United Utilities Group Plc (UU) owns and manages regulated water and wastewater networks in the NW of England. As part of a strategy of focusing on its core water activities, UU disposed of non strategic assets (Nov 2010). Operational efficiency remains key to driving earnings, given the regulated nature of revenue, with productivity gains expected from infrastructure investments (GBP3.6bn 2010–15). UU expects 12% real growth in regulatory capital value and 2% pa dividend growth until 2015 given average household bills will fall 4% in real terms (2010-15). A challenging pricing environment (Ofwat determines water prices based on RPI) coupled with an increase in capital investment may pressure margins however regulatory risk is limited given the revenue agreement tenure to 2015 resulting in high revenue visibility. Countering inflation and related interest concerns the group hedges approx. 46% of net debt. Low financial risk and an average debt maturity of >25 years provide stability however, if inflation falls it could lead to pressure on gearing and credit ratings.