TIDMBWRA
RNS Number : 5418H
Bristol Water PLC
01 June 2011
FINANCIAL HIGHLIGHTS
Post -
Pre - tax tax
GBPm GBPm
Profit for year ended 31 March 2010 23.1 18.6
Significant changes between periods:
Increase in depreciation charge on infrastructure
assets (10.1) (7.3)
Change in debt indexation cost (6.7) (4.8)
Change in discounting of deferred tax - (3.6)
Reduction in future corporation tax rate - 3.0
All other changes 1.3 0.9
Profit for year ended 31 March 2011 7.6 6.8
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Summary
-- Stable underlying performance
-- Substantial increase in statutory accounts depreciation on
infrastructure assets not yet reflected in regulatory accounts
or prices
-- More normal debt indexation charge in 2011 compared to a
credit in 2010
-- Tax charge affected by lower profits and credit to deferred
tax for lower tax rates offset by
reduction in discounting benefit
For further information contact:
Miquel Anglada, Director
Bristol Water plc
Tel 0117 953 6407
Or contact: Bristol Water Corporate Affairs on 0117 953 6470 during
office hours or 07831 453924 at any time.
CHAIRMAN'S STATEMENT
Introduction
It has been one of the most unusual years in the company's long
history. As previously reported, the Board rejected Ofwat's price
limits (and related obligations) for the five years to March 2015
and hence considerable effort went into dealing with the referral
to the Competition Commission ("CC"). Until the extent of the
required capital programme was clear, the company was restricted in
commencing projects and in the raising of necessary long-term debt.
The business also had to deal with both one of the severest
Decembers and driest years in the company's history.
I am delighted to report the company has fared well in meeting
these challenges and is well set for the future, having maintained
excellent customer service during the year.
Price Limits to 2015
2010/11 was the first year of the current regulatory period. The
company operated on the 0.6% real price increase previously allowed
by Ofwat. The CC amended Ofwat's subsequent K factors to 3.9%,
3.9%, 3.9% and 3.8% for the remaining four years and clarified the
outputs required in respect of these price limits.
The CC allowed Bristol Water one of the highest increases in
cumulative price limits and regulatory capital value in the
industry albeit average prices in 2015 will be only just above
industry averages. The scale of the K factors reflects the
significant increase in allowed capital expenditure. Some GBP250m
in current prices, net of contributions, will be invested over the
period. The CC recognised the need for a significant increase in
maintenance expenditures in order to ensure the company assets
remain in a state of stable serviceability.
To assist in balancing the relationship between water available
for supply and expected demand in the most cost efficient way, the
CC confirmed Ofwat's agreement to the company's proposed 10%
reduction in leakage by the end of the period.
The programme of outputs confirmed by the CC's determination is
challenging but, in the opinion of the Board, deliverable. Already
the company has raised new long term funding inside the CC's cost
assumptions. Although the referral process was a significant cost
and distraction for management, the Board is clear that the
company, and its customers, will benefit.
Operational performance
Required outputs for the period were uncertain pending the
conclusion of the CC referral and so the capital programme was
prioritised on areas where work was essential. However the
opportunity was taken to invest in design works for expected
schemes. As a result the expenditure in the year of nearly GBP24m
before contributions will grow substantially in 2011/12 and later
years.
There was a severe cold period throughout most of December and a
rapid thaw at Christmas time. Although this caused chaos in some
parts of the UK, our established Severe Weather Taskforce planned
ahead and delivered exemplary service to our customers. Despite
large numbers of bursts, the average time customers were without
water was reduced compared to the previous cold period in January
2010. Additional resource was employed by internal
re-prioritisation of jobs and through contractors to keep repair
times to a minimum. Additional leakage detection activity meant the
company outperformed its reduced leakage target.
Rainfall in the catchments of our reservoirs for the year to
March 2011 was only 71% of the long term average. The Company
responded by utilising its river sources to a higher degree to
maintain reservoir reserves. At the year-end, reservoir levels
stood at 85% at a time when the company objective is to have them
full. Further dry weather has meant that the maximum use of the
more expensive river sources continues. The company has a programme
of steps to minimise the risk of supply restrictions and has
carried out 32 actions to protect supplies. These include a
significant increase in making customers aware of the unusually dry
period that has been experienced. At this time, the Board does not
anticipate any supply restrictions this summer.
Water quality compliance was maintained at a very high standard
throughout the year. Customer service performance remains at high
levels with surveys consistently showing high customer
satisfaction. The company has retained a strong focus on
environmental management and working with the communities we
serve.
The company is re-designing certain operational processes to
seek operating efficiencies in future years.
Financial performance
There has been a stable underlying performance. The
determination by the CC has resulted in a GBP10m increase in the
depreciation charge on infrastructure assets compared to 2010 of
which only an element will be reflected in price limits in the
current five year regulatory period (and none at all in the 2010/11
year). The indexation of inflation-linked debt returned to a more
normal charge following the credit in the previous period.
Net debt fell modestly due to the constrained capital
expenditure and temporary reduction in dividend payments. As a
result the ratio of net debt to Ofwat's regulatory capital value
was unusually low at 31 March 2011 at 58%.
For the first time, the company directly approached the
financial markets issuing a GBP40m index linked, 30 year bond which
was rated Baa1 by Moody's. This financing will contribute
significantly to the delivery of the agreed capital programme.
Dividends
During the year GBP2.9m dividends were paid representing the
return of post-tax interest receivable on loans to the UK ultimate
parent company. No 'base' dividend was paid or is proposed to
preserve cash within the business. However, from next year, we
expect to return to our normal practice of paying our shareholders
a base level dividend reflecting the cost of capital allowed in the
5-year determination of price limits, adjusted to reflect actual
gearing levels and where appropriate actual performance relative to
regulatory assumptions.
Dividends continue to be paid on the irredeemable preference
shares and are treated as interest under the appropriate accounting
rules.
Prospects
The key risks to the company are regulatory requirements and
developments, operational events and performance problems. The
company is well placed to face the near future events but it is not
immune from the financial market uncertainties in the medium term,
which have the potential to impact its ability to obtain
appropriate financing to deliver the current and future capital
programmes.
We expect that the results for the year ended 31 March 2012 may
include the following material effects:
-- an approximate 8.6% increase in prices due to RPI and 'K'
factor;
-- an increase in the proportion of customers who are
metered;
-- an increase in chemical and power costs;
-- the potential for an increase in bad debts; and
-- an increase in interest charges and related indexation
arising from the GBP40m index-linked bond issued during the current
year.
Board membership
Alan Parsons, previous Managing Director, stated his intention
to retire from the business on 30 September 2011. His
responsibilities as Managing Director have been transferred to Luis
Garcia, who has been the Chief Executive since 1 April 2009. We
also decided to further enhance the executive board. On 23 November
2010 we appointed Mike King, formerly our director of regulation,
as Regulatory Director and on 1 January 2011 we appointed Robert
Brito as Operations Director.
We also welcome Jordi Valls who was appointed as a non-executive
director on 29 March 2011.
Three non-executive directors, Manuel Navarro, former Chief
Executive, Stefano Pellegri, former Finance Director, and Ciril
Rozman have resigned from the board on 9 September 2010, 23
November 2010 and 23 November 2010 respectively. We thank them for
their contribution and support whilst they have been with us.
Thanks
As I have referred to above it has been an exceptional year. All
of our staff have contributed to the normal running of the
company's business but this year there has been a tremendous effort
in dealing with the Competition Commission referral, raising new
funding and dealing with the challenges and inconvenience of the
harsh winter operating conditions that affected many of our staff's
Christmas holiday period. The Board's sincere thanks go to all
staff, and to our contractors, for their commitment that helped
ensure an excellent service to customers.
Moger Woolley
Chairman
31 May 2011
PROFIT AND LOSS ACCOUNT
for the year ended 31 March 2011
2011 2010
Note GBPm GBPm
Turnover 2 100.7 99.7
Operating costs 3 (82.1) (71.8)
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Operating profit 18.6 27.9
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Profit on sale of tangible fixed assets - 0.2
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Other net interest payable and similar charges 4 (9.5) (3.1)
Dividends on 8.75% irredeemable cumulative
preference
Shares 4 (1.1) (1.1)
Interest in respect of retirement benefit scheme 4 (0.4) (0.8)
Net interest payable and similar charges (11.0) (5.0)
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Profit on ordinary activities before taxation 7.6 23.1
Taxation on profit on ordinary activities 5 (0.8) (4.5)
Profit on ordinary activities after taxation 6.8 18.6
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Earnings per ordinary share 6 113.3p 310.0p
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Dividends per ordinary share 12
- declared or proposed in respect of the period 48.4p 170.12p
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- paid during the period 48.4p 170.12p
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All activities above relate to the continuing activities of the
company.
There is no difference between the profit on ordinary activities
before taxation and the retained profit for the financial year
stated above and their historical cost equivalents.
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the year ended 31 March 2011
2011 2010
Note GBPm GBPm
Profit attributable to Bristol Water plc shareholders 6.8 18.6
Actuarial gains/(losses) recognised in respect of
retirement benefit obligations 1.4 (0.4)
Attributable deferred taxation 10 (0.4) 0.1
Change in the fair value of the interest rate swap 0.1 0.1
Attributable deferred taxation 10 - -
Total recognised gains for the year 7.9 18.4
RECONCILIATION OF SHAREHOLDERS' FUNDS
for the year ended 31 March 2011
2011 2010
Note GBPm GBPm
Total recognised gains and losses 7.9 18.4
Equity dividends paid 12 (2.9) (10.2)
Increase in shareholders' funds during the year 5.0 8.2
Shareholders' funds at 1 April 84.9 76.7
Shareholders' funds at 31 March 89.9 84.9
BALANCE SHEET
at 31 March 2011
2011 2010
Note GBPm GBPm
Fixed assets 7 240.7 251.2
Other investments - Loans to ultimate UK holding
Company 68.5 68.5
Current assets
Stocks 1.1 1.0
Debtors 22.3 23.1
Cash on deposit 8 77.3 25.0
Cash at bank and in hand 2.4 1.8
103.1 50.9
Creditors: amounts falling due within one year
Short-term borrowings 9 (2.8) (2.5)
Other creditors (25.3) (28.7)
(28.1) (31.2)
Net current assets 75.0 19.7
Total assets less current liabilities 384.2 339.4
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Creditors: amounts falling due after more than one
year
Borrowings and derivatives 9 (257.3) (215.8)
8.75% irredeemable cumulative preference shares 9 (12.5) (12.5)
Deferred income (9.8) (10.3)
Provisions for liabilities 10 (22.3) (22.2)
Retirement benefit surplus 11 7.6 6.3
Net assets 89.9 84.9
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Capital and reserves
Called-up share capital 6.0 6.0
Share premium account 4.4 4.4
Other reserves 5.1 5.0
Profit and loss account 74.4 69.5
Shareholders' funds 89.9 84.9
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CASH FLOW STATEMENT
for the year ended 31 March 2011
2011 2010
Note GBPm GBPm
Net cash inflow from operating activities 13(a) 49.0 48.0
Returns on investments and servicing of finance
Interest received 4.2 4.2
Interest paid on term loans and debentures (8.6) (8.3)
Interest paid on finance leases (0.3) (0.9)
Dividends paid on 8.75% irredeemable cumulative
preference shares (1.1) (1.1)
(5.8) (6.1)
Taxation
Corporation tax paid (4.0) (2.8)
Capital expenditure and investing activities
Purchase of tangible fixed assets (24.4) (24.6)
Contributions received 3.8 3.9
Proceeds from disposal of tangible fixed assets 0.2 0.2
Increase in cash deposits maturing after three
months of the balance sheet date (46.8) -
(67.2) (20.5)
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Equity dividends paid 12 (2.9) (10.2)
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Cash (outflow)/inflow before management of liquid
resources and financing (30.9) 8.4
Management of liquid resources being
increase in liquid resources (5.5) (5.6)
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Financing
New term loan 39.5 -
Capital element of lease repayments (2.5) (2.2)
37.0 (2.2)
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Increase in cash in the year 13(b) 0.6 0.6
Cash, beginning of year 1.8 1.2
Cash, end of year 2.4 1.8
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NOTES TO THE ACCOUNTS
1. ACCOUNTING POLICIES
The significant accounting policies adopted in the
preparation of the accounts have been applied consistently,
except for the accounting policy for grants and contributions
as explained in sub-note (e) below. The significant
accounting policies adopted in the preparation of
the accounts are set out below.
(a) Accounting convention
The accounts of the company are prepared under the
historical cost convention and in accordance with
applicable accounting standards in the United Kingdom
(UK GAAP) and with the provisions of the Companies
Act 2006, except for the treatment of certain capital
contributions as explained in sub-note (e) below.
The company has not adopted IFRS for its financial
statements for the year ended 31 March 2011, and has
no current plans to do so until UK GAAP and IFRS are
fully harmonised.
(b) Going concern
In assessing the going concern basis, the directors
have considered the cash flow and financial ratios
projections of the company for the foreseeable future
which show that the company is fully funded to meet
its existing obligations.
The key risks to the company are regulatory requirements
and developments, operational events and performance
problems. The company is well placed to face the near
future, with cash and cash deposits of GBP79.7m and
the GBP30m unutilised committed borrowing facility.
The company is not immune from the severe financial
market uncertainties in the medium term, which have
the potential to impact its ability to obtain appropriate
financing to deliver the current and future capital
programmes.
The directors report that, after making enquiries,
they have concluded that the company has adequate
resources or the reasonable expectation of raising
further resources as required, to continue in operation
for the foreseeable future.
Accordingly, they continue to adopt the going concern
basis in preparing the accounts.
(c) Turnover
Turnover comprises charges to and accrued income from
customers for water and other services, exclusive
of VAT. Turnover is recognised upon delivery of water
or completion of other services.
Income from metered supplies is based upon actual
volumes of water invoiced plus estimated volumes of
uninvoiced water delivered to customers during the
year.
(d) Tangible fixed assets and depreciation
Tangible fixed assets comprise infrastructure assets
and other assets:
Infrastructure assets
Infrastructure assets comprise the integrated network
of impounding and pumped raw water storage reservoirs
and water mains and associated underground pipework.
Expenditure on such assets relating to increases in
capacity, enhancements or planned maintenance of the
network is treated as an addition to fixed assets
and is included at cost. The cost of infrastructure
assets is their purchase cost together with incidental
expenses of acquisition and directly attributable
labour costs which are incremental to the company.
Other assets
Other assets include land and buildings, operational
structures, fixed and mobile plant, equipment and
motor vehicles. All are included at cost. The cost
of other assets is their purchase cost together with
incidental expenses of acquisition and any directly
attributable labour costs which are incremental to
the company.
Depreciation
Depreciation is charged, where appropriate, on a straight-line
basis on the original cost of assets over their expected
economic lives. Freehold land is not depreciated.
Depreciation of long-life assets commences when the
assets are brought into use.
Depreciation of infrastructure assets under renewals
accounting takes account of planned expenditure levels
to maintain the operating capability of the company's
infrastructure assets in perpetuity. Other assets
are depreciated after commissioning over the following
estimated economic lives:
Operational properties and structures 15 to 100 years
Treatment, pumping and general plant 20 to 24 years
Computer hardware, software,
communications, meters and
telemetry equipment 3 to 15 years
Vehicles and mobile plant 5 to 7 years
Assets under construction are not depreciated.
Impairment The values of fixed assets are reviewed
regularly to determine whether their carrying
amounts exceed their fair values in use. Where such
an excess is believed to exist it is treated as an
impairment loss and charged to the profit and loss
account.
(e) Grants and contributions
Contributions received in respect of tangible assets,
other than those received in respect of infrastructure
assets, are treated as deferred income and amortised
in the profit and loss account over the expected useful
lives of the related assets. Contributions received
in respect of enhancing the infrastructure network
are not shown as deferred income but are deducted
from the cost of the related fixed assets. This treatment
is required by Statement of Standard Accounting Practice
Number 4 but is a departure from the Companies Act
2006 which requires that such contributions be shown
as deferred income.
In the directors' opinion, this treatment is necessary
to show a true and fair view as the related assets
do not have determinable finite lives and therefore
no basis exists for the amortisation of the contributions.
Prior to 1 April 2010, a type of contribution called
"Infrastructure Charges" was partially attributed
to the non-infrastructure assets and was treated as
deferred income and amortised in the profit and loss
account over the expected useful lives of the related
assets. However after industry wide clarification
by Ofwat, the full amount of "Infrastructure Charges"
has been attributed to the infrastructure assets from
1 April 2010.
Grants and contributions in respect of expenditure
charged to the profit and loss account are netted
against such expenditure as received.
(f) Leased assets
Assets financed by leasing agreements that transfer
substantially all the risks and rewards of ownership
of an asset to the lessee are capitalised and depreciated
over the shorter of their estimated useful lives and
the lease term. The capital portion of the lease commitment
is included in current or non-current creditors as
appropriate. The capital element of the lease rental
is deducted from the obligation to the lessor as paid.
The interest element of lease rentals and the depreciation
of the relevant assets are charged to the profit and
loss account.
Operating lease rental payments are charged to the
profit and loss account as incurred over the term
of the lease.
(g) Pension costs
The company operates both defined benefit and defined
contribution pension arrangements. Defined benefit
pension arrangements are provided through the company's
membership of the Water Companies' Pension Scheme
("WCPS") via a separate section. Defined benefit scheme
liabilities are measured by an independent actuary
using the projected unit method and discounted at
the current rate of return on high quality corporate
bonds of equivalent term and currency to the liability.
The increase in the present value of the liabilities
of the company's defined benefit pension scheme expected
to arise from employee service in the period is charged
to operating profit. The expected return on the scheme's
assets and the increase during the period in the present
value of the scheme's liabilities, arising from the
passage of time, is included in other finance income
or cost.
Actuarial gains and losses arising from experience
adjustments, changes in actuarial assumptions and
amendments to pension plans are charged or credited
direct to the statement of total recognised gains
and losses. Costs of defined contribution pension
schemes are charged to the profit and loss account
in the period in which they fall due. Administration
costs of defined contribution schemes are borne by
the company.
Past service costs are recognised in profit or loss
on a straight-line basis over the vesting period or
immediately if the benefits have vested. When a settlement
or a curtailment occurs the change in the present
value of the scheme liabilities and the fair value
of the plan assets reflects the gain or loss which
is recognised in the profit and loss account. Losses
are measured at the date that the company becomes
demonstrably committed to the transaction and gains
when all parties whose consent is required are irrevocably
committed to the transaction.
In July 2010, the government announced that it would
in future use the Consumer Price Index (CPI) rather
than the Retail Price Index (RPI) as the basis for
determining the statutory minimum percentage increase
for revaluation and indexation in the Pension Increase
(Review) Order. Based on due consideration of "UITF
Abstract 48", which governs how this issue is treated
under FRS17, and legal advice to confirm the impact
of the change for Bristol Water's section of WCPS,
it was concluded that "The Rules of the Bristol Water
plc section link pension increases in deferment and
in payment to be in line with the increases set out
in the Pension Increase (Review) Orders. The Government
has indicated that in future Pension Increase Orders
will be based on CPI rather than RPI and, provided
that no other legal considerations apply, the change
to CPI feeds through to the Section's benefits automatically".
Accordingly, commencing 31 March 2011 the CPI basis
has been used for the calculation of pension scheme
related amounts in respect of the future pension increases.
(h) Research and development
Research and development expenditure is charged to
the profit and loss account as incurred.
(i) Taxation
Current tax, including UK corporation tax and foreign
tax, is provided at amounts expected to be paid (or
recovered) using the tax rates and laws that have
been enacted or substantively enacted by the balance
sheet date.
Advance Corporation Tax (ACT) in respect of dividends
in previous years is written off to the profit and
loss account unless it could be recovered against
mainstream corporation tax in the current year or
with reasonable assurance in the future. Credit is
taken for ACT previously written off when it is recovered
against mainstream corporation tax liabilities.
Deferred tax is recognised in respect of all timing
differences that have originated but not reversed
at the balance sheet date where transactions or events
that result in an obligation to pay more tax in the
future or a right to pay less tax in the future have
occurred at the balance sheet date. Timing differences
are differences between the company's taxable profits
and its results as stated in the financial statements
that arise from the inclusion of gains and losses
in tax assessments in periods different from those
in which they are recognised in the financial statements.
Deferred tax is measured at the tax rates that are
expected to apply in the periods in which the timing
differences are expected to reverse based on tax rates
and laws that have been enacted or substantively enacted
by the balance sheet date. Deferred tax is measured
on a discounted basis to reflect the time value of
money over the period between the balance sheet date
and the dates on which it is estimated that the underlying
timing differences will reverse. The discount rates
used reflect the post-tax yields to maturity that
can be obtained on government bonds with similar maturity
dates and currencies to those of the deferred tax
assets or liabilities.
(j) Distributions to shareholders
Dividends and other distributions to shareholders
are reflected in financial statements when approved
by shareholders in a general meeting, except for interim
dividends which are included in financial statements
when paid by the company. Accordingly, proposed dividends
are not included as a liability in the financial statements.
(k) Cash on deposit
Cash on deposit represents short-term deposits having
maturity in the range of seven days to nine months.
(l) Stocks
Stocks are valued at the lower of cost and net realisable
value. Following established practice in the water
industry no value is included in the accounts in respect
of water held in store.
(m) Financial instruments The company has entered into an
interest rate swap effective from 22 October 2008. In
accordance with the provisions of FRS25, 'Financial
Instruments: Presentation', and FRS26, 'Financial
Instruments: Recognition and Measurement', the company values
its interest-rate swap on the balance sheet. The effective
portion of the swap is deferred through the statement of
total recognised gains and losses. Should there be any
ineffectiveness, any gain or loss relating to the ineffective
portion would be recognised immediately in the profit and
loss account within finance charges. The net costs of issue
of loans (being expenses incurred less premiums received)
where material are amortised over the lives of the respective
loans and disclosed within net borrowings. Immaterial amounts
are written off as incurred. Index-linked loans are
considered to be effective economic hedges and are valued at
cost plus accrued indexation.
(n) Hedge accounting The company documents at the inception
of the transaction the relationship between hedging
instruments and hedged items, as well as its risk
management objective and strategy for undertaking
a hedge transaction. The company also documents its
assessment, both at hedge inception and on an ongoing
basis, of whether the derivatives that are used in
hedging transactions are highly effective in offsetting
changes in fair value or cash flows of hedged items.
The effective portion of the swap is deferred through
the statement of total recognised gains and losses.
Should there be any ineffectiveness, any gain or loss
relating to the ineffective portion would be recognised
immediately in the profit and loss account within
finance charges.
Amounts deferred in the statement of total recognised
gains and losses are recognised in the profit and
loss account in the periods when the hedged item is
recognised in the profit and loss account, in the
same line as the recognised hedged item.
Hedge accounting is discontinued when the company
revokes the hedging relationship, the hedging instrument
expires, is terminated or exercised, or no longer
qualifies for hedge accounting.
(o) Provisions A provision is recognised when the company
has a legal or constructive obligation as a result
of past event and it is probable that an outflow of
economic benefits will be required to settle the obligation.
The effect of the time value of money, except in case
of deferred tax as mentioned in sub-note (i) above,
is not material and therefore the provisions are not
discounted.
2. TURNOVER
Turnover is wholly derived from water supply and related
activities in the United Kingdom. The maximum level
of prices the company may levy for the majority of
water charges is controlled by the Water Services
Regulation Authority (Ofwat) through the RPI +/- K
price formula.
3. OPERATING COSTS
Operating costs comprise - 2011 2010
GBPm GBPm
Net payroll cost 12.3 11.6
Total other operating costs 39.9 39.2
Net depreciation 29.9 21.0
Total operating costs 82.1 71.8
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4. NET INTEREST PAYABLE AND SIMILAR CHARGES
2011 2010
GBPm GBPm GBPm GBPm
Other net interest payable and similar
charges relate to:
Bank borrowings 1.0 1.1
Term loans and debentures - interest
charges 7.5 7.3
- indexation and
amortisation of fees and
premium on loans 4.9 (1.8)
Finance leases 0.3 0.6
13.7 7.2
Less:
Loan to Agbar UK Ltd - interest
receivable (4.0) (4.0)
Other external investments and
deposits (0.2) (0.1)
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(4.2) (4.1)
Total other net interest payable and
similar charges 9.5 3.1
Dividends on 8.75% irredeemable cumulative
preference shares 1.1 1.1
Net Interest charge in respect of
retirement benefit scheme 0.4 0.8
11.0 5.0
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Dividends on the 8.75% irredeemable cumulative preference
shares are payable at a fixed rate of 4.375% on 1
April and 1 October each year. Payment by the company
to the share registrars is made two business days
earlier. The payments are classified as interest in
accordance with FRS25.
5. TAXATION ON PROFIT ON ORDINARY ACTIVITIES
2011 2010
GBPm GBPm
Analysis of charge for the year, all arising in the
United Kingdom:
Current tax:
Corporation tax at 28% 1.0 4.9
Adjustment to prior periods (0.1) -
0.9 4.9
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Deferred tax:
Current year movement 1.4 1.8
Effect of corporation tax rate change (3.0) -
Adjustment to prior periods 0.1 -
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(1.5) 1.8
Effect of discounting 1.4 (2.2)
(0.1) (0.4)
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Tax on profit on ordinary activities 0.8 4.5
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The charge for corporation tax includes amounts for
group relief surrendered by other group companies.
Group relief is charged at the mainstream corporation
tax rate in the applicable year.
The government has announced progressive reductions
in the corporation tax rate between 1 April 2011 and
1 April 2014. The effect of corporation tax rate changes
included within the deferred tax calculation for the
year ended 31 March 2011 is restricted to the corporation
tax rate reductions that were substantially enacted
at 31 March 2011. Consequently the deferred tax is
calculated based on the future tax rate of 26%. The
beneficial effect of this change is GBP3.0m on an
undiscounted basis (GBP1.8m on a discounted basis).
Discount rates have decreased during the current year
(2010: increased during the year). Within the effect
of discounting in 2011, a decrease in the beneficial
effect of discounting of GBP0.4m (2010: increase of
GBP1.4m) has been recognised in respect of the restatement
of the opening balance at the new rates, increasing
(2010: decreasing) the overall deferred tax charge.
Factors that may affect future tax charges
The 2011 Budget announced that the rate would decrease
from 26% on 1 April 2011 to 23% on 1 April 2014. The
effect of these reductions would have reduced the
discounted deferred tax liability of the company by
GBP2.7m (GBP4.5m reduction on an undiscounted basis).
Advance Corporation Tax ("ACT") is recognised as an
asset to the extent that it is foreseen to be recoverable
in the next 12 months. There is GBP3.9m (2010: GBP3.9m)
of unrecognised ACT carried forward at 31 March 2011.
The company also holds GBP2.9m (2010: GBP2.9m) of
unrecognised capital losses, which are available to
offset against any future capital gains.
6. EARNINGS PER ORDINARY SHARE
2011 2010
m m
Earnings per ordinary share have been calculated
as follows -
On average number of ordinary shares in issue
during the year -
Earnings attributable to ordinary shares GBP6.8 GBP18.6
Weighted average number of ordinary shares 6.0 6.0
------- --------
As the company has no obligation to issue further
shares, disclosure of earnings per share on a fully
diluted basis is not relevant.
7. TANGIBLE FIXED ASSETS
2011 2010
GBPm GBPm
Net book value, beginning of year 251.2 251.7
Additions 23.9 24.4
Disposals (0.2) (2.8)
Grants and contributions (3.8) (3.3)
Depreciation (30.4) (18.8)
Net book value, end of year 240.7 251.2
------- -------
8. CASH ON DEPOSIT
2011 2010
GBPm GBPm
Cash on deposit matures:
-between seven days to three months of the balance
sheet date 30.5 25.0
- after three months of the balance sheet date 46.8 -
77.3 25.0
----- -----
Cash deposits maturing between seven days to three
months of the balance sheet date are considered as
liquid resources for the purposes of the Cash Flow
statement.
9. NET BORROWINGS AND DERIVATIVES
2011 2010
GBPm GBPm
Cash on deposit 77.3 25.0
Cash at bank and in hand 2.4 1.8
Debt due within one year (2.8) (2.5)
Debt due after one year including
interest rate swap (257.3) (215.8)
Net borrowings and derivatives excluding
8.75% irredeemable cumulative preference
shares (180.4) (191.5)
8.75% irredeemable cumulative preference
shares (12.5) (12.5)
Net borrowings and derivatives including
8.75% irredeemable cumulative preference
shares (192.9) (204.0)
-------- --------
10. PROVISIONS FOR LIABILITIES
2011 2010
GBPm GBPm
Provision for deferred tax comprises -
Accelerated capital allowances and capital element
of finance leases 39.5 41.1
Deferred income (1.4) (1.6)
Short term timing differences (0.2) (0.3)
Retirement benefit obligations 2.7 2.5
Interest rate swap (0.3) (0.3)
40.3 41.4
Effect of discounting (15.3) (16.7)
------- -------
Net provision, including deferred tax on retirement
benefit obligations 25.0 24.7
Less, attributable to retirement benefit obligations (2.7) (2.5)
Net provision, excluding deferred tax on
retirement benefit obligations 22.3 22.2
------- -------
Deferred tax movement: 2011 2010
GBPm GBPm
Provision at 1 April 24.7 25.2
Credit to Profit and Loss Account (note 5) (0.1) (0.4)
Charge/(credit) to Statement of Total Recognised Gains
and Losses in respect of:
Retirement benefit obligations 0.4 (0.1)
Interest rate swap - -
Provision at 31 March 25.0 24.7
------ ------
11. RETIREMENT BENEFIT OBLIGATIONS
The following table sets out the key assumptions used for
the valuation of the company's section of WCPS. The table
also sets out as at the accounting date the fair value of
the assets, a breakdown of the assets into the main asset
classes, the present value of the section liabilities, and
the resulting surplus.
Expected long-term Market values of
rate of return section assets
2011 2010 2009 2011 2010 2009
GBPm GBPm GBPm
Equities 7.8% 8.0% 8.0% 26.2 34.5 26.9
Diversified growth funds 7.3% n/a* n/a* 6.6 - -
Bonds 3.9% 4.1% 4.1% 116.6 108.4 96.8
Cash 2.1% 2.0% 1.9% 0.1 0.2 0.1
Market value of section
assets 149.5 143.1 123.8
Present value of
liabilities (122.8) (134.3) (106.2)
-------- -------- --------
Surplus on FRS17 basis 26.7 8.8 17.6
Amount not recognised
due to asset
recognition limit (16.4) - (8.9)
Surplus in the section 10.3 8.8 8.7
Deferred taxation at 26%
(2010 and
2009: 28%) (2.7) (2.5) (2.4)
Net pension asset 7.6 6.3 6.3
-------- -------- --------
* There was no investment in "Diversified growth funds" in
years ended 31 March 2010 and 2009.
12. DIVIDENDS IN RESPECT OF ORDINARY SHARES
2011 2010
GBPm GBPm
Dividends paid
-- Dividend in respect of 2009:
Final dividend of 60.02 pence per share,
approved by the Board on 3 August 2009 - 3.6
-- Dividend in respect of 2010:
First interim dividend of 24.27 pence per share,
approved by the Board on 6 September 2009 - 1.5
Second interim dividend of 61.69 pence per share,
approved by the Board on 11 November 2009 - 3.7
Third interim dividend of 24.14 pence per share,
approved by the Board on 22 March 2010 - 1.4
-- Dividend in respect of 2011:
First interim dividend of 24.27 pence per share,
approved by the Board on 29 September 2010 1.5 -
Second interim dividend of 24.14 pence per share,
approved by the Board on 17 March 2011 1.4 -
2.9 10.2
----- -----
The Board has not proposed a final dividend in respect
of the year ended 31 March 2011 (31 March 2010: nil).
13. SUPPLEMENTARY CASH FLOW INFORMATION
Reconciliation of operating profit to net
(a) cash inflow from operating activities -
2011 2010
GBPm GBPm
Operating profit
Depreciation, net of amortisation
of deferred income
Difference between pension
charges and normal
contributions 18.6 27.9
29.9 21.0
0.3 (0.3)
Cash flow from operations
Working capital movements
-
Stocks
Debtors
Creditors and provisions
Additional contributions to
pension scheme 48.8 48.6
(0.1) 0.1
0.8 (1.5)
0.4 1.8
(0.9) (1.0)
Net cash inflow from operating
activities 49.0 48.0
-------- --------
Reconciliation of net cash
flow to movement in net borrowings
(b) -
2011 2010
GBPm GBPm
Increase in cash in the year
Cash used to repay borrowings
Cash from new borrowings
Increase in cash deposits
in the year 0.6 0.6
2.5 2.2
(39.5) -
52.3 5.6
15.9 8.4
Indexation of debt and amortisation
of fees and premium not affecting
cash flow (4.9) 1.8
Fair value of interest rate
swap not affecting cash flow 0.1 0.1
Net borrowings at 1 April
including 8.75% irredeemable
cumulative preference shares (204.0) (214.3)
Net borrowings at 31 March
including 8.75%
irredeemable cumulative preference
shares (192.9) (204.0)
-------- --------
14. CONTINGENT LIABILITY
The company is a member of a VAT group and is jointly
liable for the VAT liabilities of Agbar UK Ltd and
certain other companies within the Agbar UK Limited
group. Other than as shown in these accounts the directors
are not aware of any other contingent liabilities
that require disclosure.
15. ULTIMATE PARENT COMPANY AND CONTROLLING PARTY
Until 7 June 2010 the ultimate parent company was
considered by the directors to be Sociedad General
de Aguas de Barcelona S.A. (Agbar), a company incorporated
in Spain. On 8 June 2010 Suez Environnement Company
S.A., a company incorporated in France and partly
owned by the French group GDF Suez, increased its
control of Agbar to 75.23% and is now regarded as
the ultimate parent company.
The takeover by Suez Environnement has been communicated
to Ofwat who have concluded a public consultation
on the identity of Bristol Water plc's ultimate holding
company for the purposes of Condition P of the company's
Instrument of Appointment. As a consequence of the
takeover, certain updating licence changes for the
ring-fencing parts of the licence were agreed. There
have been no changes to the conditions of the licence
since that point.
The largest group in which this company is consolidated
is Suez Environnement Company S.A. and copies of its
consolidated annual report are available from 1, Rue
D'Astorg 75008 Paris, France.
The smallest group in which this company is consolidated
is Agbar, and copies of its consolidated annual report
are available from Torre Agbar, Avda. Diagonal, 211,
Planta 19-08018, Barcelona, Spain.
16. FINANCIAL INFORMATION
The financial information set out above does not constitute
the company's statutory accounts for the years ended
31 March 2011 or 2010, but is derived from those accounts.
Statutory accounts for 2010 have been delivered to
the Registrar of Companies and those for 2011 will
be delivered following the company's annual general
meeting. The auditors have reported on those accounts;
their reports were unqualified, did not draw attention
to any matters by way of emphasis and did not contain
statements under s498 (2) or (3) Companies Act 2006
or equivalent preceding legislation.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR ABMLTMBAJMAB
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