may require United Utilities Networks
  to carry out an assessment of the effects of the works on the environment during
  the course of its operations.

Network services also includes United Utilities
  Energy Services Limited which installs energy saving equipment for businesses.
  A three-year contract valued at £9 million has been secured with the Welsh
  Development Agency to assist small and medium-size enterprises in Wales with
  the cost of installing new energy saving technology.

BUSINESS PROCESS OUTSOURCINGVertexis
  one of the UKs major customer management service suppliers and a leading
  provider of business process outsourcing services to the utility sector. Business
  process outsourcing is the long-term contracting out of non-core business processes,
  such as billing, handling customer enquiries and other administrative functions,
  to an external provider, who in turn administers and manages the selected processes
  based on defined and measurable performance criteria. Vertex provides end-to-end
  outsourced customer service activities to clients in the commercial, utility,
  central and local government sectors.

Vertex commenced trading in the UK in 1996.
  It entered the Canadian market in March 2002 and intends to expand its capabilities
  into the business process outsourcing market in North America. In December 2002,
  Vertex purchased a UK contact centre operator, 7C Limited, and a 75 per cent
  shareholding in 7Cs Indian customer management operation, based in New
  Delhi. The acquisition included the transfer of 7Cs key clients, including
  lastminute.com, Vodafone and Freeview and four existing contact centres in the
  UK. The acquired business has annualised revenues of around £20 million.
  Approximately 400 7C employees, in the UK and India, were transferred to Vertex.

Vertex annually handles in excess of 30 million
  customers on more than 30 client contracts, involving over 200 million inbound
  calls and around 65 million bills and documents. Sales growth for the year ended
  31 March 2003 moderated to 9 per cent, compared with 34 per cent in 2002 and
  15 per cent in 2001. This was mainly due to a downturn in activity in the telecommunications
  sector. Vertex continues to focus on its strategic markets but is moving away
  from a dependency on internal work, with 71 per cent of revenues now external
  to United Utilities (2002: 68 per cent, 2001: 46 per cent). The business is
  dependent on a small number of major contracts, one of which was with TXU Europe,
  which went into administration in late 2002. Powergen Retail Limited acquired
  the business and certain assets of TXU Europe. Vertex and Powergen have recently
  signed a memorandum of understanding and, based on this, good progress is being
  made towards finalising a new contract.

During the year, Vertex enjoyed two major contract
  wins, Westminster City Council and the Department for Work and Pensions (DWP).
  The Westminster contract has an initial term of ten years, and an option for
  the council to extend for a further five years and is worth up to £422
  million. This contract expands Vertexs public sector portfolio, which
  already includes contracts with Companies House, Birmingham City Council and
  the London Borough of Ealing. Vertex manages a whole range of council services
  with partners Cap Gemini Ernst & Young UK and Accord plc, who provide information
  technology and facilities management services, respectively. DWP is a multi-million
  pound contract over three years with Vertexs partner, SchlumbergerSema.
  The contract requires Vertex to provide a high capacity customer contact centre
  and information technology related services in order to support the DWP in its
  aim to convert up to 13 million benefit and pensions claimants to electronic
  payment methods.

Capital expenditure in the financial year 2003
  was £34.8 million (2002: £31.5 million, 2001: £34.6 million).
  The net cash outflow before payments to the providers of finance in the financial
  year 2003 was £19.5 million (2002: £11.6 million, 2001: £8.6
  million.)

TELECOMMUNICATIONSYour Communicationsoffers
  a range of fully integrated communications services  voice, data, mobile
  and internet  to the public sector and small and medium-sized corporate
  customers predominantly in central and northern England. It is focused on delivering
  complete communications packages, tailored to fit specific business needs, and
  wholesale products for resellers and other operators.

Capital expenditure for the financial year
  2003 was £21.1 million (2002: £55.8 million, 2001: £64.7 million).
  During the year ended 31 March 2003, Your Communications completed the upgrade
  of its existing core network infrastructure. This has created a more powerful
  multi-service network, delivering higher bandwidth data and voice services to
  its business customers. In addition, during the year Your Communications invested
  a further £1.6 million in a customer relationship management system, which
  will provide an order processing system able to deal with the planned expansion
  in customer numbers.

The construction of Your Communications
  network has now been completed. The group has reviewed the carrying value of
  its telecommunications assets, in accordance with UK Financial Reporting Standard
  (FRS) 11, and as a result, an adjustment to value of £25.5
  million was made during the financial year ended 31 March 2003.

Although network capacity sales are not a significant
  part of Your Communications revenues, current UK accounting practice has
  been reviewed in respect of these sales, and a revised policy has been adopted
  that treats such transactions as grants of operating leases, unless legal title
  passes. Consequently, the income from such transactions will now be recognised
  over the life of the lease rather than as a sale in the accounting period in
  which the transaction is concluded.

Your Communications focus remains on
  growth in value-added sales, becoming cash generative and progressing towards
  profitability.

Telecommunications regulationYour Communications activities are principally
  regulated by the Telecommunications Act 1984 (the Telecommunications Act)
  and by the conditions of Your Communications public telecommunications
  operator (PTO) licence. The Secretary of State for Trade and Industry and the
  Director General of Telecommunications are the principal regulators of the telecommunications
  industry in the UK.

PTO licences in the UK, including Your Communications
  licence, contain a wide range of conditions designed, in particular, to ensure
  that PTO licence holders provide a basic range of telecommunication services
  and also have an obligation to negotiate, on request, interconnection with networks
  operated by other

18United
  Utilities Annual Report on Form 20-F 2003

---






licensees, subject to the dispute resolution
  powers of the Director General of Telecommunications. PTO licences also contain
  prohibitions against showing undue preference or discrimination in the provision
  of telecommunication services. Your Communications PTO licence does not
  include price controls.

In November 2002, the UK Parliament commenced
  its review of the Communications Bill which contains the provision to replace
  the Director General of Telecommunications (Oftel) (and four other
  existing communications industry regulators) with a single regulator, the Office
  of Communications (Ofcom). Like the Director General of Telecommunications
  in the telecommunications sector, Ofcom will have powers concurrent with the
  Office of Fair Trading to apply competition rules in the communications sector.
  The Communications Bill would also remove the requirement for licensing of telecommunications
  systems and replace it with a new regulatory regime for electronic communications
  networks, services and associated facilities in line with new European Union
  Communications Directives. Oftel is currently undertaking a communications market
  review to determine future regulatory obligations to be applied to operators
  in a dominant market position, the conclusions of which are expected
  to be published in July 2003. Like all other fixed alternative operators Your
  Communications is expected to be classified as dominant, but only
  with respect to the termination of geographic calls on its own network. However,
  Oftel has proposed that it would not impose any significant regulatory obligations
  on smaller operators in this market. It is therefore expected that the proposals
  from Oftel will not have any detrimental impact on Your Communications. The
  determinations which have been issued to date by Oftel in relation to fixed
  incumbent interconnection retention, and the offering of partial private circuits
  by the fixed incumbent, would suggest a positive impact on smaller telecommunications
  operators, such as Your Communications.

Your Communications broadband wireless
  access licences in the UK were awarded under the Wireless Telegraphy Acts 1949
  and 1998, which authorise the use of radio equipment and frequencies and prescribes
  the conditions under which that equipment may be used to provide broadband wireless
  access services on a regional basis. The Secretary of State may recover part,
  or all, of the spectrum allocated to the licensee if it appears to him that
  consumer interests are not being met. The licences will remain in force until
  the end of 2015 unless earlier revoked by the Secretary of State, under specified
  and limited circumstances, or surrendered by the licensee.

There has been concern in the UK over the possible
  health effects of radiowaves emitted by base stations and mobile phones. The
  report of the Independent Expert Group on Mobile Phones, commissioned by the
  UK government, was published in May 2000. It stated that the balance of evidence
  indicated that exposure to radiofrequency radiation below national and international
  guidelines does not cause adverse health effects to the general population,
  but that there may be biological effects. It recommended that a precautionary
  approach be taken. The UK governments response to the report includes
  the publication of revised planning policy guidance on telecommunications, and
  the introduction of a requirement that applications to erect base stations with
  masts of 15 metres or under should be subject to the more rigorous public consultation
  procedures that apply to masts over that size. Research is continuing into the
  possible health effects of base stations and mobile phones. Public concern about
  the alleged risks could lead to a decrease in the demand for Your Communications
  services.

ORGANISATIONAL STRUCTUREA list of all principal operating subsidiary
  undertakings is contained in note 13 to the consolidated financial statements.

DESCRIPTION OF PROPERTYAt 31 March 2003, United Utilities Water had
  the following principal operating facilities, all of which are owned by United
  Utilities Water and are freehold, except Sandon Dock which is leasehold:

|                                                  |                                     | Approximate      |    
|------------------------------------------------- | ----------------------------------- | ---------------- | ---
|Location                                          | Description                         | area in hectares | (1)
|                                                  |                                     |                  |    
|Bowland Estate, Lancashire                        | Reservoir/gathering
        grounds | 10,120           |    
|                                                  |                                     |                  |    
|Haweswater Estate, Lake
        District, Cumbria | Reservoir/gathering
        grounds | 9,900            |    
|                                                  |                                     |                  |    
|Longdendale Estate, Cheshire                      | Reservoir/gathering
        grounds | 7,490            |    
|                                                  |                                     |                  |    
|West Pennine Moors, Lancashire                    | Reservoir/gathering
        grounds | 6,872            |    
|                                                  |                                     |                  |    
|Thirlmere Estate, Lake
        District, Cumbria  | Reservoir/gathering
        grounds | 4,850            |    
|                                                  |                                     |                  |    
|Huntington, near Chester,
        Cheshire        | Water
        treatment works       | 120              |    
|                                                  |                                     |                  |    
|Davyhulme, Greater Manchester                     | Wastewater
        treatment works  | 117              |    
|                                                  |                                     |                  |    
|Prescot, Merseyside                               | Water
        treatment works       | 72               |    
|                                                  |                                     |                  |    
|Woodgate Hill, Greater
        Manchester         | Water
        treatment works       | 40               |    
|                                                  |                                     |                  |    
|Shell Green, Widnes                               | Sludge
        processing centre    | 12               |    
|                                                  |                                     |                  |    
|Watchgate, Cumbria                                | Water
        treatment works       | 12               |    
|                                                  |                                     |                  |    
|Sandon Dock, Liverpool                            | Wastewater
        treatment works  | 8                |    
|                                                  |                                     |                  |    

(1) One hectare equals 2.47 acres.

At 31 March 2003, United Utilities Electricitys
  facilities included approximately 13,700 kilometres of overhead lines and 44,600
  kilometres of underground cables operating at 132 kilovolts, 33 kilovolts, 25
  kilovolts, 11 kilovolts, 6.6 kilovolts and 400/230 volts. United Utilities Electricity
  holds wayleaves which entitle it to run lines and cables through and across
  private land and in some circumstances these can be terminated by the landowner
  or occupier upon notice pursuant to the Electricity Act. However, United Utilities
  Electricity has statutory rights to seek the compulsory retention of a wayleave
  if termination is sought by the landowner/occupier. United Utilities Electricity
  does not anticipate that any significant relocation of these facilities will
  be required, any relocation of a major portion of these facilities would have
  a material adverse effect on the business and financial position of United Utilities
  Electricity. United Utilities Electricity also maintains approximately 17,700
  ground mounted sub-stations and 16,600 pole mounted transformers in north west
  England. These are situated on properties either owned by United Utilities Electricity
  or under lease. United Utilities Electricity anticipates that it will be able
  to negotiate lease renewals on satisfactory terms or relocate equipment so that
  the non-renewal of any such leases would not have a material adverse effect
  upon United Utilities Electricity.

United Utilities Annual Report
  on Form 20-F 2003       19

---






At 31 March 2003, Your Communications
  facilities included approximately 168 kilometres of overhead fibre and 3,422
  kilometres of underground fibre. Where the fibre is otherwise than in the public
  highway, Your Communications holds wayleaves which entitle it to run this fibre
  through and across private land and in some circumstances these can be terminated
  by the landowner or occupier upon notice. However, Your Communications has statutory
  rights under the Telecommunications Act to seek the compulsory retention of
  a wayleave if termination is sought by the landowner/occupier. The exception
  to this is the Crown Estates. Your Communications does not anticipate that any
  relocation of these facilities will be required. Any such relocation of a major
  portion of these facilities would have a material adverse effect on the business
  and financial position of Your Communications. Your Communications also maintains
  approximately 123 points of presence (including 48 microwave radio sites and
  five switches) located in England and Scotland from where services can be sold
  or where network equipment is housed. These points of presence are situated
  on properties either owned or leased by companies within United Utilities. Your
  Communications anticipates that it will be able to negotiate lease renewals
  on satisfactory terms or relocate equipment so that the non-renewal of any such
  leases would not have a material adverse effect on the business and financial
  condition of Your Communications. In addition, Your Communications leases offices
  in Birmingham, Sheffield and Bolton. The headquarters and depot in Manchester
  are leased from United Utilities Electricity.

At 31 March 2003, United Utilities Green Energys
  facilities included approximately 45MW of landfill gas generation plant, 17MW
  of small-scale hydropower plant and 13MW of small-scale industrial generation
  plant. The facilities are located throughout the UK and situated on 39 properties
  held under long-term leases. The terms of the leases coincide with the anticipated
  economic lives of the generation plants.

At 31 March 2003, Vertexs facilities
  included leased customer management centres at Knowsley, Warrington, Whitehaven,
  Rayleigh and New Delhi, India. Its headquarters in Manchester are also leased.

In addition to the properties described above,
  the company occupies various non-operational properties consisting primarily
  of offices, depots, warehouses and workshops. These are either owned by the
  company or leased. It is anticipated that the company will be able to negotiate
  renewals of any expiring leases, or relocate the relevant facilities, without
  having a material adverse impact on the company. The most significant of these
  non-operational properties are the companys London office which is leased
  by the company, the companys headquarters, and United Utilities Waters
  operations and customer centres in Warrington which are owned by United Utilities
  Water, and United Utilities Electricitys operations and customer centres
  in Manchester which are owned by United Utilities Electricity. United Utilities
  Contract Solutions headquarters in Warrington are leased.

The contaminated land regime in Part IIA of
  the Environmental Protection Act 1990 places liability for the clean-up of contaminated
  land upon any person who caused the contamination or, in some circumstances,
  who knew of its presence and failed to prevent it. If no such person can be
  found after a reasonable enquiry has been made, liability for clean-up falls
  upon the current owner or occupier of the land. The regime provides for exemptions
  from liability in certain cases. The company is not aware of any liability which
  it may have under the regime which will have a material adverse impact on its
  businesses.

The company believes that all its properties
  are in a reasonable state of repair and are adequate for their purpose. The
  company has a continuing programme of improving, replacing and disposing of
  property when considered appropriate to meet the needs of its business operations.
  The company is not aware of any material environmental issues which would prevent
  the companys anticipated utilisation of the above-mentioned properties.
  Some non-operational areas of United Utilities Waters wastewater treatment
  works at Irlam, Manchester, may be designated as contaminated, but at present
  it is not clear how the liability for the clean-up will be allocated, or the
  extent of the cost for such work. However, this is not expected to have a material
  impact on the companys results.

ITEM 5  OPERATING AND FINANCIAL REVIEW
  AND PROSPECTSThe Operating review and Financial
  review of the group appear on pages 4 to 19 and 26 to 29, respectively,
  of the 2003 annual report to shareholders, incorporated by reference herein.
  The discussion in the 2003 annual report to shareholders, together with the
  discussion below, is designed to comply with the requirements of item 5.

References to segmental operating profit/losses
  are defined as the profit from continuing operations before non-operating items,
  goodwill amortisation, exceptional items, interest and tax for a segment as
  shown in note 2 of the consolidated financial statements.

In the discussion, profit from continuing operations
  before non-operating items, goodwill amortisation, exceptional items, interest
  and tax are derived directly from the consolidated profit and loss accounts
  on page 46 of the 2003 annual report to shareholders, incorporated by reference
  herein. Management believes this financial measure provides useful information
  to investors as it represents the total of the segmental operating profits/losses
  for each segment, as shown in note 2 of the consolidated financial statements,
  which are used as the basis for discussion in the Operating review
  and Financial review in the 2003 annual report to shareholders.
  To obtain the GAAP measure, goodwill amortisation and exceptional items as recorded
  under UK GAAP are deducted from the non-GAAP measure as shown in the reconciliation
  below. The segmental analysis as shown in note 2 of the consolidated financial
  statements is prepared to highlight the underlying performance of each segment.

A reconciliation of profit before interest
  and tax and profit from continuing operations before non-operating items, goodwill
  amortisation, exceptional items, interest and tax, as used in the discussion,
  is shown in the table below:

|                                                                             | 2003
      £m |   | Restated
      2002
      £m |  | Restated
      2001
      £m |   | Restated
      2000
      £m |   | Restated
      1999
      £m |  
|---------------------------------------------------------------------------- | ------------- | - | ---------------------------- |  | ---------------------------- | - | ---------------------------- | - | ---------------------------- | -
|                                                                             |               |   |                              |  |                              |   |                              |   |                              |  
|Profit before interest and tax                                               | 558.9         |   | 533.4                        |  | 698.0                        |   | 663.0                        |   | 659.1                        |  
|                                                                             |               |   |                              |  |                              |   |                              |   |                              |  
|Goodwill amortisation                                                        | 7.5           |   | 8.0                          |  | 4.0                          |   | 0.4                          |   |                             |  
|                                                                             |               |   |                              |  |                              |   |                              |   |                              |  
|Exceptional (credit)/charge                                                  | (4.7          | ) | 11.9                         |  | (174.6                       | ) | 31.0                         |   | 31.9                         |  
|                                                                             |               |   |                              |  |                              |   |                              |   |                              |  
|Discontinued operations                                                      |              |   |                             |  | (21.6                        | ) | (76.9                        | ) | (56.4                        | )
|                                                                             |               |   |                              |  |                              |   |                              |   |                              |  
|Profit from continuing operations before
      non-operating items, goodwill |               |   |                              |  |                              |   |                              |   |                              |  
|amortisation, exceptional items, interest
      and tax                      | 561.7         |   | 553.3                        |  | 505.8                        |   | 617.5                        |   | 634.6                        |  
|                                                                             |               |   |                              |  |                              |   |                              |   |                              |  

Turnover shown for business segments is from
  continuing operations and includes the groups share of joint ventures
  turnover.

The focus of the discussion is on the financial
  statements included in the 2003 annual report to shareholders, which are prepared
  in accordance with UK GAAP. A summary of differences between UK GAAP and US
  GAAP and reconciliations to net income, shareholders equity and financial
  position in accordance with US GAAP is included in this document as listed in
  the index in item 17.

20United
  Utilities Annual Report on Form 20-F 2003

---






Looking forwardThe groups support services businesses
  made good progress in the year and further growth in non-regulated income is
  expected in the years ahead. These businesses account for a growing proportion
  of profit from continuing operations before non-operating items, goodwill amortisation,
  exceptional items, interest and tax, and have a combined order book of nearly
  £4.5 billion, principally from the utility and public sectors in the United
  Kingdom. Managements aim is to continue to advance the growth of these
  businesses by applying the core skills of business process management and infrastructure
  management to carefully selected markets.

With allowed real price increases of nearly
  nine per cent over the course of the next two years, the group expects that
  profit from continuing operations before non-operating items, goodwill amortisation,
  exceptional items, interest and tax will improve in the wastewater and water
  business. By 2005, the water industry will have been subject to 15 years of
  incentive-based regulation, which means that the scope for future efficiency
  improvements is diminished. Consequently, funding for further quality improvements
  will principally have to come from customers and the capital markets.

For the electricity distribution business,
  the UK governments commitment to green energy will increase the number
  of generators directly connected to the distribution networks. This will lead
  to the requirement for additional capital investment as the industry responds
  to the electricity regulators challenge to Rewire Britain.

REVENUESA breakdown of revenues by activity and geographic
  region is contained in note 2 to the consolidated financial statements.

Revenue recognitionThe groups revenue recognition policies
  discussed below are in accordance with UK GAAP. Differences arise between UK
  and US GAAP for revenue recognition as shown in note 36(m) of the summary of
  differences between UK and US GAAP included as listed in the index in item 17.

For licensed multi-utility operations, the
  group raises bills and recognises revenue in accordance with its entitlement
  to receive revenue in line with the limits established by the periodic regulatory
  price review processes. For customers with meters, the receivable billed is
  dependent upon the volume supplied including an estimate of the sales value
  of units supplied between the date of the last meter reading and the year end.
  Meters are read on a cyclical basis and the group recognises revenue for unbilled
  amounts based on estimated usage from the last billing through to the end of
  the financial year. The estimated usage is based on historic data, judgement
  and assumptions; actual results could differ from these estimates which would
  result in operating revenues being adjusted in the period that the revision
  to the estimates is determined. For customers who do not have a meter, the receivable
  billed is dependent upon the rateable value of the property, as assessed by
  an independent rating officer.

In the groups other businesses (infrastructure
  management, business process outsourcing and telecommunications) revenue is
  recognised in line with activity and performance, normally using amounts specified
  in contractual obligations and when collectability is reasonably assured. In
  general:

| | Variable revenues, for example
      revenues dependent upon customer volumes in the period, are recognised only
      when those variable activities are performed;                                                                                                                                                                                                                                                                                                                                                   
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Performance incentives are
      recognised in revenue only to the extent that incentives are reasonably
      considered to have been earned;                                                                                                                                                                                                                                                                                                                                                                         
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Revenue received in advance
      of performance is recognised in deferred income. When performance occurs,
      the deferred income is released and simultaneously reported as revenue;                                                                                                                                                                                                                                                                                                                              
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Set up fees received from
      clients as contributions to costs are credited to deferred income when received
      and recognised in revenue (i) as costs are incurred for fees identified
      as being against transition costs, or (ii) over the expected life of fixed
      assets if the fees are received as a contribution to assets or (iii) over
      the period of the contract in line with activity or performance levels for
      fees not contractually identified against delivered services; and
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Capacity sales pursuant to
      Indefeasible Rights of Use agreements are treated as operating leases with
      profit being recognised over the term of the agreement.                                                                                                                                                                                                                                                                                                                                              

LIQUIDITY AND CAPITAL RESOURCESThe groups primary source of liquidity
  is cash generated from its ongoing business operations. As reflected in the
  consolidated cash flow statement on page 48 of the consolidated financial statements,
  in the financial year ended 2003, net cash flow generated from the groups
  trading operations was £852 million, compared with £800 million
  in 2002 and £842 million in 2001. The water regulator and the electricity
  regulator set the majority of the groups revenues from ongoing operations,
  providing both a stable and predictable source of funds.

The groups treasury policy is discussed
  in the Financial review on page 29 of the 2003 annual report to
  shareholders.

Shorter-term liquidityShort-term liquidity requirements are met from
  the groups normal operating cash flow. Further liquidity is provided by:
  cash and short-term investment balances; the companys US$1.5 billion euro
  commercial paper programme supported by committed bank facilities; and committed
  but undrawn long-term credit facilities.

Cash and short-term investment balances were
  £689 million at 31 March 2003, compared with £388 million at 2002
  and £433 million at 2001.

Bank overdrafts and temporary borrowings, which
  are repayable in less than one year, were £157.5 million at 31 March 2003,
  compared with £164.9 million at 31 March 2002 and £262.3 million
  at 31 March 2001. The weighted average rate of interest on bank overdrafts and
  temporary borrowings was 4.25 per cent (2002: 4.8 per cent, 2001: 6.1 per cent).
  The group had available committed bank facilities of £935.0 million (2002:
  £1,010.0 million, 2001: £1,275.0 million) of which £934.2
  million was unutilised at 31 March 2003 (2002: £986.2 million, 2001: £1,252.3
  million). Of the amounts unutilised, £200.0 million expire within one
  year, £160.0 million expire after one year but in less than two years,
  and the remaining £574.2 million expire in more than two years.

United Utilities Annual Report
  on Form 20-F 2003      21

---






During the financial year ended 31 March 2003,
  the US$1.5 billion euro commercial paper programme provided revolving funding
  of £533 million with outstanding issuance of £119 million at 31
  March 2003, compared with £135 million at 2002 and £203 million
  at 2001. The US$1.5 billion euro commercial paper programme provides for the
  periodic issuance of notes by United Utilities, United Utilities Water and United
  Utilities Electricity. The notes will have a maturity (not less than one day
  and not more than 364 days) and an interest rate determined at the time of issuance.
  United Utilities has entered into £935 million of credit facilities, as
  noted above, used primarily as support for the US$1.5 billion euro commercial
  paper programme.

Longer-term liquidityThe company has effective access to the international
  debt capital markets through its €4 billion euro medium-term note programme
  and its US$2 billion US shelf registration statement. The €4 billion euro
  medium-term note programme provides for the periodic issuance by United Utilities,
  United Utilities Water and United Utilities Electricity of debt instruments
  on terms and conditions determined at the time the instruments were issued.

The currencies in which debt is held are disclosed
  in note 22 to the consolidated financial statements.

In addition, the company has contracted but
  not yet issued £50 million of long-term debt securities and a £10
  million long-term loan that had not been drawn down at 31 March 2003 compared
  with undrawn long-term loans totalling £240 million at 2002 and £200
  million at 2001.

During the last financial year, the company
  received £693 million of term funding which includes the £240 million
  of undrawn long-term loans at 2002 but excludes the £50 million of debt
  securities contracted but not yet issued and the £10 million of undrawn
  long-term loans at 2003. The details of this financing are as follows:

|                              | Rate               |     | £m    | 
|----------------------------- | ------------------ | --- | ----- | 
|                              |                    |     |       | 
|European Investment Bank      | Floating           | (1) | 240.0 | 
|                              |                    |     |       | 
|Bank loan                     | Floating           | (1) | 75.0  | 
|                              |                    |     |       | 
|Medium-term notes:            |                    |     |       | 
|                              |                    |     |       | 
|GBP  2010
      issue        | 5.25%              | (2) | 150.0 | 
|                              |                    |     |       | 
|GBP  2027
      issue        | 5.625%             | (2) | 150.0 | 
|                              |                    |     |       | 
|HKD due 2007                  | Floating           | (3) | 12.5  | 
|                              |                    |     |       | 
|JPY due 2008                  | 0.705%             | (3) | 15.4  | 
|                              |                    |     |       | 
|GBP  index-linked
      2032 | RPI+
        3.75% |     | 50.1  | 
|                              |                    |     |       | 

|Note:
|-----
|(1)  
|     
|(2)  
|     
|(3)  

The groups term loans were £3,715.9
  million at 31 March 2003, compared with £3,083.0 million at 31 March 2002
  and £2,776.4 million at 31 March 2001. Amounts repayable after more than
  five years comprise bank and other loans repayable between 2009 and 2053. Interest
  rates range from 3.375 per cent to 14.83 per cent on £1,932.0 million
  (2002: £2,386.0 million, 2001: £2,053.4 million) and are at floating
  rates on £359.0 million (2002: £228.4 million, 2001: £193.0
  million).

Contractual obligationsThe following table summarises the contractual
  obligations of the company and the effect such obligations are expected to have
  on the companys liquidity and cash flow in future periods.

|                                   |                            |   |                   |   |                                                    |   | Payments
        due by period |  
|---------------------------------- | -------------------------- | - | ----------------- | - | -------------------------------------------------- | - | ------------------------------ | -
|                                   |                            |   |                   |   |                                                    |   |                                |  
|                                   | Less
        than one year |   | 1-3
        years |   | 4-5
        years                                  |   | More
        than 5 years      |  
|                                   | £m                         |   | £m                |   | £m                                                 |   | £m                             |  
|                                   |                            |   |                   |   |                                                    |   |                                |  
|Long-term debt                     | (35.9                      | ) | (517.2            | ) | (940.7                                             | ) | (2,222.1                       | )
|                                   |                            |   |                   |   |                                                    |   |                                |  
|Capital lease obligations          | (108.7                     | ) | (0.8              | ) | (11.4                                              | ) | (68.9                          | )
|                                   |                            |   |                   |   |                                                    |   |                                |  
|Operating leases                   | (11.3                      | ) | (15.3             | ) | (9.7                                               | ) | (179.5                         | )
|                                   |                            |   |                   |   |                                                    |   |                                |  
|Total contractual cash obligations | (155.9                     | ) | (533.3            | ) | (961.8                                             | ) | (2,470.5                       | )
|                                   |                            |   |                   |   |                                                    |   |                                |  
|                                   |                            |   |                   |   |                                                    |   |                                |  
|Financial guarantees               |                            |   |                   |   | Amount
        of commitment expiration per period |  
|                                   |                            |   |                   |   |                                                    |   |                                |  
|                                   | Less than
        one year |   | 1-3 years         |   | 4-5 years                                          |   | More than 5 years              |  
|                                   | £m                         |   | £m                |   | £m                                                 |   | £m                             |  
|                                   |                            |   |                   |   |                                                    |   |                                |  
|                                   |                            |   |                   |   |                                                    |   |                                |  
|Guarantees                         | (30.5                      | ) | (165.8            | ) | (224.5                                             | ) | (295.0                         | )
|                                   |                            |   |                   |   |                                                    |   |                                |  
|Total commercial commitments       | (30.5                      | ) | (165.8            | ) | (224.5                                             | ) | (295.0                         | )
|                                   |                            |   |                   |   |                                                    |   |                                |  

The table above discloses financial guarantees
  given by United Utilities in support of borrowings by subsidiary companies,
  where the underlying obligation is already reflected in the disclosure of long-term
  debt. The £715.8 million of financial guarantees relate to borrowings
  by United Utilities Water and United Utilities Electricity from the European
  Investment Bank.

The capital commitments of the group as at
  31 March 2003 were £402.7 million. The group also has obligations under
  its licence to comply with the capital programmes as specified by the regulators.

22United
  Utilities Annual Report on Form 20-F 2003

---






Performance guaranteesAs part of the commercial operations of the group,
  performance guarantees are sometimes required by clients. These guarantees may
  be called where the standards of service set out within the relevant contract
  are not fulfilled and other possible remedies under the contract are not successful.

Total guarantees as at 31 March 2003, where
  a financial limit has been specified, were £133.6 million (2002: £126.8
  million, 2001: £131.6 million)

Guarantees totalling £99.5 million, and
  a guarantee which has unlimited liability, are supported by an indemnification
  agreement from a third party external to United Utilities.This indemnification
  agreement follows the disposal of certain operations, and contains no limit
  on the value of indemnity available. Therefore any payments under these guarantees
  may be fully recoverable from the third party.

Performance guarantees supporting the groups
  contribution to the performance of partnership companies totalled £10.1
  million. The partnership company is responsible for arranging the issue of the
  guarantee by a financial institution to the client, and the partners are required
  to provide an indemnity to the financial institution for a share of that guarantee,
  in proportion to their shareholding in the partnership company. Alternatively,
  the partners may be required to issue a guarantee directly to the client, contributing
  to the total guarantee in proportion to their shareholding in the partnership
  company. These arrangements are supported by cross-indemnities from the partners,
  (i.e. the partners must pay a proportionate share of any indemnity payable to
  the financial institution or directly to the client). The full value of the
  guarantees will only become payable if the guarantee issued by the financial
  institution, or directly to the client, were to be payable in full.

Guarantees totalling £24.0 million relate
  to the disposal of certain operations, and reflect the capped value of indemnities
  issued to the purchaser for pre-completion events. It is anticipated that in
  the event of a claim the group may be able to recover funds from its insurers,
  although this will depend on the circumstances of the incident giving rise to
  the claim under the indemnity.

The carrying value of these guarantees is £nil,
  (2002: £nil, 2001: £nil).

Where a performance guarantee has been issued
  by a financial institution, United Utilities will have agreed to indemnify the
  bank in the event the guarantee is exercised, otherwise the guarantee will be
  issued by United Utilities or a subsidiary company.

Joint venturesThe group enters into joint ventures with consortium
  partners. The financial and legal structure of a joint venture is designed to
  limit the groups exposure to the extent of the equity investment and loans
  provided by the group, with no further recourse should the joint venture default.
  Excluding the provision for joint venture losses in accordance with FRS9, for
  which the group has no financial commitment, the maximum exposure of the group
  is limited to the carrying value of the investments which was £40.2 million
  at 31 March 2003 (2002: £53.0 million) and the trade debtors due from
  the joint ventures of £8.6 million at 31 March 2003 (2002: £5.1
  million). All joint venture arrangements have been consolidated into the groups
  results on a gross equity accounting basis. The joint venture normally enters
  into the main contract with the customer, for example by taking on ownership
  of the assets subject to the contract. The consortium partners may then enter
  into subcontracts with the joint venture for the provision of services appropriate
  to their expertise. This enables the company to take on only those risks which
  fall within its normal commercial expertise, such as infrastructure management,
  while other parties will provide their skills to the joint venture and take
  on those risks accordingly, for example design and construction. However, the
  performance of any joint venture will affect the groups financial performance
  to the extent of its interest in such a joint venture.

SummaryManagement has reviewed the business plan and
  considers that the group has sufficient liquidity to meet the anticipated financial
  commitments for the next twelve months.

INFLATIONInflation affects revenues, operating expenses
  and interest charges. However, the impact of inflation has not had a material
  effect on the groups operating results during the year.

RESEARCH AND DEVELOPMENTUnited Utilities undertakes research primarily
  to provide improved standards of service to customers together with continuing
  improvements in business efficiency. The groups intention is to strengthen
  its understanding of science and technology in relation to its range of wastewater
  and water treatment processes, in order to ensure that treatment plants are
  able to meet the required current and future standards. It also aims to develop
  new solutions for areas of its business (for example, looking at new processes
  to render waste materials inert and to turn them into saleable products). New
  methods are being investigated to determine the condition of assets, and ways
  in which to improve maintenance methodologies to ensure the delivery of consistent
  satisfactory performance and the maximisation of asset life. Research is also
  undertaken into current practices, for example in relation to health concerns
  relating to drinking water standards.

United Utilities is a member of a number of
  collaborative research programmes including UK Water Industry Research and Water
  Research Centre, both of which address common issues that face the UK water
  industry. EA Technology Limited provides a similar service to the UK electricity
  distribution industry. The group also undertakes company specific projects with
  these and other research and development providers and with universities.

Over the past three years, research and development
  expenditure by the group was £0.8 million in the year ended 31 March 2003
  (2002: £1.5 million, 2001: £2.6 million).

United Utilities Annual Report
  on Form 20-F 2003      23

---






Patent portfolio managementThe company acquires patents in order to provide
  protection of those ideas and inventions which it intends to exploit commercially.
  Patents are maintained for up to 20 years.

There are currently 23 inventions which have
  patents awarded in several jurisdictions. During the year ended 31 March 2003,
  these 23 active patents generated 83 patent renewals in 26 different countries.

The cost of maintaining patents was less than
  £50,000 per annum in each of the last three years.

LicencesUnited Utilities grants licences to third parties
  for the commercial exploitation of its patent rights and intellectual property.
  There are currently ten active licence agreements. United Utilities may, as
  part of the licence, provide support to licencees for the purposes of marketing
  the product or service.

CRITICAL ACCOUNTING POLICIESThe group prepares its consolidated financial
  statements in accordance with accounting principles generally accepted in the
  United Kingdom and reconciles its net income, shareholders equity and
  financial position to US GAAP. As such, the group is required to make certain
  estimates, judgements and assumptions that it believes are reasonable based
  upon the information available. These estimates and assumptions affect the reported
  amounts of assets and liabilities at the date of the financial statements and
  the reported amounts of revenue and expenses during the periods presented.

On an ongoing basis, the group evaluates its
  estimates using historical experience, consultation with experts and other methods
  considered reasonable in the particular circumstances. Actual results may differ
  significantly from the estimates, the effect of which is recognised in the period
  in which the facts that give rise to the revision become known.

The groups accounting policies are detailed
  in note 1 of the consolidated financial statements. The following paragraphs
  detail the policies the group believes to have the most significant impact on
  the annual results under UK GAAP and US GAAP:

Carrying value of long-lived assetsThe groups accounting policy for tangible
  fixed assets is detailed in note 1(g) of the consolidated financial statements.
  The carrying value of tangible fixed assets under UK GAAP as at 31 March 2003
  was £7,087.3 million. Additions to tangible fixed assets totalled £787.3
  million and the depreciation charge was £349.8 million in the year ended
  31 March 2003. The estimated useful economic lives of fixed assets are based
  on managements judgement and experience. When management identifies that
  actual useful lives differ materially from the estimates used to calculate depreciation,
  that charge is adjusted prospectively. Due to the significance of fixed asset
  investment to the group, variations between actual and estimated useful lives
  could impact operating results both positively and negatively, although, historically
  few changes to estimated useful lives have been required.

In accordance with UK GAAP and US GAAP, the
  group is required to evaluate the carrying values of fixed assets for impairment
  whenever circumstances indicate, in managements judgement, that the carrying
  value of such assets may not be recoverable. An impairment review requires management
  to make subjective judgements concerning the cash flows, growth rates and discount
  rates of the income generating units under review. With the construction of
  the telecommunications network now completed, the group has reviewed the carrying
  value of its telecommunications assets, in accordance with FRS11, Impairment
  of Fixed Assets and Goodwill, under UK GAAP. Based on an assumed pre-tax nominal
  weighted average cost of capital of 16 per cent, and a long-term real growth
  rate of 2.25 per cent, an adjustment to value of £25.5 million has been
  made representing £14.6 million tangible assets, £8.6 million intangible
  assets and £2.3 million goodwill. Under US GAAP, there is no indication
  of impairment of tangible or intangible assets with finite lives in the telecommunications
  business on an undiscounted cash flow basis in accordance with Statement of
  Financial Accounting Standard (SFAS) 144, Accounting for Impairment
  or Disposal of Long-Lived Assets. Furthermore, under SFAS 142, Goodwill and
  Other Intangible Assets, there is no impairment for goodwill. Therefore a reconciling
  item is recorded as discussed in note 36(g) of the summary of differences between
  UK and US GAAP included as listed in the index in item 17.

Renewals accountingUnder UK GAAP, the depreciation charge for infrastructure
  assets is the estimated level of annual expenditure required to maintain the
  operating capability of the network which is based on the groups asset
  management plan which has been certified by Halcrow Management Sciences Limited,
  an independent infrastructure management consultant approved by Ofwat. Variations
  between actual infrastructure spend and estimated spend are included in the
  balance sheet, with the principle being to equalise the effect of
  annual spend variations on the charge to the profit and loss account. Therefore,
  the independently certified asset management plan has an impact on the groups
  operating profit and changes in the plan assumptions could give rise to a different
  operating profit. These assumptions include judgements relating to the condition
  and performance of infrastructure assets. Under US GAAP, the depreciation charge
  reflects actual expenditure in the year and therefore, as discussed in note
  36(b) in the summary of differences between UK and US GAAP included as listed
  in the index in item 17, a reconciling item is recorded.

Deferred taxThe group accounts for deferred tax on a discounted
  basis, as permitted by UK GAAP. The deferred tax provision under UK GAAP as
  at 31 March 2003 is £335.6 million. The balance sheet provision is discounted
  using the rate of interest at the balance sheet date on UK gilts with similar
  maturity dates and currencies to those of the deferred tax assets and liabilities.
  Therefore, the group uses 15+ years UK gilt rate to reflect the long-life nature
  of infrastructure and operational assets. An increase or decrease in applicable
  discount rates of 0.1 per cent would change the balance sheet provision at 31
  March 2003 by approximately £9 million and the tax charge, for the year
  then ended, by the same amount. Discounting is not permitted under US GAAP and
  therefore, as discussed in note 36(k) in the summary of differences between
  UK and US GAAP included as listed in the index in item 17, a reconciling item
  is recorded for the discounting impact. A deferred tax asset is regarded as
  recoverable and therefore recognised only when, on the basis of available evidence,
  it is regarded as more likely than not that there will be suitable taxable profits
  from which the future reversal of the underlying timing differences can be deducted.
  Changes to managements view of the recoverability of deferred tax assets
  could give rise to different tax charges.

24United
  Utilities Annual Report on Form 20-F 2003

---






Revenue recognition for regulated activitiesThe groups regulated revenues recognised
  in the financial year include amounts billed to customers on a cyclical basis
  and unbilled amounts based on estimated usage from the last billing to the end
  of the financial year. The estimated usage is based on judgement and assumptions.
  Actual results could differ from these estimates which would result in operating
  revenues being adjusted in the period that the revision to the estimates is
  determined.

Revenue recognition for non-regulated
  activitiesUnder UK GAAP, the group recognises revenue generally
  at the time of delivery and when collection of the resulting debt is reasonably
  assured. Should management consider that the criteria for revenue recognition
  are not met for a transaction, revenue recognition would be delayed until such
  time that the transaction becomes fully earned. Payments received in advance
  of revenue recognition are recorded as deferred revenue. Under US GAAP, the
  group recognises revenue when (i) persuasive evidence of an arrangement exists;
  (ii) delivery has occurred or services have been rendered; (iii) the sales price
  is fixed or determinable; and (iv) collectability is reasonably assured. This
  difference in approach results in reconciling items for revenue and profit recognition,
  as further discussed in note 36(m) in the summary of differences between UK
  and US GAAP included as listed in the index in item 17. Under both UK and US
  GAAP, performance based revenues are recognised only to the extent that the
  revenues are prudently considered to have been earned at the reporting date.

Provision for doubtful debtsAt each balance sheet date, United Utilities
  and each of its subsidiaries evaluate the collectability of trade debtors and
  record provisions for doubtful debts based on experience. These provisions are
  based on, amongst other things, comparisons of the relative age of accounts
  and consideration of actual write-off history. The actual level of debt collected
  may differ from the estimated levels of recovery, which could impact operating
  results positively or negatively. As at 31 March 2003, the groups gross
  trade debtors were £313.6 million and the provision for doubtful debts
  was £93.9 million.

Accounting for provisions and contingenciesThe group is subject to a number of claims incidental
  to the normal conduct of its business, relating to and including commercial,
  contractual and employment matters, which are handled and defended in the ordinary
  course of business. The group routinely assesses the likelihood of any adverse
  judgements or outcomes to these matters as well as ranges of probable and reasonably
  estimated losses. Reasonable estimates involve judgements made by management
  after considering information including notifications, settlements, estimates
  performed by independent parties and outside counsel, available facts, identification
  of other potentially responsible parties and their ability to contribute, and
  prior experience. In accordance with UK GAAP, a provision is recognised when
  it is probable that an obligation exists for which a reliable estimate can be
  made of the obligation after careful analysis of the individual matter. The
  required provision may change in the future due to new developments and as additional
  information becomes available. Matters that are either possible obligations
  or do not meet the recognition criteria for a provision are disclosed, unless
  the possibility of transferring economic benefits is remote.

GoodwillThe group records all assets and liabilities
  acquired in purchase acquisitions, including goodwill, at fair value as required
  by UK and US GAAP. Under UK GAAP, goodwill is amortised to £nil by equal
  annual instalments over the estimated useful life, generally not exceeding 20
  years. Goodwill is assessed for impairment whenever events or circumstances
  might indicate that it may be impaired. The review is performed on the same
  basis as for tangible fixed assets as discussed above by considering income
  generating units. As at 31 March 2003, the net book value of goodwill under
  UK GAAP was £78.0 million (including goodwill related to joint ventures
  within fixed asset investments) and the amortisation charge for the year then
  ended was £7.5 million. Under US GAAP, goodwill is no longer amortised
  as of 1 April 2002 but is subject, at a minimum, to annual tests for impairment.
  The initial goodwill recorded and subsequent impairment analysis requires management
  to make subjective judgements concerning the fair value of reporting units.
  Under US GAAP, the carrying value of goodwill as at 31 March 2003 was £981.3
  million. This is substantially higher than that reported under UK GAAP due to
  a significant amount of goodwill written off directly to reserves under UK GAAP
  prior to the adoption of FRS10.

PensionsThe group operates two defined benefit schemes,
  one of which has a defined contribution section, which are independent of the
  groups finances. Actuarial valuations of the schemes are carried out as
  determined by the trustees at intervals of not more than three years. Under
  UK GAAP, the pension cost is assessed in accordance with the advice of a firm
  of actuaries based on the latest actuarial valuation and assumptions determined
  by the actuary. The assumptions are based on information supplied to the actuary
  by the group, supplemented by discussions between the actuary and management.
  The assumptions are disclosed in note 25 of the consolidated financial statements.
  Under US GAAP, actuarial determinations are required on an annual basis. Additionally
  a different method of calculating the pension cost is required and therefore
  a reconciling item is recorded as discussed in note 36(a) in the summary of
  differences between UK and US GAAP included as listed in the index in item 17.
  Both UK and US GAAP operating results are affected by the actuarial assumptions
  used. These assumptions include investment returns on the schemes assets,
  discount rates, pay growth and increases to pensions in payment and deferred
  pensions. Changes to these assumptions could give rise to different operating
  results.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTSRecently issued UK GAAP and US GAAP accounting
  pronouncements which have yet to be adopted are described in note 1(t) of the
  consolidated financial statements and in note 36(q) of the summary of differences
  between UK and US GAAP included as listed in the index in item 17, respectively.

United Utilities Annual Report
  on Form 20-F 2003     25

---






ITEM 6  DIRECTORS, SENIOR MANAGEMENT
  AND EMPLOYEES

Directors and senior managementThe business of the company is managed by the
  board of directors (the board). The companys constitution
  (the articles of association) provides that directors must retire
  from office at the third annual general meeting following their appointment
  or re-appointment by shareholders at an annual general meeting. The retiring
  directors may offer themselves for re-election. Jane Newell, John
  Roberts and Gordon Waters will retire as directors at the 2003 annual general
  meeting and will seek re-election under the rotation provisions in the articles
  of association. The directors may appoint one or more of their number to the
  office of managing director or to any executive office for such period and on
  such terms as they think fit.

The biographies of the executive and non-executive
  directors appear on page 31 of the 2003 annual report to shareholders, incorporated
  by reference herein. The business address of each of the directors is the companys
  registered office which is Dawson House, Great Sankey, Warrington WA5 3LW, England.

The executive and non-executive directors of
  the company serving during the 2003 financial year were:

|                                | Age |  | Position                                                       |  | Date
      appointed
        to current office |  | Date
      resigned  
|------------------------------- | --- |  | -------------------------------------------------------------- |  | ---------------------------------------------- |  | ---------------------
|                               
|Executive
        directors     |     |  |                                                                |  |                                                |  |                      
|                               
|John Roberts                    | 57  |  | Chief
        executive                                        |  | 1 September
        1999                       |  |                      
|                               
|Simon Batey                     | 49  |  | Group
        finance director                                 |  | 1 April
        2000                           |  |                      
|                               
|Les Dawson                      | 46  |  | Managing
        director, United Utilities Service Delivery   |  | 1 November
        2000                        |  | 25 March
        2003
|                               
|Gordon Waters                   | 55  |  | Managing
        director, United Utilities Contract Solutions |  | 1 March
        1996                           |  |                      
|                               
|Non-executive
        directors |     |  |                                                                |  |                                                |  |                      
|                               
|Sir Richard Evans               | 60  |  | Chairman
        and chairman of the nomination committee      |  | 1 September
        1997                       |  |                      
|                               
|Sir Peter Middleton             | 69  |  | Deputy
        chairman and senior independent non-executive   |  | 1 January
        1994                         |  |                      
|                               
|Norman Broadhurst               | 61  |  | Chairman
        of the audit committee                        |  | 1 April
        1999                           |  |                      
|                               
|Jane Newell                     | 59  |  | Chairman
        of the companys major pension schemes        |  | 1 September
        1996                       |  |                      
|                               
|Andrew Pinder                   | 56  |  | Non-executive
        director                                 |  | 1 September
        2001                       |  |                      
|                               
|John Seed                       | 64  |  | Chairman
        of the remuneration committee                 |  | 1 March
        1996                           |  |                      
|                               

The following are the executive officers of
  the company who are not board directors, but are members of the executive leadership
  team:

|                   | Age |  | Position                                                                                                                                                             |  | Principal
        business activities
        outside the company |  | Date appointed
        to current office |  | Date
        of expiry of service
        contract (to age 60)
|------------------ | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------- |  | ---------------------------------------- |  | --------------------------------------------------------------
|                  
|                   |     |  |                                                                                                                                                                      |  |                                                                   |  |                                          |  |                                                               
|Executive officers |     |  |                                                                                                                                                                      |  |                                                                   |  |                                          |  |                                                               
|                  
|Bob Armstrong      | 53  |  | Managing director, United Utilities Customer
      Sales.
      Joined as head of personnel and then became customer services and strategic
      planning director. |  | Chairman of Water UK                                              |  | 1 October 2000                           |  | 21 November 2009                                              
|                  
|Linda Booth        | 50  |  | Group human resources director.Joined as human resources director,Your Communications.                                                                               |  | Director of Create LiverpoolTrading Limited                       |  | 1 January 2003                           |  | 9 October 2012                                                
|                  
|Tom Drury          | 41  |  | Managing director, Vertex.Joined as group financial controller and becamefinance director, United Utilities
      Water. Previouslywith PricewaterhouseCoopers.      |  |                                                                   |  | 1 April 1996                             |  | 14 September 2021                                             
|                  
|Dr Clive Elphick   | 46  |  | Group planning director.Joined as group financial controller
      and latereconomic regulatory director, United Utilities Water.Previously with Deloitte & Touche.  |  |                                                                   |  | 1 December 1994                          |  | 24 November 2016                                              
|                  
|Hugh Logan         | 53  |  | Managing director, Your Communications.Joined from British Telecommunications
      PLCwhere he was managing director, BT Mobile.                                    |  |                                                                   |  | 17 July 2000                             |  | 11 November 2009                                              
|                  
|Ian Priestner      | 46  |  | Group communications director.Joined from British Gas PLC where
      he washead of public policy and government
      relations.                                    |  |                                                                   |  | 16 October 2000                          |  | 20 May 2017                                                   
|                  
|Tim Rayner         | 42  |  | Secretary.A solicitor, joined as group legal
      adviser. Previouslya partner at Addleshaw, Sons & Latham, a law firm.                                             |  |                                                                   |  | 1 April 1998                             |  | 4 August 2020                                                 
|                  
|David Scott        | 50  |  | Former group human resources director.
      Joined from HM Prison Service where he was director of personnel.                                                       |  |                                                                   |  | 1 June 1998                              |  | Resigned31 December2002                                       
|                  

There are no family relationships between any
  of the directors or senior management. There are no arrangements or understandings
  with major shareholders, customers, suppliers or others pursuant to which any
  of the persons referred to above was selected as a director or member of senior
  management.

26United
  Utilities Annual Report on Form 20-F 2003

---






CompensationDuring the financial year 2003, the aggregate
  amount of compensation paid by the company to all directors of the company was
  £2,263,930. Details of amounts paid to each individual director are shown
  in the Directors remuneration report on pages 38 to 44 of
  the 2003 annual report to shareholders, incorporated by reference herein. During
  the financial year 2003, the aggregate amount of compensation paid by the company
  to the executive officers was £1,888,626. Details of amounts paid to each
  individual executive officer are not disclosed as there is no legal requirement
  to publicly disclose this information in England and Wales.

During the financial year 2003, the total amounts
  set aside or accrued by the company or its subsidiaries to provide pension,
  retirement or similar benefits for all directors and executive officers was
  £1,489,000. Non-executive directors do not participate in any of the companys
  pension schemes.

Board PracticesNon-executive directors are appointed for an
  initial term of three-years, which may be renewed for additional three-year
  periods thereafter. They do not have contracts of service and, in the event
  of early termination for whatever reason, they are not entitled to compensation.

All executive directors and executive officers
  have contracts which are terminable by the company serving one years notice,
  except for Bob Armstrong who, by virtue of a long-standing contractual arrangement,
  has a three-year notice period. Contracts terminate automatically upon the director
  or executive officer reaching age 60 unless the company agrees that a director
  may continue to work after attaining age 60. The dates of expiration of each
  executive directors service contract at age 60 are shown in the 2003 annual
  report to shareholders on page 44 within the Remuneration report
  at table 10, which is incorporated by reference herein. The dates of expiration
  for each executive officers service contract at age 60 are shown in the
  table above. No special arrangements apply if there is a change in control.

Service contracts do not provide explicitly
  for termination payments (other than for holidays due but not taken), liquidated
  damages or payments in lieu of notice. If a contract is to be terminated, the
  remuneration committee will, in each circumstance, determine the compensation
  that may be paid after applying such mitigation it considers is fair and reasonable.
  It will take into account best practice and legal advice on the companys
  liability to pay compensation and the amount of compensation in each case.

Summaries of the functions and membership of
  the nomination committee and the audit committee appear on pages 35 and 36 respectively
  within the sections headed Report on governance and Directors
  remuneration report of the 2003 annual report to shareholders, incorporated
  by reference herein.

EmployeesNumber of employees

|Financial
        year ended 31 March                                 | 2003   |  | 2002   |  | 2001   | 
|--------------------------------------------------------------------- | ------ |  | ------ |  | ------ | 
|                                                                      |        |  |        |  |        | 
|Licensed multi-utility operations                                     | 4,269  |  | 4,368  |  | 4,764  | 
|                                                                      |        |  |        |  |        | 
|Infrastructure management                                             | 2,163  |  | 2,076  |  | 407    | 
|                                                                      |        |  |        |  |        | 
|Business process outsourcing                                          | 6,540  |  | 6,576  |  | 5,015  | 
|                                                                      |        |  |        |  |        | 
|Telecommunications                                                    | 681    |  | 743    |  | 618    | 
|                                                                      |        |  |        |  |        | 
|Other activities                                                      | 149    |  | 130    |  | 109    | 
|                                                                      |        |  |        |  |        | 
|Divestments                                                           |        |  |        |  |        | 
|                                                                      |        |  |        |  |        | 
|Energy supply                                                         |       |  |       |  | 114    | 
|                                                                      |        |  |        |  |        | 
|Contracting                                                           |       |  |       |  | 25     | 
|                                                                      |        |  |        |  |        | 
|Average number of persons employed by the
      group during the year | 13,802 |  | 13,893 |  | 11,052 | 
|                                                                      |        |  |        |  |        | 

Substantially all of the groups employees
  are based in the United Kingdom.

The group continues to recognise, and to work
  in partnership with, a range of trade unions operating across the sectors in
  which it operates. A statement of principles underpins the approach to labour
  relations across the group. Changes to employment legislation in the UK are
  increasing the numbers of employees embraced by collective bargaining arrangements.
  Good industrial relations remains a priority for United Utilities across the
  whole of its business.

In summary:

| | Licensed multi-utility operations
       99 per cent of employees within United Utilities Service Delivery
      are now represented by trade unions for collective bargaining purposes under
      the terms of a recently signed voluntary collective agreement. Work is currently
      underway to consolidate legacy multiple agreements into a consistent set
      of terms and conditions.                                                                                                                                                                             
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | Infrastructure management
       trade union involvement in United Utilities Contract Solutions has
      increased significantly with the acquisition of the Welsh Water contract,
      whose workforce is heavily unionised. 95 per cent of employees in Wales
      are covered by collective bargaining arrangements. Network services has
      80 per cent of its workforce under collective bargaining but, in the remainder
      of United Utilities Contract Solutions, staff are employed on personal contracts
      and are not covered by collective agreements.
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | Business process outsourcing
       around 51 per cent of the Vertex workforce are covered by collective
      bargaining arrangements. Union membership is increasing as Vertex acquires
      new contracts in the telecommunications and public sectors in the UK. Vertex
      has a progressive approach to partnership with its trade unions, and has
      been recognised externally for best practice in this area.                                                                                                                                                   
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | Telecommunications 
      26 per cent of the Your Communications workforce is covered by collective
      bargaining arrangements.                                                                                                                                                                                                                                                                                                                                                                                                                                            

United Utilities Annual Report
  on Form 20-F 2003      27

---






Share OwnershipAs at 21 May 2003, the total interest in ordinary
  shares held by the directors and executive officers of United Utilities as a
  group was as follows:

|Title
        of class     | Identity
        of person or group                   | Amount
        of interest |  | Per
        cent of class | 
|-------------------------- | ----------------------------------------------------- | -------------------------- |  | ------------------------- | 
|                           |                                                       |                            |  |                           | 
|Ordinary shares of £1 each | Directors
        and executive officers (16 persons) | 161,618                    |  | 0.0290                    | 
|                           |                                                       |                            |  |                           | 

Individual holdings of the directors in the
  share capital of the company are shown below:

|                    |        |  |          |  | At
        21 May 2003 | 
|------------------- | ------ |  | -------- |  | ---------------------- | 
|                    |        | 
|                    | Shares |  | Deferred |  | Total                  | 
|                    |        |  |          |  |                        | 
|John Roberts        | 35,255 |  | 15,264   |  | 50,519                 | 
|                    |        |  |          |  |                        | 
|Simon Batey         | 49,505 |  | 12,732   |  | 62,237                 | 
|                    |        |  |          |  |                        | 
|Gordon Waters       | 26,636 |  | 8,850    |  | 35,486                 | 
|                    |        |  |          |  |                        | 
|Sir Richard Evans   | 245    |  |         |  | 245                    | 
|                    |        |  |          |  |                        | 
|Norman Broadhurst   | 341    |  |         |  | 341                    | 
|                    |        |  |          |  |                        | 
|Sir Peter Middleton | 4,574  |  |         |  | 4,574                  | 
|                    |        |  |          |  |                        | 
|Jane Newell         | 4,356  |  |         |  | 4,356                  | 
|                    |        |  |          |  |                        | 
|Andrew Pinder       |       |  |         |  |                       | 
|                    |        |  |          |  |                        | 
|John Seed           | 5,555  |  |         |  | 5,555                  | 
|                    |        |  |          |  |                        | 

In addition, as at 21 May 2003, the executive
  directors, as a group, and executive officers of United Utilities, as a group,
  held options to purchase 7,940 and 74,672 ordinary shares respectively, all
  of which were issued pursuant to the United Utilities employee ShareSave scheme,
  the company share option scheme 1999 or its predecessor, the executive share
  option scheme. Under the terms of the deferred share plan, at 21 May 2003, the
  executive directors as a group held 36,846 shares and the executive officers
  as a group held 37,727 shares. Individual holdings of share options held by
  the executive directors are disclosed within the Remuneration report
  on pages 38 to 44 of the 2003 annual report to shareholders, incorporated by
  reference herein. None of the executive officers holds more than one per cent
  of the ordinary share capital of the company and therefore individual share
  ownership details are not disclosed.

Owning shares in the company is an important
  way of strengthening employees involvement in the development of the business
  and of bringing together their interests and those of shareholders. The company
  promotes greater ownership of its shares by offering employees the opportunity
  to build up a shareholding through its various share schemes, namely the company
  share option scheme 1999 and the two Inland Revenue approved all-employee schemes,
  ShareSave (a save-as-you-earn share option scheme) and ShareBuy
  (a share incentive plan). Under the rules of the ShareSave scheme an eligible
  employee can save up to £250 per month from their net salary for a three
  or a five-year term, and in proportion to the level of savings an option to
  purchase shares at the end of the term is granted. Under the rules of the ShareBuy
  plan an eligible employee is able to apply up to £125 from their gross
  salary (or ten per cent of monthly taxable salary) into the plan. These funds
  are then passed to the independent trustee of the plan who makes a monthly purchase
  of United Utilities shares at full market price. The shares are then held in
  trust for the employee for a five-year term in order to retain the maximum tax
  advantage. The group accepts its responsibility to provide financial education
  to employees and, in particular, to make employees aware of the risk involved
  in building up a large stake in a single stock. Accordingly, the company makes
  available a multi-stock United Utilities Individual Saving Account (ISA) for
  employees who wish to invest in a more diverse portfolio and facilitates access
  for employees to independent financial advisors. The success of these initiatives
  is evidenced by the receipt in December 2002 of an award from ProShare for the
  third consecutive year for Best Financial Education Programme for Employees
  and, in May 2003, the company also received an award from Employee Benefits
  Magazine for Most Effective Share Scheme Strategy. Note 24 to the
  consolidated financial statements provides further information on the operation
  of the groups share option schemes.

ITEM 7   MAJOR SHAREHOLDERS
  AND RELATED PARTY TRANSACTIONSAs far as is known to United Utilities, it is
  not directly or indirectly owned or controlled by another corporation or by
  an individual or government. At 31 March 2003, Deutsche Bank AG and its associated
  companies beneficially owned 3.42 per cent of the issued share capital, as notified
  to the company in accordance with Rule 13d-7 of the US Securities and Exchange
  Act of 1934. At 24 January 2003, in accordance with the Companies Act 1985,
  the company received notification of Legal and General PLCs material holding
  of 3.33 per cent of ordinary voting shares in the company, and on 12 May 2003,
  the company received notification of Barclays PLCs material holding of
  3.04 per cent of ordinary voting shares in the company. As at 21 May 2003, there
  have been no changes or additions to the notifications detailed above. Holders
  of all ordinary shares, including those held through ADSs, have the same voting
  rights.

United Utilities does not know of any arrangements
  the operation of which may at a subsequent date result in a change in control
  of the company.

As of 14 April 2003, there were 94 registered
  holders of 18,620 ordinary shares with addresses in the US, constituting less
  than one per cent of the ordinary shares in issue at that date, and there were
  14 registered holders of ADRs evidencing 1,140,400 ADSs (equivalent to 2,280,800
  ordinary shares) with an address in the US, constituting less than one per cent
  of the ordinary shares in issue at that date.

Other than with respect to employment agreements
  and compensation arrangements, there is no material indebtedness owed to or
  by, and there have been no material transactions between, the company and management
  during the companys three most recent financial years, nor are there presently
  proposed to be any such indebtedness or any material transactions, or any transactions
  that were unusual in their nature or conditions to which the company or any
  of its subsidiaries was or is a party and in which any director or executive
  officer, or five per cent shareholder, or any relative or spouse thereof or
  any associate of the company or any enterprise that directly or indirectly controls,
  is controlled by or is under common control with the company, had or is to have
  a direct or indirect material interest.

For details of related party transactions see
  note 35 to the consolidated financial statements.

28United
  Utilities Annual Report on Form 20-F 2003

---






ITEM 8   FINANCIAL INFORMATIONThe consolidated financial statements required
  by this item and included in this report are listed in the Index to consolidated
  financial statements appearing in item 17.

LITIGATIONOther than a legal dispute regarding the contract
  between the Bangkok Metropolitan Authority and the NOSS Consortium, which was
  terminated in March 1998 by the consortium in which North West Water International
  Limited is a partner, and which is now proceeding to full arbitration (the outcome
  of the arbitration is not expected within the next financial year), the company
  is not aware of any material litigation to which it or any of its subsidiaries
  is a party, or of which any of their property is the subject, or any such proceedings
  known to be contemplated by any third party or governmental authority.

The company is engaged in litigation in the
  ordinary course of its operations, such as contract disputes, disputes over
  easements/wayleaves and other similar property matters, bill collections, personal
  injury claims and workers compensation claims. The company does not believe
  that such litigation, either individually or in aggregate, is material. The
  company maintains insurance and, to the extent that the amounts in dispute may
  not be covered by such insurance, maintains provisions in those situations where
  management deems it appropriate in accordance with UK GAAP.

DIVIDENDSAn interim dividend in respect of each financial
  year is normally declared by United Utilities in November for payment in the
  following February. The final dividend in respect of each financial year has
  historically been recommended by directors in May and paid in October, following
  approval by shareholders in July. However, the 2003 final dividend is scheduled
  to be paid earlier, in August 2003. The following table sets out the dividends
  paid on ordinary shares and on ADSs in respect of the past five financial years,
  excluding any associated UK tax credit in respect of such dividends.

|                                                                        |                    |       | Years
        ended 31 March |      
|----------------------------------------------------------------------- | ------------------ | ----- | ---------------------------- | -----
|                                                                        |                    |       |                              |      
|                                                                        | Note               | 2003  | 2002                         | 2001 
|Pence per ordinary share                                                | (i)                | p     | p                            | p    
|                                                                        |                    |       |                              |      
|Interim                                                                 | (ii)               | 15.50 | 15.30                        | 15.00
|                                                                        |                    |       |                              |      
|Final                                                                   | (ii)               | 32.10 | 31.70                        | 31.10
|                                                                        |                    |       |                              |      
|Total                                                                   | (ii)               | 47.60 | 47.00                        | 46.10
|                                                                        |                    |       |                              |      
|US $ per ordinary share                                                 | (i)                | $     | $                            | $    
|                                                                        |                    |       |                              |      
|Interim                                                                 | (ii)               | 0.25  | 0.22                         | 0.22 
|                                                                        |                    |       |                              |      
|Final                                                                   | (ii)               | 0.51  | 0.45                         | 0.46 
|                                                                        |                    |       |                              |      
|Total                                                                   |                    | 0.76  | 0.67                         | 0.68 
|                                                                        |                    |       |                              |      
|Total dividend per ADS($)                                               | (i),
        (iii) | 1.52  | 1.34                         | 1.36 
|                                                                        |                    |       |                              |      
|                                                                        |                    |       |                              |      
|The exchange rates at the dividend payment
      dates were as follows: |                    |       |                              |      
|                                                                        |                    |       |                              |      
|                                                                        |                    | 2003  | 2002                         | 2001 
|                                                                        |                    |       |                              |      
|Exchange rate at interim payment date                                   |                    | 1.63  | 1.42                         | 1.45 
|                                                                        |                    |       |                              |      
|Exchange rate at final payment date                                     | (iv)               | 1.58  | 1.42                         | 1.48 
|                                                                        |                    |       |                              |      

|Notes:
|------
|(i)   
|(ii)  
|(iii) 
|(iv)  

Future dividends will depend upon the companys
  earnings, financial condition and other factors. Interim and final dividends
  paid in the past are not necessarily indicative of future interim and final
  dividends, or the future relationships between them. A person resident in the
  UK for tax purposes who receives a dividend from United Utilities is generally
  entitled to a tax credit, currently at a rate of one-ninth of the net dividend
  (or ten per cent of the sum of the net dividend and the associated UK tax credit).
  For further information, see item 10 Taxation.

Cash dividends are paid by United Utilities
  in pounds sterling. Exchange rate fluctuations will affect the US dollar amounts
  received by owners of the ADSs on the conversion by the Depositary of such cash
  dividends paid. In addition, fluctuations in the exchange rate between pounds
  sterling and US dollars will affect the US equivalent of the quoted pound sterling
  price of ordinary shares on the London Stock Exchange and, as a result, are
  likely to affect the market price of ADSs in the US and the ordinary shares
  in the UK.

SIGNIFICANT CHANGESManagement is not aware of any significant changes
  in the financial position of the company since 31 March 2003.

United Utilities Annual Report
  on Form 20-F 2003      29

---






ITEM 9   THE OFFER AND LISTING

The principal trading market for the ordinary
  shares of the company is the London Stock Exchange. The ordinary shares have
  been listed on the London Stock Exchange since 12 December 1989. The American
  Depositary Shares (ADSs), each representing two ordinary shares, have been listed
  on the New York Stock Exchange since 28 January 1998. The ADSs, evidenced by
  American Depositary Receipts (ADRs), are issued by the London office of the
  Bank of New York (BONY), as Depositary under a Deposit Agreement dated 28 January
  1998 between the company, BONY and the holders from time to time of ADSs.

The tables below set out, for the periods indicated,
  (i) the highest and lowest middle-market quotations for the ordinary shares
  (as derived from the Daily Official List of the London Stock Exchange); and
  (ii) the reported high and low sales prices of the United Utilities ADSs on
  the New York Stock Exchange.

|                    | London
        Stock Exchange
      per ordinary
        share |  | New
        York Stock Exchange
      per ADS | 
|------------------- | -------------------------------------------------------------- |  | --------------------------------------------- | 
|                    |                                                                |  |                                               | 
|                    | High
        (p)                                               |  | Low
        (p)                               | 
|                    |                                                                |  |                                               | 
|Financial year 1999 | 957.0                                                          |  | 727.0                                         | 
|                    |                                                                |  |                                               | 
|Financial year 2000 | 876.0                                                          |  | 482.5                                         | 
|                    |                                                                |  |                                               | 
|Financial year 2001 | 740.0                                                          |  | 566.0                                         | 
|                    |                                                                |  |                                               | 
|Financial year 2002 |                                                                |  |                                               | 
|                    |                                                                |  |                                               | 
|First quarter       | 673.5                                                          |  | 597.5                                         | 
|                    |                                                                |  |                                               | 
|Second quarter      | 670.0                                                          |  | 594.0                                         | 
|                    |                                                                |  |                                               | 
|Third quarter       | 650.0                                                          |  | 578.0                                         | 
|                    |                                                                |  |                                               | 
|Fourth quarter      | 623.5                                                          |  | 589.0                                         | 
|                    |                                                                |  |                                               | 
|Financial year 2003 |                                                                |  |                                               | 
|                    |                                                                |  |                                               | 
|First quarter       | 668.0                                                          |  | 604.0                                         | 
|                    |                                                                |  |                                               | 
|Second quarter      | 650.0                                                          |  | 554.5                                         | 
|                    |                                                                |  |                                               | 
|Third quarter       | 642.0                                                          |  | 578.0                                         | 
|                    |                                                                |  |                                               | 
|Fourth quarter      | 634.0                                                          |  | 551.5                                         | 
|                    |                                                                |  |                                               | 
|December 2002       | 642.0                                                          |  | 600.0                                         | 
|                    |                                                                |  |                                               | 
|January 2003        | 634.0                                                          |  | 562.0                                         | 
|                    |                                                                |  |                                               | 
|February 2003       | 612.5                                                          |  | 571.0                                         | 
|                    |                                                                |  |                                               | 
|March 2003          | 610.0                                                          |  | 551.5                                         | 
|                    |                                                                |  |                                               | 
|Financial year 2004 |                                                                |  |                                               | 
|                    |                                                                |  |                                               | 
|April 2003          | 623.0                                                          |  | 601.0                                         | 
|                    |                                                                |  |                                               | 
|May 2003            | 622.0                                                          |  | 598.0                                         | 
|                    |                                                                |  |                                               | 

ITEM 10   ADDITIONAL INFORMATION

MEMORANDUM AND ARTICLES

The memorandum of association of the company
  provides that its principal objects are, among other things, to be a holding
  company and to carry on business as a general commercial company and to carry
  on any trade or business or activity of any nature which may seem to the directors
  to be capable of being conveniently or advantageously carried on.

DirectorsA director of the company shall not vote, and
  shall not be counted in the quorum, in relation to any resolution of the directors
  or of a committee of the directors on any resolution concerning any contract,
  arrangement, transaction or any proposal whatsoever to which the company is
  or is to be a party and in which he has, directly or indirectly, any material
  interest other than, inter alia, as a shareholder of the company.

So far as the legislation allows, the directors
  may exercise all the companys powers to borrow money; to mortgage or charge
  all or any of the companys undertaking, property (present and future),
  and uncalled capital; to issue debentures and other securities; and to give
  security either outright or as collateral security for any debt, liability or
  obligation of the company or any third party. Such powers can be amended by
  the sanction of a special resolution.

A director shall be capable of being appointed
  or re-elected a director despite having attained the age of 70 or any other
  age and shall not be required to retire by reason of his having attained any
  particular age and section 293 of the UK Companies Act 1985 (the Companies
  Act) (relating to the appointment and retirement as directors of persons
  who are aged 70 or over) shall not apply. A director shall not be required to
  hold any shares in the company.

SharesThe holders of ordinary shares of the company
  are entitled to the profits of the company available for distribution and resolved
  to be distributed, in proportion to the number of ordinary shares held by them
  and the amounts paid up or credited as paid up on such ordinary shares. With
  the sanction of an ordinary resolution of the company, the directors may offer
  any holders of ordinary shares the right to elect to receive further ordinary
  shares, credited as fully paid, instead of cash in respect of the whole or part
  of any dividend. All dividends unclaimed for a period of 12 years after having
  been declared shall (if the board so resolves) be forfeited and shall cease
  to be owed by the company.

30United
  Utilities Annual Report on Form 20-F 2003

---






If the company is wound up, the liquidator
  may, with the sanction of a special resolution of the company and any other
  sanction required by law, divide among the members in specie the whole or any
  part of the assets of the company and may, for that purpose, value any assets
  and determine how the division shall be carried out as between the members or
  different classes of members. Any such division may be otherwise than in accordance
  with the existing rights of the members but, if any division is resolved otherwise
  than in accordance with such rights, the members shall have the same right of
  dissent and consequential rights as if such resolution were a special resolution
  passed pursuant to section 110 of the Insolvency Act 1986. The liquidator may,
  with the like sanction, vest the whole or any part of the assets in trustees
  on such trusts for the benefit of the members as he, with the like sanction,
  shall determine, but no member shall be compelled to accept any assets on which
  there is a liability.

All substantive resolutions put to a vote at
  a general meeting shall be decided on a poll. All other resolutions shall be
  decided on a show of hands. Every holder of ordinary shares present in person
  shall on a show of hands have one vote, and every holder of ordinary shares
  present in person or by proxy shall on a poll have one vote for every ordinary
  share of which he is the holder. The chairman of a general meeting has absolute
  discretion in determining whether a resolution is a substantive resolution or
  otherwise and his decision shall be final. If a shareholder has been given notice
  in accordance with section 212 of the Companies Act and has failed to provide
  the necessary information in accordance with the statutory timeframes, the shareholder
  shall not be entitled to exercise their right to vote at the meeting; a further
  restriction exists should a call or any other sum due and payable by the shareholder
  remain unpaid.

Section 80 of the Companies Act provides that,
  to allot any relevant securities (as defined in the Companies Act and which
  includes, with certain exceptions, shares and securities convertible into shares),
  the directors require authorisation which may be given in the articles of association
  or by ordinary resolution of shareholders stating the maximum amount which may
  be allotted and the date on which the authority will expire (being not more
  than five years from the date of such authority).

Shareholders have rights of pre-emption in
  respect of the allotment of equity securities (as defined in the Companies Act
  and which includes, with certain exceptions, shares and securities convertible
  into shares) which are, or are to be, paid up in cash, although these pre-emptive
  rights can be displaced or modified by a special resolution of the shareholders
  or under the articles of association. The authority given by such a special
  resolution can last for five years. In practice, a company whose shares are
  publicly traded is unlikely to receive shareholder consent for the disapplication
  of pre-emptive rights in respect of shares representing more than five per cent
  of its existing issued ordinary share capital.

Subject to the exceptions referred to below,
  if a holding of any class or classes of shares or any interest in them (other
  than certain exempt interests) reaches three per cent of the aggregate nominal
  value of the issued voting share capital (or, in the case of the companys
  share capital being divided into different classes, issued voting shares comprised
  in the relevant class), the shareholder (whether foreign or domestic) must notify
  the company of the interest within two business days of the acquisition taking
  the holding over three per cent and of any subsequent increase or decrease in
  the extent of that interest. There are less stringent requirements for certain
  categories of interests in shares (non-material interests), for
  example interests held by managers of certain collective investment schemes.
  Non-material interests need only be disclosed when the aggregate of those interests
  and other interests (other than exempt interests) reaches a threshold of ten
  per cent of the aggregate nominal value of the share capital concerned. The
  Companies Act gives a public company power to require persons who it believes
  to be, or to have been within the previous three years, interested in its voting
  shares, to disclose prescribed particulars of those interests. Failure to supply
  the information required is an offence and may lead to disenfranchisement of
  the relevant shares and a prohibition on their transfer and on dividend and
  other payments in respect of them and the issue of additional shares in respect
  thereof.

Under the Rules Governing Substantial Acquisitions
  of Shares, where a person or company acquires 15 per cent or more of the voting
  rights of a listed company or where an acquisition increases their holding of
  shares or rights over shares which would amount to an increase in voting rights
  by a whole percentage point, notification must be given to the company and the
  London Stock Exchange no later than noon on the business day following the date
  of acquisition.

General meetings21 clear days written notice is required
  to be given to shareholders for an annual general meeting or an extraordinary
  general meeting where a special resolution is to be proposed. Ordinarily, only
  14 clear days notice is required for an extraordinary general meeting.
  An annual general meeting can be held at shorter notice provided that all the
  shareholders entitled to attend and vote agree; and in the case of an extraordinary
  general meeting if shareholders holding 95 per cent in nominal value entitled
  to attend and vote agree. If a shareholder is unable to attend the general meeting
  they are entitled to appoint a proxy to vote on their behalf and a corporate
  body is entitled to appoint a corporate representative to vote on its behalf.
  Not more than 15 months shall elapse between one meeting and the next. In addition
  to the directors, a member or members holding not less than one-tenth of the
  paid-up capital can require that a general meeting be convened.

The articles of association do not contain
  any limitations preventing non-UK residents or foreign shareholders from holding
  shares in the company; all shares rank pari passu.

MATERIAL CONTRACTS

United Utilities, through its subsidiary United
  Utilities Water, holds a licence for the provision of water supply and wastewater
  services in an area of north west England comprising 2.9 million homes and businesses.
  In addition, United Utilities, through its subsidiary United Utilities Electricity,
  holds the electricity distribution licence for an area in north west England
  comprising more than two million homes and businesses. For more information
  on these licences see Economic regulation of wastewater and water
  and Economic regulation of electricity distribution in item 4.

In 2001, the group established a €4 billion
  euro medium-term note programme that provides for the issuance of debt instruments
  with terms and conditions determined at the time the instruments are issued.
  For more information on this programme see Longer term liquidity
  in item 5.

EXCHANGE CONTROLS

There are currently no UK laws, decrees or
  regulations that restrict the export or import of capital, including, but not
  limited to, foreign exchange controls, or which affect the remittance of dividends,
  interest or other payments to non-UK resident holders of the companys
  securities except as otherwise detailed in Taxation below.

There are no limitations imposed by UK law
  or the companys memorandum and articles of association which restrict
  the right of non-UK resident or non-UK citizen owners, as opposed to UK resident
  or citizen owners, to hold or vote the ordinary shares. However, non-UK shareholders
  are not entitled to receive notice from the company, including notices of general
  meetings, unless they have given the company an address in the UK to which such
  notices may be sent.

United Utilities Annual Report
  on Form 20-F 2003      31

---






TAXATIONThe following is a summary of the principal US
  federal and UK tax considerations that are likely to be material to the ownership
  and disposition of ordinary shares or ADSs by a holder that is a resident of
  the US for the purposes of the income tax convention which was signed on behalf
  of the US and the UK on 24 July 2001 and entered into force on 31 March 2003
  (the New Treaty) or, in the circumstances described below, the previous
  income tax convention between the US and the UK (the Old Treaty)
  and in either case is fully eligible for benefits thereunder (an eligible
  US holder) and satisfies the three conditions set out below. The summary
  does not purport to be a comprehensive description of all of the tax considerations
  that may be relevant to a holder of ordinary shares or ADSs. In particular,
  the summary deals only with eligible US holders which hold ordinary shares or
  ADSs as capital assets, and does not address the tax treatment of investors
  which are subject to special tax rules, such as banks, tax-exempt entities,
  insurance companies, dealers in securities or currencies, persons that elect
  mark to market treatment, persons that hold ordinary shares or ADSs as part
  of an integrated investment (including a straddle) comprised of
  an ordinary share or ADS and one or more other positions, and persons that own,
  directly or indirectly, ten per cent or more of the voting stock of the company.
  This summary is based on the New Treaty, the Old Treaty and the tax laws of
  the US and the UK in effect on the date hereof, which are subject to change.

For taxes withheld at source, the New Treaty
  is effective from 1 May 2003. Holders should however note that any person that
  is or would have been entitled to greater benefits under the Old Treaty than
  under the New Treaty can elect to have the provisions of the Old Treaty apply
  in their entirety for a period of twelve months from the date on which the New
  Treaty would otherwise have effect. Holders should consult their own tax advisers
  with respect to the implications in their own particular circumstances of making
  that election, including the possible entitlement to a special US foreign tax
  credit described below under Taxation of dividends  United States.

This summary applies to eligible US holders
  if they are:

| | the beneficial owner of the
      ordinary shares or ADSs and of any dividends received;                                                                                                                                                                                                 
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                          
| | an individual citizen or resident
      of the United States, a US corporation, or otherwise subject to US federal
      income tax on a net income basis in respect of their shares or ADSs; and                                                                                        
|  |                                                                                                                                                                                                                                                                                          
| | not also a resident of the
      United Kingdom for UK tax purposes and they do not hold ordinary shares
      or ADSs in connection with the conduct of a business through a permanent
      establishment or the performance of personal services through a fixed base
      in the UK.

Special rules, including a limitation of benefits
  provision, apply in limited circumstances under the New Treaty to shares or
  ADSs owned by an investment or holding company. This section does not discuss
  the treatment of such holders.

Holders should consult their own advisers regarding
  the tax consequences of the acquisition, ownership, and disposition of ordinary
  shares or ADSs in the light of their particular circumstances, including the
  effect of any state, local, or other national laws.

Beneficial owners of ADSs will be treated as
  owners of the underlying shares for US federal income tax purposes and deposits
  and withdrawals of shares in exchange for ADSs will not result in the realisation
  of gain or loss for US federal income tax purposes.

Taxation of dividends

United KingdomThere is no UK withholding tax on dividends.
  A shareholder resident for UK tax purposes in the UK that receives a dividend
  from the company will generally be entitled to a tax credit equal (since 1999)
  to one-ninth of the dividend. The Old Treaty allowed an eligible US holder to
  claim a similar tax credit from the UK Inland Revenue. However, it also provided
  for a notional UK withholding tax which, in the case of an eligible US holder
  that owned, directly or indirectly, less than ten per cent of the voting stock
  of the company, was set at 15 per cent of the aggregate of the dividend and
  the credit. This meant that no amount was actually payable to such holders by
  the Inland Revenue in respect of their tax credit entitlement.

The New Treaty provides neither for the right
  to claim the credit nor for the notional withholding tax. The result is that
  no eligible US holder will be entitled by virtue of the New Treaty to an additional
  payment from the UK Inland Revenue on receipt of a dividend from the company.

United StatesEligible US holders must include dividends received
  in ordinary income on the date such a holder or ADS depositary received them.
  The dividends will be treated as foreign source income. Eligible US holders
  should determine the amount of dividend income by converting pounds sterling
  into US dollars at the exchange rate in effect on the date of such holders
  (or the depositarys, in the case of ADSs) receipt of the dividend. Subject
  to certain exceptions for positions that are hedged or held for less than 60
  days, an individual eligible US holder generally will be subject to US taxation
  at a maximum rate of 15 per cent in respect of dividends received after 2002
  and before 2009.

If an eligible US holder qualified for benefits
  under the Old Treaty then such holder may be eligible, subject to generally
  applicable limitations, to receive a special US foreign tax credit equal to
  one-ninth of the amount of certain cash dividends that such holder receives
  on the ordinary shares or ADSs, so long as such holder makes an election to
  include in income, as an additional notional dividend, an amount equal to the
  tax credit. This foreign tax credit is generally only available with respect
  to dividends paid before 1 May 2003, unless such holder elects to apply the
  Old Treaty in its entirety for a period of twelve months from the effective
  date of the New Treaty.

32United
  Utilities Annual Report on Form 20-F 2003

---






Taxation of capital gains

United KingdomGain realised by an eligible US holder on the
  sale or other disposition of ordinary shares or ADSs will not be subject to
  UK taxation, provided that such shares are not held in connection with a UK
  branch or agency or (in relation to accounting periods commencing on, or after,
  1 January 2003) a UK permanent establishment.

United StatesGain realised on the sale, exchange or other
  disposition of ordinary shares or ADSs will be included in income for US tax
  purposes and will be long-term capital gain if the ordinary shares or ADSs were
  held for more than one year. The net amount of long-term capital gain recognised
  by an individual eligible US holder generally is subject to taxation at a maximum
  rate of 20 per cent; however, net long-term capital gain recognised by an individual
  eligible US holder after 5 May 2003 and before 1 January 2009 generally is subject
  to taxation at a maximum rate of 15 per cent.

Backup witholding tax and information
  reportingDistributions made on ordinary shares and proceeds
  from the sale of ordinary shares or ADSs that are paid within the UK or through
  certain US-related financial intermediaries to US holders are subject to information
  reporting and may be subject to a backup US withholding tax unless,
  in general, the US holder complies with certain procedures or is a corporation
  or other person exempt from such withholding. Holders that are not US persons
  generally are not subject to information reporting or backup withholding tax,
  but may be required to comply with applicable certification procedures to establish
  that they are not US persons in order to avoid the application of such information
  reporting requirements or backup withholding tax to payments received within
  the US or through certain US-related financial intermediaries.

Stamp duty and stamp duty reserve
  taxA transferee of ordinary shares will generally
  be required to pay UK stamp duty or stamp duty reserve tax at a rate of 0.5
  per cent of the consideration paid for the transfer.

However, no UK stamp duty should be payable
  on the transfer of an ADS or beneficial ownership of an ADS, provided that any
  instrument of transfer is executed and remains at all times outside the UK,
  and no UK stamp duty reserve tax should in any event be payable on an agreement
  to transfer an ADS or beneficial ownership of an ADS.

DOCUMENTS ON DISPLAYUnited Utilities is subject to the information
  requirements of the US Securities Exchange Act of 1934, as amended, and is therefore
  required to file reports, including annual reports on Form 20-F, and other information
  with the US Securities and Exchange Commission. These materials, including this
  annual report and the exhibits thereto, may be inspected and copied at the Commissions
  public reference rooms in Washington, DC, New York, NY and Chicago, IL. Please
  call the Commission at +1-800-732-0330 for further information on the public
  reference rooms. Any filings made electronically will be made available to the
  public over the internet at the Commissions web site at http://www.sec.gov.

ITEM 11  QUANTITATIVE AND QUALITATIVE
  DISCLOSURES ABOUT MARKET RISK

RISK MANAGEMENTThe principal financial market risks faced by
  the company are the risks of interest rate movements and foreign currency movements.

INTEREST RATE AND FOREIGN CURRENCY
  MANAGEMENTThe company uses a combination of interest rate
  swaps, futures and funding instruments to hedge exposure to interest rate volatility.
  The companys use of derivative instruments relates directly to underlying
  indebtedness; no speculative or trading transactions are undertaken. The proportion
  of debt at effective fixed rates of interest for more than one year is set in
  conjunction with the level of floating rate debt and projected regulatory revenues
  that are exposed to inflationary adjustments (index-linked). In addition, the
  company aims to manage its short-term budgetary commitments by ensuring that
  the majority of floating rate interest is fixed for periods of less than one
  year through the use of exchange-traded financial futures. The company has limited
  exposure to foreign currency exchange rate movements. Interest rate management
  and funding policies are set by the board. The company has elected not to designate
  any of its derivative instruments as hedges for US GAAP accounting purposes.

QUANTITATIVE DISCLOSURE OF MARKET
  RISKThe analysis below presents the sensitivity of
  the market value of the groups financial instruments to selected changes
  in market rates and prices. The range of changes chosen reflects the groups
  view of changes that are reasonably possible over a one year period. Market
  values are quoted values, or, where these are not available, those values are
  obtained by discounting cash flows at market rates and prices. The market values
  for interest rate risk are calculated by using a standard zero coupon discounted
  cash flow pricing model.

For long-term debt, a favourable change in
  market value results in a decline in the absolute value of debt. For other financial
  instruments, a favourable change in market value results in an increase in market
  value.

United Utilities Annual Report
  on Form 20-F 2003      33

---






INTEREST RATE RISKThe sensitivity analysis assumes an instantaneous
  one per cent (100 basis points) move in interest rates for all maturities and
  all currencies from their levels at 31 March 2003 and 31 March 2002, with all
  other variables held constant.

|                       |                     |   | Market
        value change |   |                  |   | Market
        value change |  
|---------------------- | ------------------- | - | --------------------------- | - | ---------------- | - | --------------------------- | -
|                       |                     |   |                             |   |                  |   |                             |  
|                       | Market
      value  |   | +1% movement                |   | -1% movement     |   | Market value                |  
|                       | 31 March
      2003 |   | in interest rate            |   | in interest rate |   | 31 March 2002               |  
|Interest rate movement | £m                  |   | £m                          |   | £m               |   | £m                          |  
|                       |                     |   |                             |   |                  |   |                             |  
|Long-term debt         | (4,185              | ) | 238                         |   | (271             | ) | (3,253                      | )
|                       |                     |   |                             |   |                  |   |                             |  
|Interest rate swaps    | (28                 | ) | (78                         | ) | 94               |   | (87                         | )
|                       |                     |   |                             |   |                  |   |                             |  
|Currency swaps         | 240                 |   | (72                         | ) | 85               |   | 94                          |  
|                       |                     |   |                             |   |                  |   |                             |  

The movement in market value of debt and instruments
  hedging debt will not result in any immediate change to the groups financial
  statements, since market values are not recognised on the group balance sheet.
  An increase in short-term interest rates of all currencies of one per cent would
  increase group net interest payable for the financial year by £2.0 million
  (2002: £1.5 million, 2001: £2.1 million).

FOREIGN CURRENCY RISKThe sensitivity analysis assumes an instantaneous
  ten per cent change in foreign currency exchange rates against sterling from
  their levels at 31 March 2003 and 31 March 2002, with all other variables held
  constant. The +10 per cent case assumes a ten per cent strengthening of sterling
  versus all other currencies and the -10 per cent a weakening of sterling.

|               |                       |   | Market
        value change |   |                       |   | Market
        value change |  
|-------------- | --------------------- | - | --------------------------- | - | --------------------- | - | --------------------------- | -
|               |                       |   |                             |   |                       |   |                             |  
|               |                       |   | +10%
        movement       |   | -10%
        movement |   |                             |  
|               | Market
        value  |   | in foreign                  |   | in foreign            |   | Market
        value        |  
|               | 31
        March 2003 |   | exchange
        rate       |   | exchange
        rate |   | 31 March
        2002       |  
|               | £m                    |   | £m                          |   | £m                    |   | £m                          |  
|               |                       |   |                             |   |                       |   |                             |  
|Long-term debt | (4,185                | ) | 208                         |   | (254                  | ) | (3,253                      | )
|               |                       |   |                             |   |                       |   |                             |  
|Currency swaps | 240                   |   | (209                        | ) | 256                   |   | 94                          |  
|               |                       |   |                             |   |                       |   |                             |  

Market value changes from movements in currency
  rates in long-term debt, currency swaps and forward contracts hedging debt are
  taken through the groups statement of total recognised gains and losses
  in accordance with SSAP 20.

Substantially all cash and cash equivalents
  are held in sterling and sterling denominated instruments.

ITEM 12   DESCRIPTION
  OF SECURITIES OTHER THAN EQUITY SECURITIESNot applicable.

ITEM 13   DEFAULTS, DIVIDEND
  ARREARAGES AND DELINQUENCIESNone.

ITEM 14   MATERIAL MODIFICATIONS
  TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDSNone.

ITEM 15   CONTROLS AND
  PROCEDURESWithin the 90-day period prior to the filing
  of this report, an evaluation has been carried out under the supervision and
  with the participation of the companys management, including the companys
  chief executive and group finance director, of the effectiveness of the design
  and operation of the companys disclosure controls and procedures. Based
  upon and as part of that evaluation, the chief executive and group finance director
  concluded that the disclosure controls and procedures are effective in all material
  respects to ensure that information required to be disclosed in the reports
  the company files and submits under the Exchange Act are recorded, processed,
  summarised and reported as and when required.

In addition, there have been no significant
  changes in the companys internal controls or in other factors that could
  significantly affect these controls subsequent to the date of their evaluation.

Certifications in accordance with section 302
  of the Sarbanes-Oxley Act 2002 can be found on page 38 of this Form 20-F.

ITEM 16C  PRINCIPAL ACCOUNTANT
  FEES AND SERVICESDetails of audit fees, audit-related fees, tax
  fees and all other fees are given in the Report on governance on
  page 37 of the 2003 annual report to shareholders, incorporated by reference
  herein.

34United
  Utilities Annual Report on Form 20-F 2003

---






ITEM 17   FINANCIAL STATEMENTS

Index to the financial statements

|Financial statements                                                                                                                                                                                                                                                                                             |  |  | Pages       |  | Related
        notespages | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ----------- |  | -------------------------- | 
|                                                                                                                                                                                                                                                                                                                 | 
|Independent Auditors Report as of
      and for the year ended 31 March 2003(1)                                                                                                                                                                                                                                 |  |  | 35          |  |                           | 
|                                                                                                                                                                                                                                                                                                                 | 
|Independent Auditors Report as of
      and for the years ended 31 March 2002 and 2001(1)                                                                                                                                                                                                                       |  |  | 36          |  |                           | 
|                                                                                                                                                                                                                                                                                                                 | 
|Consolidated profit and loss account for
      each of the three years ended 31 March 2003(2)                                                                                                                                                                                                                    |  |  | 46          |  | 53-57                      | 
|                                                                                                                                                                                                                                                                                                                 | 
|Consolidated balance sheets at 31 March
      2003 and 2002(2)                                                                                                                                                                                                                                                   |  |  | 47          |  | 57-71                      | 
|                                                                                                                                                                                                                                                                                                                 | 
|Consolidated cash flow statement for each
      of the three years ended 31 March 2003(2)                                                                                                                                                                                                                        |  |  | 48          |  | 71-74                      | 
|                                                                                                                                                                                                                                                                                                                 | 
|Statements of total recognised gains and
      losses for each of the three years ended 31 March 2003(2)                                                                                                                                                                                                         |  |  | 49          |  |                           | 
|                                                                                                                                                                                                                                                                                                                 | 
|Reconciliations of movements in equity
      shareholders funds for each of the three years ended 31 March 2003(2)                                                                                                                                                                                              |  |  | 49          |  |                           | 
|                                                                                                                                                                                                                                                                                                                 | 
|Notes to the consolidated financial statements(2)                                                                                                                                                                                                                                                                |  |  | 50-74       |  |                           | 
|                                                                                                                                                                                                                                                                                                                 | 
|Reconciliation of consolidated net income,
      shareholders equity and financial position reported in accordance
      with AccountingPrinciples Generally
      Accepted in the United Kingdom to those in accordance with Accounting Principles
      Generally Accepted in the United States of America(3) |  |  | 74(a)-74(g) |  |                           | 
|                                                                                                                                                                                                                                                                                                                 | 
|                                                                                                                                                                                                                                                                                                                

|(1) | Page numbers refer to pages
      in this report.                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                   
|(2) | Page numbers refer to pages
      of the 2003 annual report to shareholders that are incorporated by reference
      herein and included in exhibit 10.1.                         
|    |                                                                                                                                                                                   
|(3) | Page numbers refer to sections
      which do not form part of the 2003 annual report to shareholders but are
      incorporated by reference herein and included in exhibit 10.1.

The consolidated financial statements listed
  in the above index which are included in the 2003 annual report to shareholders
  and selected other pages are incorporated by reference herein. With the exception
  of the foregoing, pages listed in the above index and the items incorporated
  by reference in items 3, 4, 5, 6, 7, 16C, 17 and 19 of this report, the 2003
  annual report to shareholders is not to be deemed filed as part of this report.

INDEPENDENT AUDITORS REPORTTo the Directors of United Utilities PLC

We have audited the consolidated financial
  statements of United Utilities PLC and subsidiaries as of and for the year ended
  31 March 2003 as listed in the accompanying index. These financial statements
  are the responsibility of the companys management. Our responsibility
  is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing
  standards generally accepted in the United States of America. Those standards
  require that we plan and perform the audit to obtain reasonable assurance about
  whether the financial statements are free of material misstatement. An audit
  includes examining, on a test basis, evidence supporting the amounts and disclosures
  in the financial statements. An audit also includes assessing the accounting
  principles used and significant estimates made by management, as well as evaluating
  the overall financial statement presentation. We believe that our audit provides
  a reasonable basis for our opinion.

In our opinion, such financial statements present
  fairly, in all material respects, the financial position of United Utilities
  PLC and subsidiaries at 31 March 2003, and the results of its operations and
  its cash flows for the year then ended in conformity with accounting principles
  generally accepted in the United Kingdom.

We also audited the adjustments described in
  note 1(a) that were applied to restate the 2002 and 2001 financial statements
  to give retroactive effect to the changes in the method of accounting for pre-contract
  costs in accordance with Urgent Issues Task Force Abstract No. 34, Pre-contract
  costs, and for telecommunications network capacity sales. In our opinion,
  such adjustments are appropriate and have been properly applied.

Accounting principles generally accepted in
  the United Kingdom vary in certain significant respects from accounting principles
  generally accepted in the United States of America. The application of the latter
  would have affected the determination of net income for the period ended 31
  March 2003 and the determination of shareholders equity and financial
  position at 31 March 2003, to the extent summarised in note 36 to the consolidated
  financial statements as listed in the accompanying index.

DELOITTE & TOUCHE
  Manchester, United Kingdom

21 May 2003, except for note 36 as to which
  the date is 9 June 2003

United Utilities Annual Report
  on Form 20-F 2003     35

---






INDEPENDENT AUDITORS REPORTTo the Directors of United Utilities PLC

We have audited the accompanying consolidated
  balance sheets of United Utilities PLC and subsidiaries ( the group)
  as of 31 March 2002, and the related consolidated profit and loss accounts,
  cash flow statements, statements of total recognized gains and losses and reconciliation
  of movements in equity shareholders funds for each of the years in the
  two-year period ended 31 March 2002, before the restatement for the changes
  in accounting policy explained in note 1(a). These consolidated financial statements
  are the responsibility of the groups management. Our responsibility is
  to express an opinion on these consolidated financial statements based on our
  audits.

We conducted our audits in accordance with
  auditing standards generally accepted in the United Kingdom and the United States
  of America. Those standards require that we plan and perform the audit to obtain
  reasonable assurance about whether the financial statements are free of material
  misstatement. An audit includes examining, on a test basis, evidence supporting
  the amounts and disclosures in the financial statements. An audit also includes
  assessing the accounting principles used and significant estimates made by management,
  as well as evaluating the overall financial statement presentation. We believe
  that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial
  statements referred to above present fairly, in all material respects, the financial
  position of United Utilities PLC and subsidiaries as of 31 March 2002, and the
  results of their operations and their cash flows for each of the years in the
  two-year period ended 31 March 2002 in conformity with accounting principles
  generally accepted in the United Kingdom.

Accounting principles generally accepted in
  the United Kingdom vary in certain significant respects from accounting principles
  generally accepted in the United States of America. Application of accounting
  principles generally accepted in the United States of America would have affected
  results of operations for each of the years in the two-year period ended 31
  March 2002 and consolidated shareholders equity as of 31 March 2002 to
  the extent summarised in note 36 to the consolidated financial statements.

KPMG Audit PlcChartered Accountants 
  Registered Auditor 
  Manchester 
  England 
  31 May 2002

36United
  Utilities Annual Report on Form 20-F 2003

---






ITEM 18   FINANCIAL STATEMENTSNot applicable.

ITEM 19   EXHIBITS

|1.1  | The articles
      of association of United Utilities PLC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|2.1  | The deposit agreement between United Utilities
      PLC, the Bank of New York and the owners and holders from time to time of
      American Depositary Receipts issued under the Deposit Agreement (included
      as an exhibit to the Registration Statement on Form F-6, Registration No.
      333-8238, filed on 23 January 1998).                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|2.2  | Amended and
      restated trust deed relating to the €4 billion euro medium-term note
      programme.                                                                                                                                                                                                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|2.3  | Other than as provided in exhibit 2.2,
      the total amount of long-term debt securities of United Utilities PLC authorised
      under any instrument does not exceed ten per cent of the total assets of
      the group on a consolidated basis. United Utilities PLC agrees to provide
      to the Securities and Exchange Commission, upon request, copies of any instruments
      that define the rights of holders of long-term debt of United Utilities
      that are not filed as exhibits to this annual report.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|4.1  | Instrument of
      appointment by the Secretary of State for the Environment of North West
      Water Limited (now called United Utilities Water) as a water and sewerage
      undertaker under the Water Act 1989.                                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|4.2  | Electricity
      Distribution Licence  standard conditions                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|4.3  | Electricity
      Distribution Licence for Norweb plc (now called United Utilities Electricity)
       special conditions.                                                                                                                                                                                                                                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|4.4  | Executive directors
      service contracts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|8.1  | A list of all principal operating subsidiaries
      is contained in note 13 to the consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.1 | Excerpts of
      the 2003 annual report to shareholders of United Utilities PLC and reconciliations
      to US GAAP.                                                                                                                                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.2 | Certifications
      pursuant to section 906 of the Sarbanes-Oxley Act 2002 (subsections (a)
      and (b) of section 1350, Chapter 63 of Title 18, United States Code).                                                                                                                                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.3 | Consent of
      Deloitte & Touche                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.4 | Consent of
      KPMG Audit Plc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

SIGNATURESPursuant to the requirements of Section 12 of
  the Securities Exchange Act of 1934, the registrant certifies that it meets
  all of the requirements for filing on Form 20-F and has duly caused this annual
  report to be signed on its behalf by the undersigned thereunto duly authorised.

United Utilities PlcRegistrant

|/s/                                                                                                                     | John Edward Roberts                                                                                         | Date 9 June 2003
|----------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------- | ----------------
|. . . . . . . . . . . . . . .
      . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
      . . . | . . . . . . . . . . . . . . . . . . . .
      . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

John Edward RobertsChief executive

United Utilities Annual Report
  on Form 20-F 2003     37

---






CERTIFICATIONI, John Edward Roberts, certify that

|1. | I have reviewed
      this annual report on Form 20-F of United Utilities PLC;                                                                                                                                                                                                                                                                                                                              
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                             
|2. | Based on my knowledge,
      this annual report does not contain any untrue statement of a material fact
      or omit to state a material fact necessary to make the statements made,
      in light of the circumstances under which such statements were made, not
      misleading with respect to the period covered by this annual report;                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                             
|3. | Based on my knowledge,
      the financial statements, and other financial information included in this
      annual report, fairly present in all material respects the financial condition,
      results of operations and cash flows of the registrant as of, and for, the
      periods presented in this annual report;                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                             
|4. | The registrants
      other certifying officers and I are responsible for establishing and maintaining
      disclosure controls and procedures (as defined in Exchange Act Rules 13a-14
      and 15d-14) for the registrant and we have:                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                             
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                             
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                             
|   | c)                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                             
|5. | The registrants
      other certifying officers and I have disclosed, based on our most recent
      evaluation, to the registrants auditors and the audit committee of
      the registrants board of directors (or persons fulfilling the equivalent
      function):                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                             
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                             
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                             
|6. | The registrants
      other certifying officers and I have indicated in the report whether or
      not there were significant changes in internal controls or in other factors
      that could significantly affect internal controls subsequent to the date
      of our most recent evaluation, including any corrective actions with regard
      to significant deficiencies and material weaknesses.

|                                                                                                                      |                                                                                         
|--------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------
|                                                                                                                      |                                                                                         
|                                                                                                                      |                                                                                         
|/s/ John Edward Roberts                                                                                               | Date 9 June 2003                                                                        
|..................................................................................................................... | ........................................................................................
|John Edward Roberts, Chief executive                                                                                  |                                                                                         

CERTIFICATIONI, Simon George Batey, certify that

|1. | I have reviewed
      this annual report on Form 20-F of United Utilities PLC;                                                                                                                                                                                                                                                                                                                              
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                             
|2. | Based on my knowledge,
      this annual report does not contain any untrue statement of a material fact
      or omit to state a material fact necessary to make the statements made,
      in light of the circumstances under which such statements were made, not
      misleading with respect to the period covered by the report;                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                             
|3. | Based on my knowledge,
      the financial statements, and other financial information included in this
      annual report, fairly present in all material respects the financial condition,
      results of operations and cash flows of the registrant as of, and for, the
      periods presented in this annual report;                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                             
|4. | The registrants
      other certifying officers and I are responsible for establishing and maintaining
      disclosure controls and procedures (as defined in Exchange Act Rules 13a-14
      and 15d-14) for the registrant and we have:                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                             
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                             
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                             
|   | c)                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                             
|5. | The registrants
      other certifying officers and I have disclosed, based on our most recent
      evaluation, to the registrants auditors and the audit committee of
      the registrants board of directors (or persons fulfilling the equivalent
      function):                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                             
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                             
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                             
|6. | The registrants
      other certifying officers and I have indicated in the report whether or
      not there were significant changes in internal controls or in other factors
      that could significantly affect internal controls subsequent to the date
      of our most recent evaluation, including any corrective actions with regard
      to significant deficiencies and material weaknesses.

|                                                                                                                      |                                                                                         
|--------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------
|                                                                                                                      |                                                                                         
|                                                                                                                      |                                                                                         
|/s/ Simon George Batey                                                                                                | Date 9 June 2003                                                                        
|..................................................................................................................... | ........................................................................................
|Simon George Batey, Group finance
      director                                                                      |                                                                                         

38United
  Utilities Annual Report on Form 20-F 2003

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Glossary

|Term used in annual report or Form
      20-F                   | US equivalent
      or brief description                                  
|--------------------------------------------------------------- | --------------------------------------------------------------------------
|                                                               
|Accounts                                                        | Financial statements                                                      
|                                                               
|Acquisition method of accounting                                | Purchase accounting                                                       
|                                                               
|Allotted                                                        | Issued                                                                    
|                                                               
|Called-up share capital                                         | Ordinary shares, issued and
      fully paid                              
|                                                               
|Capital allowances                                              | Tax term equivalent to US
      tax depreciation allowances               
|                                                               
|Class of business                                               | Industry segment                                                          
|                                                               
|Creditors                                                       | Accounts payable/payables                                                 
|                                                               
|Creditors: amounts falling due after more
      than one year   | Long-term liabilities                                                     
|                                                               
|Creditors: amounts falling due within one
      year            | Current liabilities                                                       
|                                                               
|Debtors                                                         | Accounts receivable/receivables                                           
|                                                               
|Finance lease                                                   | Capital lease                                                             
|                                                               
|Employee share option                                           | Employee stock option                                                     
|                                                               
|Equity shareholders funds                                      | Stockholders equity                                                      
|                                                               
|Financial year                                                  | Fiscal year                                                               
|                                                               
|Fixed asset investments                                         | Long-term investments                                                     
|                                                               
|Freehold                                                        | Ownership with absolute rights
      in perpetuity                        
|                                                               
|Freehold land                                                   | Land owned                                                                
|                                                               
|Gearing                                                         | Leverage                                                                  
|                                                               
|Group, or consolidated, accounts                                | Consolidated financial statements                                         
|                                                               
|Interest receivable                                             | Interest income                                                           
|                                                               
|Interest payable                                                | Interest expense                                                          
|                                                               
|Nominal value                                                   | Par value                                                                 
|                                                               
|Ordinary share                                                  | Common stock/share                                                        
|                                                               
|Pension scheme                                                  | Pension plan                                                              
|                                                               
|Profit                                                          | Income (or earnings)                                                      
|                                                               
|Profit and loss account (reserve)                               | Retained earnings                                                         
|                                                               
|Profit and loss account                                         | Income statement                                                          
|                                                               
|Reconciliation of movements in equity shareholders
      funds | Statement of changes in stockholders
      equity                        
|                                                               
|Reserves                                                        | Stockholders equity
      other than capital stock                       
|                                                               
|Share capital                                                   | Ordinary shares, capital stock
      or common stock issued and fully paid
|                                                               
|Share premium account                                           | Premiums paid in excess of
      par value                                
|                                                               
|Shares in issue                                                 | Shares outstanding                                                        
|                                                               
|Stocks                                                          | Inventories/operating stocks                                              
|                                                               
|Tangible fixed assets                                           | Property, plant and equipment                                             
|                                                               
|Turnover                                                        | Revenues (or sales)                                                       
|                                                               



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EXHIBIT
  INDEX

|1.1  | The articles
      of association of United Utilities PLC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|2.1  | The deposit agreement between United Utilities
      PLC, the Bank of New York and the owners and holders from time to time of
      American Depositary Receipts issued under the Deposit Agreement (included
      as an exhibit to the Registration Statement on Form F-6, Registration No.
      333-8238, filed on 23 January 1998).                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|2.2  | Amended and
      restated trust deed relating to the €4 billion euro medium-term note
      programme.                                                                                                                                                                                                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|2.3  | Other than as provided in exhibit 2.2,
      the total amount of long-term debt securities of United Utilities PLC authorised
      under any instrument does not exceed ten per cent of the total assets of
      the group on a consolidated basis. United Utilities PLC agrees to provide
      to the Securities and Exchange Commission, upon request, copies of any instruments
      that define the rights of holders of long-term debt of United Utilities
      that are not filed as exhibits to this annual report.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|4.1  | Instrument of
      appointment by the Secretary of State for the Environment of North West
      Water Limited (now called United Utilities Water) as a water and sewerage
      undertaker under the Water Act 1989.                                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|4.2  | Electricity
      Distribution Licence  standard conditions                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|4.3  | Electricity
      Distribution Licence for Norweb plc (now called United Utilities Electricity)
       special conditions.                                                                                                                                                                                                                                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|4.4  | Executive directors
      service contracts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|8.1  | A list of all principal operating subsidiaries
      is contained in note 13 to the consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.1 | Excerpts of
      the 2003 annual report to shareholders of United Utilities PLC and reconciliations
      to US GAAP.                                                                                                                                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.2 | Certifications
      pursuant to section 906 of the Sarbanes-Oxley Act 2002 (subsections (a)
      and (b) of section 1350, Chapter 63 of Title 18, United States Code).                                                                                                                                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.3 | Consent of
      Deloitte & Touche                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.4 | Consent of
      KPMG Audit Plc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               



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