RNS Number:3954N
Mid Kent Water PLC
10 June 2005
10 June 2005
Mid Kent Water Limited
Preliminary results
for the year to 31 March 2005
Chairman's Statement
Introduction
This year has been a very important one in the history and progress of Mid Kent
Water Limited, with the Company consolidating on its recent operational success,
the satisfactory conclusion of the Periodic Review process and the successful
sale of the Company to a new owner committed to the long term development of our
business.
Mid Kent Water has consistently improved its regulatory performance over the
last five years and I am pleased to report that the year ended 31 March 2005
represents its best position to date with all levels of customer service either
improved or broadly maintained compared to last year. The Company also believes
that the Final Determination which was the culmination of a long and intensive
Periodic Review process is a fair and balanced outcome for the Company.
On 28 February 2005 Utilities Trust of Australia and Hastings Diversified
Utilities Fund purchased 100% of the share capital of Swan Group, Mid Kent Water
's holding company. I am pleased to welcome Peter Taylor, Jim Hallam and Carey
Anderson onto the Board and look forward to working with them in the continued
development of the Mid Kent Water business.
Results
Turnover for the year was #43.2m, up marginally on #43m last year. Water income
increased by 0.4% on last year reflecting a water price rise of 2.53% offset by
a year on year reduction in demand following the dry summer of 2003 and
customers moving to metered billing. Non-regulated turnover was maintained at
#4.6m.
Operating profit was #14.1m compared to #14.2m in the previous year. The
depreciation charge increased in the year by #0.7m reflecting the Company's
continued investment in its infrastructure but other Operating costs showed a
decrease of #0.3m representing the effect of further operating efficiencies.
Net interest payable has increased by #0.7m reflecting the cost of increased
debt in the business.
After profit on the disposal of fixed assets of #0.2m (2004: #1.7m) profit
before tax has reduced to #6.3m from #8.6m in 2004.
Dividend
The Company has declared a final dividend of #1.5m, giving a total dividend for
the year of #4.8m (2004: #5m).
Capital Expenditure
Cash payments for capital expenditure in the year were #24.6m (2004: #22.2m).
Significant investment in the year was delivered in network improvements to
enhance the resilience and flexibility of the Company's infrastructure.
A new reservoir at our Ford pumping station was constructed during the year and
became operational in May 2005. This reservoir will improve operational services
and the security of supply in the Herne Bay and Whitstable area.
Water Quality
The quality of water we deliver to our customers' taps is of paramount
importance and I am pleased to report that once more our compliance with DWI
standards has improved, with expected compliance for 2004 at 99.97% compared to
99.92% in 2003. During the year the Company brought back in-house its laboratory
service which had previously been provided by Eclipse Scientific Limited, a
sister company which was sold by Swan Group in July 2004.
Non-Regulated Activity
This year has seen another good performance from the Company's non-regulated
commercial business which utilises the core skills inherent in our staff coupled
with the Mid Kent Water brand. Key revenue streams include water related
consultancy services, environmental and fishery management and the provision of
water operational services to the owners of private water infrastructure.
Corporate Social Responsibility
The community in which Mid Kent Water operates is very important to the Company
and we strive to ensure that all stakeholders are consulted and involved in our
plans. We also support staff in a range of charitable activities and in
particular in fund-raising for Water Aid. This year a staff member went with
Water Aid to Tanzania to support the work of the charity at first hand.
Employees
The sale of a company can, at times, present a significant distraction to staff.
I am pleased to report that this was not the case for Mid Kent Water this year
and that once more the staff's commitment and hard work ensured that the Company
continued to deliver high quality customer focused service. On behalf of the
Board, I would like to thank all the staff for their continued support.
The Year Ahead
The year ahead will be important to the development of the company as we begin
to implement the schemes and deliver the efficiencies that are part of the Price
Review Process. I look forward to working with the staff, my fellow Directors
and our new owners in ensuring that the Company continues to efficiently provide
ongoing high quality customer service.
Gordon Maxwell
9 June 2005
Profit and loss account
Year ended 31 March 2005
------------------------------ ----------- -----------
Notes 2005 2004
2 #000 #000
Turnover 43,200 43,039
Operating costs (29,112) (28,837)
------------------------------ ----------- -----------
Operating profit 14,088 14,202
Profit on sale of fixed assets 177 1,656
------------------------------ ----------- -----------
Profit on ordinary activities before interest 14,265 15,858
Interest receivable and similar income 3,383 2,976
Interest payable and similar charges (11,372) (10,218)
------------------------------ ----------- -----------
3 Profit on ordinary activities before taxation 6,276 8,616
Tax on profit on ordinary activities 337 (716)
------------------------------ ----------- -----------
4 Profit on ordinary activities after taxation 6,613 7,900
Dividends paid and proposed (4,776) (4,973)
------------------------------ ----------- -----------
Retained profit for the year 1,837 2,927
------------------------------ ----------- -----------
5 Earnings per ordinary share - basic and 35.4p 42.4p
diluted
------------------------------ ----------- -----------
4 Dividends per ordinary share 24.95p 26.67p
------------------------------ ----------- -----------
Summarised balance sheet
At 31 March 2005
---------------------------------- -------- --------
2005 2004
#000 #000
Fixed assets
Tangible assets 184,561 173,986
---------------------------------- -------- --------
Current assets
Stocks 798 722
Debtors: amounts falling due within one year 7,704 8,043
Debtors: amounts falling due after more than one year 35,000 35,000
Investments 12,024 10,060
Cash at bank and in hand 1,136 1,130
---------------------------------- -------- --------
56,662 54,955
Creditors: amounts falling due within one year (43,281) (43,635)
---------------------------------- -------- --------
Net current assets/(liabilities) 13,381 11,320
---------------------------------- -------- --------
Total assets less current liabilities 197,942 185,306
Creditors: amounts falling due after more than one
year (142,434) (138,105)
Provision for liabilities and charges (9,473) (9,810)
---------------------------------- -------- --------
Net assets 46,035 37,391
---------------------------------- -------- --------
Capital and reserves
Attributable to equity interests
Called up ordinary share capital 19,781 18,646
Share premium 5,672 -
Profit and loss account 20,582 18,745
---------------------------------- -------- --------
Equity shareholders' funds 46,035 37,391
---------------------------------- -------- --------
Summarised cash flow statement
Year ended 31 March 2005
---------------------------------- -------- --------
2005 2004
#000 #000
Net cash inflow from operating activities 22,079 21,501
Returns on investments and servicing of finance (2,521) (4,550)
Taxation and group relief (4,048) (411)
Net capital expenditure (22,270) (20,259)
Equity dividends paid (4,507) (6,841)
---------------------------------- -------- --------
Cash outflow before management of liquid resources and
financing (11,267) (10,560)
Management of liquid resources (1,964) 4,868
Financing 13,237 5,250
---------------------------------- -------- --------
Increase/(decrease) in cash in the year 6 (442)
---------------------------------- -------- --------
Notes 6 to 9 are part of this statement.
NOTES
1 Basis of preparation
(i) The financial information included within this statement has been prepared
on the basis of accounting policies consistent with those set out in the
Report and Accounts for the year ended 31 March 2004.
(ii) The information shown for the years ended 31 March 2005 and 31 March 2004
does not constitute statutory accounts within the meaning of section 240
of the Companies Act 1985 and has been extracted from the full accounts
for the years ended 31 March 2005 and 31 March 2004 respectively. The
reports of the auditors on those accounts were unqualified and did not
contain a statement under either Section 237(2) or Section 237(3) of the
Companies Act 1985. The accounts for the year ended 31 March 2004 have
been filed with the Registrar of Companies. The accounts for the year
ended 31 March 2005 will be delivered to the Registrar of Companies in due
course.
(iii) The financial information included in this statement was approved by the
Board on 9 June 2005.
2 Analysis of turnover
2005 2004
#000 #000
Unmeasured supplies 20,950 21,072
Measured supplies 17,691 17,407
Other activities 4,559 4,560
-------------------------------- ----------- -----------
43,200 43,039
-------------------------------- ----------- -----------
3 Corporation tax
-------------------------------- ----------- -----------
2005 2004
#000 #000
-------------------------------- ----------- -----------
Current tax
-------------------------------- ----------- -----------
UK Corporation tax 300 -
-------------------------------- ----------- -----------
Tax over provided in previous years (300) (875)
Group relief surrendered by other group undertakings - 2,607
-------------------------------- ----------- -----------
- 1,732
Deferred tax
Discounted origination and reversal of timing
differences (337) (1,016)
-------------------------------- ----------- -----------
(337) 716
-------------------------------- ----------- -----------
4 Dividends
A final dividend of 7.80p per ordinary share in respect of the year ended
31 March 2005 will be paid on 30 June 2005 to shareholders on the register
at 23 June 2005. The final dividend is in addition to the interim dividend
of 9.65p and a second interim dividend of 7.50p, already paid, making a
total of 24.95p for the year. This compares with a final dividend last year
of 6.83p and an interim dividend of 19.84p, making a total of 26.67p for
that year.
5 Earnings per ordinary share - basic and diluted
Earnings per ordinary share are calculated on the profit for the year of
#6,613,000 (2004: #7,900,000) and the weighted average number of shares in
issue of 18,688,000 (2004: 18,646,000).
6 Reconciliation of operating profit to net cash inflow from operating
activities
2005 2004
#000 #000
Operating profit 14,088 14,202
Depreciation charge 9,488 8,745
Increase in stocks (76) (41)
Decrease/(increase) in debtors (945) 3,748
Decrease in creditors (476) (5,153)
-------------------------------- ----------- -----------
22,079 21,501
-------------------------------- ----------- -----------
7 Analysis of cash flows for headings netted in cash flow statement
2005 2004
#000 #000
Returns on investments and servicing of finance
Interest received 4,667 2,342
Interest paid (7,188) (6,884)
Interest element of finance lease rental payments - (8)
-------------------------------- ----------- -----------
(2,521) (4,550)
-------------------------------- ----------- -----------
Net capital expenditure
Purchase of tangible fixed assets (24,568) (22,180)
Contributions to infrastructure assets 2,082 234
Sale of tangible fixed assets 216 1,687
-------------------------------- ----------- -----------
(22,270) (20,259)
-------------------------------- ----------- -----------
Management of liquid resources
Cash deposits (1,964) 4,868
-------------------------------- ----------- -----------
Financing
Issue of ordinary share capital 6,807 -
Loans (repaid to)/from other group undertakings (11,070) 5,250
Bank loans 21,500 -
Repayment of debentures (4,000) -
-------------------------------- ----------- -----------
13,237 5,250
-------------------------------- ----------- -----------
8 Analysis of net debt
At Cash Non-cash At
1 April flow changes 31 March
2004 2005
#000 #000 #000 #000
Cash at bank and in hand 1,130 6 - 1,136
Short term deposits 10,060 1,964 - 12,024
---------------------- --------- --------- --------- ---------
11,190 1,970 - 13,160
Loans from other group
undertakings (11,070) 11,070 - -
Index linked loan (139,985) - (4,247) (144,232)
Bank loans - (21,500) - (21,500)
Issue costs 2,341 - (82) 2,259
Debenture stock (4,461) 4,000 - (461)
---------------------- --------- --------- --------- ---------
(141,985) (4,460) (4,329) (150,774)
---------------------- --------- --------- --------- ---------
The above table excludes the loan to the Company's parent undertakings of
#35,000,000 (2004: #35,000,000).
-------------------------------------------------
9 Reconciliation of net cash flow to movements in net debt
2005 2004
#000 #000
Increase/(decrease) in cash in the year 6 (442)
Cash inflow from increase in debt and lease financing
(net of issue costs paid of nil (2003: #2,450,000)) (6,430) (5,250)
Cash outflow/(inflow) from movement in liquid
resources 1,964 (4,868)
Movement in net debt resulting from cash flows (4,460) (10,560)
Loan indexation (4,247) (3,782)
Amortisation of loan issue costs (82) (84)
Net debt at 1 April (141,985) (127,559)
--------------------------------- ----------- ----------
Net debt at 31 March (150,774) (141,985)
--------------------------------- ----------- ----------
The above table excludes the loan to the Company's parent undertakings of
#35,000,000 (2004: #35,000,000).
-------------------------------------------------
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The company news service from the London Stock Exchange
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