On 24 July 2008, the High Court (the ‘Court’) approved the scheme of arrangement (the ‘Scheme’) of United Utilities PLC to establish a new listed company, United Utilities Group PLC, as the holding company of United Utilities PLC. United Utilities PLC shareholders received 17 United Utilities Group PLC ordinary shares for every 22 United Utilities PLC shares, together with one United Utilities Group PLC B share of 170.0 pence for each United Utilities PLC share.
On 30 July 2008, the Court approved the reduction of the capital of United Utilities Group PLC, whereby the nominal value of each ordinary share was reduced from 500.0 pence to five pence.
In addition, a merger reserve was created in the company statement of financial position of United Utilities Group PLC upon the Scheme becoming effective, which, in order to create further distributable reserves in United Utilities Group PLC, was capitalised into A shares, which were cancelled as part of the reduction of capital of United Utilities Group PLC.
The reduction of capital became effective on 31 July 2008. The effect of the Scheme of arrangement and the subsequent reduction in capital increased the distributable reserves of United Utilities Group PLC by £4.8 billion which enabled the return of £1,499.0 million capital to take place and will allow future dividends.
The merger reserve arises on consolidation and represents the capital adjustment to reserves required to effect the reverse acquisition, being the difference between the existing share capital and share premium of United Utilities PLC at the date of the reverse acquisition and the share capital, including B shares, of United Utilities Group PLC following the reduction of capital of United Utilities Group PLC. The increase in the merger reserve during the year ended 31 March 2010 is due to the redemption of the remaining £16.7 million of B shares in April 2009 (see note 18).
50,400 ordinary shares were allotted during the year ended 31 March 2010 (2009: 104,399 ordinary shares) for the exercise of options in accordance with the rules of the employee ShareSave scheme and the executive share option scheme for a total consideration of £0.2 million (2009: £0.7 million).
As permitted by section 408 of the Companies Act 2006, the company has not presented its own income statement. The amount of group (loss)/ profit for the financial year dealt with in the company’s income statement is £522.9 million loss (2009: £133.0 million profit) after accounting for dividends received from subsidiary undertakings of £231.2 million (2009: £172.5 million).
The increase in the capital redemption reserve during the year ended 31 March 2010 is due to the redemption of the remaining £16.7 million of B shares in April 2009 (see note 18).