RNS Number:6365M
Mid Kent Water PLC
24 November 2006
24 November 2006
Mid Kent Water
Interim statement
for the half year ended 30 September 2006
Chairman's statement
The company began the current financial year in anticipation of another dry
summer and, in common with other water companies in the south east of England,
we were preparing for a drought. In May 2006, our application for further
restrictions under a Non Essential Use Order was granted. Customer response to
our requests to conserve water have been outstanding and, with the reduced water
usage I am pleased to report that these additional restrictions did not need to
be implemented. I would like to take this opportunity to thank both our
customers and our staff, who performed exceptionally throughout, for their
effort and support. Throughout this period we have been determined to keep all
stakeholders informed of the water resources position and the outlook for the
future.
Management and staff have continued successfully to deliver the company
objectives, maintaining supply against this backdrop of scarce resources. In
August, OFWAT published the Water Industry OPA score, with the Company achieving
278 (283 in the previous year) out of a maximum of 288. The majority of the 5
point reduction in our score has arisen because of the sensible introduction of
the hosepipe ban.
The relationship with our owners continues to develop and the Company has
continued to meet its financial objectives.
Immediately following the half year, our owners acquired South East Water
Limited with the stated intention of merging their new acquisition with Mid Kent
Water Limited. The proposed merger has been referred to the Competition
Commission. This activity has prompted a number of changes on the Board, with
the Chairman, Managing Director, Finance Director and one non-executive Director
resigning to take up positions with South East Water.
A new Managing Director, Paul Seeley, has been appointed and I have taken over
the role of Executive Chairman. In both cases we were previous members of the
Board.
The profitability of the company has remained strong with profit before tax
showing a 14.1% improvement on the previous year.
Financial Performance
Turnover to 30 September 2006 was #23.5m compared to #23.9m in the six month
period to 30 September 2005. With the price increase of 0.5% allowed by OFWAT
plus RPI of 2.43% built into prices, the reduction in revenue of #0.4m (2%)
clearly demonstrates the lower revenue arising from the reduction in water
usage.
Operating profit has been held at a comparable level to the previous year. The
reduction in revenue has been compensated by cost savings. Net interest has
reduced by 19.6% owing to the reduction in inflation in the six month period to
30 September 2006, compared to the same period in the previous year.
Profit after tax of #4.2m for the period represents an increase of 13.8%
compared to the previous year. Water consumption and revenue will be kept under
review for the remainder of the year, as will the operating cost base. I am
confident that the Company's financial performance for the full year will be in
line with our Company Plan.
Capital Expenditure
Capital expenditure is on plan with expenditure of #11.3m for the first half of
the financial year, compared with #11.1m for the six months to 30 September
2005.
Water Quality
Our Water Quality performance has been maintained, with compliance indices above
the Industry Average for the first six months of the year.
Non Regulated Activity
The first six months of the year have been a challenge for the non-regulated
part of the business owing to the slow down in the completion of new housing
developments. The business remains committed to non regulated activity and
remains on plan to deliver its profit for the period.
Graham Setterfield
Chairman
23 November 2006
Interim statement
for the half year ended 30 September 2006
Profit and loss account
Notes Half year ended Half year ended 30 Year ended
30 September September 2005 31 March
2006 (restated) 2006
(unaudited) (unaudited) (audited)
#000 #000 #000
3 Turnover 23,467 23,887 48,094
Operating costs 15,476 15,883 31,544
---------- ---------- ----------
4 Operating profit 7,991 8,004 16,550
Profit on sale of 19 36 152
fixed assets ---------- ---------- ----------
Profit on ordinary 8,010 8,040 16,702
activities before
interest
Interest receivable 1,864 1,786 3,777
Interest payable and (4,536) (5,111) (11,534)
similar charges
Return on pension 150 94 188
scheme assets ---------- ---------- ----------
Profit on ordinary 5,488 4,809 9,133
activities before
taxation
Tax charge on profit (1,309) (1,137) (2,179)
on ordinary ---------- ---------- ----------
activities
Profit on ordinary 4,179 3,672 6,954
activities after ---------- ---------- ----------
taxation
Earnings per ordinary 21.1 18.6 35.2
share ---------- ---------- ----------
Interim statement
for the half year ended 30 September 2006
Statement of recognised gains and losses
Notes Half year Half year ended 30 Year ended
ended 30 September 2005 31 March
September 2006 (restated) 2006
(unaudited) (unaudited) (audited)
#000 #000 #000
Profit for the financial 4,179 3,672 6,954
period
Pension schemes actuarial (868) 1,241 2,481
(loss)/gain ---------- ---------- ----------
3,311 4,913 9,435
Prior year adjustments
FRS 17 - Retirement - (2,243) (2,243)
Benefits
FRS 21 - Events after the - 1,543 1,543
Balance Sheet date
FRS 25 - Financial - 4,507 4,507
Instruments: Disclosure ---------- ---------- ----------
and presentation
3,311 8,720 13,242
---------- ---------- ----------
Interim statement
for the half year ended 30 September 2006
Balance sheet
Notes Half year ended Half year ended 30 Year ended
30 September September 2005 31 March
2006 (restated) 2006
(unaudited) (unaudited) (audited)
#000 #000 #000
Fixed assets
Tangible assets 204,353 190,061 198,150
---------- ---------- ----------
Current assets
Stocks 720 717 636
Debtors: amounts falling 10,335 9,422 8,870
due within one year
Debtors: amounts falling 39,375 36,451 37,873
due after more than one
year
Investments 9,000 15,000 15,312
Cash at bank and in 4,405 5,162 1,229
hand ---------- ---------- ----------
63,835 66,752 63,920
Creditors: amounts (24,885) (21,644) (22,484)
falling due within one ---------- ---------- ----------
year
Net current assets 38,950 45,108 41,436
---------- ---------- ----------
Total assets less 243,303 235,169 239,586
current liabilities
Creditors: amounts (182,154) (177,778) (180,989)
falling due after more
than one year
Provision for (12,910) (10,473) (11,722)
liabilities and ---------- ---------- ----------
charges
Net assets excluding 48,239 46,918 46,875
pension asset
Pension asset 286 (685) 875
---------- ---------- ----------
Net assets 48,525 46,233 47,750
---------- ---------- ----------
Capital and reserves
Called up share 19,781 19,781 19,781
capital
Share premium account 5,672 5,672 5,672
Profit and loss 23,072 20,780 22,297
account ---------- ---------- ----------
Capital employed 48,525 46,233 47,750
---------- ---------- ----------
Interim statement
for the half year ended 30 September 2006
Cash flow statement
Notes Half year Half year ended 30 Year ended
ended 30 September 2005 31March
September 2006 (restated) 2006
(unaudited) (unaudited) (audited)
#000 #000 #000
5 Net cash inflow from 12,639 11,399 24,352
operating activities
6 Returns on investment and (3,066) (3,568) (6,220)
servicing of finance
6 Net capital expenditure (11,206) (10,551) (21,734)
6 Equity dividends paid (1,503) (2,778) (5,517)
---------- ---------- ----------
Cash outflow before (3,136) (5,498) (9,119)
management of liquid
resources and financing
6 Management of liquid 6,312 (2,976) (3,288)
resources
6 Financing - 12,500 12,500
---------- ---------- ----------
Increase in cash during 3,176 4,026 93
the period ---------- ---------- ----------
Notes
1 The figures for the year ended 31 March 2006 do not constitute the Company's
statutory accounts for that period but have been extracted from the statutory
accounts, which have been filed with the Registrar of Companies. The auditors
have reported on those accounts and that report was unqualified and did not
contain a statement under Section 237 (2) of the Companies Act. The accounts
for the six months ended 30 September 2006 have not been audited, nor have the
accounts for the equivalent period in 2005. They comply with relevant
accounting standards and have been prepared on a consistent basis using
accounting policies set out in the 2006 Annual Report.
2 The tax charge for the period ended 30 September 2006 has been based on the
estimated effective rate for the full year.
Half year Half year Year ended
ended 30 ended 30 31 March
September 2006 September 2006
2005
(restated)
(unaudited) (unaudited) (audited)
#000 #000 #000
3 Analysis of turnover
Unmeasured supplies 11,592 11,671 23,069
Measured supplies 10,213 10,039 20,858
Other activities 1,662 2,177 4,167
---------- ---------- ----------
23,467 23,887 48,094
---------- ---------- ----------
4 Operating profit
Operating profit is stated after
charging
Refinancing costs 13 25 40
---------- ---------- ----------
5 Reconciliation of operating profit to net cash inflow from operating
activities
Operating profit 7,991 8,004 16,550
Depreciation charge 5,187 5,040 10,239
(Increase)/decrease in stocks (84) 81 162
(Increase)/decrease in debtors (1,470) (1,714) (1,168)
Increase/(decrease) in creditors 1,264 349 (708)
Adjustment for pension funding (249) (361) (723)
--------- ---------- ---------
12,639 11,399 24,352
--------- ---------- ---------
6 Analysis of cash flows for headings netted in cash flow statement
Returns on investments and servicing of finance
Interested received 367 331 906
Interest paid (3,406) (3,899) (6,764)
Loan issue costs (27) - (362)
--------- ---------- ---------
(3,066) (3,568) (6,220)
--------- ---------- ---------
Net capital expenditure
Purchase of tangible fixed assets (12,496) (11,054) (24,035)
Contributions to infrastructure 1,261 456 2,124
assets
Sale of tangible fixed assets 29 47 177
--------- ---------- ---------
(11,206) (10,551) (21,734)
--------- ---------- ---------
Notes (continued)
Half year Half year ended Year ended
ended 30 30 September 31 March
September 2005 2006
2006 (restated)
(unaudited) (unaudited) (audited)
#000 #000 #000
6 Analysis of cash flows for headings netted in cash flow statement (continued)
Equity dividends paid
Dividends paid (1,503) (2,778) (5,517)
--------- ---------- ---------
Management of liquid resources
Decrease/(Increase) in cash 6,312 (2,976) (3,288)
deposits --------- ---------- ---------
Financing
Bank loans repaid - (21,500) (21,500)
Index linked loan - 34,000 34,000
--------- ---------- ---------
- 12,500 12,500
--------- ---------- ---------
At 1 April Cash flow Non-cash At 30
2006 changes September
2006
#000 #000 #000 #000
7 Analysis of net debt
Cash at bank and in 1,229.0 3,176.0 - 4,405.0
hand
Short term deposits 15,312.0 (6,312.0) - 9,000.0
--------- --------- ---------- ---------
16,541.0 (3,136.0) - 13,405.0
Index linked loan (183,057.0) - (1,144.0) (184,201.0)
Bank loans - - - -
Issue costs 2,529.0 - (21.0) 2,508.0
Debenture stock (461.0) - - (461.0)
--------- --------- ---------- ---------
(164,448.0) (3,136.0) (1,165.0) (168,749.0)
--------- --------- ---------- ---------
Half year Half year Year ended
ended 30 ended 30 31 March
September 2006 September 2006
2005
(restated)
(unaudited) (unaudited) (audited)
#000 #000 #000
8 Reconciliation of net cash to movements in net debt
Increase in cash in period 3,176 4,026 93
Cash inflow from increase in debt - (12,122) (12,140)
financing
Cash (inflow)/outflow from movement (6,312) 2,976 3,288
in liquid resources --------- --------- ---------
Movement in net debt resulting from (3,136) (5,120) (8,759)
cash flows
Loan indexation (1,144) (1,677) (4,825)
Amortisation of loan issue costs (21) (45) (90)
Net debt at start of period (164,448) (150,774) (150,774)
--------- --------- ---------
Net debt at end of period (168,749) (157,616) (164,448)
--------- --------- ---------
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