TIDMBWRA
RNS Number : 3517H
Bristol Water PLC
30 November 2015
BRISTOL WATER plc
Announcement of interim results for the six months ended 30
September 2015
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 07554 771538
at any time.
FINANCIAL HIGHLIGHTS
GBPm
Profit after taxation for 6 months to 30 September
2014 15.0
-------
Significant changes between periods:
Decrease in Revenue (10.4)
Decrease in operational expenditure 2.3
Increase in depreciation (0.6)
Decrease in debt indexation charge 1.8
Decrease in other interest charges (0.3)
(7.2)
Decrease in taxation due to lower profit before
tax 2.4
Profit after tax for 6 months to 30 September 2015 10.2
-------
Summary
-- Continued stable underlying financial and operational performance
-- Significant level of capital investment continued with a
GBP16.3m investment during the period
-- Decrease in EBITDA mainly driven by revenue decrease due to
reduction in water tariffs partially offset by efficiencies in
operating expenditure
-- Decrease in debt indexation charge due to lower RPI
-- Increase in depreciation following recent capital investment
CHAIRMAN'S STATEMENT
This period has been marked by significant progress in
restructuring our business in order to deliver our new Operating
Model. This step change demonstrates the Company's commitment to
effectively deliver its targets for the AMP6 period, to meet the
regulatory challenges on the horizon and to renew our emphasis on
trust and confidence as a customer-focused business.
The Competition and Markets Authority ("CMA") Final
Determination for Bristol Water has set water tariffs for the
remainder of AMP6 2016-2020. We are now focused on delivering our
commitments and working constructively with all our stakeholders
throughout this regulatory period and into the next Price Review to
get the best outcome possible for our customers.
Following a detailed company-wide review of all aspects of our
business in 2014, known as Project Channel, we have identified a
new Target Operating Model that will make the Company more
resilient, efficient and better prepared for changes in the
statutory and regulatory environment in which we operate, such as
retail separation which is on the horizon for 2017. This means
significant change and a 10% reduction in staff levels. The new
structure will be operational by early 2016. Other key areas within
the project include improvement of asset management and commercial
management and development of capabilities required to operate in
the new non-household market.
During the six months ended 30 September 2015, we have reduced
water bills in line with Ofwat's Final Determination. This has led
to revenues falling by over GBP10m compared to the same period last
year. In order that we continue to deliver for customers, we have
maintained financial stability by targeting early delivery of
efficiencies, reprioritising our capital and maintenance
expenditure and restricting shareholder dividends. These actions
have collectively meant that our profit before tax was only GBP7.2m
lower than the comparative period last year, our net debt position
remained fairly constant compared to the last year end and we have
maintained our Baa1 Moody's credit rating. As further detailed in
notes 1 and 3 to the accounts, we adopted the new UK GAAP from 1
April 2015 and the comparative numbers have been restated
accordingly.
The Company has performed well operationally over the last six
months, despite dealing with a higher than expected number of
bursts in June and several significant outages in September, which
resulted in affected customers being without water for longer than
average. With the commitment of our staff and contracting partners
and improved customer communications we have managed to minimise
the impact of any disruption sustained by our customers during
these emergencies and unwanted calls are 20% lower than
forecasted.
This year has seen the construction of a new pumping station and
reservoir at Dundry costing GBP1m, which has recently been
commissioned for service. Construction has also started at Barrow
Treatment Works to install a UV plant costing nearly GBP7m; this
investment is the final stage of a long term programme to add UV to
our major treatment works to mitigate Cryptosporidium risks, a need
recently evidenced in the news by the Cryptosporidium event in the
North West. The UV project at Barrow Treatment Works means our
water quality continues to meet the high quality standards set by
our regulators.
Scoping of the Southern Resilience Scheme is now complete and we
have a defined route for a new 30km trunk main that will improve
security of supply to 280,000 customers in Somerset.
Ofwat's service measure SIM captures the customer experience,
their interaction with the Company and the reasons that prompted
them to contact us. The latest SIM results, published in July 2015
(representing 2014/15), placed us 11(th) out of 18 companies in the
industry, a disappointing drop from the previous year's 5(th)
position. There are many causes we can attribute to this: we
experienced two significant bursts in this period (Kingswood and
Burnham-on-Sea), SIM methodology changed and our peers improved. We
are addressing this with new initiatives and expertise from a new
Consumer Strategy Manager who will help us reverse this trend.
We know that our customers value our Bristol call centre service
and quick response times, but we know we can do better and have to
cater for new customer demands and their expected digital channels
for service. We have introduced a Twitter account and have been
piloting a customer texting service for unplanned interruptions to
support our new customer experience strategy. This strategy focuses
on improvement in four areas: customer communications, customer
service, consumer insight and customer centric organisation. We
will continue to introduce new customer feedback mechanisms to
listen to our customers and provide the services they require.
Early signs for this period through our monthly customer
satisfaction survey show improvement, from 4.37 at the start of the
financial year to 4.46 (out of 5) in October.
Several innovative environmental initiatives have begun at
Bristol Water. One is our new principle the 'Biodiversity Index' -
a tool for environmental management of our investment programme to
quantify the wildlife importance of the sites we affect and the
improvements we make. The National Hedgelaying Championships was
held at Chew Valley Lake in October and attended by the Shadow
Secretary for the Environment. Many other improvements will be
performed by our own staff through a new environmental volunteers
programme, increasing staff awareness of biosecurity and protected
species.
Our successful catchment management projects to protect water
sources have been extended to include new techniques, including a
project in partnership with Defra. This explores an ecosystems
services approach to catchment management and development of new
ways to analyse satellite land use data to identify "hotspots"
where intervention with landholders can be cost beneficial.
Our visibility has been particularly high this year because of
our relationship with Bristol 2015 European Green Capital and the
opportunities we have created to promote water and our business.
One of our contributions has been the installation of a water
fountain in Bristol's Millennium Square - after the first six weeks
it had already provided 7,000 litres of water. We have also
attended major city and county events with our exhibition vehicle,
and we have extended our reach by providing drinking water bowsers
at other high profile gatherings. Positioning our product at the
heart of the community earns us positive PR and recognition of the
benefits of tap water over bottled water.
We continue to support local good causes where possible by
coordinating volunteer teams of staff to carry out community
projects, donating water butts and distributing water efficiency
packs widely on request. We have also sponsored exhibitions, events
and activities that are aligned to our values and that enhance the
quality of life in the region, such as the national touring
'Wildlife, Camera, Action' exhibition and 'Bristol Festival of
Nature'.
This has been a testing time for our staff who have had to deal
with restructuring and the CMA Price Review. However, Bristol Water
is built upon firm foundations and I want to thank everyone for the
resilience and professionalism that has been shown. It means that
our customers continue to get the high quality and reliable water
supply that they expect from us, day in day out.
Keith Ludeman
Chairman
27 November 2015
Bristol Water plc - Interim Accounts
INCOME STATEMENT
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