RNS Number:4478F
Mid Kent Water PLC
20 December 2002
20 December 2002
MID KENT WATER
INTERIM STATEMENT
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2002
CHAIRMAN'S STATEMENT
In my last report in June, I outlined the significant changes in both management
and ownership that had occurred. I am delighted to report that these changes
have now delivered significant improvements in performance, and the Company has
moved from 23rd to 14th place in The Office of Water Services (OFWAT)'s overall
performance assessment of levels of service for all companies for 2001/2.
Furthermore, the Company has successfully completed an efficiency project which
will deliver cost reductions in excess of #1.3m in 2003/4. Both achievements
stand the company in good stead as it prepares its draft Business Plan for the
next periodic review period, 2005-2010.
Financial Performance
Turnover in the half year to 30 September 2002 was #20.2m compared with #19.0m
for the same period last year, an increase of 6.1%. Water income rose by 4.2% to
#18.4m, which includes the price increase of 4.07% allowed by OFWAT.
Operating profit was #7.1m before restructuring costs of #1.3m associated with
the performance improvement project, compared with #6.6m for the same period
last year.
Net interest payable has increased from #2.0m to #2.6m, reflecting the increased
borrowings required to fund the ongoing capital expenditure programme.
There have been a number of significant disposals of surplus property and land,
which have resulted in profits of #1.4m.
As a result of the above factors, profit before tax in the half year to 30
September 2002 was #4.6m compared with #4.7m for the same period last year.
Refinancing
Since the end of the period, the Company has restructured its balance sheet, and
has replaced its previous borrowing from its parent company with long term debt
funded through a 30 year bond issue. This debt will match the long term nature
of the Company's assets. As part of this process the Company has paid a one-off
restructuring dividend of #26.8m, and accordingly no dividend was proposed for
the period under review.
Capital Expenditure
Cash payments for capital expenditure in the period amounted to #13.9m, compared
to #15.8m for the same period last year. A new treatment plant at Goudhurst was
commissioned in August ahead of the Drinking Water Inspectorate ("DWI")
milestone date. A new granular activated carbon (GAC) treatment process is being
built at our only surface water treatment facility at Bewl Water and will be
commissioned this month, two months ahead of the DWI milestone date.
Water Quality
The quality of water at our customers' taps continues to improve, with reported
compliance for 2001 being 99.84% compared with 99.80% for the previous year.
Non Regulated Activity
We have continued to refocus our contracted services for the industrial/
commercial market place, and we are very pleased to report our success in
recently winning a contract for rehabilitation works outside of our supply area
with a value in excess of #0.5m; together with further works at preferred bidder
stage that should come to fruition in the second half of the financial year. The
re-branding of the Company was launched in September, and this has enabled us to
develop further water related activity within the Mid Kent area.
Employees
The last six months have been a difficult time for our staff with much upheaval
and uncertainty associated with the restructuring. However, their performance
has been first class throughout this period, and I would like to take this
opportunity to thank them for their efforts in continuing to ensure that Mid
Kent Water delivers an excellent service to its customers at all times.
Keith Tozzi
Chairman
20 December 2002.
INTERIM STATEMENT
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2002
PROFIT AND LOSS ACCOUNT
Half year ended Half year ended Year ended
30 September 30 September 31 March
2002 2001 2002
Notes (unaudited) (unaudited)
#000 #000 #000
4 Turnover 20,150 18,983 38,710
Operating costs (14,363) (12,345) (24,478)
5 Operating profit 5,787 6,638 14,232
Profit on sale of fixed assets 1,409 43 477
Profit on ordinary activities before interest 7,196 6,681 14,709
Interest receivable 46 72 106
Interest payable and similar charges (2,675) (2,031) (4,357)
3 Profit on ordinary activities before taxation 4,567 4,722 10,458
Tax on profit on ordinary activities (1,627) (705) (1,464)
6 Profit on ordinary activities after taxation 2,940 4,017 8,994
Dividends - (1,762) (4,402)
Retained profit for the period 2,940 2,255 4,592
Earnings per ordinary share 15.8p 21.5p 48.2p
Dividends per ordinary share 0.00p 9.45p 23.61p
INTERIM STATEMENT
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2002
SUMMARISED BALANCE SHEET
Half year ended Half year ended Year ended
30 September 30 September 31 March
2002 2001 2002
(unaudited) (unaudited)
#000 #000 #000
Fixed assets
Tangible assets 158,522 143,867 151,978
Current assets
Stocks 730 459 567
Debtors 8,071 7,948 7,922
Cash at bank and in hand 806 2,383 1,370
9,607 10,790 9,859
Creditors: amounts falling due within one year (27,396) (36,637) (33,200)
Net current liabilities (17,789) (25,847) (23,341)
Total assets less current liabilities 140,733 118,020 128,637
Creditors: amounts falling due after more than one
year (64,157) (48,631) (56,107)
Provision for deferred taxation (14,004) (12,094) (12,898)
Net assets 62,572 57,295 59,632
Capital and reserves
Attributable to equity interests
Called up share capital 18,646 18,646 18,646
Profit and loss account 43,926 38,649 40,986
Capital employed 62,572 57,295 59,632
INTERIM STATEMENT
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2002
SUMMARISED CASH FLOW STATEMENT
Half year ended Half year ended Year ended
30 September 30 September 31 March
2002 2001 2002
(unaudited) (unaudited)
#000 #000 #000
Net cash inflow from operating activities 8,700 10,044 17,727
Returns on investments and servicing of finance (2,476) (1,639) (4,009)
Taxation (884) 687 682
Capital expenditure (11,314) (15,471) (27,456)
Equity dividends paid (2,640) (2,521) (4,283)
Cash outflow before financing (8,614) (8,900) (17,339)
Financing 8,050 6,099 13,525
Decrease in cash (564) (2,801) (3,814)
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 2002.
The results for the year ended 31 March 2002 are an abridged extract from
the published accounts delivered to the Registrar of Companies and on which
the auditors' report was unqualified.
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 2002 has been based on the
estimated effective rate for the full year.
Half year ended Half year ended Year ended
30 September 30 September 31 March
2002 2001 2002
(unaudited) (unaudited)
#000 #000 #000
4 Analysis of turnover
Unmeasured supplies 10,636 10,716 21,200
Measured supplies 7,735 6,915 14,645
Other activities 1,779 1,352 2,865
20,150 18,983 38,710
5 Operating profit
Operating profit is stated after charging
Restructuring costs 1,307 - -
6 Dividends
No interim dividend is proposed (year ended 31 March 2002: 9.45p) pending a change in the Company's capital
structure.
7 Reconciliation of operating profit to operating cash flow
Operating profit 5,787 6,638 14,232
Depreciation charge 3,403 3,375 6,637
Increase in stocks (163) - (108)
Increase in debtors (487) (599) (249)
Increase/(decrease) in creditors 160 630 (2,785)
8,700 10,044 17,727
8 Analysis of cash flows
Returns on investment and servicing of finance
Interest received 46 58 106
Interest paid (2,522) (1,689) (4,100)
Interest element of finance lease rental payments - (8) (15)
(2,476) (1,639) (4,009)
Capital expenditure
Purchase of tangible fixed assets (13,906) (15,809) (28,473)
Contributions to infrastructure assets 772 287 805
Sale of tangible fixed assets 1,820 51 212
(11,314) (15,471) (27,456)
Financing
Capital element of finance lease rental payments - (1) (75)
Loans from holding company 8,050 6,100 13,600
8,050 6,099 13,525
9 Analysis of net debt At Cash At
1 April flow 30 September 2002
2002
#000 #000 #000
Cash at bank and in hand 1,370 (564) 806
Finance leases (53) - (53)
Unsecured loans (51,600) (8,050) (59,650)
Debenture stock (4,461) - (4,461)
(54,744) (8,614) (63,358)
10 Reconciliation of net cash flow to movement in net debt
Decrease in cash in the period (564) (2,801) (3,814)
Cash outflow from finance lease repayments - 1 75
Cash inflow from unsecured loans (8,050) (6,100) (13,600)
Movement in net debt resulting from cash flows (8,614) (8,900) (17,339)
Net debt at start of period (54,744) (37,405) (37,405)
Net debt at end of period (63,358) (46,305) (54,744)
11 Post balance sheet events
On 21 November 2002, Mid Kent Financing Limited became the Company's
immediate parent company.
On 3 December 2002, the Company re-registered as a private company in order
that it could provide financial assistance to other group undertakings. The
financial assistance provided was in respect of the discharging of loans
incurred by Swan Capital Investments on the acquisition of the entire share
capital of Swan Group Limited on 18 May 2001.
On 9th December 2002 the Company received a loan of #135million from Royal
Bank of Scotland plc. This loan is an index linked 30 year facility and is
secured upon the assets of the Company. On the same day the Company repaid
its outstanding intercompany loan from Swan Group Limited of #58.25million
and made a loan of #35million to its new parent company, Mid Kent Financing
Limited. These loans enabled Swan Capital Investments to repay the
#120million term loan from WestLB and to fund its ongoing working capital
requirement.
The Company also arranged a #5million working capital facility from NatWest
Bank and a #2million committed overdraft facility.
The Company declared a special dividend of #26.75million paid on 9 December
2002.
The Company subsequently re-registered as a public limited company on 11
December 2002.
For Further Information:
Bob Atwood, Group Finance Director, swan group plc Telephone: 01634 873035
Mark Woolfenden, Smithfield Financial Telephone: 020 7360 4900
This information is provided by RNS
The company news service from the London Stock Exchange
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