TIDMBWRA
RNS Number : 3845Y
Bristol Water PLC
28 November 2014
BRISTOL WATER plc
Announcement of interim results for the six months ended 30
September 2014
Bristol Water plc is ultimately owned by Capstone Infrastructure
Corporation (50%), Sociedad General de Aguas de Barcelona S.A.
(Agbar) (30%), and Itochu Corporation of Japan (20%).
Bristol Water plc supplies water to over 1.2 million people and
businesses in an area of almost 2,400 square kilometres centred on
Bristol.
For further information contact:
Luis García, Chief Executive
Mick Axtell, Finance Director
Bristol Water plc
Tel 0117 953 6470
Or contact: Bristol Water Corporate Affairs on 0117 953 6470 during
office hours or 07831 518964 / 07770 533238 at any time.
FINANCIAL HIGHLIGHTS - REPORTED UNDER UK GAAP
GBPm
Profit after tax for 6 months to 30 September 2013 11.2
------
Significant changes between periods:
Increase in Earnings Before Interest, Tax, Depreciation
and Amortisation ("EBITDA") 2.8
Increase in depreciation (0.4)
Decrease in debt indexation charge 0.5
One-off effect of corporation tax rate reduction
enacted last year (5.0)
Impact of movement in discount rates and other changes
in deferred tax liability (0.6)
------
(2.7)
Increase in taxation due to higher profit before
tax (0.6)
Profit after tax for 6 months to 30 September 2014 7.9
------
Summary
-- Continued stable underlying financial and operational performance
-- High customer satisfaction levels - Based on the latest
published SIM scores in July 2014, Bristol Water ("the Company")
was 5(th) in the industry
-- Significant level of capital investment continued with a
GBP32.4m investment during the period
-- Increase in EBITDA mainly driven by revenue increase due to
RPI and K factor as required to support the significant capital
investment
-- Decrease in debt indexation charge due to lower RPI
-- Increase in depreciation following recent capital investment
-- Last year's results included a credit of GBP5m due to a
one-off reduction in deferred tax liability resulting from
reduction in corporation tax rate
CHAIRMAN'S STATEMENT
Introduction
The Company has continued to perform well operationally and
financially over the last six months having firmly focussed on
meeting our regulatory requirements and the expectations of
customers and other stakeholders by delivering excellent customer
service and water quality.
We have dealt with a couple of major bursts and flooding
incidents during this period but with the commitment of our staff
and contracting partners, managed to minimise the impact of any
disruption sustained by our customers during these emergencies.
The summer months of 2014 have been drier than in previous
years, with approximately half of the long-term average rainfall
expected for the period. Our resource position has been managed
well and no supply issues have been encountered.
The results for the six months ended 30 September 2014 reflect
our stable financial performance. EBITDA increased by GBP2.8m
compared to the same period last year, which supports the
significant ongoing capital investment programme. Our capital
programme led to higher depreciation, and interest on our
index-linked debt was lower due to favourable RPI movements. Profit
before tax increased by GBP2.9m to GBP11.2m as a result of the
above factors. Profit after tax declined by GBP3.3m to GBP7.9m
predominantly due to the exceptional deferred tax credit recognised
in the same period last year in relation to the reduction in future
corporation taxation rates.
Earlier in the year we submitted our Business Plan proposals for
the next regulatory period following extensive consultation with
both household and non-household customers which was overseen by an
independent customer representative panel. Further information has
been submitted to Ofwat as part of the price review process and we
now await their Final Determination.
Capital investment
Our extensive capital investment programme has progressed well.
During the period we invested GBP32.4m on our mains rehabilitation
schemes and major upgrades to two key pumping stations. The mains
rehabilitation work will improve both the security of water supply
for the future, and water quality in respect of discoloured water
and iron compliance. The work on pumping stations will increase
operational efficiency and improve resilience of our key pumping
stations.
We have adopted a collaborative approach with the highway
authorities and implemented stakeholder engagement campaigns with
local residents and businesses to ensure they are kept fully
informed on the status of our works. Engagement with customers and
commuters has been paramount to the successful delivery of the key
projects across this Asset Management Plan ("AMP") period and we
have used both traditional communication methods as well as using
our mobile exhibition unit which allows people to speak to us
face-to-face.
The planning application for a second reservoir at Cheddar was
submitted in 2013 and has been successful. The need to build the
GBP100m-plus reservoir is driven by future demands for water across
the supply area and will also provide long-term recreational and
conservation benefits. We have obtained planning permission from
Sedgemoor District Council, however securing funding through the
price review process will be required before the work can start on
the new reservoir.
The majority of AMP5 projects have now been completed and we are
confident that we will achieve substantially all the remaining
outputs by the end of the regulatory period 2010-15.
Price review process
Following the June submission of our Business Plan proposals for
the period 2015-20 we were advised by Ofwat in early August that it
had concerns about the wholesale costs in our plan, as there was a
significant difference between our assessment of these costs based
on independent reviews and Ofwat's own assessment based upon its
cost model. This was confirmed in their Draft Determination on 29
August.
After consulting with external, independent experts and
carefully carrying out our own internal reviews of the Draft
Determination, a response was filed to Ofwat in early October. In
our response we proposed a GBP21m reduction over the AMP6 period in
our total wholesale costs from GBP562m to GBP541m in real terms.
Our revised proposals will, however, still deliver the levels of
service and service improvements contained in our original plans
which were endorsed by 92% of household customers and 97% of
business customers surveyed during the consultation process.
We have had further engagement with Ofwat since our October
response, aimed at resolving the points of difference on total
wholesale costs. Ofwat will publish its Final Determination on 12
December.
Customer service
Our customer service remained high throughout 2013/14 with our
performance against Ofwat's service measure, published in July
2014, placing us 5(th) in the industry. On the basis of Ofwat's
three year average of SIM scores, the Company was ranked 4(th) in
the industry. The customer service measure captures the customer
experience, their interaction with the Company and the reasons that
prompted them to contact us. We believe having local knowledgeable
customer-focussed staff who deliver quick response times and who
keep customers informed of what we are doing at all times has
helped keep customer satisfaction high. We will continue to
introduce new customer feedback mechanisms in order that we can
improve on our service delivery.
As part of our affordability strategy we are working very
closely with partners in the debt advice sector, including Citizens
Advice Bureaux to promote the various schemes which allow customers
genuinely unable to afford their bill to pay a fair contribution
towards the costs. Customers also receive independent debt advice
together with water efficiency advice.
Building for the future
To strengthen our business for future emerging channels and to
build on the continual business improvement processes, we have
embarked on a detailed company-wide review of all aspects of the
business. This project will identify ways in which we can make the
business more resilient and efficient and better prepared for
changes in the statutory and regulatory environment in which we
operate. We support government plans to increase the level of
choice for commercial customers in the sector and believe this
could deliver real benefits to customers and we are working towards
retail separation which will take place in April 2017.
Community engagement
As part of our community engagement programme we have been 'out
and about' in the community delivering talks and workshops and
exhibiting at a number of small and major events to promote the
good use of water.
Our events team attended a number of large shows - the Festival
of Nature, VegFest, Bristol Harbourside Festival and the
International Bristol Balloon Fiesta where they were able to answer
water related queries, promote the free water saving packs
available from Bristol Water as well as handing out hundreds of
educational posters displaying the water cycle to children. We have
also provided information and leaflets on a wide range of topics,
including metering, leakage, tariffs and water wise tips for
gardening.
As a responsible corporate citizen we think it is important for
us to engage with our customers face-to-face and we estimate that
we have engaged with over 14,000 people throughout the summer
months at the various events that we have attended.
With all the necessary statutory and regulatory environmental
requirements placed on water companies to maintain their
environmental assets and land holdings, Bristol Water has just
appointed an Environmental Programme Delivery Manager. This person
will work collaboratively, drawing on the expertise of farmers,
other bodies like the Wildlife Trusts, Farming & Wildlife
Advisory Group (FWAG), Natural England and Areas of Outstanding
Natural Beauty Partnerships and will work alongside similar
initiatives such as the Catchment Sensitive Farming (CSF)
Initiative run by Natural England and the Environment Agency.
At the end of September, 20,000 glass eels rescued from West
Country estuaries by the Sustainable Eel Group (SEG) earlier this
year were released into Chew Lake. Scientists have classified them
as 'critically endangered' due to the plummeting numbers arriving
in Europe since the 1980s and 90s and we have been working with the
SEG and Avon Wildlife Trust to protect this species by helping them
move inland and by repopulating rivers and waterways.
Financial performance
There has been a stable underlying performance during the
period. Compared to the same period last year, turnover increased
by GBP4.3m to GBP66m due to RPI and 'K' factor, and profit before
tax increased by GBP2.9m to GBP8.3m. These results reflect the net
impact of:
-- the 6.5% increase in prices allowed by Ofwat - required for
the on-going capital investment programme, and an increase in
demand from metered customers,
-- higher operating costs, predominantly driven by inflationary
and above inflation market price increases, increase in costs
associated with the improvement of customer service, increase in
network maintenance costs driven by ageing mains network, and
higher provision for uncollected debt from our customers. Increase
in operating costs is partially offset by savings from our
efficiency programme, Avon+,
-- higher depreciation charge driven by large capital investment during the last year, and
-- lower interest indexation charge due to lower RPI.
Profit after tax was GBP3.3m lower compared to the same period
last year resulting from GBP2.9m higher profit before tax and
GBP6.2m higher tax charge. The increase in tax charge was driven by
higher taxable profit during the period, movement on discount rates
for deferred tax, and the last year's deferred tax including the
impact of reduction in corporation tax rate.
Net debt excluding the 8.75% irredeemable cumulative preference
shares was GBP296.5m, representing approximately 71% of March 2015
expected Regulatory Capital Value of GBP418.5m.
During the six months GBP11m was drawn down from the loan
facilities arranged in 2012. The remaining undrawn facilities of
GBP20m and the cash and bank balances of GBP8.4m reflect our strong
financial position at 30 September 2014. Subsequent to the period
end a facility of GBP20m has been replaced with a new facility of
GBP70m which, along with the cash and bank balances, is expected to
be sufficient to meet the funding requirements for the ongoing
2010-15 capital programme.
Dividends
During the period GBP7.2m dividends were paid. Dividends
comprised GBP3.3m 'final' dividend in respect of the year ended 31
March 2014, a first interim ordinary dividend of GBP2.3m, and a
second interim dividend of GBP1.6m representing the return of
post-tax interest receivable on loans to a UK parent company.
The Board has proposed a third interim dividend of GBP2.4m in
respect of the year ending 31 March 2015.
Risks and uncertainties
In the Strategic Report within the Company's Annual Report 2014
we set out a summary of the key risks and uncertainties facing the
Company. The key risks identified are regulatory requirements and
developments, and operational conditions outside of company
control. The Company is well placed to respond to the near future
events, but it is not immune to the continuing financial market
uncertainties in the medium term, which have the potential to
impact its ability to obtain appropriate financing to deliver
future capital programmes.
We anticipate that the results for the second half of the year
may include the following:
-- the impact of movements in socio economic conditions on the bad debts charge,
-- the impact of weather on network maintenance and water treatment costs,
-- impact of volatility in chemical prices,
-- the impact of RPI movements on our indexed-linked debt, and
-- the impact of further substantial capital investment.
Our revenue for the next financial year will be dependent upon
Ofwat's Final Determination to be published on 12 December
2014.
Keith Ludeman
Chairman
28 November 2014
Bristol Water plc - Interim Accounts
PROFIT AND LOSS ACCOUNT
For the six months ended 30 September 2014
Six months to Six months to Year to
30 September 30 September 31 March
2014 2013 2014
(unaudited) (unaudited)
Note GBPm GBPm GBPm
Turnover 2 66.0 61.7 123.9
Operating costs 3 (49.0) (47.1) (96.0)
Operating profit 17.0 14.6 27.9
Loss on disposal of tangible assets - - (0.6)
Other net interest payable and similar charges 4 (5.3) (5.8) (11.7)
Dividends on 8.75% irredeemable cumulative preference
shares 4 (0.5) (0.5) (1.1)
Net interest payable and similar charges (5.8) (6.3) (12.8)
---------- -------- --------
Profit on ordinary activities before taxation 11.2 8.3 14.5
Tax on profit on ordinary activities 5 (3.3) 2.9 2.6
Profit on ordinary activities after taxation 7.9 11.2 17.1
---------- -------- --------
Earnings per ordinary share 6 131.5p 186.7p 285.1p
All activities above relate to the continuing activities of the
Company.
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the six months ended 30 September 2014
Six months to Six months to Year to
30 September 30 September 31 March
2014 2013 2014
(unaudited) (unaudited)
Note GBPm GBPm GBPm
Profit attributable to Bristol Water plc shareholders 7.9 11.2 17.1
Actuarial gains/(losses) recognised in respect of
retirement
benefit obligations 10,11 0.8 (2.5) (3.0)
Attributable deferred taxation 10,11 (0.2) 0.9 1.0
Change in the fair value of the interest rate swap 11 0.1 0.5 0.8
Attributable deferred taxation 11 - (0.2) (0.2)
Total recognised gains for the period 8.6 9.9 15.7
---------- -------- -------
BALANCE SHEET
30 September 2014
At At At
30 September 30 September 31 March
2014 2013 2014
(unaudited) (unaudited)
Note GBPm GBPm GBPm
Fixed assets 7 358.9 333.8 345.9
Other investments - Loans to a UK holding company 68.5 68.5 68.5
Current assets
Stocks 1.3 1.3 1.3
Debtors 38.3 34.5 31.9
Cash on deposits 8 - 11.8 2.0
Cash at bank and in hand 8 8.4 0.1 10.7
48.0 47.7 45.9
Creditors: amounts falling due within one year
Current portion of long-term borrowings 8 (18.3) (0.3) (0.4)
Other creditors (44.3) (46.1) (42.9)
(62.6) (46.4) (43.3)
Net current (liabilities) / assets (14.6) 1.3 2.6
Total assets less current liabilities 412.8 403.6 417.0
-------------- -------------- -----------
Creditors: amounts falling due after more than one year
Borrowings and derivatives 8 (286.6) (277.1) (292.1)
8.75% irredeemable cumulative preference shares 8 (12.5) (12.5) (12.5)
Deferred income (8.1) (8.6) (8.3)
Provision for liabilities 9 (22.6) (21.9) (21.3)
Net assets excluding retirement benefit surplus 83.0 83.5 82.8
-------------- -------------- -----------
Retirement benefit surplus 10 10.2 8.7 9.0
Net assets including retirement benefit surplus 93.2 92.2 91.8
Capital and reserves
Called-up share capital 6.0 6.0 6.0
Share premium account 4.4 4.4 4.4
Other reserves 4.9 4.5 4.8
Profit and loss account 77.9 77.3 76.6
Shareholders' funds 11 93.2 92.2 91.8
CASH FLOW STATEMENT
For the six months ended 30 September 2014
Six months to Six months to Year to
30 September 30 September 31 March
2014 2013 2014
(unaudited) (unaudited)
Note GBPm GBPm GBPm
Net cash inflow from operating activities 13(a) 29.1 29.7 66.4
Returns on investments and servicing of finance
Interest received 2.1 2.1 4.1
Interest paid on term loans and debentures (5.5) (5.3) (10.7)
Interest paid on finance leases (0.2) (0.1) (0.1)
Dividends paid on 8.75% irredeemable cumulative (0.5) (0.5) (1.1)
preference shares
(4.1) (3.8) (7.8)
Taxation
Corporation tax paid (1.2) (0.2) (1.2)
Capital expenditure and investing activities
Purchase of tangible fixed assets (33.5) (43.8) (83.8)
Contributions received 1.7 1.8 4.0
Proceeds from disposal of tangible fixed assets 0.2 - 0.1
(Increase)/decrease in cash deposits maturing after
three
months from the balance sheet date 8 - (5.5) -
(31.6) (47.5) (79.7)
Equity dividends paid 12 (7.2) (7.0) (13.2)
Cash outflow before management of liquid
resources and financing (15.0) (28.8) (35.5)
---------- -------- -------
Management of liquid resources being
decrease in liquid resources 8 2.0 3.2 7.5
---------- -------- -------
Financing
New term loans 11.0 24.6 51.6
Repayment of loans - - (14.0)
Capital element of lease repayments (0.3) (2.1) (2.1)
---------- -------- -------
10.7 22.5 35.5
---------- -------- -------
(Decrease)/increase in cash 13(b) (2.3) (3.1) 7.5
Cash, beginning of period 10.7 3.2 3.2
Cash, end of period 8.4 0.1 10.7
NOTES TO THE INTERIM ACCOUNTS
For the six months ended 30 September 2014
Note 1: Accounting policies
The financial information contained in this interim announcement
does not constitute statutory accounts within the meaning
of section 435 of the Companies Act 2006.The interim accounts,
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 2014 as set out in the Annual Report.
A copy of the statutory accounts for that year has been delivered
to the Registrar of Companies. The auditors' report on those
accounts was not qualified and did not contain statements
under s.498 (2) or (3) of the Companies Act 2006. The accounting
policies adopted in the preparation of these interim accounts
are in accordance with United Kingdom Generally Accepted
Accounting Practices (UK GAAP). These interim accounts have
also been prepared in accordance with the Accounting Standards
Board Statement, 'Half-yearly Financial Reports'.
In relation to the future of financial reporting in the UK,
the ASB has issued the following standards:
* FRS 100 'Application of Financial Reporting
Requirements' (issued on 22 November 2012);
* FRS 101 'Reduced Disclosure Framework' (under EU
IFRS) (issued on 22 November 2012);
* FRS 102 'The Financial Reporting Standard applicable
in the UK and the Republic of Ireland' ('FRSUKI',
formerly the 'FRSME') (issued on 14 March 2013).
The proposed effective date is periods beginning on or after
1 January 2015, with early adoption permitted for periods
beginning on or after the date of issue of the standards.
As outlined in the Company's Annual Report for the year ended
31 March 2014, the Company is not required to, and does not
intend to, adopt the above for statutory reporting before
the proposed effective date.
Note 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.
Note 3: Operating costs
Six months to Six months to Year to
30 September 30 September 31 March
2014 2013 2014
(unaudited) (unaudited)
GBPm GBPm GBPm
Operating costs comprise -
Payroll cost, net of recharges to fixed assets and
including retirement benefit costs 6.5 6.1 12.2
Depreciation, net of amortisation of deferred income 19.0 18.6 38.6
Other operating costs 23.5 22.4 45.2
49.0 47.1 96.0
--------- -------- -------
Note 4: Net interest payable and similar charges
Six months to Six months to Year to
30 September 30 September 31 March
2014 2013 2014
(unaudited) (unaudited)
GBPm GBPm GBPm
Interest payable and similar charges relate to:
Bank borrowings 0.9 0.5 1.5
Term loans and debentures:
interest charges 4.7 4.8 9.2
indexation and amortisation of fees and premium on
loans 1.9 2.4 4.8
Finance leases 0.1 - 0.1
-------------- -------------- ----------
7.6 7.7 15.6
Dividends on 8.75% irredeemable cumulative
preference shares 0.5 0.5 1.1
Interest (income)/charge in respect of retirement
benefit scheme (0.3) 0.1 0.2
Interest payable and similar charges 7.8 8.3 16.9
Less interest receivable and similar income:
Loan to Bristol Water Holdings UK Ltd - interest
receivable (2.0) (2.0) (4.0)
Other external investments and deposits - - (0.1)
-------------- -------------- ----------
(2.0) (2.0) (4.1)
Total net interest payable and similar charges 5.8 6.3 12.8
-------------- -------------- ----------
Note 5: Tax on profit on ordinary activities
Six months to Six months to Year to
30 September 30 September 31 March
2014 2013 2014
(unaudited) (unaudited)
GBPm GBPm GBPm
The charge/(credit) for taxation comprises -
Current tax:
Corporation tax at 21% (2013/14: 23%) 1.9 1.3 2.3
Adjustment to prior periods - - (0.1)
1.9 1.3 2.2
Deferred tax:
Origination and reversal of timing differences 0.6 0.7 1.2
Effect of corporation tax rate change - (5.0) (5.0)
Adjustment to prior periods - - 0.1
-------------- -------------- ----------
0.6 (4.3) (3.7)
Effect of discounting 0.8 0.1 (1.1)
Total deferred tax 1.4 (4.2) (4.8)
Tax on profit on ordinary activities 3.3 (2.9) (2.6)
The overall tax credit for the period ended 30 September 2013 and the year ended 31 March
2014 included the exceptional effect on the deferred tax provision of the reduction in the
corporation tax rate from 23% to 20% by the financial year 2014/15. The effect of this tax
rate reduction is disclosed above on an undiscounted basis as a credit of GBP5m (discounted
basis: credit of GBP3.7m).
Note 6: Earnings per ordinary share
Six months to Six months to Year to
30 September 30 September 31 March
2014 2013 2014
(unaudited) (unaudited)
m m m
Earnings per share have been calculated as follows -
Earnings GBP7.9 GBP11.2 GBP17.1
Weighted average number of ordinary shares in issue 6.0 6.0 6.0
Note 7: Fixed assets
Six months to Six months to Year to
30 September 30 September 31 March
2014 2013 2014
(unaudited) (unaudited)
GBPm GBPm GBPm
The movement in fixed assets comprises -
Net book value, beginning of period 345.9 313.7 313.7
Additions 34.1 40.7 76.0
Disposals (0.2) - (0.7)
Grants and contributions (1.7) (1.8) (4.0)
Depreciation charge for period (19.2) (18.8) (39.1)
Net book value, end of period 358.9 333.8 345.9
Note 8: Net borrowings
At At At
30 September 30 September 31 March
2014 2013 2014
(unaudited) (unaudited)
GBPm GBPm GBPm
Net borrowings comprise -
Debt due after one year, excluding 8.75%
irredeemable cumulative preference shares 286.6 277.1 292.1
Current portion of long-term borrowings 18.3 0.3 0.4
304.9 277.4 292.5
Cash on deposits maturing:
within three months from the balance sheet date - (6.3) (2.0)
after three months from the balance sheet date - (5.5) -
Cash at bank and in hand (8.4) (0.1) (10.7)
---------- -------- -------
Net borrowings excluding 8.75% irredeemable
cumulative preference shares 296.5 265.5 279.8
8.75% irredeemable cumulative preference shares 12.5 12.5 12.5
Net borrowings 309.0 278.0 292.3
Note 9: Provision for liabilities
At At At
30 September 30 September 31 March
2014 2013 2014
(unaudited) (unaudited)
GBPm GBPm GBPm
Deferred tax liability 36.9 35.5 36.1
Effect of discounting (11.8) (11.4) (12.6)
Net provision, including deferred tax on
retirement
obligations 25.1 24.1 23.5
Less, attributable to retirement benefit
obligations
(note 10) (2.5) (2.2) (2.2)
---------- -------- -----------
Net provision, excluding deferred tax on
retirement
benefit obligations 22.6 21.9 21.3
---------- -------- -----------
Note Retirement benefits
10:
Pension arrangements for the Company's employees are partly
provided through the Company's membership of the Water Companies'
Pension Scheme ("WCPS"), which provides defined benefits
based on final pensionable pay. The Company's membership
of WCPS is through a separate section of the scheme. The
assets of the section are held separately from those of the
Company and are invested by discretionary fund managers appointed
by the trustees of the scheme. The section has been closed
to new entrants and all new eligible employees are offered
membership of a stakeholder pension scheme.
In addition to providing benefits to employees and ex-employees
of Bristol Water plc, the section provides benefits to former
Bristol Water plc employees who transferred to Bristol Wessex
Billing Services Ltd. The majority of the section assets
and liabilities relate to Bristol Water plc employees and
ex-employees.
The latest triennial valuation of the pension scheme was
completed as at 31 March 2013. The total deficit as at 31
March 2013 measured on a long-term scheme funding basis was
GBP2.4m, representing a funding level of 98.7%.
An updated estimate of the scheme's funding deficit at 31
March 2014 indicated a funding surplus of GBP1.0m. The improvement
in the funding position since the triennial valuation at
31 March 2013 reflects primarily the net result of increase
in the Company's contribution rates since March 2013, and
an increase in the discount rates used for measurement of
present value of the pension obligation, as partially offset
by reduction in yields available on long dated gilts. The
funding surplus of GBP1.0m compares to GBP12.7m surplus in
our accounts, in which we are required to follow the valuation
concepts embodied in Financial Reporting Standard 17. The
main difference between the funding and accounting positions
is due to the use of a different approach to valuing scheme
liabilities.
Pension assets and liabilities are recognised in the accounts
in accordance with Financial Reporting Standard 17 'Retirement
Benefits' (FRS 17). The net pension surplus has been calculated
by using an asset recognition limit, calculated under FRS
17, to recognise the pension asset to the extent that future
contributions will be reduced or refunds received.
In accordance with FRS 17 actuarial gains and losses are
recognised immediately in the Statement of Total Recognised
Gains and Losses.
In summary, assets and liabilities under FRS 17 were:
At At At
30 September 30 September 31 March
2014 2013 2014
(unaudited) (unaudited)
GBPm GBPm GBPm
Market value of section assets 186.4 171.2 175.1
Present value of liabilities (152.7) (142.0) (147.1)
Surplus in the section 33.7 29.2 28.0
Amount not recognised due
to asset
recognition limit (21.0) (18.3) (16.8)
Deferred taxation (2.5) (2.2) (2.2)
Net pension asset on FRS17
basis 10.2 8.7 9.0
------------ ---------- --------------
Note 11: Shareholders' funds
Six months to Six months to Year to
30 September 30 September 31 March
2014 2013 2014
(unaudited) (unaudited)
GBPm GBPm GBPm
Movement in shareholders' funds -
At the beginning of the period 91.8 89.3 89.3
Profit for the period 7.9 11.2 17.1
Actuarial gains/(losses) recognised in respect of
retirement benefit obligations 0.8 (2.5) (3.0)
Attributable deferred taxation (0.2) 0.9 1.0
Fair value of interest rate swap 0.1 0.5 0.8
Attributable deferred taxation - (0.2) (0.2)
Ordinary dividends (note 12) (7.2) (7.0) (13.2)
At the end of the period 93.2 92.2 91.8
---------- -------- -------
Note 12: Ordinary dividends
Six months to Six months to Year to
30 September 30 September 31 March
2014 2013 2014
(unaudited) (unaudited)
GBPm GBPm GBPm
Dividends paid in respect of 2014/15
First interim dividend of 39.18 pence per share, 2.3 - -
approved for payment on 17 July 2014
Second interim dividend of 26.63 pence per share, 1.6 - -
approved for payment on 29 September 2014
Dividends paid in respect of 2013/14:
First interim dividend of 39.18 pence per share,
approved for payment on 25 July 2013 - 2.3 2.3
Second interim dividend of 26.68 pence per share,
approved for payment on 27 September 2013 - 1.6 1.6
Third interim dividend of 39.18 pence per share,
approved by the Board on 21 November 2013 - - 2.3
Fourth interim dividend of 39.18 pence per share,
approved for payment on 6 February 2014 2.3
- -
Fifth interim dividend of 25.82 pence per share,
approved for payment on 27 March 2014 1.6
Final dividend of 54.18 pence per share, approved 3.3 - -
for payment on 15 May 2014
Dividends paid in respect of 2012/13:
Final dividend of 50.85 pence per share, approved
for payment on 22 May 2013 - 3.1 3.1
7.2 7.0 13.2
-------------- -------------- ----------
A third interim dividend of GBP2.4m in respect of the year ending 31 March 2015 has been proposed
by the Board for payment before the end of November 2014.
Note 13: Supplementary cash flow information
Six months to Six months to Year to
30 September 30 September 31 March
2014 2013 2014
(unaudited) (unaudited)
GBPm GBPm GBPm
a) Reconciliation of operating profit to net cash
inflow from operating activities -
Operating profit 17.0 14.6 27.9
Depreciation, net of amortisation of deferred
income 19.0 18.6 38.6
Difference between pension charges and normal
contributions (0.2) (0.1) (0.6)
------------ ----------- -------
Cash flow from operations 35.8 33.1 65.9
Working capital movements:
Stocks - - -
Debtors (6.4) (5.2) (2.6)
Creditors and provisions (0.1) 2.0 3.5
Additional contributions to pension scheme (0.2) (0.2) (0.4)
Net cash inflow from operating activities 29.1 29.7 66.4
------------ ----------- -------
b) Reconciliation of net cash flow to movement in
net borrowings -
(Decrease)/increase in cash in the period (2.3) (3.1) 7.5
Cash used to repay borrowings 0.3 2.1 16.1
Cash from new borrowings (11.0) (24.6) (51.6)
(Decrease)/increase in cash deposits in the period (2.0) 2.3 (7.5)
-------- -------- --------
(15.0) (23.3) (35.5)
Indexation of debt, amortisation of fees and
premiums,
and other movements not affecting cash
flow (1.8) (2.3) (4.7)
Fair value of interest rate swap not affecting
cash flow 0.1 0.5 0.8
Net borrowings, beginning of period, including
8.75% irredeemable cumulative preference
shares (292.3) (252.9) (252.9)
Net borrowings, end of period, including 8.75%
irredeemable cumulative preference shares (309.0) (278.0) (292.3)
-------- -------- --------
Note Ultimate parent company and controlling party
14:
At the balance sheet date the immediate parent company was
Bristol Water Core Holdings Limited, a company incorporated
in England and Wales. The ultimate parent company and controlling
party was considered by the directors to be Capstone Infrastructure
Corporation, a company incorporated in Canada.
The group in which this company is consolidated is Capstone
Infrastructure Corporation and copies of its consolidated
annual report are available from 155 Wellington Street West,
Suite 2930 Toronto, ON M5V 3H1, Canada.
Note Related party transactions
15:
During the six months to 30 September 2014 the Company spent
GBP1.6m on purchase of customer related services from BWBSL,
a joint venture company with Wessex Water Services Limited.
At 30 September 2014 GBP1.7m was receivable from BWBSL and
GBP1.1m was payable to BWBSL.
Note Circulation
16:
This interim announcement is available on the Bristol Water
web site: http://www.bristolwater.co.uk. Paper copies are
also available from the Company's registered office at Bridgwater
Road, Bristol, BS13 7AT.
DIRECTORS' RESPONSIBILITIES FOR THE PREPARATION OF INTERIM
ACCOUNTS
We confirm that to the best of our knowledge:
-- These interim accounts have been prepared in accordance with
UK GAAP and the Accounting Standards Board Statement, 'Half-yearly
Financial Reports', and
-- The Chairman's Statement includes a fair review of the
information required to indicate important events during the first
six months of the financial year and their impact on the interim
accounts, and a description of the principal risks and
uncertainties for the remaining six months of the financial
year.
Going concern
The Company had net current liabilities of GBP14.6m (31 March
2014: net current assets of GBP2.6m) at 30 September 2014. The net
current liabilities position does not represent any cash flow or
funding risk as an amount of GBP18m within the current liabilities
relates to the current portion of a bank loan, which is due to be
refinanced from a new long term facility of GBP70m arranged
subsequent to the period end. The new GBP70m facility replaced a
GBP20m facility which existed at 30 September 2014. Excluding the
GBP18m short term liability, the Company had net current assets of
GBP3.4m at 30 September 2014.
The directors have a reasonable expectation that the Company has
adequate resources available to it to continue in operational
existence for the foreseeable future and have therefore continued
to adopt the going concern policy in preparing the interim
accounts. This conclusion is based upon, amongst other matters, a
review of the Company's financial projections together with a
review of the cash and committed borrowing facilities available to
the Company as well as consideration of the Company's capital
adequacy.
By order of the Board
S C Robson
Secretary
28 November 2014
Independent review report to Bristol Water plc
Report on the condensed interim financial statements
Our conclusion
We have reviewed the condensed interim financial statements,
defined below, in the half-yearly financial report of Bristol Water
plc for the six months ended 30 September 2014. Based on our
review, nothing has come to our attention that causes us to believe
that the condensed interim financial statements are not prepared,
in all material respects, in accordance with the Statement
"Half-yearly financial reports" issued by the UK Accounting
Standards Board and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
This conclusion is to be read in the context of what we say in
the remainder of this report.
What we have reviewed
The condensed interim financial statements, which are prepared
by Bristol Water plc, comprise:
-- the balance sheet as at 30 September 2014;
-- the profit and loss account and statement of total recognised
gains and losses for the period then ended;
-- the cash flow statement for the period then ended;
-- the explanatory notes to the condensed interim financial statements.
As disclosed in note 1, the financial reporting framework that
has been applied in the preparation of the full annual financial
statements is applicable law and United Kingdom Accounting
Standards (UK Generally Accepted Accounting Practice).
The condensed interim financial statements included in the
half-yearly financial report have been prepared in accordance with
the Statement "Half-yearly financial reports" issued by the UK
Accounting Standards Board and the Disclosure and Transparency
Rules of the United Kingdom's Financial Conduct Authority.
What a review of condensed financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK and
Ireland) and, consequently, does not enable us to obtain assurance
that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed interim financial statements.
Responsibilities for the condensed interim financial statements
and the review
Our responsibilities and those of the directors
The half-yearly financial report, including the condensed
interim financial statements, is the responsibility of, and has
been approved by, the directors. The directors are responsible for
preparing the half-yearly financial report in accordance with the
Disclosure and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
Our responsibility is to express to the company a conclusion on
the condensed interim financial statements in the half-yearly
financial report based on our review. This report, including the
conclusion, has been prepared for and only for the company for the
purpose of complying with the Disclosure and Transparency Rules of
the Financial Conduct Authority and for no other purpose. We do
not, in giving this conclusion, accept or assume responsibility for
any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
28 November 2014
Bristol
Notes:
(a) The maintenance and integrity of the Bristol Water plc
website is the responsibility of the directors; the work carried
out by the auditors does not involve consideration of these matters
and, accordingly, the auditors accept no responsibility for any
changes that may have occurred to the financial statements since
they were initially presented on the website.
(b) Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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