RNS Number:8941U
Bristol Water PLC
29 November 2000
Page 1
BRISTOL WATER plc
INTERIM RESULTS
for the six months ended 30th September 2000
Page 2
HIGHLIGHTS
FIRST SET OF RESULTS AFTER PRICE DETERMINATION
Six months ended 30th September 2000 1999 % change
#'000 #'000
(unaudited) (unaudited)
Turnover 32,254 34,994 -8%
Operating profit 8,935 10,766 -17%
Pre-tax profit 6,906 8,790 -21%
Net profit 5,212 7,280 -28%
Earnings per ordinary share -
Shares in issue 77.8p 112.3p -31%
Interim dividend per ordinary
Share, net 24.0p 19.4p 24%
Highlights
Turnover down by 8% reflecting impact of Ofwat's Price
Determination
Good progress made towards delivery of efficiency targets -
comparable operating costs reduced by 10% in real terms.
#4m reduction in net debt in period.
Interim dividend increased by 24%, representing an underlying
10% increase from 1999/00, plus an adjustment to rebalance the
interim / final dividend ratio base.
High service levels maintained - rated 3rd in Ofwat service
level rankings.
The company is one of the largest independent water supply
companies in the country, providing an average of
approximately 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.
Pages 3-4
CHAIRMAN'S STATEMENT
In my previous statement I highlighted a series of major changes that were
under way. I can report now that we have achieved much and that the pace of
positive change continues. We are dealing with the challenges of the new price
limits set for the regulated business.
Overall results
The price determination that came into force on 1st April 2000 for the
regulated business meant a 10% real reduction in charges to customers. Before
inflation this has had a #3.3 million adverse effect on revenue. Given the
high level of fixed costs within the business, reduced profitability is
inevitable when previous out-performance is captured for customers in the form
of lower prices. This is the dominant feature affecting the Company's
profitability when comparing current performance with that of the same period
last year.
However, excellent work has been done in reducing the comparable regulatory
cost base by 10% in real terms while improving further our already impressive
standards of service to customers.
After taking account of additional maintenance costs for the Gloucester to
Sharpness Canal of #0.5 million, which were allowed for within the new price
limits, operating costs are #1.8 million lower in real terms than in the
comparative period last year.
During last year we made a substantial investment in restructuring costs.
Since then we have continued to consider carefully business processes and
associated risk factors. This has enabled us to cut costs while maintaining
the quality of services to customers. As a result, we are making very good
progress towards delivering the efficiency savings implicit in the price
determination. The search for reductions in the cost base, whilst maintaining
our high standards of service, is our clear, continuing imperative. The price
reductions imposed have however had the net effect of reducing pre-tax profits
to #6.9 million, 21% lower.
Net debt reduced by #4.1m in the period. Cashflows are heavily influenced by
the profile of capital investment which is weighted towards the second half of
the year. As a result gearing fell from 88% at 31st March to 79%.
Capital investment in the period has been lower than expected at #7 million
partly due to delays in obtaining planning permissions on key sites, lower
than projected numbers of customers opting to have a free meter installed, and
a lead pipe replacement programme that cannot fully proceed until national
policy guidelines are finalised. The mains renovation programme is advancing
well. We anticipate capital expenditure for the full year of some #20 million,
bringing important benefits to our customers.
Our high level of services to customers was recognised in an OFWAT report
showing us in third position overall in the industry. OFWAT has also
recognised we are one of the few companies to have brought leakage down to
economic levels.
Dividends
The dividend for the six months to 30th September 2000 on the 8.75%
Irredeemable Preference Shares was paid on 1st October 2000 and amounted to #
547,000.
An interim dividend on the Ordinary Shares of 24 pence per share will be paid
on 30th November 2000. The dividend includes an adjustment to rebalance the
interim/final dividend ratio. A broadly similar dividend is payable to
shareholders of the parent company, Bristol Water Holdings plc.
Conclusion
It has been a period of substantial progress. We have focussed on
out-performing the targets implicit within the price determination. Over our
150-year history we have had much experience of dealing with challenges and
making the most of opportunities. We intend to maintain and reinforce this
record. Developments to date give us confidence for the future.
Alan Parsons
Executive Chairman
29th November 2000
Page 5
PROFIT & LOSS ACCOUNT
Six months to Six months Year to
to
30th September 30th 31st
September March
2000 1999 2000
(unaudited) (unaudited)
Note #000's #000's #000's
Turnover 2 32,254 34,994 69,453
Operating costs 3 (23,319) (24,228) (50,710)
Operating profit 8,935 10,766 18,743
Profit on disposals of tangible fixed 182 600 207
assets
Net interest payable 4 (2,211) (2,576) (4,970)
Profit on ordinary activities
Before taxation 6,906 8,790 13,980
Taxation 5 (1,694) (1,510) (2,736)
Profit on ordinary activities
After taxation 5,212 7,280 11,244
Dividends - 6
On irredeemable preference shares 547 547 1,094
On ordinary shares 1,440 1,166 4,355
Total dividends 1,987 1,713 5,449
Profit retained 3,225 5,567 5,795
Earnings per share - 7 77.8p 112.3p 169.2p
Dividend per ordinary share 6 24.0p 19.4p 72.6p
The profit on ordinary activities after taxation includes all recognised gains
and losses.
Page 6
SUMMARISED BALANCE SHEET
At 30th At 30th At 31st
September September March
2000 1999 2000
(unaudited) (unaudited)
Note #000's #000's #000's
Tangible fixed assets 8 164,530 164,953 165,309
Current assets -
Stocks 760 1,010 811
Debtors 9,946 9,912 8,857
Cash and term deposits 9 4,728 340 1,552
15,434 11,262 11,220
Creditors: amounts falling due within
one year -
Short term borrowings 9 1,428 1,552 1,419
Other creditors 22,331 21,501 21,088
23,759 23,053 22,507
Net current liabilities (8,325) (11,791) (11,287)
Total assets less current liabilities 156,205 153,162 154,022
Creditors: amounts falling due after 9 (66,725) (68,021) (67,619)
more than one year
Deferred income (8,526) (8,338) (8,463)
Provisions for liabilities and charges 10 (698) - (909)
Net operating assets 80,256 76,803 77,031
Shareholders Funds 11
Ordinary shares 5,998 5,998 5,998
8.75% irredeemable preference shares 12,500 12,500 12,500
Share premium and non-distributable 10,185 10,185 10,185
reserves
Profit and loss account 51,573 48,120 48,348
Total Shareholders' Funds 80,256 76,803 77,031
Analysed as
Equity Shareholders' Funds 67,756 64,303 64,531
Non-equity Shareholders' Funds 12,500 12,500 12,500
Page 7
SUMMARISED CASH FLOW STATEMENT
Six months Six months Year
to to to
30th 30th 31st
September September March
2000 1999 2000
(unaudited) (unaudited)
Note #000's #000's #000's
Net cash inflow from operating activities 12 15,508 15,005 29,624
Returns on investments and servicing of
finance -
Net interest paid (1,727) (2,494) (4,799)
Dividends paid on preference (non-equity) (547) (547) (1,094)
shares
(2,274) (3,041) (5,893)
Taxation paid (763) (137) (2,015)
Capital expenditure and investing activities -
Purchase of tangible fixed assets (6,728) (12,520 (21,354)
Contributions received 1,231 1,420 2,891
Proceeds from disposal of tangible fixed 276 656 1,043
assets
(5,221) (10,444)(17,420)
Dividends paid on ordinary (equity) shares (3,189) (2,722) (3,888)
Net cash inflow/(outflow) before management 4,061 (1,339) 408
of liquid resources and financing
Management of liquid resources,
being increase in short term deposits (2,000) - -
Financing -
New loans and leases - 296 296
Capital element of lease repayments (885) (1,067) (1,602)
(885) (771) (1,306)
Increase / (decrease) in cash 12 1,176 (2,110) (898)
Cash beginning of period 1,552 2,450 2,450
Cash end of period 2,728 340 1,552
Pages 8-10
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 but have been 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 2000 as set
out in the Annual Report and Accounts. Those accounts (on which the auditors
gave an unqualified report) have been delivered to the Registrar of Companies.
Note 2: Turnover
Six months to Six months to Year to
30th September 30th September 31 March
2000 1999 2000
(unaudited) (unaudited)
#000's #000's #000's
Turnover comprises -
Metered water supply 10,700 10,666 21,497
Unmeasured water supply 19,650 22,209 44,467
Other services 1,904 2,119 3,489
32,254 34,994 69,453
Note 3: Operating costs
Operating costs comprise -
Payroll cost, net of recharges 4,963 5,106 10,449
Other operating expenses 11,824 12,536 25,633
Depreciation, net 6,532 6,586 13,037
Exceptional provision for
restructuring costs - - 1,591
23,319 24,228 50,710
Note 4: Interest payable
Interest payable and similar charges comprise -
Interest payable and similar charges 2,419 2,702 5,162
Interest income (208) (126) (192)
2,211 2,576 4,970
Six months to Six months to Year to
30th 30th 31st
September September March
2000 1999 2000
(unaudited) (unaudited)
#000's #000's #000's
Note 5: Taxation
The charge for taxation comprises -
Corporation Tax at 30% 2,506 2,160 3,889
Less advanced corporation tax set (812) (787) (1,289)
off
1,694 1,373 2,600
Advance corporation tax - 137 136
1,694 1,510 2,736
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 2000 and amounted to #547,000.
The Board has declared an interim dividend of 24.0 pence (net) (1999 - 19.4
pence) on each Ordinary share amounting to #1,440,000 (1999 - #1,166,000),
payable on 30 November 2000.
Note 7: Earnings per share
The calculation of earnings per share is based on profit attributable to
holders of Ordinary Shares of #4,665,000 (1999 - #6,733,000) and the weighted
average number of Ordinary Shares in issue during the period of 5,998,025
(1999 - 5,998,025).
Note 8: Movement in tangible fixed
assets
Six months to Six months to Year to
30th 30th 31st
September September March
2000 1999 2000
(unaudited) (unaudited)
#000's #000's #000's
The movement in tangible fixed
assets comprises -
Net book value, beginning of period 165,309 160,765 160,765
Additions 7,005 12,166 21,099
Disposals (94) (56) (222)
Contributions (1,037) (1,204) (2,411)
Depreciation (6,653) (6,718) (13,922)
Net book value, end of period 164,530 164,953 165,309
Note 9: Net debt
Net debt comprises -
Term deposits 2,000 - -
Cash less overdrafts 2,728 340 1,552
Debt due within one year (1,428) (1,552) (1,419)
Debt due after one year (66,725) (68,021) (67,619)
Net debt (63,425) (69,233) (67,486)
NOTES TO THE INTERIM RESULTS
At 30th September At 30th September At 31st
March
2000 1999 2000
(unaudited) (unaudited)
#000's #000's #000's
Note 10: Provisions for
liabilities and charges
Restructuring costs (698) - (909)
Note 11: Shareholders'
funds
Movement in shareholders'
funds -
Beginning of period 77,031 71,236 71,236
Profit for the period 5,212 7,280 11,244
Dividends (1,987) (1,713) (5,449)
End of period 80,256 76,803 77,031
Note 12: Supplementary
cashflow information
a) Reconciliation of
operating profit to net
cash inflow from
operating activities -
Operating profit 8,935 10,766 18,743
Depreciation, net 6,532 6,586 13,037
Cashflow from operations 15,467 17,352 31,780
Working capital movements 41 (2,347) (2,156)
b) Reconciliation of net
cashflow to movement in
net debt
Increase/(decrease) in 1,176 (2,110) (898)
cash in the period
Increase in short term 2,000 - -
deposits
Cash used to reduce debt 885 1,067 1,602
Cash from new financing - (296) (296)
(Increase)/decrease in 4,061 (1,339) 408
net debt in period
Net debt, beginning of (67,486) (67,894) (67,894)
period
Net debt, end of period (63,425) (69,233) (67,486)
Note 13: 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.
Page 11
INDEPENDENT REVIEW REPORT TO BRISTOL WATER HOLDINGS PLC
Introduction
We have been instructed by the company to review the financial information set
out on pages 5 to 10 and we have
read the other information contained in the interim report and considered
whether it contains any apparent
misstatements or material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been
approved by the directors. The Listing Rules of the Financial Services
Authority require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the
preceding annual report and accounts, except where any changes, and the
reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999
/4 issued by the Auditing
Practices Board. A review consists principally of making enquiries of group
management and applying analytical
procedures to the financial information and underlying financial data and
based thereon, assessing whether the
accounting policies and presentation have been consistently applied unless
otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially
less in scope than an audit performed in accordance with Auditing Standards
and therefore provides a lower level
of assurance than an audit. Accordingly we do not express an audit opinion on
the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial
information as presented for the six months ended 30 September 2000.
PricewaterhouseCoopers
Chartered Accountants
Bristol
29th November 2000
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