RNS Number:9835N
Mid Kent Water PLC
30 November 2001
30 November 2001
MID KENT WATER PLC
INTERIM STATEMENT
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2001
CHAIRMAN'S STATEMENT
Introduction
This is the first year that Mid Kent Water (the "Company") has prepared an
interim statement. Its publication follows the changes that have occurred to
the Company's parent over the last six months.
In May 2001 the Company's parent, Mid Kent Holdings plc, was acquired by Swan
Capital Investments. Part of the reason for the change in ownership was to
secure the funds required by the Company over the next few years to meet its
substantial capital investment programme. Swan Capital Investments has secured
a five-year revolving credit facility of #50m to finance the Company's ongoing
capital expenditure and working capital needs. This facility will assist the
Company in carrying out the infrastructure maintenance and enhancements that
are planned, and will help to secure the long term availability of water
supplies in the mid-Kent area.
The period has also seen significant changes in the management of the Company,
with the appointment of a new managing director and other changes to the
executive team. We have started to see the benefits of these changes both in
terms of improvements in the quality of our customer service and, from our
internal restructuring, in terms of process improvements and their associated
cost savings.
Financial Performance
Turnover in the half year to 30 September 2001 was #19.0m compared with #17.9m
for the same period last year. Water income has increased by 6.6% to #17.6m.
This increase reflects the price increase of 7.74% allowed by the Regulator,
offset by the impact of metering and the reduction in metered volumes.
Operating profit was #6.6m compared with #4.5m for the same period last year.
It should be noted that operating profit last year was stated after
Competition Commission costs of #1.5m.
Net interest payable has increased from #1.6m to #2.0m reflecting the reduced
cash balance and increased borrowings position. Whilst the company had #1.9m
of profit from surplus property disposals in the half year to 30 September
2000 there were no disposal profits in the same period this year. As a result
of the above, profit before tax in the half year to 30 September 2001 at #
4.7m, remained unchanged from the same period last year.
An interim dividend of 9.45p per share was paid on 27 November 2001 (2000:
9.01p).
Capital expenditure
Net cash capital expenditure in the half year to 30 September 2001 was #15.5m
compared to #3.7m for the same period last year. This reflects the delayed
start to the capital programme that arose because of the uncertainties of the
price determination process. However, spend in the current year is progressing
well with an expectation that all regulatory targets will be met. Our mains
rehabilitation project has already passed the first milestone of the
undertaking given to the Drinking Water Inspectorate ("DWI") with over 100km
of mains either relined or replaced; additionally three new treatment plants
will have been commissioned by 31 March 2002. We continue to promote the take
up of meters, with over 10,000 installed since April 2000.
Water quality
It is pleasing to note that the quality of water at our customers' taps
continues to improve, and it is expected that this year's overall compliance
performance will be better than that reported by the Chief Inspector of the
DWI last year.
Non regulated activity
We have continued to further develop our contracted services for the
industrial/commercial market place in South East England, and a number of
innovative opportunities are actively being investigated. We are also
continuing to grow our share of the plumbing service market and to build on
the reputation of our Fisheries.
Employees
The Company and its customers continues to benefit from the skills, dedication
and commitment of all its people. With the new executive team in place, we are
now in a position to deliver further improvements in the quality of customer
service throughout the business, whilst achieving the efficiency targets
agreed with OFWAT.
Keith Tozzi
Chairman
30 November 2001
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2001
PROFIT AND LOSS ACCOUNT
Half year ended Half year ended Year ended
30 September 30 September 31 March
2001 2000 (restated) 2001
Notes (unaudited) (unaudited) (restated)
#000 #000 #000
4 Turnover 18,983 17,926 36,561
Operating costs (12,345) (13,417) (27,758)
5 Operating profit 6,638 4,509 8,803
Profit on sale of fixed assets 43 1,863 1,875
Profit on ordinary activities 6,681 6,372 10,678
before interest
Interest receivable 72 334 604
Interest payable and similar
charges (2,031) (1,958) (3,946)
3 Profit on ordinary activities 4,722 4,748 7,336
before taxation
Tax on profit on ordinary
activities (705) (421) (848)
Profit on ordinary activities 4,017 4,327 6,488
after taxation
Ordinary dividends (1,762) (1,681) (4,200)
Retained profit for the period 2,255 2,646 2,288
6 Earnings per ordinary share 21.5p 23.2p 34.8p
Dividends per ordinary share 9.45p 9.01p 22.53p
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2001
SUMMARISED BALANCE SHEET
Half year ended Half year ended Year ended
30 September 30 September 31 March
2001 2000 (restated) 2001
(unaudited) (unaudited) (restated)
#000 #000 #000
Fixed assets
Tangible assets 143,867 123,273 133,869
Current assets
Stocks 459 531 459
Debtors 7,948 7,079 7,335
Cash at bank and in hand 2,383 11,841 5,184
10,790 19,451 12,978
Creditors: amounts falling due (36,637) (33,036) (37,172)
within one year
Net current liabilities (25,847) (13,585) (24,194)
Total assets less current 118,020 109,688 109,675
liabilities
Creditors: amounts falling due after (48,631) (42,589) (42,531)
more than one year
Provision for deferred taxation (12,094) (11,701) (12,104)
Net assets 57,295 55,398 55,040
Capital and reserves
Attributable to equity interests
Called up share capital 18,646 18,646 18,646
Profit and loss account 38,649 36,752 36,394
Capital employed 57,295 55,398 55,040
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2001
SUMMARISED CASH FLOW STATEMENT
Half year Half year Year
ended ended ended
30 September 30 September 31 March
2001 2000 2001
(unaudited) (unaudited) #000
#000 #000
Net cash inflow from operating 10,044 9,813 17,718
activities
Returns on investments and servicing of (1,639) (1,688) (3,349)
finance
Taxation 687 (1,139) (2,537)
Capital expenditure (15,471) (1,283) (11,051)
Equity dividends paid (2,521) (2,918) (4,600)
Cash (outflow)/inflow before financing (8,900) 2,785 (3,819)
Financing 6,099 (1) (54)
(Decrease)/increase in cash (2,801) 2,784 (3,873)
Notes 7 to 10 are part of this statement.
Notes
1 The interim results have been prepared on the basis of the accounting
policies adopted for the financial year ended 31 March 2001, other than
where changes were necessary to implement FRS 19 "Deferred Tax".
The results for the year ended 31 March 2001 are an abridged extract from
the published accounts delivered to the Registrar of Companies and on which
the auditors' report was unqualified. This extract and the results for the
half year ended 30 September 2000 have been restated, where appropriate,
for the change in accounting policy required under FRS 19 and as described
below.
FRS 19 has been adopted by the company in the current period. It requires
full provision of deferred tax assets and liabilities arising from timing
differences between the recognition of gains and losses in the financial
statements and the tax computations. In adopting FRS 19 the company has
decided to use the option of discounting, as permitted by the standard.
Under the previous Accounting Standard (SSAP 15 "Accounting for Deferred
Tax"), the company's policy was to provide for deferred tax under the
liability method only on timing differences that, in the opinion of the
directors, would reverse. The adoption of FRS 19 has resulted in a prior
year adjustment that has decreased shareholders' funds by #11,365,000 at 1
April 2000.
The restatement of comparative amounts has resulted in a reduction of
reserves of #11,701,000 at 30 September 2000 and #12,104,000 at 31 March
2001. The tax charges for the half year ended 30 September 2000 and for the
year ended 31 March 2001 have increased by #336,000 and #739,000
respectively.
2 All recognised gains and losses are included in the profit and loss account
for the period.
3 The tax charge for the period ended 30 September 2001 has been based on the
estimated effective rate for the full year.
Half year Half year
ended ended Year ended
30 September 30 September 31 March
2001 2000 2001
(unaudited) (restated) (restated)
(unaudited) #000
#000 #000
4 Analysis of turnover
Unmeasured supplies 10,716 10,397 20,599
Measured supplies 6,915 6,145 12,967
Other activities 1,352 1,384 2,995
18,983 17,926 36,561
5 Operating profit
Operating profit is stated after
charging
Competition Commission referral
costs - 1,545 1,545
6 Earnings per ordinary share
Earnings per ordinary share have been calculated by dividing the profit for
the period by the number of ordinary shares in issue (18,646,000).
Half year Half year
ended ended Year ended
30 September 30 September 31 March
2001 2000 2001
(unaudited) (unaudited) #000
#000 #000
7 Reconciliation of operating profit to operating cash flow
Operating profit 6,638 4,509 8,803
Depreciation charge 3,375 3,279 6,619
(Increase)/decrease in stocks - (6) 66
(Increase)/decrease in debtors (599) 198 (112)
Increase in creditors 630 1,833 2,342
10,044 9,813 17,718
8 Analysis of cash flows for headings
netted in cash flow statement
Returns on investment and servicing of
finance
Interest received 58 280 608
Interest paid (1,689) (1,956) (3,941)
Interest element of finance lease (8) (12) (16)
rental payments
(1,639) (1,688) (3,349)
Capital expenditure
Purchase of tangible fixed assets (15,809) (7,705) (18,477)
Contributions to infrastructure assets 287 4,023 4,976
Sale of tangible fixed assets 51 2,399 2,450
(15,471) (1,283) (11,051)
Financing
Capital element of finance lease (1) (1) (54)
rental payments
6,100 - -
Increase in unsecured loans
6,099 (1) (54)
9 Analysis of net debt At 1 April Cash flow At 30
2001 #000 September
#000 2001
#000
Cash at bank and in hand 5,184 (2,801) 2,383
Finance leases (128) 1 (127)
Unsecured loans (38,000) (6,100) (44,100)
Debenture stock (4,461) - (4,461)
(37,405) (8,900) (46,305)
Half year Half year
ended ended Year ended
30 September 30 September 31 March
2001 2000 2001
(unaudited) (unaudited) #000
#000 #000
10 Reconciliation of net cash flow to movement in net debt
(Decrease)/increase in cash in the (2,801) 2,784 (3,873)
period
Cash outflow from finance lease
repayments 1 1 54
Cash inflow from unsecured loans (6,100) - -
Movement in net debt resulting from (8,900) 2,785 (3,819)
cash flows
Net debt at start of period (37,405) (33,586) (33,586)
Net debt at end of period (46,305) (30,801) (37,405)
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