RNS Number:6342I
Northumbrian Water Finance PLC
28 November 2007
28 November 2007
NORTHUMBRIAN WATER GROUP PLC
HALF-YEARLY FINANCIAL REPORT FOR THE SIX MONTHS ENDED
30 SEPTEMBER 2007
Northumbrian Water Group plc (NWG or the Group) presents its half-yearly report
for the six months ended 30 September 2007.
HIGHLIGHTS 2007
Financial highlights Six months to Six months to
30.9.2007 30.9.2006 Change Change
#m #m #m %
Continuing operations
Revenue 333.8 315.9 17.9 5.7
Profit on ordinary activities before interest 148.1 129.5 18.6 14.4
Profit before tax 88.0 75.5 12.5 16.6
Profit before tax and FV debt amortisation1 85.0 71.1 13.9 19.5
Profit after tax2 98.2 56.8 41.4 72.9
Net debt 2,128.1 2,053.4 74.7 3.6
Continuing operations
Basic EPS2 18.94p 10.95p 7.99p 73.0%
Adjusted EPS1,3 13.19p 11.32p 1.87p 16.5%
Ordinary dividend proposed 4.00p 3.75p 0.25p 6.7%
Notes:
1 Excludes amortisation of debt fair value #3.0 million (2006: #4.4 million)
2 Includes deferred tax credit #26.8 million (2006: charge, #8.3 million)
3 Excludes deferred tax credit #26.8 million (2006: charge, #8.3 million), IAS
39 #nil (2006: credit, #2.0 million)
* Revenue increase mainly reflects the uplift in tariffs to support
continuing high capital investment
* Regulated capital investment in the period of #117 million (2006:
#100.5 million)
* Funding secured for capital programme to 2010
* Highest levels of customer satisfaction in England and Wales
* Leakage targets achieved
* 100% bathing water compliance
* Ordinary interim dividend of 4.00 pence (2006: 3.75 pence) per share to
be paid on 1 February 2008
Managing Director John Cuthbert said, "The Group has delivered strong
operational and financial performance in the first six months. As announced
previously, NWL has successfully raised the finance for its investment programme
through to 2010 and will not be increasing prices to customers by the full
amount allowed.
NWL has today published 'Looking to the future', strategic direction statements
for its operating areas in the north east and south east of England. These
consultation documents set out ambitions for the next 25 years and beyond.
Stakeholders have already made an important contribution to these documents and
we have also drawn on our extensive customer research. We aim to use this
consultation process to ensure our future plans meet not only UK and EU
legislative requirements, but also the priorities of our customers, CCWater and
other key stakeholders."
For further information contact:
Northumbrian Water 0191 301 6419
John Cuthbert, Managing Director
Chris Green, Finance Director
Alistair Baker, Communications & PR Manager
Pelham PR 020 7743 6670
James Henderson
Chelsea Hayes
Archie Berens
INTERIM MANAGEMENT REPORT
NWG's financial performance
Revenue for the six months to 30 September 2007 was #333.8 million (2006: #315.9
million). This 5.7% increase is mainly due to the uplift in water and sewerage
tariffs at Northumbrian Water Limited (NWL), the Group's principal subsidiary.
Profit on ordinary activities before interest for the six months was #148.1
million (2006: #129.5 million). Operating costs decreased slightly by #0.7
million to #185.7 million largely reflecting lower energy prices.
The net interest charge was #60.3 million (2006: #54.2 million). This includes
a credit of #3.0 million (2006: #4.4 million) from the amortisation of the debt
fair value and a gain of #2.9 million in 2006 from the cancellation of a
financial instrument.
Profit on ordinary activities before tax for the six months was #88.0 million
(2006: #75.5 million). The current tax charge of #16.6 million (2006: #10.4
million) reflects increased profitability and the effect of the 2005 changes in
tax rules on capitalised maintenance expenditure, offset by tax relief for the
prepayment of pension contributions.
The deferred tax credit was #26.8 million (2006: charge, #8.3 million). During
the period, the tax rate change from 30% to 28% was enacted and this results in
a one-off credit to the income statement of #35.4 million.
As disclosed in the Group's 2007 annual report and financial statements, the
2007 Budget also proposed changes to capital allowances. These changes are
expected in the 2008 Finance Act and, accordingly, no adjustment has yet been
made.
Capital structure
The Group's capital structure and gearing ratios remain largely unchanged from
those reported on 6 June 2007. Based on an estimated mid-year Regulated Capital
Value (RCV) of #2,879 million (March 2007: #2,817 million) gearing for the
Group was 74% of RCV at 30 September 2007 (March 2007: 74%). Gearing at NWL,
including the Kielder securitisation, remained at 65%, whilst gearing for the
regulated business of NWL increased slightly to 58% (March 2007: 57%).
NWG net debt increased by #48.5 million to #2,128.1 million, whilst that for
NWL's regulated business increased by #50.5 million to #1,658.6 million.
The Group's debt structure remains largely unchanged with 64% fixed at an
average rate of 6.18%, 19% index linked at an average real rate of 1.85% and 17%
on a variable rate basis.
Current funding is sufficient to meet NWL's capital programme to March 2010.
Cash interest cover for the Group improved from 2.9x at March 2007 to 3.5x
reflecting the impact of the index linked bonds.
Definitions of gearing, net debt and cash interest cover are disclosed in the
March 2007 annual report and financial statements, a copy of which is available
on the Company's website at www.nwg.co.uk.
Northumbrian Water Limited
Revenue was #313.5 million for the six months to 30 September 2007 (2006: #296.2
million). The 5.8% increase is mainly due to the uplift in water and sewerage
charges to support the continuing high capital investment programme agreed as
part of the regulatory price review in 2004. In addition, the revenue includes
#2.7 million (2006: #2.6 million) from the scientific services business
transferred into NWL from Analytical & Environmental Services Limited (AES) at
31 March 2007.
Operating costs increased from #171.8 million to #173.1 million, principally
reflecting the impact of inflation, increased depreciation charges from capital
investment and costs relating to the scientific services income referred to
above. These have been partially offset by lower energy costs and efficiency
savings.
Energy prices for 2007/08 are significantly lower than those for the previous
year and are closer to the level assumed by the regulator at the last price
review. However, energy prices remain volatile and it is already evident that
substantial increases in energy costs will be experienced in 2008/09, largely
removing the benefit gained this year.
Profit on ordinary activities before interest for the period was #140.4 million
(2006: #124.4 million).
Capital investment for the period was #117.0 million (2006: #100.5 million).
For the regulated business, forecast capital investment by 2007/08 on a
cumulative basis is within 2% of the capital programme approved by Ofwat for the
period from 2005 to 2010. At 30 September 2007, NWL has capital expenditure
contracted of #130.8 million.
NWL continues to score very well on measures of customer service and market
survey results confirm that customer satisfaction remains high.
CCWater's inaugural Annual Tracking Survey 2006 showed that 96% of NWL customers
are satisfied with their water supply and 93% with their sewerage services. In
the same survey, 80% of NWL customers are satisfied with the value for money of
their water services and 86% with the value for money of the sewerage services.
These were the highest levels recorded in England and Wales and confirm
independent research commissioned by NWL: over 91% of customers are satisfied
with the service and 87% consider their bills value for money.
Water quality results remain good. Drinking water quality is at an all time
high and the high quality of rivers and bathing waters has been maintained.
This year all 33 bathing waters passed the required mandatory standard and 82%
passed the more demanding guideline standard.
Although our area was not as badly affected by flooding during the period as
other parts of the country, sewer flooding incidents have increased
substantially to 816 as a consequence of severe storms (2006: 212). Capital
investment was accelerated after the storms in 2005 and several major schemes
were completed recently. The largest of these schemes, at Shiremoor in North
Tyneside, has removed 71 properties from the "At Risk of Flooding Register" and
the Acomb Crescent Scheme in Newcastle has removed a further 57.
Major improvements to the water treatment works at Warkworth in Northumberland
were completed on time in August 2007. They incorporate an additional treatment
process to remove pesticides from raw water. Work to reduce discoloured water
is on target to lay 17 km of large diameter pipes in the initial phase of the
programme to improve over 150 km of pipes in the next three years.
Managing leakage helps meet our customers' demand for water. It also reduces
the energy used to treat and pump the water, which lowers carbon emissions and
helps combat climate change. We agreed leakage targets with Ofwat of 156 Ml/d
in the northern operating area and 68.3 Ml/d in the south for 2006/07 and, once
again, both have been met. Our efforts have resulted in leakage levels in Essex
& Suffolk being among the lowest in the country over a number of years.
Reducing leakage in our southern operating area is particularly important, given
the forecast growth in population, and is a key part of the work to find
sustainable ways of meeting the increasing demand for water. NWL continues to
play a leading role in the review of leakage methodologies with the Environment
Agency and Ofwat.
NWL's southern operating areas are in the driest part of the country.
Nevertheless, NWL has avoided restrictions on the use of water and has
maintained average water resource levels in the Essex supply area by managing
demand and achieving leakage levels that are among the lowest in the country.
Customers have also contributed by responding positively to our water efficiency
promotions over the last ten years.
The pre-planning submission stage of the project to increase the capacity of the
Abberton reservoir in Essex is drawing to a close and the planning application
will be submitted in early December. When the project is completed in 2014, the
capacity of the reservoir will be increased by around 60%.
NWL has extended its effluent treatment plant at Bran Sands on Teesside to
provide its first anaerobic treatment facility which will reduce the amount of
waste going to landfill. This significant investment is designed to treat 96
tonnes of chemical oxygen demand a day. Construction of a second plant has also
commenced at Bran Sands and this will convert sludge into green energy that will
meet half the electricity requirement for the entire treatment works.
The pilot stages of our innovative Work Management programme have been completed
successfully with the hardware installed in all vehicles, ready for the roll out
which is now underway. Work Management uses the latest satellite and
communications technology to transfer data electronically between mobile and
office based employees. This three year investment programme will improve
customer service, reduce costs and improve communications across the business.
It will also make a major contribution to improving our environmental impact by
reducing journeys and is predicted to reduce our mileage by around 30%.
We have successfully created a new scientific services division within NWL by
merging the business of AES with NWL's water and waste water compliance teams.
AES continues to operate as a trading division of NWL, providing services to
blue chip clients such as Marks & Spencer, the Ministry of Defence, Castle
Cement, Northern Ireland Water and National Grid Property Limited (a subsidiary
of National Grid Transco plc).
In April this year NWL, in conjunction with Carillion Water, won the Robert
Stephenson Award for the Civil Engineering Contract of the Year. The award,
from the Institution of Civil Engineers North East, recognised the quality of
the work at Seahouses sewage treatment works and associated pumping stations at
Beadnell and Bamburgh.
In November, the former waterworks building at Easington Colliery in County
Durham was re-opened as Healthworks. This is the culmination of a unique
partnership between Northumbrian Water, County Durham Primary Care Trust,
Easington District Council and Horden and Easington Colliery Neighbourhood
Management and will provide a range of dedicated health improvement and
community regeneration services. Healthworks will be a focal point for service
providers and community groups to address the health and social
issues facing one of the most deprived areas of England.
This project is part of NWL's commitment to corporate responsibility to
contribute to the long term sustainability of the communities served. Within
the partnership we have been able to use our own 'Water for health' campaign to
support the Primary Care Trust's Healthy Living agenda to make a lasting
contribution to the local community.
Water and waste water contracts
Revenue for the Group's water and waste water contracts was #16.9 million for
the six months to 30 September 2007 (2006: #17.5 million) and profit on ordinary
activities before interest was #3.4 million (2006: #4.5 million). The decrease
in profit on ordinary activities before interest is principally due to a one-off
credit in respect of gas indexation on tariffs. All contracts continue to
perform satisfactorily.
The Group is a shareholder in two consortia delivering private finance
initiative contracts with Scottish Water. In Ireland, the Group is part of a
contractual consortium that designed and built a waste water treatment plant for
Cork City Council, which the Group also operates and maintains.
AquaGib Limited, in which the Group owns two thirds of the equity, with the
balance owned by the Government of Gibraltar, continues to operate Gibraltar's
dual drinking water and sea water distribution systems. In June 2007, AquaGib
placed a contract for additional reverse osmosis units which will complement
existing units and replace less efficient processes used to produce potable
water from sea water. The project will cost #3.3 million and is due to be
completed in Spring 2008.
Financial calendar
2007
19 December Ex-dividend date
21 December Record date
2008
1 February Interim dividend payment
6 February Interim Management Statement
4 June Preliminary results announcement
31 July AGM
31 July Interim Management Statement
13 August Ex-dividend date
15 August Record date
12 September Final dividend payment
Principal risks and uncertainties
In considering the next six months there are no material changes to the
principal risks and uncertainties affecting the business activities of the Group
as described in the March 2007 annual report and financial statements, a copy of
which is available on the Company's website at www.nwg.co.uk.
Pensions
The Group operates both a final salary defined benefit and a contract-based
contribution pension scheme. Following an extensive review and consultation,
the defined benefit scheme will close to new members at the end of 2007.
Contributions from members who remain in the defined benefit scheme will
increase from 1 April 2008.
From 1 January 2008, new employees will have the opportunity to join a new
occupational trust-based defined contribution arrangement.
At 30 September 2007, the surplus (under IAS19) of the defined benefit scheme
had increased from #42.7 million, at 31 March 2007, to #74 million. This
reflects the third and final tranche of #23.3 million paid to the scheme in
April 2007. A total of #59.4m, representing both employee and employer
contributions for the 5 years to 31 December 2010, has now been invested in the
scheme's assets.
The surplus also reflects the latest assumption on scheme mortality which will
form the basis of the next actuarial valuation as at 31 December 2007.
Dividend
The Board has declared an interim dividend for the period of 4.00 pence per
share (2006: 3.75 pence). This dividend will be paid on 1 February 2008 to
shareholders on the register at the close of business on 21 December 2007. The
dividend cover for the period is 4.7x, and 3.3x excluding deferred tax and the
amortisation of debt fair value.
The dividend is consistent with the policy announced by the Board in June 2005
to maintain a progressive dividend policy with real increases of around 3% p.a.
during the current regulatory period.
Outlook
The Company's operating and financial performance remains strong. By continuing
to concentrate on our core water and waste water competencies we will maintain
our high levels of customer satisfaction and our ability to deliver value to our
stakeholders.
We will continue to focus on managing energy costs and take positive steps to
reduce the environmental impact of our business.
We are consulting with all our stakeholders on our plans for the medium and long
term and will endeavour to continue to manage the business to meet our
regulatory obligations, provide value for our stakeholders and to be a
responsible business in the communities we serve.
John Cuthbert
Managing Director
27 November 2007
Interim consolidated income statement
Six months ended 30 September 2007
Six months to Six months Year to
30.9.2007 to 30.9.2006 31.3.2007
#m #m #m
Notes
Continuing operations
Revenue 2 333.8 315.9 633.5
Operating costs (185.7) (186.4) (375.3)
Profit on ordinary activities before interest 2 148.1 129.5 258.2
Finance costs payable (68.8) (60.0) (127.0)
Finance income receivable 8.5 5.8 15.8
Share of profit after tax of associates and jointly controlled 0.2 0.2 0.8
entities
Profit on ordinary activities before taxation 2 88.0 75.5 147.8
- current taxation 3 (16.6) (10.4) (8.6)
- deferred taxation 3 26.8 (8.3) (28.0)
Profit for the period 98.2 56.8 111.2
Attributable to:
Equity shareholders of the company 98.1 56.7 110.9
Minority interests 0.1 0.1 0.3
98.2 56.8 111.2
Basic earnings per share for profit attributable to ordinary
equity holders of the parent 5 18.94p 10.95p 21.42p
Diluted earnings per share for profit attributable to ordinary
equity holders of the parent 5 18.92p 10.93p 21.38p
Adjusted earnings per share for profit attributable to ordinary
equity holders of the parent (excluding deferred tax, amortisation
of debt fair value and IAS 39 adjustments) 5 13.19p 11.32p 24.95p
Ordinary dividend proposed per share 4 4.00p 3.75p 7.52p
Dividend paid per share 4 7.52p 7.04p 10.79p
Consolidated statement of recognised income and expense
Six months ended 30 September 2007
Six months to Six months Year to
30.9.2007 to 30.9.2006 31.3.2007
#m #m #m
Actuarial gains/(losses) 9.2 (2.4) 25.0
Gains on cash flow hedges - 1.9 2.4
Tax on items charged or credited to equity (2.6) 0.7 (7.5)
Translation differences - - (0.2)
Total income and expense recognised in equity 6.6 0.2 19.7
Transferred to the income statement on cash flow hedges - (2.9) (2.9)
Profit for the period 98.2 56.8 111.2
Total recognised income and expense 104.8 54.1 128.0
Attributable to:
Equity shareholders of the Company 104.7 54.0 127.7
Minority interests 0.1 0.1 0.3
104.8 54.1 128.0
Interim consolidated balance sheet
As at 30 September 2007
30.9.2007 30.9.2006 31.3.2007
Note #m #m #m
Non-current assets
Goodwill 3.6 3.7 3.6
Other intangible assets 64.2 64.2 64.2
Property, plant and equipment 3,189.4 3,041.0 3,119.9
Investments in jointly controlled entities 3.4 3.2 3.6
Financial assets 17.2 21.2 18.0
Pension asset 74.0 17.0 42.7
Other receivables 1.7 1.7 1.7
Other investments 0.2 0.3 0.2
3,353.7 3,152.3 3,253.9
Current assets
Inventories 3.4 3.6 3.7
Trade and other receivables 125.6 111.6 122.8
Cash and cash equivalents 265.8 247.4 316.9
394.8 362.6 443.4
TOTAL ASSETS 3,748.5 3,514.9 3,697.3
Non-current liabilities
Interest bearing loans and borrowings 2,376.9 2,295.1 2,382.1
Provisions 2.8 3.0 2.9
Deferred income tax liabilities 507.0 503.3 531.2
Other payables 9.5 10.2 10.0
Grants 203.1 186.3 193.3
3,099.3 2,997.9 3,119.5
Current liabilities
Interest bearing loans and borrowings 36.0 22.9 34.5
Provisions 0.2 0.3 0.2
Trade and other payables 163.6 158.7 165.6
Income tax payable 10.2 16.4 4.4
210.0 198.3 204.7
TOTAL LIABILITIES 3,309.3 3,196.2 3,324.2
NET ASSETS 439.2 318.7 373.1
Capital and reserves
Issued capital 51.9 51.9 51.9
Share premium reserve 446.5 446.5 446.5
Cash flow hedge reserve 1.0 0.5 1.0
Treasury shares (1.3) (1.7) (1.3)
Currency translation (0.2) - (0.2)
Retained earnings (60.5) (180.1) (126.5)
Equity shareholders' funds 437.4 317.1 371.4
Minority interest 1.8 1.6 1.7
TOTAL CAPITAL AND RESERVES 7 439.2 318.7 373.1
Interim consolidated cash flow statement
Six months ended 30 September 2007
Six months to Six months Year to
30.9.2007 to 30.9.2006 31.3.2007
#m #m #m
Note
Operating activities
Reconciliation of profit before interest to net cash flows from
operating activities
Profit on ordinary activities before interest 148.1 129.5 258.2
Depreciation and other similar non-cash charges 44.8 42.8 92.9
Other non-cash charges 0.2 0.3 (6.2)
Net charge for provisions, less payments (0.1) (0.1) (0.3)
Difference between pension contributions paid and amounts
recognised in the income statement
0.5 2.7 4.4
Decrease/(increase) in inventories 0.3 (0.3) (0.4)
Increase in trade and other receivables (3.1) (4.2) (13.6)
(Decrease)/increase in trade and other payables (0.9) (5.4) 0.9
Cash generated from operations 189.8 165.3 335.9
Advanced contributions in respect of retirement benefits (22.6) (25.8) (25.8)
Net interest paid (57.1) (54.9) (124.7)
Income taxes paid (10.8) (4.4) (14.6)
Net cash flows from operating activities 99.3 80.2 170.8
Investing activities
Interest received 6.4 2.5 12.5
Capital grants received 12.1 9.5 18.8
Proceeds on disposal of property, plant and equipment 1.3 0.8 2.2
Dividends received from jointly controlled entities 0.4 0.6 0.9
Purchase of property, plant and equipment (120.3) (99.3) (211.4)
Net cash flows from investing activities (100.1) (85.9) (177.0)
Financing activities
New borrowings 3.5 325.1 425.0
Maturity of investments 0.9 1.0 2.1
Settled hedge instruments - 2.9 3.4
Issue costs of new borrowings - (0.4) (0.4)
Own shares purchased - - (0.2)
Dividends paid to minority interests - - (0.1)
Dividends paid to equity shareholders (38.7) (36.4) (55.8)
Repayment of borrowings (12.0) (193.7) (201.1)
Payment of principal under hire purchase contracts and finance
leases
(3.9) (3.5) (4.8)
Net cash flows from financing activities (50.2) 95.0 168.1
Increase in cash and cash equivalents (51.0) 89.3 161.9
Cash and cash equivalents at start of period 315.8 153.9 153.9
Cash and cash equivalents at end of period 6 264.8 243.2 315.8
Notes to the interim financial statements
1. Basis of preparation
The interim financial statements for the six months to 30 September 2007 have
been prepared in accordance with International Accounting Standard (IAS) 34 '
Interim Financial Reporting'. The interim financial statements do not include
all the information and disclosures required in the annual report and financial
statements and should be read in conjunction with the Group's annual report and
financial statements as at 31 March 2007. The annual report and financial
statements of the Group are prepared in accordance with International Financial
Reporting Standards (IFRS) as adopted by the European Union.
The accounting policies and methods of computation adopted are the same as those
applied in the annual report and financial statements for the year ended 31
March 2007, except for the adoption of those standards and interpretations
listed below which are required to be followed in the Group's annual report and
financial statements for the year ending 31 March 2008:
* IFRS 7- Financial Instruments: Disclosures
* Amendment to IAS 1 - Presentation of Financial Instruments: Capital
disclosures
* IFRIC 8 - Scope of IFRS 2
* IFRIC 9 - Reassessment of Embedded Derivatives
* IFRIC 10 - Interim Financial Reporting and Impairment
* IFRIC 11: IFRS 2 - Group and Treasury Share transactions
The adoption of these Standards and Interpretations do not have any effect on
the financial position or performance of the Group.
The results for the year ended 31 March 2007 have been extracted from the annual
report and financial statements which have been delivered to the Registrar of
Companies. The independent auditors' report on those financial statements was
unqualified and did not contain a statement under section 237 (2) or (3) of the
Companies Act 1985. The financial information contained in the interim
financial statements does not constitute statutory accounts as defined in
Section 240 of the Companies Act 1985.
The figures for the above periods are unaudited and do not constitute statutory
accounts. However, the auditors have carried out a review of the figures to 30
September 2007 and their report is set out in the independent review report.
The operations of the Group are not subject to material seasonality or
cyclicality. There have been no changes in related party transactions since the
last annual report and financial statements for the year ended 31 March 2007
that have a material effect on the Group's financial position or performance for
the period.
This report was approved by the Board of Directors on 27 November 2007.
2. Segmental analysis of revenue and profit on ordinary
activities before interest
The 'Other' segment (formerly disclosed as 'Related services') previously
included AES. On 31 March 2007, the business of AES merged with NWL and
operates as a trading division of NWL. Accordingly, the comparatives for the '
Other' and 'Northumbrian Water Limited' segments, for the six months to 30
September 2006 and 12 months to 31 March 2007, have been restated by #2.6
million and #5.3 million in respect of revenue, and #0.2 million and #0.4
million in respect of profit on ordinary activities before interest,
respectively.
Credits for central unallocated costs and provisions included in profit on
ordinary activities before interest, for the six months to 30 September 2006 and
12 months to 31 March 2007, of #0.6 million and #3.4 million respectively, have
also been restated to be included within the 'Other' segment.
Revenue
Northumbrian Water & waste
Water water
Limited contracts Other Total
#m #m #m #m
Six months ended 30 September 2007
Segment revenue 313.5 16.9 6.2 336.6
Inter-segment revenue - - (2.8) (2.8)
Revenue to external customers 313.5 16.9 3.4 333.8
Six months ended 30 September 2006
Segment revenue 296.2 17.5 5.7 319.4
Inter-segment revenue - - (3.5) (3.5)
Revenue to external customers 296.2 17.5 2.2 315.9
Year ended 31 March 2007
Segment revenue 591.8 37.0 11.2 640.0
Inter-segment revenue - - (6.5) (6.5)
Revenue to external customers 591.8 37.0 4.7 633.5
Profit on ordinary activities before
interest
Northumbrian Water & waste
Water water
Limited contracts Other Total
#m #m #m #m
Six months ended 30 September 2007
Segment profit on ordinary activities before interest 140.4 3.4 4.3 148.1
Net finance costs (60.3)
Share of profit from associates and jointly controlled
entities 0.2
Profit on ordinary activities before taxation 88.0
Taxation 10.2
Profit for the period 98.2
Six months ended 30 September 2006
Segment profit on ordinary activities before interest 124.4 4.5 0.6 129.5
Net finance costs (54.2)
Share of profit from associates and jointly controlled
entities 0.2
Profit on ordinary activities before taxation 75.5
Taxation (18.7)
Profit for the period 56.8
Year ended 31 March 2007
Segment profit on ordinary activities before interest 243.0 11.9 3.3 258.2
Net finance costs (111.2)
Share of profit from associates and jointly controlled
entities
0.8
Profit on ordinary activities before taxation 147.8
Taxation (36.6)
Profit for the year 111.2
3. Taxation
Six months to Six months Year to
30.9.2007 to 30.9.2006 31.3.2007
#m #m #m
Current tax:
UK corporation tax - continuing operations 16.6 10.3 21.0
- income tax reported in equity on cash - 0.1 0.1
flow hedges
- adjustment in respect of prior periods - - (12.5)
Total current tax 16.6 10.4 8.6
Deferred tax:
Deferred tax - continuing operations 8.5 11.3 21.0
- impact of rate reduction (35.4) - -
- income tax reported in equity on cash flow hedges - (0.1) (0.1)
- adjustment in respect of prior periods 0.1 (2.9) 7.1
Total deferred tax (26.8) 8.3 28.0
Tax (credit)/charge in the income statement (10.2) 18.7 36.6
4. Dividends paid and proposed
The Board has declared an ordinary interim dividend for the period of 4.00 pence
per share (2006/07: 3.75 pence). The dividend will be paid on 1 February 2008
to shareholders on the register at the close of business on 21 December 2007.
Six months to Six months Year to
30.9.2007 to 30.9.2006 31.3.2007
#m #m #m
Declared and paid during the period:
Equity dividends on ordinary shares:
Interim dividend for 2006/07: 3.75p - - 19.4
Final dividend for 2006/07: 7.52p (2005/06: 7.04p) 38.9 36.4 36.4
Dividends paid 38.9 36.4 55.8
Proposed dividend for the period:
Interim dividend for 2007/08: 4.00p (2006/07: 3.75p) 20.7 19.4 -
Final dividend for 2006/07: 7.52p - - 39.0
5. Earnings per share
Basic earnings per share (EPS) is calculated by dividing the profit attributable
to ordinary equity holders of the parent by the weighted average number of
ordinary shares in issue during the period. Treasury shares held are excluded
from the weighted average number of shares for basic EPS.
Weighted Weighted
average average
number of Earnings number of Earnings
Earnings shares per share Earnings shares per share
30.9.2007 30.9.2007 30.9.2007 30.9.2006 30.9.2006 30.9.2006
#m million pence #m million Pence
Basic EPS 98.1 517.9 18.94 56.7 517.6 10.95
Diluted EPS 98.1 518.6 18.92 56.7 518.6 10.93
The weighted average number of shares for diluted EPS is calculated by including
the treasury shares held.
Adjusted EPS is considered by the directors to give a better indication of the
Group's underlying performance and is calculated as follows:
Weighted Weighted
average average
number of Earnings number of Earnings
Earnings shares per share Earnings shares per share
Six months to: 30.9.2007 30.9.2007 30.9.2007 30.9.2006 30.9.2006 30.9.2006
#m million pence #m million Pence
Basic EPS 98.1 517.9 18.94 56.7 517.6 10.95
Deferred tax (26.8) (5.17) 8.3 1.60
Amortisation of debt fair value (3.0) (0.58) (4.4) (0.84)
IAS 39 derivatives (net of tax) - - (2.0) (0.39)
Adjusted EPS 68.3 517.9 13.19 58.6 517.6 11.32
Weighted
average
number of Earnings
Earnings shares per share
Year to: 31.3.2007 31.3.2007 31.3.2007
#m million pence
Basic EPS 110.9 517.7 21.42
Diluted EPS 110.9 518.6 21.38
Basic EPS 110.9 517.7 21.42
Deferred tax 28.0 5.41
Amortisation of debt fair value (7.7) (1.49)
Derivatives (2.0) (0.39)
Adjusted EPS 129.2 517.7 24.95
6. Cash and cash equivalents
For the purposes of the consolidated cash flow statement, cash and cash
equivalents comprise the following:
Six months to Six months Year to
30.9.2007 to 30.9.2006 31.3.2007
#m #m #m
Cash at bank and in hand 23.7 21.2 53.3
Short term deposits 242.1 226.2 263.6
Bank overdrafts (1.0) (4.2) (1.1)
264.8 243.2 315.8
7. Reconciliation of movements in equity
Equity Share Cash flow
share premium hedge
capital reserve reserve Treasury Currency Retained Total Minority
shares translation earnings equity interests Total
#m #m #m #m #m #m #m #m #m
At 1 April 2006 51.9 446.5 1.5 (1.7) - (198.9) 299.3 1.5 300.8
Shares purchased - - - (0.2) - - (0.2) - (0.2)
Total recognised
income and expense for
the year - - (0.5) - (0.2) 128.4 127.7 0.3 128.0
Share-based payment - - - - - 0.4 0.4 - 0.4
Exercise of LTIP - - - 0.6 - (0.6) - - -
awards
Equity dividends paid - - - - - (55.8) (55.8) (0.1) (55.9)
At 31 March 2007 51.9 446.5 1.0 (1.3) (0.2) (126.5) 371.4 1.7 373.1
Total recognised
income and expense for
the period - - - - - 104.7 104.7 0.1 104.8
Share-based payment - - - - - 0.2 0.2 - 0.2
Equity dividends paid - - - - - (38.9) (38.9) - (38.9)
At 30 September 2007 51.9 446.5 1.0 (1.3) (0.2) (60.5) 437.4 1.8 439.2
Equity Share Cash flow
share premium hedge
capital reserve reserve Treasury Retained Total Minority
shares earnings equity interests Total
#m #m #m #m #m #m #m #m
At 1 April 2006 51.9 446.5 1.5 (1.7) (198.9) 299.3 1.5 300.8
Total recognised income and
expense for the period
- - (1.0) - 55.0 54.0 0.1 54.1
Share-based payment - - - - 0.2 0.2 - 0.2
Equity dividends paid - - - - (36.4) (36.4) - (36.4)
At 30 September 2006 51.9 446.5 0.5 (1.7) (180.1) 317.1 1.6 318.7
Responsibility Statements
We confirm that to the best of our knowledge:
a) The interim financial statements have been prepared in accordance with IAS
34;
b) The interim management report includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the first six
months and description of principal risks and uncertainties for the remaining
six months of the year); and
c) The interim management report includes a fair review of the information
required by DTR 4.2.8R (disclosure of related party transactions and changes
therein).
By order of the Board
John Cuthbert Chris Green
Managing Director Finance Director
27 November 2007
INDEPENDENT REVIEW REPORT TO NORTHUMBRIAN WATER GROUP PLC
Introduction
We have been engaged by the Company to review the interim set of financial
statements in the half-yearly financial report for the six months ended 30
September 2007 which comprise the Consolidated Income Statement, Consolidated
Statement of Recognised Income and Expense, Consolidated Balance Sheet,
Consolidated Cash Flow Statement and the related notes 1 to 7. We have read the
other information contained in the half-yearly financial report and considered
whether it contains any apparent misstatements or material inconsistencies with
the information in the interim set of financial statements.
This report is made solely to the Company in accordance with guidance contained
in ISRE 2410 (UK and Ireland) "Review of Interim Financial Information Performed
by the Independent Auditor of the Entity" issued by the Auditing Practices
Board. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company, for our work, for this report,
or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved
by, the directors. The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
As disclosed in note 1, the annual report and financial statements of the Group
are prepared in accordance with IFRS as adopted by the European Union. The
interim set of financial statements included in this half-yearly financial
report have been prepared in accordance with International Accounting Standard
34, "Interim Financial Reporting," as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the interim set
of financial statements in the half-yearly financial report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the interim set of financial statements in the half-yearly financial report
for the six months ended 30 September 2007 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure and Transparency Rules of the United
Kingdom's Financial Services Authority.
Ernst & Young LLP
Registered Auditor
Newcastle upon Tyne
27 November 2007
This information is provided by RNS
The company news service from the London Stock Exchange
END
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