RNS Number:3244B
Bristol Water PLC
24 November 1999
BRISTOL WATER plc
INTERIM RESULTS
for the six months ended 30th September 1999
HIGHLIGHTS
Six months ended 30th September 1999 1998 % change
#'000 #'000
(unaudited) (unaudited)
Turnover 34,994 33,467 5%
Operating profit 10,766 10,017 7%
Pre-tax profit 8,790 7,911 11%
Net profit 7,280 7,241 1%
Earnings per ordinary share -
Shares in issue 112.2p 108.9p 3%
Interim dividend per ordinary
share, net 19.44p 19.44p - %
The Company is one of the largest independent water supply companies in the
country providing 300 million litres of water each day through 6,500
kilometres of mains. It is responsible for supplying over one million people
and businesses in an area of almost 2,400 square kilometres, centred on
Bristol. The area served covers the Bristol conurbation and surrounding parts
of Somerset, Gloucestershire and Wiltshire.
The Company's performance in customer service, water quality and engineering
standards is amongst the highest in the water industry.
Bristol Water plc is a subsidiary of Bristol Water Holdings plc.
CHAIRMAN'S STATEMENT
These interim accounts will be the last before price limits are set for the
next five years for the regulated business. This is an important matter for
the Company, its future profitability, its financing requirements and its
dividend prospects. It will take some time to review the price limits
and related obligations. Accordingly, we have decided that it is preferable to
issue our results to 30th September 1999 now and to write to you again when we
have given proper consideration to the price limits.
Although profit before tax has increased by 11%, the Board has decided to
leave the interim dividend unchanged, at 19.44 pence per ordinary share, due
to the material uncertainties of the regulated price review. The figures for
the six months are influenced by the following key factors -
a) good progress in the regulated business's operating profits
b) a #600,000 gain from disposal of two properties
c) a return to a more normal level of charge for taxation
restraining after tax profits and earnings per share.
Each factor is reviewed in more detail below.
RESULTS
The Company has made good progress in the six months ended 30th September
1999. Standards of service to customers continue to improve and are highly
rated by Ofwat.
Revenues grew by 5% to #35.0 million benefiting from the 1% real price
increase allowed by Ofwat and income from new connections but offset by
increasing numbers of customers switching to meters to reduce their bills.
Operating costs grew by 3% including depreciation charges continuing to
increase because of the investment programme. The increase in operating
profit of 7% to #10.8 million was supplemented by property sales yielding a
contribution of #0.6 million. Interest cost increased by a fifth to #2.6
million reflecting the burden of financing the investment programme and the
effect of redeeming preference shares in 1998. Pre-tax profit grew to #8.8
million, an increase of 11%.
The taxation charge has returned to more normal levels following a one off
benefit of #0.5 million in the comparative period related to ACT changes last
year. This left profit after tax 1% higher at #7.3 million. Earnings per
share increased by 3% to 112.2 pence per share.
Investment remains significant at #11 million in the six months but at only
two thirds last year's level. Underlying cashflow has been broadly neutral in
the period.
DIVIDENDS AND RETENTIONS
The dividend on the 8.75% irredeemable preference shares for the first six
months of the year was paid on 1st October 1999 and amounted to #547,000.
The Board has declared a dividend of 19.44 pence (net) per share on each
ordinary share amounting to #1,166,000. This is unchanged from the previous
interim dividend and will be paid on 30th November 1999. All of the ordinary
shares are held by Bristol Water Holdings plc. This represents 86% of the
dividend paid to external shareholders of the parent company albeit the
Company produced 98% of group profit for the period.
Overall the cost of dividends has fallen reflecting the redemption in 1998 of
preference shares at the end of their term. Accordingly a record #5.6 million
has been retained in the business to help strengthen financial ratios.
OUTLOOK AND DEVELOPMENTS
In common with the industry, we anticipate a tough set of price limits for the
five year period starting in April 2000 to be announced by the Regulator on
25th November. We have submitted robust arguments to the Director General of
Water Services in the build up process. We will challenge his determination
if we believe it to be necessary in the best interests of the company, its
customers, employees and shareholders after considering all relevant factors.
New management structures are being put in place to meet the challenges before
us. We announced at the Annual General Meeting that I will be retiring at the
end of the financial year. Alan Parsons, our finance director, will take my
place and we are currently recruiting his replacement. Organisational
changes are already taking place to challenge continually our cost structures
and to react positively to the opening of competition in the water industry.
MILLENNIUM AND YEAR 2000 COMPUTER COMPLIANCE
The Company has been active in its review of potential problems that might be
caused by computers and other equipment when we move through into the next
millennium. Thorough testing, replacement where necessary and contingency
plans provide assurance that the Company and its customers will not be
adversely affected. Many staff will be on duty throughout the period to ensure
water supplies are not disrupted and our thanks go to them and their families
for their support.
On behalf of my Board, may I take the opportunity of wishing you well as we
enter the undoubtedly challenging start to the next century.
J R Browning Chairman
PROFIT & LOSS ACCOUNT
Six months to Six months to Year to
30th September 30th September 31st March
1999 1998 1999
(unaudited) (unaudited)
Note #000's #000's #000's
Turnover 2 34,994 33,467 66,793
Operating costs 3 (24,228) (23,450) (47,493)
_________________________________
Operating profit 10,766 10,017 19,300
Profit on disposals 600 27 135
Interest payable 4 (2,576) (2,133) (4,650)
_________________________________
Profit on ordinary activities
before taxation 8,790 7,911 14,785
Taxation 5 (1,510) (670) (1,213)
_________________________________
Profit on ordinary activities
after taxation 7,280 7,241 13,572
Dividends - 6
On irredeemable preference shares 547 547 1,094
On redeemable preference shares - 162 162
On ordinary shares 1,166 1,166 3,888
_________________________________
Total dividends 1,713 1,875 5,144
_________________________________
Profit retained 5,567 5,366 8,428
_________________________________
Earnings per share - 7 112.2p 108.9p 205.3p
_________________________________
Dividend per
ordinary share 6 19.44p 19.44p 64.8p
_________________________________
The profit on ordinary activities after taxation includes all recognised gains
and losses.
SUMMARISED BALANCE SHEET
At 30th September At30th September At 31st March
1999 1998 1999
(unaudited) (unaudited)
Note #000's #000's #000's
Tangible fixed assets 8 164,953 155,297 160,765
_________________________________________
Current assets -
Stocks 1,010 1,022 1,128
Debtors 9,912 9,418 8,563
Cash and term deposits 9 340 - 2,450
_________________________________________
11,262 10,440 12,141
Creditors: amounts falling due
within one year -
Short term borrowings 9 1,552 8,731 1,523
Other creditors 21,501 26,507 23,072
_________________________________________
23,053 35,238 24,595
_________________________________________
Net current liabilities (11,791) (24,798) (12,454)
Creditors: amounts falling
due after one year 9 (68,021) (54,165) (68,821)
Accruals and deferred income (8,338) (8,160) (8,254)
_________________________________________
Net operating assets 76,803 68,174 71,236
_________________________________________
Ordinary shares 5,998 5,998 5,998
8.75% irredeemable preference shares 12,500 12,500 12,500
Share premium and non-
distributable reserves 10,185 10,185 10,185
Profit and loss account 48,120 39,491 42,553
_________________________________________
Shareholders' funds 10 76,803 68,174 71,236
_________________________________________
SUMMARISED CASHFLOW STATEMENT
Six months to Six months to Year to
30th September 30th September 31st March
1999 1998 1999
(unaudited) (unaudited)
Note #000's #000's #000's
Net cash inflow from
operating activities 11 15,005 17,177 30,355
________________________________________
Returns on investments and
servicing of finance -
Net interest paid (2,494) (2,387) (4,888)
Dividends paid on preference
(non-equity) shares (547) (709) (1,256)
________________________________________
(3,041) (3,096) (6,144)
________________________________________
Taxation paid (137) (186) (1,604)
________________________________________
Capital expenditure and
investing activities -
Purchase of tangible fixed assets (12,520) (19,188) (34,065)
Contributions received 1,420 1,698 3,860
Proceeds from disposal of
tangible fixed assets 656 4 213
________________________________________
(10,444) (17,448) (29,992)
________________________________________
Dividends paid on ordinary
(equity) shares (2,722) (2,520) (3,686)
________________________________________
Net cash outflow before management
of liquid resources and financing (1,339) (6,073) (11,071)
Financing -
New loans and leases 296 390 15,586
Debt and lease repayments (1,067) (983) (1,503)
Redemption of preference shares - (5,770) (5,770)
________________________________________
(771) (6,363) 8,313
________________________________________
Decrease in cash 11 (2,110) (12,436) (2,758)
________________________________________
NOTES TO THE INTERIM RESULTS
Note 1: Accounting policies
The financial information contained in this interim announcement does not
constitute statutory accounts within the meaning of s.240 of the Companies Act
1985. The interim results, which have not been audited or reviewed by the
company's auditors, have been prepared on the basis of the accounting policies
adopted by Bristol Water plc for the year ended 31 March 1999 as set
out in the Annual Report and Accounts. These accounts (on which the
auditors gave an unqualified report) have been delivered to the Registrar of
Companies. In preparing the interim results regard has been given to all
Financial Reporting Standards up to and including number 15. FRS 12 and 15
dealing with provisions was adopted for the first time in relation to
infrastructure renewals accounting in the last audited accounts.
This requires the inclusion of movements and balances related to
infrastructure renewals within fixed assets and depreciation. Adoption of the
new standards has required the restatement of certain 30 September 1998
comparative figures but has not affected profits.
Note 2: Turnover
Six months to Six months to Year to
30th September 30th September 31st March
1999 1998 1999
(unaudited) (unaudited)
#000's #000's #000's
Turnover comprises -
Metered water supply 10,666 9,470 19,332
Unmetered water supply 22,209 22,048 43,657
Other services 2,119 1,949 3,804
_____________________________________
34,994 33,467 66,793
Note 3: Operating costs
Operating costs comprise -
Payroll cost, net of
recharges 5,106 4,719 9,224
Other operating expenses 12,536 12,501 25,817
Depreciation, net 6,586 6,230 12,452
______________________________________
24,228 23,450 47,493
______________________________________
Note 4: Interest payable
Interest payable and similar charges comprise -
Interest payable and
similar charges 2,702 2,371 5,028
Interest Income (126) (238) (378)
______________________________________
2,576 2,133 4,650
______________________________________
Note 5: Taxation
Six months to Six months to Year to
30th September 30th September 31st March
1999 1998 1999
(unaudited) (unaudited)
#000's #000's #000's
The charge for taxation comprises -
Corporation Tax at 30%
(prior - 31%) 2,160 1,519 2,875
Less advanced corporation
tax set off (787) (986) (1,839)
_____________________________________
1,373 533 1,036
Advance corporation tax 137 137 177
_____________________________________
1,510 670 1,213
_____________________________________
Note 6: Dividends
The dividend on the 8.75% Irredeemable Preference Shares for the first
half of the financial year was paid on 1st October 1999 and amounted to
#547,000.
The Board has declared an interim dividend of 19.44 pence (net) on each
Ordinary Share amounting to #1,166,000, payable on 30 November 1999.
Note 7: Earnings per share
The calculation of earnings per share is based on profit attributable to
holders of Ordinary Shares of #6,733,000 (1998 - #6,532,000) and the weighted
average number of Ordinary Shares in issue during the period of 5,998,025
(1998 - 5,998,025).
Note 8: Movement in tangible fixed assets
The movement in tangible fixed assets comprises -
Net book value, beginning of period 160,765 145,197 145,197
Additions 12,166 17,778 31,599
Disposals (56) (15) (78)
Contributions (1,204) (1,320) (3,244)
Depreciation (6,718) (6,343) (12,709)
________________________________
Net book value, end of period 164,953 155,297 160,765
________________________________
Note 9: Net debt
At 30th September At 30th September At 31st March
1999 1998 1999
(unaudited) (unaudited)
#000's #000's #000's
Net debt comprises -
Cash less overdrafts 340 (7,228) 2,450
Debt due within one year (1,552) (1,503) (1,523)
Debt due after one year (68,021) (54,165) (68,821)
________________________________________
Net debt (69,233) (62,896) (67,894)
________________________________________
Note 10: Shareholders' funds
Six months to Six months to Year to
30th September 30th September 31st March
1999 1998 1999
(unaudited) (unaudited)
#000's #000's #000's
Movement in shareholders' funds -
Beginning of period 71,236 68,578 68,578
Profit for the period 7,280 7,241 13,572
Dividends (1,713) (1,875) (5,144)
Redemption of preference shares - (5,770) (5,770)
________________________________________
End of period 76,803 68,174 71,236
________________________________________
Note 11: Supplementary cashflow information
Six months to Six months to Year to
30th September 30th September 31st March
1999 1998 1999
(unaudited) (unaudited)
#000's #000's #000's
a)Reconciliation of operating profit to net cash inflow from operating
activities -
Operating profit 10,766 10,017 19,300
Depreciation, net 6,586 6,230 12,452
_________________________________________
Cashflow from operations 17,352 16,247 31,752
Working capital movements (2,347) 930 (1,397)
_________________________________________
Net cash inflow from
operating activities 15,005 17,177 30,355
_________________________________________
b) Reconciliation of net cashflow to movement in net debt -
Decrease in cash in the period (2,110) (12,436) (2,758)
Cash used to reduce debt 1,067 983 1,503
Cash from new financing (296) (390) (15,586)
________________________________________
Increase in net debt in period (1,339) (11,843) (16,841)
Net debt, beginning of period (67,894) (51,053) (51,053)
________________________________________
Net debt, end of period (69,233) (62,896) (67,894)
________________________________________
Note 12: Circulation
This interim announcement is being sent to all shareholders and debenture
holders. Copies are available to the public from the Company's registered
office at PO Box 218, Bridgwater Road, Bristol BS99 7AU.
END
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