The board is acutely aware of the group’s relationships with its regulators, Ofwat, Defra, the Drinking Water Inspectorate, the Environment Agency and the Office of Environmental Protection (OEP). The OEP was established in November 2021 following the enactment of the 2021 Environment Act, with the purpose of protecting and improving the environment by holding government bodies and other public authorities, including water companies, to account.

By the nature of the regulatory model, the company is in regular contact with its regulators working to deliver the best outcome for shareholders, customers, communities and the environment. The company is continuing to co-operate fully with Ofwat and the Environment Agency investigations into water and wastewater companies in England and Wales.

In October 2024, the Government set up the Independent Water Commission, chaired by Sir Jon Cunliffe. The Commission was given a broad terms of reference to review the regulatory framework, the regulators and incentives that govern the water industry model and strategic water planning. It required consideration of the conditions needed in the private regulated model to attract the investment required to improve environmental performance, bring more accountability, rebuild public trust and confidence, and secure a resilient, innovative water sector and framework that will “work for decades to come”. The Commission has been tasked with coming up with a set of recommendations to reform the water sector regulatory systems “to deliver the necessary reset of the water sector in England and Wales.” The company contributed fully towards the evidence gathering process which sets out to improve the framework under which we invest in, manage and deliver water and wastewater services for customers and the environment, with the board being kept fully apprised of the progress of the review.

The five-yearly price review is an extremely complex process for all those involved - with management beginning to devise plans for the next AMP while only part way through an existing AMP. The company received the final determination (FD) for AMP8 on 19 December 2024. The board was apprised in detail of the implications for all stakeholders should the FD be accepted without further challenge by the company via a referral to the Competition and Markets Authority. After much analysis and taking into account the view of management, the board concluded that the group’s purpose of a stronger, greener and healthier North West was best served by not submitting an appeal to the FD.

Following receipt of the FD, the Board considered the company’s dividend policy for the next AMP, based on the expected level of returns from the regulated company. Payment of dividends is subject to conditions contained within its appointee licence - that dividends declared or paid will: ‘not impair the ability of the appointee to finance the appointed business, taking account of current and future investment needs and financial resilience over the longer term’; ‘take account of service delivery for customers and the environment over time, including performance levels and other obligations’; ‘reward efficiency and the effective management of risks to the appointed business’. The board approved the company’s dividend policy targeting growth in the dividend per share of CPIH inflation each year from the 2024/25 base, which the board believes would be most likely to promote the long-term success of the company for the benefit of its members as a whole.

The health, safety and wellbeing of all our employees and contractors has, again, been an area of focus for the board – holding management to account through regular presentations and discussions at board meetings. Driving the right health and safety culture and embedding the right behaviours amongst employees is vital, and even more so given the demands, challenges and new ways of operating required to deliver the £13 billion AMP8 capital programme safely. The board was pleased that, following extensive consultation with colleagues across the business, the existing ‘Home Safe and Well’ programme would be refreshed with leadership capability being improved to support cultural change by focusing on behaviour, engagement and compliance with the freshly articulated standards and requirements. The refreshed programme was launched at the March 2025 all-colleague event in Blackpool and a special launch event for our contracting partners was held in Blackpool in April 2025.

On 3 January 2025, it was announced that, following a competitive procurement process to deliver the project under Ofwat’s ‘direct procurement for customers’ (DPC) arrangements, the STRABAG Equitix Consortium was the preferred bidder (PB) to be appointed as the competitively appointed provider (the CAP) with the estimated construction cost being £2.5 billion to £2.9 billion. The CAP will finance the project and recover its costs via a monthly charge to UUW, over the life of the project. This charge will be recovered from customers as part of UUW’s wholesale water charges. Management have been working closely with the PB to achieve financial close at the earliest opportunity.

The CAP will design, build, finance and maintain the replacement of six single line tunnel sections of the Haweswater Aqueduct. The aqueduct is a critical asset for the supply of water to customers in Cumbria, Lancashire and Greater Manchester. DPC is a model that Ofwat is expected to roll out throughout the sector for large capital infrastructure projects in AMP8 and beyond.

The board has regular oversight of cyber security matters – cyber risk is a top-ten risk for United Utilities. As a provider of essential services for UK Critical National Infrastructure, the group is governed by the Network and Information Systems Regulations (NIS Regulations), which focus on cyber security compliance. Monitoring/ enforcement of these regulations is within the remit of the DWI. The chief security officer, who reports functionally to the customer and technology director, presents to the board twice a year, providing the board with insight into the mitigation activities employed by the group in response to the evolving threat of cyber and physical security attacks. The protection of our customers, our people and our assets is of the utmost importance.

As reported last year, Clare Hayward joined the board on 16 April 2024, with Paulette Rowe stepping down at the conclusion of the AGM on 19 July 2024. Ian El-Mokadem will join the board on 1 June 2025, bringing his considerable experience to the board of working in regulatory environments in the delivery of essential public services.

In the following pages of this corporate governance report, we set out how the board has fully applied the principles and fully complied and reported on the provisions of the 2018 UK Corporate Governance Code (the code). In relation to provision 10, we have explained below why the board considers that Alison Goligher continues to be independent notwithstanding that she will remain as a director beyond the ninth anniversary of her first appointment.

Our £13 billion AMP8 capital programme will provide a step change for the group in comparison with its AMP7 programme. The board concluded that it would be beneficial for Alison to remain on the board, thereby retaining her experience of large capital programmes and providing a level of continuity among board members as the board oversees the group’s transition into AMP8.

The board was clear, notwithstanding the length of term served on the board, that with her personal style and approach Alison continues to bring an independent perspective and mindset to board discussions. Her consistent and effective approach contributes hugely to the board’s oversight role and in providing effective challenge to management. She shares her experience as a non-executive director with management and other board members through her wise counsel and pragmatism. Furthermore, she continues to be free from any conflicting interests with those of the group.

I look forward to welcoming shareholders to the company’s main offices in Warrington at the annual general meeting in July, the details of which are included in the notice of meeting.

Sir David Higgins
Chair