TIDM52IP
RNS Number : 3111C
Welsh Water Utilities Finance PLC
11 November 2009
Record investment at Welsh Water provides
long-term benefits to customers
Despite the continuing difficult economic environment Glas Cymru (the
'not-for-profit' company that owns Welsh Water) can report good progress - in
the six months to September 2009 - in operational and environmental performance
and in customer service, with its 'customer dividend' this year rising to GBP22
per customer.
Glas Cymru is unique amongst UK utility companies in that it has no
shareholders. It reinvests all its financial surpluses for the benefit of Welsh
Water's customers.Since 2001, it has returned some GBP150 million through its
annual 'customer dividend' - it is the only water company to give a 'customer
dividend' in this way.
Glas Cymru Chairman Lord Burns said, "Welsh Water continues to respond
positively to the challenges of the current economic recession. The strong
financial position that we have built up since 2001 means that we can afford to
push ahead with our largest ever capital investment programme, with over GBP360
million of projects expected to be delivered this year. This investment is
highly beneficial to the economy in Wales and will allow us to protect drinking
water safety for many years to come as well as to start to respond to the
long-term challenges of climate change."
Highlights for the half-year
* A 'customer dividend' in 2009-10 of GBP22 per customer totalling GBP28 million
(2008-09: GBP21 per customer, totalling GBP27 million). The 'customer dividend'
has increased steadily since it was first introduced in 2003 at GBP9 per
customer.
* Welsh Water Assist tariff introduced on a trial basis which, combined with the
existing Water Direct and Water Collect tariffs and the Welsh Water Customer
Assistance Fund, offers a range of support for many customers who are facing
financial hardship as they pay their water bills.
* Capital investment of GBP170 million (2008: GBP168 million) - a record level
which will benefit customer service, environmental performance and drinking
water quality.
* Sustained good overall service performance, with Ofwat's latest publication
giving an operational performance assessment (OPA) score in 2008-09 of 406
points (2008: 394 points) putting Welsh Water once again in the top half of the
water and sewerage companies.
* A robust financial position, with gearing at 72% (2008: 71%) - as against 93%
when Welsh Water was acquired by Glas Cymru in May 2001.
Welsh Water had to continue to respond to serious operating challenges
including, in April, a further risk to drinking water quality in north Wales
which required a precautionary boil water notice to some 70,000 customers in
Denbighshire and Flintshire. In 2008, we initiated an expanded and accelerated
GBP200 million investment programme throughout Wales to improve the protection
of drinking water quality against such risks in the future and 11 schemes have
already been completed, with a further 7 schemes underway or in development.
The results in detail:
Financial results
* Operating profit increased to GBP97.1 million (2008: GBP83.2 million); however,
due largely to the record capital investment in the period, there was a cash
deficit (before financing activities) of GBP22.5 million (2008: cash surplus of
GBP18.2 million).
* Operational costs fell to GBP129 million (2008: GBP131 million), reflecting
power costs down by GBP4 million, offset by additional charges for bad and
doubtful debts of GBP3 million.
* Net debt of 72% of Regulatory Capital Value (RCV) (2008: 71%).
* A robust liquidity position, with GBP569 million of cash and undrawn bank loans
as at 30 September 2009, meaning that the business is well funded to 2010 and
beyond.
* Strong credit ratings, with the senior bonds being rated A by Standard and
Poor's and Fitch Ratings, and A3 by Moody's.
Operational performance
* Bacteriological compliance 'at the tap' in the nine months to September 2009 of
99.8% (2008: 99.7%).
* Further reductions in the level of leakage to 6.9 m3/km/day (2008: 7.1
m3/km/day).
* 99.7% compliance at wastewater treatment works (2008: 100%).
* In the 2008 summer season, Wales had 43 Blue Flag beaches and marinas, around a
third of the UK total.
* Continuing high customer satisfaction, as measured by independent tracking
research.
Major capital investment programme
* Capital investment of GBP170 million (2008: GBP168 million) benefiting customer
service, environmental quality and drinking water quality.
* Total capital investment since April 2005 of GBP1,332 million (equivalent to
over GBP1,000 of investment for every household served).
* Good progress in delivering our enhanced drinking water quality protection
programme, with work completed in south Wales at Talybont water treatment works
(GBP17 million) and on target to deliver major schemes at Court Farm (GBP18
million) and Crai (GBP15 million). In north Wales we have accelerated investment
and are on target to complete major improvement work at Cwellyn (GBP14 million),
Rhiwgoch (GBP9 million) and Mynydd Llandygai (GBP11 million) to provide
additional treatment within the next year. We have also completed installation
of ultra violet disinfection treatment at 11 sites across Wales.
* 145km of water mains have been refurbished in the nine months to September 2009
with a further 28km planned for the remainder of the year. This will conclude a
10 year replacement programme which will have seen 4,025km of water mains being
refurbished.
* Work is well advanced to mitigate the risk of sewer flooding for 286 properties.
Price Review for 2010-15
In April 2009, Welsh Water published its plans for the period 2010 to 2015, in
which it proposed to maintain a high level of capital expenditure, including
important investments to enhance the protection of drinking water quality,
mitigate the worst impacts of sewer flooding, substantially reduce the carbon
footprint of its activities and improve customer service. All this is to be
achieved without the average household customer's bill in 2015 being any higher
in real terms than it is today.According to Ofwat research, over 90% of Welsh
Water's customers endorsed its draft business plan which was published in 2008.
Welsh Water continues to believe that its published plans are in the best
interests of its customers and has made strong representations to Ofwat to this
effect. Ofwat will publish their final determination on 26 November 2009.
Notes for Editors:
1. Glas Cymru was formed in April 2000 for the sole purpose of acquiring Welsh
Water. It is a 'company limited by guarantee registered under the Companies Act
1985. Glas Cymru has no shareholders. Instead, Members carry out an important
corporate governance role but they do not receive dividends nor do they have any
other financial interest in the Company. This corporate structure ensures that
all financial surpluses generated are retained and reinvested for the benefit of
Welsh Water and its customers.
2. Glas Cymrus constitution strictly limits its purpose to that of financing
water assets in Welsh Waters area of appointment and managing Welsh Waters
business so that high quality water and sewerage services are delivered at least
cost to the communities served by Welsh Water. Glas Cymru cannot diversify into
other unrelated commercial activities.
3. Welsh Water outsources the provision of operational and customer services and
the delivery of its investment programme. By working closely in a partnership
framework with industry specialists, we aim to deliver improving business
performance and customer benefits.
4. Welsh water has recently introduced new customer tariffs, unique in the UK
water industry, which provide assistance to some customers who are facing
financial hardship as they pay their water charges. These include capped charges
for a specific group of customers with low income and high water use, and a
range of collection methods that include a discount for direct payment from
benefits.
5. Consistent, independent research of customer opinion carried out by Beaufort
Research shows that customer satisfaction with the service provided by Welsh
Water remains stable at very high levels - with nearly 80% of customers being
either "satisfied" or "very satisfied". Customers rate the value for money
provided by Welsh Water as being above that provided by other utility companies
in Wales covered by the survey.
6. Profit before tax (excluding the fair value movements in financial
instruments) increased to GBP65 million (2008: GBP2 million) primarily due to
the impact of RPI deflation on index-linked debt as reported under International
Accounting Standards.
Ends
For further information, contact the Welsh Water press office on 02920
556140.
glas
Interim report and accounts
for the six months ended 30 September 2009
Chairman's Statement
Financial results
Despite the continuation of a challenging economic environment, I am pleased to
report a solid financial performance over the past six months. Our financial
position remains strong, with gearing (as measured by net debt to regulatory
capital value) unchanged from 31 March 2009 at 72%, down from 93% on the
acquisition of Welsh Water in May 2001. As at 30 September 2009, available
funding included cash deposits of GBP114 million and committed bank facilities
totalling GBP455 million, including a GBP35 million loan agreement with KfW
IPEX-Bank GmbH signed on 2 July 2009. This gives a balance of funding currently
available of GBP569 million, meaning that we are securely financed until after
2010. Our customer dividends have been increased to GBP22 per customer this year
at a total cost of some GBP28 million.
We are not immune to the difficulties brought on by the current economic
climate, and we have felt the impact of this in the form of reduced demand for
our services and higher bad debt charges. Price rises of 5.4% overall and
reductions in power costs have produced an operating profit for the half year of
GBP97 million, up from a profit of GBP83 million for the same period last year.
However, due largely to the record capital investment in the period, there was a
cash deficit (before financing activities) of GBP22.5 million (2008: cash
surplus of GBP18.2 million).
We have benefited from unprecedentedly low interest rates during 2009, which
have significantly reduced our borrowing costs, and a fall in the Retail Prices
Index from July 2008 to January 2009 has resulted in a reduction in the value of
our index-linked bonds (a credit to the income statement of GBP25 million,
compared to a charge of GBP15 million in the prior period). The result is that
financing costs of GBP33 million (excluding fair value movements) are some GBP48
million lower than in the prior period.
During the six months, we have invested GBP170 million (2008: GBP168 million)
into Welsh Water's GBP1.4 billion AMP4 capital programme to improve customer
service, environmental quality and drinking water quality, bringing overall
expenditure since 2005 to GBP1,332 million.
Over the coming months, we expect the economic downturn will continue to impact
on our customers and the financial performance of the company. However, our
strong financial position means that we are well placed to deal with the impact
of further economic uncertainties and to continue to work in the interests of
our customers.
Operational performance
On 23 October 2009, Ofwat published its Annual Report on Levels of Service for
the Water Industry in England and Wales for the year ended 31 March 2009. On
Ofwat's "Overall Performance Assessment" (OPA), Welsh Water scored 406 out of a
maximum of 438, a good improvement on the previous year's score of 394. Compared
to other water and sewerage companies, Welsh Water was ranked fourth equal,
moving up from its fifth position the year before.
Our service performance has been generally good during the year to date; water
quality compliance as defined by Ofwat's key measure, the Operational
Performance Index, is 99.8% (a slight drop from 99.9% in September 2008).
Coastal areas continue to benefit from high quality bathing water, with
Wales being awarded 43 Blue Flags in 2009, around a third of the total awarded
to the UK. We have responded well to the very significant challenges caused by
increasingly erratic weather patterns during recent years: 25 flooding incidents
resulting from the hydraulic overload of our sewers were caused by rain we might
expect to see from 1 in 10 year storms, a reduction from 75 for the first half
of the previous year. However, occurrences of sewage flooding due to blockages
and other causes rose, from 112 to 137, although 25 of this period's incidents
are provisional and subject to further analysis. To improve proactive management
of the sewer network, we completed the installation of over 600 Hawkeye devices
in 2008/09, forming a telemetry system which allows us to monitor sewer flows
remotely. By allowing a quicker response time, we are confident that this
technology will help us to further reduce the number of sewer flooding
incidents.
On 28 April 2009 we issued a Boil Water Notice to 70,000 customers in
Denbighshire and Flintshire supplied with tap water from our Alwen water
treatment works. We cannot take any risks with public health and this was a
precautionary measure following an increase in coliform bacteria found in our
routine water quality monitoring programme. We installed new treatment equipment
and were able to lift the Boil Water Notice on 7 May. No-one was made ill by the
water during the incident and we appreciate the support of our customers during
this time; we know that being asked to boil water for routine use is disruptive
to daily life. Over the last few years we have seen a marked reduction in the
quality of some of our upland water sources, which means that the existing
treatment facilities are no longer sufficient to ensure the production of safe
drinking water. In addition to the planned investment already planned, in 2008
we initiated and have accelerated a GBP200 million investment programme to
improve the reliability of drinking water quality throughout Wales.
Chairman's Statement cont'd
Looking ahead
We are proud to be a long-term business responsible for providing an essential
public service to more than 3 million people. We are very aware that the
decisions we make today will impact our customers, our economy and our
environment for many years to come. As such, we set out our long term objectives
for the water industry in Wales in "Welsh Water: Our Sustainable Future" which
was published in November 2007.
In April 2009, Welsh Water published its plans for the period 2010 to 2015, in
which it proposed to maintain a high level of capital expenditure, including
important investments to enhance the protection of drinking water quality,
mitigate the worst impacts of sewer flooding, substantially reduce the carbon
footprint of its activities and improve customer service. These plans
represented a measured programme in pursuit of the long-term objectives set out
in "Our Sustainable Future", which could be achieved without the average
household customer's bill in 2015 being any higher in real terms than it is
today. According to Ofwat research, over 90% of Welsh Water's customers endorsed
our draft business plan.
We continue to believe that our published plans are in the best, long-term
interests of our customers. Ofwat will publish its Final Determination for all
water and sewerage companies on 26 November 2009.
In the current very difficult climate it is crucial both to demonstrate to our
investors that Welsh Water is a 'safe home' for long term investment and to
reassure our customers that we are planning ahead to ensure the continuation of
high standards of service. At the same time, knowing the financial challenges
faced by a significant proportion of our customers, we are committed to ensuring
that this essential public service remains affordable. We believe that Glas
Cymru, which owns Welsh Water on behalf of its customers, is best placed to meet
each of these challenges.
Lord Burns
Chairman - Glas Cymru Cyfyngedig
11 November 2009
Review of the business
Financial results
Financial performance
Glas Cymru's financial results cover the six months to 30 September 2009.
Comparative figures are given for the six months to 30 September 2008 and the
year ended 31 March 2009.
Turnover in the six months to 30 September 2009 was GBP339 million, as compared
to GBP328 million in the six months to 30 September 2008. The increase reflects
the RPI+K increase in prices of 5.4% allowed by Ofwat, less the 'customer
dividend' for the year. Welsh Water is the only water company to give such an
annual 'customer dividend', which for 2009-10 has increased to GBP22 per
customer (2008: GBP21 per customer) at a total cost this year of GBP28 million
(2008: GBP27 million).
Customer debt recovery has deteriorated during the period, a reflection of the
impact the economic slowdown is having on customers. Welsh Water and its service
partner Veolia have taken steps to ensure that the monitoring and recovery of
customer debt are maintained at the highest possible levels, but accept that the
recession in Wales and England will continue to impact on collection rates; in
recognition of this, there has been an increase in the provision for bad debts.
Operating costs (excluding depreciation and infrastructure renewals expenditure)
fell to GBP129 million (2008: GBP131 million): the major variances result from
power cost reductions (GBP4 million) offset by additional bad and doubtful debt
charges (GBP3 million).
Net interest payable in the period (excluding fair value movements) was GBP33
million (2008: GBP81 million), including an indexation credit on index linked
debt of GBP25 million (2008: charge of GBP15 million). The reduction in net
interest payable reflects the fall in interest rates since last year and the
impact of negative inflation on the indexation charge on RPI-linked debt.
Profit before taxation (and before the fair value movements on financial
instruments) was GBP65 million, up on the comparative period's profit of GBP2
million, primarily reflecting the reductions in interest payable. After allowing
for the movement in the fair value of financial instruments, the total profit
before tax was GBP84 million (2008: loss of GBP69 million). There was a deferred
taxation charge for the period of GBP25 million (2008: GBP13 million); no
corporation tax is payable.
Capital investment in the six month period (including infrastructure renewals
expenditure) of GBP170 million before grants and contributions (2008: GBP168
million) will bring improvements to customer service, environmental quality and
drinking water quality. Overall expenditure since 2005 totals GBP1,332 million,
which is broadly in line with Welsh Water's GBP1.4 billion AMP4 capital
investment programme.
Financial position
Our financial position has remained stable over the first half of the year with
gearing (net debt/regulatory capital value) at 30 September 2009 of 72% (31
March 2009: 72%); this compares to some 93% on the acquisition of Welsh Water in
May 2001.
The prudent financing policies followed by the company mean that, despite the
recent turmoil in credit markets, its bonds continue to trade well relative to
those of similar companies. Credit rating agency Moody's has maintained its 'A3'
corporate family rating for Welsh Water, with 'A' grade ratings of the senior
bonds by Standard and Poor's and Fitch Ratings, all reflecting the quality of
the company's creditworthiness. Welsh Water's Class A bonds are guaranteed by
MBIA but the ratings of these bonds now reflect the ratings of the underlying
business.
As at 30 September 2009, Glas Cymru had cash, short-term deposits and undrawn
syndicated bank facilities of GBP569 million, giving the company a high level of
financial liquidity. On 2 July 2009, a GBP35 million loan agreement was signed
with KfW IPEX-Bank GmbH to secure funding for essential water and wastewater
improvement schemes throughout Wales to 2010.
Review of the business cont'd
Customer service, water quality and environmental quality
The results for the first six months of the year show that service performance
continues to be of a high overall standard. Key measures include:
Levels of service
* 376 customers experiencing loss of water supply for more than six hours so far
this year, fewer than the same period last year (2008: 772);
* Fewer customers experiencing sewer flooding during the year to date - 167 (2008:
258); and
* Continuing high standards of customer satisfaction, as measured by independent
tracking research.
Water quality
* Overall compliance at the tap is 99.9%, similar to last year (99.9%);
* Water treatment works bacteriological performance was 99.9% for the year to date
(2008: 99.8%); and
* Bacteriological compliance 'at the tap' in the nine months to September was
99.8% (2008: 99.7%).
Environment
* Leakage reduced to 180 mega litres per day ('mld') for the year to date, 9 mld
below the same period last year and in a good position to meet the year end
statutory target of 195 mld;
* 99.7% waste water treatment works compliance (2008: 100%);
* Six major pollution incidents in the nine months to September (2008: 4
incidents); and
* For the 2008 summer season Wales was awarded 43 Blue Flag beaches and marinas,
around a third of the UK total.
Health and safety
* There has been a slight decrease in reportable accidents, from 19 to 18 in the
six months. In addition, the total number of dangerous occurrences and
reportable diseases has reduced from 1 to nil during the same period; but
* Working time lost due to accidents has risen by 46% compared to the same period
last year owing to the severity of a number of the reportable accidents.
Major capital investment
Welsh Water's GBP1.4 billion AMP4 capital investment programme aims to deliver
improvements to drinking water quality, environmental protection and the
alleviation of sewer flooding. Significant outputs include:
* Total capital investment for the six months of GBP170 million (2008:
GBP168 million) benefiting customer service, drinking water and environmental
quality;
* Total capital investment since April 2005 of GBP1,332 million (equivalent to
over GBP1,000 of investment for every household served);
* Good progress delivering our enhanced drinking water quality protection
programme, with work completed at Talybont water treatment works (GBP17 million)
and on target to deliver major schemes at Court Farm (GBP18 million) and Crai
(GBP15 million). In North Wales we have accelerated investment and are on target
to complete major improvement work at Cwellyn (GBP14 million), Rhiwgoch
(GBP9 million) and Mynydd Llandygai (GBP11 million) to provide secondary
treatment within the next year. We have also completed installation of
additional UV disinfection treatment at 11 sites across Wales as part of the
accelerated water quality improvement programme;
* 145 km of water mains have been refurbished so far this year with a further
28 km in the remainder of the year to conclude the Section 19 quality
improvement programme which has delivered 4,025 km of refurbished mains in total
over the last 10 years;
* Work is well advanced to mitigate the risk of 286 properties being flooded by
sewage and this will be achieved by the end of the financial year;
* GBP24 million is being invested in improving waste water treatment works
including GBP15 million at Llanelli to improve the treatment of storm water
discharged to the Loughor estuary; and
* Improving combined sewer overflows has seen GBP21 million invested during the
year to date across the region to help improve river quality in Wales, which in
2008 has seen the best ever levels of biological and chemical standards for the
last 10 years (88% and 95% respectively).
Summary of key measures of service performance
+----------------------------------------------------------+--------------+--------------+
| | Period | Period |
| | to | to |
| | 30 September | 30 September |
| | 2009 | 2008 |
+----------------------------------------------------------+--------------+--------------+
| Levels of Service | | |
+----------------------------------------------------------+--------------+--------------+
| Properties 'at risk' of receiving low pressure | 387 | 1,0471 |
+----------------------------------------------------------+--------------+--------------+
| Unplanned water supply interruptions | 376 | 772 |
+----------------------------------------------------------+--------------+--------------+
| Properties 'at risk' of sewage flooding | 250 | 315 |
+----------------------------------------------------------+--------------+--------------+
| Sewage flooding incidents - hydraulic overload ("1 in 10 | 25 | 75 |
| year storms") | | |
+----------------------------------------------------------+--------------+--------------+
| Sewage flooding incidents - other causes | 1373 | 112 |
+----------------------------------------------------------+--------------+--------------+
| Billing enquiries answered within 5 days | 99.9% | 99.9% |
+----------------------------------------------------------+--------------+--------------+
| Written complaints answered within 10 days | 99.6% | 99.2% |
+----------------------------------------------------------+--------------+--------------+
| Customer meters read within year | 97.4% | 93.1% |
+----------------------------------------------------------+--------------+--------------+
| | | |
+----------------------------------------------------------+--------------+--------------+
| Water Quality | | |
+----------------------------------------------------------+--------------+--------------+
| Bacteriological compliance 'at the tap'2 | 99.8% | 99.7% |
+----------------------------------------------------------+--------------+--------------+
| Iron compliance 'at the tap'2 | 99.2% | 99.5% |
+----------------------------------------------------------+--------------+--------------+
| Operational Performance Index2 | 99.8% | 99.9% |
+----------------------------------------------------------+--------------+--------------+
| | | |
+----------------------------------------------------------+--------------+--------------+
| Environment | | |
+----------------------------------------------------------+--------------+--------------+
| Leakage (m³/km/day) | 6.9 | 7.1 |
+----------------------------------------------------------+--------------+--------------+
| Number of 'Category 1 and 2' pollution incidents2 | 6 | 3 |
+----------------------------------------------------------+--------------+--------------+
| Number of 'Category 3' pollution incidents2 | 222 | 181 |
+----------------------------------------------------------+--------------+--------------+
| Customers served by compliant wastewater treatment | 99.7% | 99.9% |
| works2 | | |
+----------------------------------------------------------+--------------+--------------+
| Wastewater treatment works complying with consents | 98.6% | 99.8% |
+----------------------------------------------------------+--------------+--------------+
| Sewage sludge recycled satisfactorily | 100% | 100% |
+----------------------------------------------------------+--------------+--------------+
1 This number was higher than usual for a half-year period following a review
of logging program data.
2 Calendar year to end of September.
3 Of these 137 incidents, 25 are provisional and subject to further analysis.
Statement of directors' responsibility
The directors confirm that this condensed consolidated interim financial
information has been prepared in accordance with IAS 34 as adopted by the
European Union and that the interim management report includes a fair review of
the information required by the Disclosure and Transparency Rules paras 4.2.7
and 4.2.8, namely:
* An indication of important events that have occurred during the first six months
and their impact on the condensed set of financial statements, and a description
of the principal risks and uncertainties for the remaining six months of the
financial year; and
* Material related party transactions in the first six months and any material
changes in the related-party transactions described in the last annual report.
The principal risks and uncertainties affecting the group for the 6 months to 31
March 2010 are materially unchanged from those presented on pages 24 and 25 of
the group's published Annual Report and Accounts for the year ended 31 March
2009. The Annual Report and Accounts are published on the group's website,
www.dwrcymru.com, and are available from the Company Secretary on request.
By order of the Board
R G Curtis LLB ACIS
Company Secretary
11 November 2009
Consolidated income statement
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| | | Six months | Six months | Year ended |
| | | ended | ended | |
+---------------------------------------+------+---------------+---------------+---------------+
| | | 30 September | 30 September | 31 March |
+---------------------------------------+------+---------------+---------------+---------------+
| | | | 2009 | | 2008 | | 2009 |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| |Note | | GBPm | | GBPm | | GBPm |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| | | | | | | | |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| Revenue | 2 | | 338.5 | | 327.9 | | 657.2 |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| | | | | | | | |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| Operating costs | | | | | | | |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| | | | | | | | |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| - Operational expenditure | | | (129.4) | | (131.0) | | (266.9) |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| - Infrastructure renewals | | | (42.3) | | (47.7) | | (101.1) |
| expenditure | | | | | | | |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| - Depreciation and amortisation | | | (69.8) | | (65.9) | | (133.5) |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| - Profit/(loss) on disposal of | | | 0.1 | | (0.1) | | (0.8) |
| fixed assets | | | | | | | |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| | | | | | | | |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| Operating profit | | | 97.1 | | 83.2 | | 154.9 |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| | | | | | | | |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| Financing costs | | | | | | | |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| | | | | | | | |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| - Interest payable and similar | 3a | | (35.0) | | (86.3) | | (174.3) |
| charges | | | | | | | |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| - Interest receivable | 3a | | 2.5 | | 5.5 | | 8.6 |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| - Fair value gains/(losses) on | 3b | | 19.6 | | (71.0) | | (86.5) |
| derivative financial instruments | | | | | | | |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| | | | (12.9) | | (151.8) | | (252.2) |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| | | | | | | | |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| Profit/(loss) before taxation | | | 84.2 | | (68.6) | | (97.3) |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| | | | | | | | |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| Taxation charge | 4 | | (24.5) | | (13.3) | | (5.6) |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| | | | | | | | |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| Profit/(loss) for the period | | | 59.7 | | (81.9) | | (102.9) |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| | | | | | | | |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
+---------------------------------------+-----+-----+--------+-----+--------+-----+--------+
| Profit/(loss) before taxation and | | | | | | | |
| fair value adjustments | | | | | | | |
+---------------------------------------+-----+-----+--------+-----+--------+-----+--------+
| | | | | | | | |
+---------------------------------------+-----+-----+--------+-----+--------+-----+--------+
| Profit/(loss) before taxation per | | | 84.2 | | (68.6) | | (97.3) |
| income statement | | | | | | | |
+---------------------------------------+-----+-----+--------+-----+--------+-----+--------+
| | | | | | | | |
+---------------------------------------+-----+-----+--------+-----+--------+-----+--------+
| Effect of fair value (gains)/losses | | | (19.6) | | 71.0 | | 86.5 |
| on derivative financial instruments | | | | | | | |
+---------------------------------------+-----+-----+--------+-----+--------+-----+--------+
| | | | | | | | |
+---------------------------------------+-----+-----+--------+-----+--------+-----+--------+
| Profit/(loss) before taxation and | | | 64.6 | | 2.4 | | (10.8) |
| fair value adjustments | | | | | | | |
+---------------------------------------+-----+-----+--------+-----+--------+-----+--------+
| | | | | | | | |
+---------------------------------------+-----+-----+--------+-----+--------+-----+--------+
Consolidated statement of comprehensive income
+---------------------------------------+------+-----+--------+-----+--------+-----+---------+
| | | Six months | Six months | Year ended |
| | | ended | ended | |
+---------------------------------------+------+--------------+--------------+---------------+
| | | 30 September | 30 September | 31 March |
+---------------------------------------+------+--------------+--------------+---------------+
| | | | 2009 | | 2008 | | 2009 |
+---------------------------------------+------+-----+--------+-----+--------+-----+---------+
| |Note | | GBPm | | GBPm | | GBPm |
+---------------------------------------+------+-----+--------+-----+--------+-----+---------+
| | | | | | | | |
+---------------------------------------+------+-----+--------+-----+--------+-----+---------+
| Profit/(loss) for the period | | | 59.7 | | (81.9) | | (102.9) |
+---------------------------------------+------+-----+--------+-----+--------+-----+---------+
| | | | | | | | |
+---------------------------------------+------+-----+--------+-----+--------+-----+---------+
| Other comprehensive income: | | | | | | | |
+---------------------------------------+------+-----+--------+-----+--------+-----+---------+
| | | | | | | | |
+---------------------------------------+------+-----+--------+-----+--------+-----+---------+
| Actuarial loss recognised in the | | | (1.1) | | (2.0) | | (10.4) |
| pension scheme | | | | | | | |
+---------------------------------------+------+-----+--------+-----+--------+-----+---------+
| | | | | | | | |
+---------------------------------------+------+-----+--------+-----+--------+-----+---------+
| Movement on deferred tax asset | 4 | | 0.3 | | 0.6 | | 2.9 |
| relating to the pension scheme | | | | | | | |
+---------------------------------------+------+-----+--------+-----+--------+-----+---------+
| | | | | | | | |
+---------------------------------------+------+-----+--------+-----+--------+-----+---------+
| Total comprehensive income/(losses) | | | 58.9 | | (83.3) | | (110.4) |
| for the period | | | | | | | |
+---------------------------------------+------+-----+--------+-----+--------+-----+---------+
| | | | | | | | |
+---------------------------------------+------+-----+--------+-----+--------+-----+---------+
Consolidated statement of changes in equity
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| | | Six months | Six months | Year ended |
| | | ended | ended | |
+---------------------------------------+------+---------------+---------------+---------------+
| | | 30 September | 30 September | 31 March |
+---------------------------------------+------+---------------+---------------+---------------+
| | | | 2009 | | 2008 | | 2009 |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| |Note | | GBPm | | GBPm | | GBPm |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| | | | | | | | |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| Deficit on reserves at start of | | | (152.1) | | (41.7) | | (41.7) |
| period | | | | | | | |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| | | | | | | | |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| Profit/(loss) for the period | | | 59.7 | | (81.9) | | (102.9) |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| | | | | | | | |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| Other comprehensive income: | | | | | | | |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| | | | | | | | |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| Actuarial loss recognised in the | | | (1.1) | | (2.0) | | (10.4) |
| pension scheme | | | | | | | |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| | | | | | | | |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| Movement on deferred tax asset | 4 | | 0.3 | | 0.6 | | 2.9 |
| relating to the pension scheme | | | | | | | |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| | | | | | | | |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| Total comprehensive income for the | | | 58.9 | | (83.3) | | (110.4) |
| period | | | | | | | |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| | | | | | | | |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| Deficit on reserves at end of period | | | (93.2) | | (125.0) | | (152.1) |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
| | | | | | | | |
+---------------------------------------+------+-----+---------+-----+---------+-----+---------+
Consolidated balance sheet
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| | | | At | | At | | At |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| | | 30 | 30 September | 31 March |
| | | September | | |
+---------------------------------------+--------+--------------+-----------------+-----------------+
| | | | 2009 | | 2008 | | 2009 |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| | Note | | GBPm | | GBPm | | GBPm |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| Assets | | | | | | | |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| Non-current assets | | | | | | | |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| Property, plant and equipment | 5 | | 3,028.8 | | 2,929.3 | | 2,980.0 |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| Intangible assets | 6 | | 49.6 | | 33.3 | | 46.2 |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| Financial assets: derivative | | | 1.2 | | - | | - |
| financial instruments | | | | | | | |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| | | | 3,079.6 | | 2,962.6 | | 3,026.2 |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| Current assets | | | | | | | |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| Trade and other receivables | 7 | | 122.6 | | 125.3 | | 102.2 |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| Financial assets: | | | | | | | |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| Financial assets: derivative | | | 4.5 | | 6.4 | | 26.0 |
| financial instruments | | | | | | | |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| Cash and cash equivalents | | | 114.2 | | 139.9 | | 139.3 |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| | | | 241.3 | | 271.6 | | 267.5 |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| Liabilities | | | | | | | |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| Current liabilities | | | | | | | |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| Trade and other payables | 8 | | (108.0) | | (135.9) | | (129.5) |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| Financial liabilities: | | | | | | | |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| - Borrowings | | | (51.2) | | (57.4) | | (20.0) |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| - Derivative financial instruments | | | (17.8) | | (6.8) | | (2.1) |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| | | | (177.0) | | (200.1) | | (151.6) |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| | | | | | | | |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| Net current assets | | | 64.3 | | 71.5 | | 115.9 |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| | | | | | | | |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| Non-current liabilities | | | | | | | |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| Trade and other payables | 8 | | (2.8) | | (2.2) | | (3.0) |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| Financial liabilities: | | | | | | | |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| - Borrowings | | | (2,712.5) | | (2,644.1) | | (2,739.7) |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| - Derivative financial instruments | | | (126.1) | | (141.9) | | (181.7) |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| Retirement benefit obligations | | | (8.8) | | - | | (7.8) |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| Provisions | | | (9.9) | | (8.1) | | (9.2) |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| | | | (2,860.1) | | (2,796.3) | | (2,941.4) |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| | | | | | | | |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| Net assets before deferred tax | | | 283.8 | | 237.8 | | 200.7 |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| | | | | | | | |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| Deferred tax (net) | | | (377.0) | | (362.8) | | (352.8) |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| | | | | | | | |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| Net liabilities | | | (93.2) | | (125.0) | | (152.1) |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| | | | | | | | |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| | | | | | | | |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| Deficit on reserves | | | (93.2) | | (125.0) | | (152.1) |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
| | | | | | | | |
+---------------------------------------+--------+--+-----------+-----+-----------+-----+-----------+
Consolidated statement of cash flows
+------------------------------------+--------------+----+----------------------------------+--------+---------+--------+--------+--------------+
| | Six months | Six months | Year ended |
| | ended | ended | |
+------------------------------------+------------------------------------------------------+------------------+-----------------+
| | 30 | 30 September | 31 March |
| | September | | |
+------------------------------------+------------------------------------------------------+------------------+-----------------+
| | | 2009 | | 2008 | | 2009 |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+--------+
| | | | | GBPm | | GBPm |
| | | GBPm | | | | |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+--------+
| | | | | | | |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+--------+
| Operating profit | | 97.1 | | 83.2 | | 154.9 |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+--------+
| | | | | | | |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+--------+
| Adjustments for | | | | | | |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+--------+
| - Depreciation and amortisation | | 69.8 | | 65.9 | | 133.5 |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+--------+
| - (Profit)/loss on disposal of | | (0.1) | | 0.1 | | 0.8 |
| fixed assets | | | | | | |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+--------+
| | | | | | | |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+--------+
| Changes in working capital | | | | | | |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+--------+
| - (Increase)/decrease in trade | | (22.4) | | (8.7) | | 11.1 |
| and other receivables | | | | | | |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+--------+
| - (Decrease)/increase in trade | | (9.0) | | 17.9 | | 8.1 |
| and other payables | | | | | | |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+--------+
| - Increase/(decrease) in | | 0.7 | | (0.4) | | 0.7 |
| provisions | | | | | | |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+--------+
| | | (30.7) | | 8.8 | | 19.9 |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+--------+
| | | | | | | |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+--------+
| Cash generated from operations | | 136.1 | | 158.0 | | 309.1 |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+--------+
| | | | | | | |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+-----------------------+
| Interest received | | 2.5 | | 5.7 | | 9.8 |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+-----------------------+
| Interest paid | | (27.5) | | (28.4) | | (129.4) |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+-----------------------+
| Cash flows from operating | | 111.1 | | 135.3 | | 189.5 |
| activities - net | | | | | | |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+-----------------------+
| | | | | | | |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+-----------------------+
| Cash flows from investing | | | | | | |
| activities | | | | | | |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+-----------------------+
| Purchases of property, plant and | | (139.8) | | (125.2) | | (257.0) |
| equipment | | | | | | |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+-----------------------+
| Grants and contributions received | | 6.1 | | 8.2 | | 13.6 |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+-----------------------+
| Net proceeds from/(costs of) sale | | 0.1 | | (0.1) | | (0.8) |
| of property, plant and equipment | | | | | | |
+---------------------------------------------------+----+----------------------------------+--------+---------+--------+-----------------------+
| Cash flows from investing | | (133.6) | | (117.1) | | (244.2) |
| activities - net | | | | | | |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+-----------------------+
| | | | | | | |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+-----------------------+
| Cash flows from financing | | | | | | |
| activities | | | | | | |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+-----------------------+
| Long term loans and finance leases | | | | - | | 85.0 |
| received | | - | | | | |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+-----------------------+
| Revolving credit facility and term | | (2.2) | | (2.2) | | (4.4) |
| loan repayments | | | | | | |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+-----------------------+
| Capital element of finance lease | | | | - | | (10.4) |
| payments | | - | | | | |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+-----------------------+
| Other loan repayments | | (0.4) | | (0.2) | | (0.3) |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+-----------------------+
| Cash flows from financing | | (2.6) | | (2.4) | | 69.9 |
| activities - net | | | | | | |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+-----------------------+
| | | | | | | |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+-----------------------+
| Net (decrease)/increase in cash, | | (25.1) | | 15.8 | | 15.2 |
| cash equivalents and | | | | | | |
| bank overdrafts | | | | | | |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+-----------------------+
| | | | | | | |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+-----------------------+
| Cash, cash equivalents and bank | | 139.3 | | 124.1 | | 124.1 |
| overdrafts at start of | | | | | | |
| period | | | | | | |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+-----------------------+
| | | | | | | |
+------------------------------------+-------------------+----------------------------------+--------+---------+--------+-----------------------+
| Cash, cash equivalents and bank | | 114.2 | | 139.9 | | 139.3 |
| overdrafts at end of | | | | | | |
| period | | | | | | |
+------------------------------------+--------------+----+----------------------------------+--------+---------+--------+--------+--------------+
Notes to the condensed consolidated financial statements
1. Basis of preparation
The interim report and accounts are for the six months ended 30 September 2009;
they have been prepared in accordance with the Disclosure and Transparency Rules
of the Financial Services Authority and with IAS 34, 'Interim financial
reporting' as adopted by the European Union, using accounting policies
consistent with International Financial Reporting Standards (IFRSs). The interim
report and accounts should be read in conjunction with the annual financial
statements for the year ended 31 March 2009, which have been prepared in
accordance with IFRSs as adopted by the European Union. Except as described
below, the accounting policies applied are consistent with those of the annual
financial statements for the year ended 31 March 2009, as described in those
annual financial statements.
Taxes on income in the interim period are accrued using the tax rate that would
be applicable to expected total annual earnings.
The following amendments to standards are mandatory for the first time for the
financial year beginning 1 April 2009:
* IAS 1 (revised), "Presentation of financial statements". The interim financial
statements have been prepared under the revised disclosure requirements; the
main impacts on the group are the replacement of the statement of recognised
income and expense with a statement of comprehensive income and the inclusion of
a statement of changes in equity;
* IAS 23 (amendment), "Borrowing costs". The amendment prohibits immediate
expensing of borrowing costs relating to qualifying assets. As permitted by the
amended standard, the requirements have been applied prospectively in these
interim financial statements, such that GBP0.5m of borrowing costs have been
capitalised (see notes 3 and 5); and
* IFRS 8, "Operating segments" is effective for accounting periods beginning on or
after 1 January 2009 and replaces IAS 14, "Segment reporting". IAS 14 required
segmental reporting based on two sets of segments (business and geographical),
while IFRS 8 requires the segments to be derived from the reports used by the
chief operating decision maker for the allocation of resources and assessment of
performance. The directors consider that there is only one reporting segment,
being the operation of the water and sewerage business in the United Kingdom,
and therefore the disclosures made under IAS 14 remain appropriate under IFRS 8.
These financial statements are unaudited but have been formally reviewed by the
auditors and their report is set out on page 15. The interim financial results
do not comprise statutory accounts within the meaning of Section 434 of the
Companies Act 2006. The results shown for the year ended 31 March 2009 have been
derived from the group's audited full financial statements filed with the
Registrar of Companies. The report of the auditors on those accounts was
unqualified and did not contain a statement under Section 237(2) or 237(3) of
the Companies Act 1985.
The company is limited by guarantee and does not have any share capital. In the
event of the company being wound up, the liability of its members is limited to
GBP1 each.
2. Segmental information
All reported revenue and operating profits arise from the operation of water and
sewerage business in the United Kingdom. Revenue recognised reflects the actual
charges levied on customers in the period. The difference between the actual
revenue and the level of revenue that could have resulted had the full Ofwat
allowed level of charges been levied is referred to as a 'customer dividend'.
3. Financing costs and fair value of derivative financial instruments
+----------------------------------------+-+----+-----------------------------------+-+----+----------------------------------------+-+----+---------+
| | Six months | Six months | Year ended |
| | ended | ended | |
+----------------------------------------+------------------------------------------+-----------------------------------------------+----------------+
| a) Net interest | | 30 | | 30 | | 31 March |
| before fair value | | September | | September | | 2009 |
| gains/(losses) on | | 2009 | | 2008 | | |
| derivative financial | | | | | | |
| instruments | | | | | | |
+----------------------------------------+-+----------------------------------------+-+---------------------------------------------+-+--------------+
| | | | | | | |
| | | GBPm | | GBPm | | GBPm |
+----------------------------------------+------+-----------------------------------+------+----------------------------------------+------+---------+
| Interest payable on bonds | | (43.6) | | (43.2) | | (86.1) |
+----------------------------------------+------+-----------------------------------+------+----------------------------------------+------+---------+
| Indexation on index-linked bonds | | 25.5 | | (14.8) | | (41.4) |
+----------------------------------------+------+-----------------------------------+------+----------------------------------------+------+---------+
| Interest payable on finance leases | | (11.0) | | (23.1) | | (37.1) |
+----------------------------------------+------+-----------------------------------+------+----------------------------------------+------+---------+
| Other loan interest | | (5.2) | | (3.7) | | (7.4) |
+----------------------------------------+------+-----------------------------------+------+----------------------------------------+------+---------+
| Other interest payable and finance | | (1.0) | | (1.5) | | (2.5) |
| costs | | | | | | |
+----------------------------------------+------+-----------------------------------+------+----------------------------------------+------+---------+
| Interest (debit)/credit on pension | | (0.2) | | | | 0.2 |
| scheme liabilities | | | | - | | |
+----------------------------------------+------+-----------------------------------+------+----------------------------------------+------+---------+
| Capitalisation of borrowing costs | | 0.5 | | | | - |
| under IAS 23 | | | | - | | |
+----------------------------------------+------+-----------------------------------+------+----------------------------------------+------+---------+
| Interest payable | | (35.0) | | (86.3) | | (174.3) |
+----------------------------------------+------+-----------------------------------+------+----------------------------------------+------+---------+
| Interest receivable | | 2.5 | | 5.5 | | 8.6 |
+----------------------------------------+------+-----------------------------------+------+----------------------------------------+------+---------+
| Net interest payable before fair | | (32.5) | | (80.8) | | (165.7) |
| value adjustments | | | | | | |
+----------------------------------------+-+----+-----------------------------------+-+----+----------------------------------------+-+----+---------+
Notes to the condensed consolidated financial statements cont'd
3. Financing costs and fair value of derivative financial instruments (cont'd)
+----------------------------------------+--+---+-------------------------------------+--+---+-----------------------------------------------+--+---+--------+
| | Six months | Six months | Year ended |
| | ended | ended | |
+----------------------------------------+--------------------------------------------+------------------------------------------------------+---------------+
| b) Fair value | | 30 | | 30 | | 31 March |
| gains/(losses) on | | September | | September | | 2009 |
| derivative financial | | 2009 | | 2008 | | |
| instruments | | | | | | |
+----------------------------------------+--+-----------------------------------------+--+---------------------------------------------------+--+------------+
| | | | | | | GBPm |
| | | GBPm | | GBPm | | |
+----------------------------------------+------+-------------------------------------+------+-----------------------------------------------+------+--------+
| Fair value gains/(losses) on | | 5.5 | | (4.9) | | (28.3) |
| interest rate swaps | | | | | | |
+----------------------------------------+------+-------------------------------------+------+-----------------------------------------------+------+--------+
| Fair value gains/(losses) on | | 14.1 | | (66.1) | | (58.2) |
| index-linked swaps | | | | | | |
+----------------------------------------+------+-------------------------------------+------+-----------------------------------------------+------+--------+
| Total fair value gains/(losses) on | | 19.6 | | (71.0) | | (86.5) |
| derivative financial | | | | | | |
| instruments | | | | | | |
+----------------------------------------+------+-------------------------------------+------+-----------------------------------------------+------+--------+
| Deferred tax effect at 28% of fair | | (5.5) | | 19.9 | | 24.2 |
| value gains/(losses) | | | | | | |
+----------------------------------------+------+-------------------------------------+------+-----------------------------------------------+------+--------+
| Net of tax impact of fair value | | 14.1 | | (51.1) | | (62.3) |
| gains/(losses) | | | | | | |
+----------------------------------------+--+---+-------------------------------------+--+---+-----------------------------------------------+--+---+--------+
Whilst the group employs an economically effective policy using interest rate
and index-linked swaps, the hedge accounting criteria of IAS 39 are not
satisfied. Consequently, the group's interest rate and index-linked swaps are
fair valued at each balance sheet date with the movement (net loss or gain)
disclosed in the income statement. Over the life of these swaps, if held to
maturity, these fair value adjustments will reverse and reduce to zero.
The notional value of the interest rate swaps is GBP192m (2008: GBP192m) and the
index linked swaps GBP805m (2008: GBP751m).
4. Taxation
+--------------------------------------+------------+------------+------------+
| | 30 | 30 | 31 March |
| | September | September | 2009 |
| | 2009 | 2008 | |
+--------------------------------------+------------+------------+------------+
| Tax on profit/(loss) comprises: | GBPm | GBPm | GBPm |
+--------------------------------------+------------+------------+------------+
| | | | |
+--------------------------------------+------------+------------+------------+
| Corporation tax | - | - | - |
+--------------------------------------+------------+------------+------------+
| | | | |
+--------------------------------------+------------+------------+------------+
| Deferred tax | | | |
+--------------------------------------+------------+------------+------------+
| Adjustment in respect of prior | (0.6) | 2.2 | 4.0 |
| periods | | | |
+--------------------------------------+------------+------------+------------+
| Current year movements | (23.6) | 19.5 | 30.3 |
+--------------------------------------+------------+------------+------------+
| Effect of IBA abolition | - | (34.4) | (37.0) |
+--------------------------------------+------------+------------+------------+
| | (24.2) | (12.7) | (2.7) |
+--------------------------------------+------------+------------+------------+
| | | | |
+--------------------------------------+------------+------------+------------+
| Taxation charge | (24.2) | (12.7) | (2.7) |
+--------------------------------------+------------+------------+------------+
| | | | |
+--------------------------------------+------------+------------+------------+
| Analysed as: | | | |
+--------------------------------------+------------+------------+------------+
| Charged to income statement | (24.5) | (13.3) | (5.6) |
+--------------------------------------+------------+------------+------------+
| Credited to statement of | 0.3 | 0.6 | 2.9 |
| comprehensive income | | | |
+--------------------------------------+------------+------------+------------+
| | (24.2) | (12.7) | (2.7) |
+--------------------------------------+------------+------------+------------+
The company does not expect to pay corporation tax on its trading profits for
the current year due to the availability of capital allowances on its investment
programme.
Notes to the condensed consolidated financial statements cont'd
5. Property, plant and equipment
+--------------------------+-----------+----------------+-------------+------------+----------+
| | Freehold | Infrastructure | Operational | Plant | Total |
| | land & | assets | structures | equipment, | |
| | buildings | | | computer | |
| | | | | hardware | |
+--------------------------+-----------+----------------+-------------+------------+----------+
| | GBPm | GBPm | GBPm | GBPm | GBPm |
+--------------------------+-----------+----------------+-------------+------------+----------+
| Cost | | | | | |
+--------------------------+-----------+----------------+-------------+------------+----------+
| At 1 April 2009 | 34.4 | 1,513.1 | 2,383.4 | 226.2 | 4,157.1 |
+--------------------------+-----------+----------------+-------------+------------+----------+
| Additions net of | - | 23.4 | 86.0 | 5.1 | 114.5 |
| grants and contributions | | | | | |
+--------------------------+-----------+----------------+-------------+------------+----------+
| At 30 September 2009 | 34.4 | 1,536.5 | 2,469.4 | 231.3 | 4,271.6 |
+--------------------------+-----------+----------------+-------------+------------+----------+
| | | | | | |
+--------------------------+-----------+----------------+-------------+------------+----------+
| | | | | | |
+--------------------------+-----------+----------------+-------------+------------+----------+
| Accumulated | | | | | |
| depreciation | | | | | |
+--------------------------+-----------+----------------+-------------+------------+----------+
| At 1 April 2009 | 16.8 | 131.2 | 859.4 | 169.7 | 1,177.1 |
+--------------------------+-----------+----------------+-------------+------------+----------+
| Charge for the period | - | 16.8 | 40.9 | 8.0 | 65.7 |
+--------------------------+-----------+----------------+-------------+------------+----------+
| At 30 September 2009 | 16.8 | 148.0 | 900.3 | 177.7 | 1,242.8 |
+--------------------------+-----------+----------------+-------------+------------+----------+
| | | | | | |
+--------------------------+-----------+----------------+-------------+------------+----------+
| Net book value | | | | | |
+--------------------------+-----------+----------------+-------------+------------+----------+
| At 30 September 2009 | 17.6 | 1,388.5 | 1,569.1 | 53.6 | 3,028.8 |
+--------------------------+-----------+----------------+-------------+------------+----------+
| At 31 March 2009 | 17.6 | 1,381.9 | 1,524.0 | 56.5 | 2,980.0 |
+--------------------------+-----------+----------------+-------------+------------+----------+
The net book value of fixed assets includes GBP0.5m (March 2009: GBPnil) of
capitalised interest.
The group forecasts GBP193m of capital expenditure over the remainder of the
AMP4 period to 31 March 2010. While only a portion of this amount has been
formally contracted for, the group is effectively committed to the total as part
of its overall capital expenditure programme approved by its regulator.
6. Intangible assets
Intangible assets comprise computer software and related system
developments.
+--------------------------------------+------------+--------------+------------+
| | Cost | Amortisation | Net book |
| | | | value |
+--------------------------------------+------------+--------------+------------+
| | GBPm | GBPm | GBPm |
+--------------------------------------+------------+--------------+------------+
| | | | |
+--------------------------------------+------------+--------------+------------+
| At 1 April 2009 | 101.5 | (55.3) | 46.2 |
+--------------------------------------+------------+--------------+------------+
| Additions | 7.5 | (4.1) | 3.4 |
+--------------------------------------+------------+--------------+------------+
| At 30 September 2009 | 109.0 | (59.4) | 49.6 |
+--------------------------------------+------------+--------------+------------+
7. Trade and other receivables
+----------------------------------------+------------+------------+------------+
| | 30 | 30 | 31 March |
| | September | September | 2009 |
| | 2009 | 2008 | |
+----------------------------------------+------------+------------+------------+
| | GBPm | GBPm | GBPm |
+----------------------------------------+------------+------------+------------+
| Amounts falling due within one year | | | |
+----------------------------------------+------------+------------+------------+
| Trade receivables | 86.7 | 120.1 | 109.4 |
+----------------------------------------+------------+------------+------------+
| Less provision for impairment of | (37.2) | (66.1) | (70.6) |
| receivables | | | |
+----------------------------------------+------------+------------+------------+
| Trade receivables - net | 49.5 | 54.0 | 38.8 |
+----------------------------------------+------------+------------+------------+
| Prepayments and accrued income | 62.7 | 63.8 | 62.0 |
+----------------------------------------+------------+------------+------------+
| Other receivables | 10.4 | 7.5 | 1.4 |
+----------------------------------------+------------+------------+------------+
| | 122.6 | 125.3 | 102.2 |
+----------------------------------------+------------+------------+------------+
Notes to the condensed consolidated financial statements cont'd
8. Trade and other payables
+----------------------------------------+------------+------------+------------+
| | 30 | 30 | 31 March |
| | September | September | 2009 |
| | 2009 | 2008 | |
+----------------------------------------+------------+------------+------------+
| Current | GBPm | GBPm | GBPm |
+----------------------------------------+------------+------------+------------+
| | | | |
+----------------------------------------+------------+------------+------------+
| Trade payables | 17.8 | 36.9 | 28.2 |
+----------------------------------------+------------+------------+------------+
| Capital payables | 40.5 | 49.4 | 53.4 |
+----------------------------------------+------------+------------+------------+
| Other taxation and social security | 0.5 | 0.4 | 0.4 |
+----------------------------------------+------------+------------+------------+
| Accruals and deferred income | 49.2 | 49.2 | 47.5 |
+----------------------------------------+------------+------------+------------+
| | 108.0 | 135.9 | 129.5 |
+----------------------------------------+------------+------------+------------+
| Non-current | | | |
+----------------------------------------+------------+------------+------------+
| Deferred income | 2.8 | 2.2 | 3.0 |
+----------------------------------------+------------+------------+------------+
9. Analysis and reconciliation of net debt
+----------------------------------------+------------+------------+------------+
| a) Net debt at the | 30 | 30 | 31 March |
| balance sheet date | September | September | 2009 |
| may be analysed as: | 2009 | 2008 | |
+----------------------------------------+------------+------------+------------+
| | GBPm | GBPm | GBPm |
+----------------------------------------+------------+------------+------------+
| | | | |
+----------------------------------------+------------+------------+------------+
| Cash and cash equivalents | 114.2 | 139.9 | 139.3 |
+----------------------------------------+------------+------------+------------+
| | | | |
+----------------------------------------+------------+------------+------------+
| Debt due after one year | (1,794.0) | (1,772.3) | (1,821.2) |
+----------------------------------------+------------+------------+------------+
| Debt due within one year | (4.0) | (4.0) | (4.5) |
+----------------------------------------+------------+------------+------------+
| Finance leases | (892.1) | (842.5) | (892.1) |
+----------------------------------------+------------+------------+------------+
| Accrued interest | (73.6) | (82.7) | (41.9) |
+----------------------------------------+------------+------------+------------+
| | (2,763.7) | (2,701.5) | (2,759.7) |
+----------------------------------------+------------+------------+------------+
| | | | |
+----------------------------------------+------------+------------+------------+
| Net debt | (2,649.5) | (2,561.6) | (2,620.4) |
+----------------------------------------+------------+------------+------------+
| | | | |
+----------------------------------------+------------+------------+------------+
+----------------------------------------+------------+------------+------------+
| b) The movement in | 30 | 30 | 31 March |
| net debt during the | September | September | 2009 |
| period may be | 2009 | 2008 | |
| summarised as: | | | |
+----------------------------------------+------------+------------+------------+
| | GBPm | GBPm | GBPm |
+----------------------------------------+------------+------------+------------+
| | | | |
+----------------------------------------+------------+------------+------------+
| Net debt at start of period | (2,620.4) | (2,524.4) | (2,524.4) |
+----------------------------------------+------------+------------+------------+
| | | | |
+----------------------------------------+------------+------------+------------+
| (Decrease)/increase in net cash | (25.1) | 15.8 | 15.2 |
+----------------------------------------+------------+------------+------------+
| | | | |
+----------------------------------------+------------+------------+------------+
| Decrease/(increase) in debt | 2.5 | 2.4 | (69.9) |
+----------------------------------------+------------+------------+------------+
| (Increase)/decrease in net debt | (22.6) | 18.2 | (54.7) |
| arising from cash flows | | | |
+----------------------------------------+------------+------------+------------+
| Movement in accrued interest | (31.7) | (40.6) | 0.2 |
+----------------------------------------+------------+------------+------------+
| Indexation of index-linked debt | 25.5 | (14.8) | (41.4) |
+----------------------------------------+------------+------------+------------+
| Other non-cash movements | (0.3) | - | (0.1) |
+----------------------------------------+------------+------------+------------+
| Movement in net debt during the period | (29.1) | (37.2) | (96.0) |
+----------------------------------------+------------+------------+------------+
| | | | |
+----------------------------------------+------------+------------+------------+
| Net debt at end of period | (2,649.5) | (2,561.6) | (2,620.4) |
+----------------------------------------+------------+------------+------------+
Independent review report to Glas Cymru Cyfyngedig
Introduction
We have been engaged by the company to review the condensed set of financial
statements in the interim report and accounts for the six months ended 30
September 2009, which comprises the consolidated income statement, consolidated
statement of comprehensive income, consolidated statement of changes in equity,
consolidated balance sheet, consolidated statement of cash flows and related
notes. We have read the other information contained in the interim report and
accounts and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set of financial
statements.
Directors' responsibilities
The interim report and accounts is the responsibility of, and has been approved
by, the directors. The directors are responsible for preparing the interim
report and accounts in accordance with the Disclosure and Transparency Rules of
the United Kingdom's Financial Services Authority.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in the interim report and
accounts has been prepared in accordance with International Accounting Standard
34, "Interim Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed
set of financial statements in the interim report and accounts based on our
review. This report, including the conclusion, has been prepared for and only
for the company for the purpose of the Disclosure and Transparency Rules of the
Financial Services Authority and for no other purpose. We do not, in producing
this report, 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.
Scope of review
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.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the interim report and
accounts for the six months ended 30 September 2009 is not prepared, in all
material respects, in accordance with International Accounting Standard 34 as
adopted by the European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
PricewaterhouseCoopers LLP
Chartered Accountants
11 November 2009
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GUGMGGUPBGRU
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