We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Dee Valley Grp | LSE:DVW | London | Ordinary Share | GB0031798449 | ORD 5P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 1,812.50 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMDVW
RNS Number : 7978A
Dee Valley Group PLC
10 June 2016
Dee Valley Group Plc (the 'Group')
Annual Results Announcement for the year to 31 March 2016
A positive start to AMP6
Key Financial and Operational Highlights
-- Profit before tax broadly consistent with the prior year, with the impact of a reduction in revenue partially offset by lower operating expenses:
o Profit from operations of GBP6.6m (2015: GBP7.5m). Revenue for the year impacted by the AMP6 Final Determination, which imposed a reduction in prices in this first year of AMP6, and lower consumption amongst certain large, non-household customers;
o Profit before tax of GBP4.2m (2015: GBP4.5m), with the reduction in profit from operations offset by a lower non-cash loan indexation charge, due to the lower rate of RPI inflation during the year;
o Profit after tax GBP4.7m is GBP1.2m higher than the prior year as a result of a non-cash deferred tax credit arising due to a reduction in the corporation tax rate applied in calculating the tax position;
o Capital investment of GBP6.2m in the year (GBP5.6m cash spend net of capital accruals);
o Net cashflow from operating activities GBP12.0m (2015: GBP13.0m), with the reduction primarily due to lower operating profit.
-- Continued focus on the customer, and delivering high levels of customer satisfaction:
o 4th lowest water bills in England and Wales;
o Social tariff in place from April 2016;
o Ranked 4(th) out of the 18 water companies in England and Wales on Ofwat's qualitative measure of customer service (SIM), up from 8(th) place in 14/15;
o 13% reduction in customer complaints compared to the prior year;
o Ranked 1(st) in the industry by CC Water research for value for money and quality of response to customer contacts.
-- Operational performance continues to improve, with infrastructure and water quality improvements delivered:
o Drinking water quality compliance index improved to 99.95%;
o 27% reduction in discoloured water customer contacts year-on-year;
o 31% reduction in the number of bursts year-on-year;
o 50% reduction in customer interruptions to supply;
o Leakage level remains below target and one of the lowest in the sector;
o Cleaned one seventh of our network in the year, more than doubling to 290km - a key contributor to the significant reduction in discoloured water customer contacts.
-- Well placed to deliver the AMP6 investment plan
o Long-term funding secured to support this investment programme (GBP30m revolving credit facility with a 5 year term to 2020) at a lower cost and with a 2 year option to extend to 2022;
o Delivery of the key project for this AMP, the replacement of the Legacy treatment works, is progressing and capital investment is forecast to increase in the year ended 31 March 2017 as work on this project continues.
-- Dividend consistent with the prior year and previously announced policy:
o Final dividend 42.0p per share, giving a total dividend of 62.5p per share, consistent with the prior year and the base dividend in our AMP6 dividend policy.
Comment from Ian Plenderleith, Chief Executive, Dee Valley Group Plc
It has been a very positive start to this regulatory period for Dee Valley Water. In 2015/16 we have continued to focus on the customer and customer service, and thanks to the efforts and hard work of all my colleagues across Dee Valley Water we have made huge progress.
Our bills remain the fourth lowest in the sector and our investments into new customer systems have reaped benefits, with a strong improvement in our ranking on the Ofwat qualitative SIM measure and customer complaints down 13% year-on-year.
In previous years, customer satisfaction with water quality had been a particular challenge for us, however I am pleased to report that we have risen to this challenge with customer contacts for discoloured water reducing by 27% year-on-year. We are now well on track to outperform the target set for us by our regulators and meet the standards expected by our customers.
In 2015/16 we reviewed and improved our investment programme to drive further benefits for our customers and shareholders, and will continue to challenge ourselves to look for more efficient and effective ways to deliver a high quality service to our customers.
We have made significant progress during the first year of this AMP period with the foundations now in place to enable us to continue to improve and achieve the outcomes that our customers want over the next five years and beyond.
Summary Income Statement
2016 2015 GBP'000 GBP000 Revenue 23,149 24,599 ----------------------------------------- ---------- --------- Profit from operations 6,574 7,453 ----------------------------------------- ---------- --------- Profit before tax 4,244 4,458 ----------------------------------------- ---------- --------- Profit after tax 4,655 3,490 ----------------------------------------- ---------- --------- Basic and diluted earnings per ordinary share 100.5p 75.3p ----------------------------------------- ---------- --------- Total dividend per ordinary share 62.5p 62.5p ----------------------------------------- ---------- ---------
10 June 2016
Enquiries
Dee Valley Group Plc
Ian Plenderleith Tel: 01978 846946
Chief Executive
Investec Bank Plc
Jeremy Ellis / Josh Levy Tel: 020 7597 4000
Chief Executive's Review
I have completed my first full year in Dee Valley Water and it has been a pleasure to work alongside our people and external stakeholders to bring significant improvements in service and operating performance for our customers.
We achieved a positive performance in the past year and can look forward to the next four years, and beyond, secure in the knowledge that we are laying strong foundations for long-term success.
When I joined Dee Valley Water in August 2014 it was clear we had high-quality people with extensive local knowledge. It was also clear that this local knowledge should be used to drive improvements in customer service and operating performance.
This coincided with the change in regulatory focus by Ofwat from capital expenditure (capex) based solutions to total expenditure (totex) and customer outcomes, which gave smaller companies such as ours the opportunity to be more flexible and agile in our means of delivering performance improvements. To fully take advantage of this regulatory shift we needed to create a culture that is forward looking with local customers at its heart. Achieving this would position us to deliver long-term value for our shareholders and external stakeholders.
The changes we have made during the past twelve months have laid the foundations. We have harnessed the knowledge and skills of our people and teams to develop a shared companywide vision. We have simplified and modernised our working practices to ensure our managers can easily access the best operational and customer information; we have made structural changes to ensure we are organised in a way that delivers a great service on behalf of our customers.
Everyone at Dee Valley Water now understands fully - and is completely aligned with - our vision to be the leading water service provider with our local customers at heart.
Ofwat KPI Performance
The key performance indicators set by Ofwat for the Group are summarised in two high-level areas which provide a broad overview of performance.
2015/16 2015/16 Measurement -------------------- ------------ -------- ----------------- Performance Target -------------------- ------------ -------- ----------------- Customer Experience --------------------------------------------------------------- Service Incentive Mechanism Score out (SIM) 83.5 80 of 100 -------------------- ------------ -------- ----------------- Hours lost per property Water supply for three Interruptions 0.087 0.2 hours or longer -------------------- ------------ -------- ----------------- Complaints Discoloured per 1,000 water contacts 1.32* 2.8 population -------------------- ------------ -------- ----------------- Number of bursts 169 247 Mains bursts -------------------- ------------ -------- ----------------- Non-household Service Incentive Score out Mechanism 82.0 80 of 100 -------------------- ------------ -------- ----------------- Reliability and stability --------------------------------------------------------------- Litres per property per Leakage 78.6 90.8 day -------------------- ------------ -------- ----------------- Security of supply index 100% 100% Index score -------------------- ------------ -------- ----------------- Per capita 128** 131.44 Litres per consumption person per and water day efficiency -------------------- ------------ -------- ----------------- Mean zonal compliance percentage 99.95%* 99.95%
-------------------- ------------ -------- -----------------
(*) Calendar year measure
(**) The current year key performance indicators have yet to be audited.
Financial Review
Overview
Following the agreement of a five year, GBP30 million revolving credit facility in May 2015, the Group is well placed to deliver the investment plan agreed with Ofwat for the period to 2020. The facility provides cost effective funding to support the delivery of the largest capital investment plan in the Group's history.
Whilst capital delivery in the year ended 31 March 2016 was focused on preparation for the decommissioning of the Legacy treatment site, which has now commenced, and other key projects for AMP6, capital expenditure of GBP6.2 million was incurred in relation to the mains renewal programme and projects including investment at Oerog Springs.
The Group's financial performance was impacted by the PR14 final determination, which imposed a reduction in prices and therefore contributed to the downturn in revenue in the current year. However, this was mitigated by a reduction in operating expenses and financing costs.
Strong progress has been made against the Group's operational key performance indicators this year and this, alongside the financial certainty provided by the agreement of financing at favourable interest rates, ensures that the Group can progress confidently into the second year of AMP6. Capital investment in the year ended 31 March 2017 is forecast to exceed GBP10 million as work on the Legacy alternative scheme progresses.
Financial Results
Profit from Operations
Profit from operations for the year ended 31 March 2016 was GBP6.6 million (2015: GBP7.5 million), with the impact of a reduction in revenue (GBP1.5 million) partially offset by a GBP0.7 million reduction in operating expenses.
Revenue for the year (GBP23.1 million; 2015: GBP24.6 million) was impacted by a 4% reduction in prices in this first year of AMP6, effective from 1 April 2015, and a reduction in consumption amongst certain large, non-household customers.
The reduction in operating expenses in comparison to the prior year was influenced by a reduction in the bad debt charge and an increase in the capitalisation of labour costs.
A review of the doubtful debt provisioning estimate in the prior year lead to a one-off increase in the provision to ensure that it covered all debts that were greater than two years old and to specifically provide for customers' debts based on historic default and non-payment. A consistent provisioning methodology has been applied in the current year, with the bad debt charge falling by GBP0.3 million year-on-year to a total of GBP0.5 million.
In the year ended 31 March 2016, the capitalisation of labour costs has increased due to the additional headcount required and recruited to enable the Group to deliver its largest ever capital investment programme.
The operating cost benefit arising from the above factors has been partially offset by investment to enhance the Group's Customer Service function. This investment will ensure that the Group continues to offer sector leading customer service, supported by an improved website and enhanced online payment options.
Taxation
A taxation credit of GBP0.4 million has arisen in the year (2015: GBP1.0 million charge), the variance primarily relating to a deferred tax credit which results from a reduction in the UK corporation rate from 20% to 19% (effective from 1 April 2017) and subsequently to 18% (effective from 1 April 2020).
Both of these amendments were substantively enacted on 18 November 2015 and the full impact of the reduction has been applied in calculating the tax position. The deferred tax liability at 31 March 2016 has been calculated based on the rate of 18% (2015: 20%).
Profit after Taxation
Profit after taxation of GBP4.7 million is GBP1.2 million higher than the prior year (2015: GBP3.5 million).
Whilst profit from operations fell by GBP0.9 million, this was offset by a reduction in the non-cash loan indexation charge, linked to the lower rate of RPI inflation during the year (GBP0.7 million), and the deferred tax credit referred to above (GBP1.3 million).
Earnings per share for the year (100.5p) is consequently higher than the prior year equivalent (75.3p). However, after adjustment for the deferred tax credit, adjusted earnings per share is broadly consistent with the prior year at 73.5p.
Final Dividend
In the prior year the Group announced that the dividend policy for the period from 2015-2020 would be to maintain an annual dividend base of 62.5 pence per ordinary share, adjusted where appropriate for a share of any financial performance, whether from revenue or cost efficiency. The latter adjustment was to be assessed by the Board on an annual basis.
The Board has considered financial performance during the year ended 31 March 2016 and, following this assessment, has proposed a final dividend of 42.0 pence per ordinary share for the year ended 31 March 2016. Operating profit has been adversely impacted by the decline in revenue this year and cost efficiencies have yet to be embedded, with management focusing on investment in key functions such as Customer Services this year.
Together with the interim dividend of 20.5 pence per ordinary share, the total dividend for the year will therefore be consistent with the base position of 62.5 pence per ordinary share.
The final dividend is expected to be paid on 1 August 2016 to shareholders on the register at the close of business on 1 July 2016.
Balance Sheet
Group net assets increased by GBP2.9 million (9.8%) to GBP32.3 million during the year. The increase was due to the retained profit for the year of GBP4.7 million less dividends paid of GBP2.9 million, plus an actuarial gain, net of deferred taxation, on the defined benefit pension scheme of GBP1.1 million.
The net book value of Property, Plant and Equipment increased by GBP1.4 million to GBP97.5 million, with capital expenditure of GBP6.2 million offset by the depreciation charge for the period (GBP4.8 million). Contributions received in the year of GBP1.1 million (2015: GBP1.2 million) are recorded as deferred income and credited to the Income Statement over the life of the relevant asset. Whilst preparation for the commencement of the Legacy alternative project has continued, current year capex has focused on other projects including investment at Oerog Springs, Boughton WTP and the mains renewal programme.
The Directors continue to believe that asset lives applied in the carrying value of long life assets are appropriate and similar to those adopted by comparator companies.
A valuation of the Group's defined benefit surplus as at 31 March 2016 was performed by the Group's actuarial advisors in accordance with IAS 19 Employee Benefits. The assumptions underlying the calculation of liabilities of the defined benefit scheme represent the current central estimates recommended by the actuaries. The defined benefit surplus increased to GBP9.7 million (2015: GBP7.9 million), influenced by a reduction in the value of the scheme's obligations as a result of an increase in corporate bond yields and the impact of lower price inflation.
Liquidity and Financing
Short-term liquidity requirements are met from the Group's normal operating cash flow and short-term bank borrowings. The objective is to ensure continuity of funding whilst also arranging funding in advance of being required to ensure that sufficient undrawn committed bank facilities are maintained.
During the year the Group refinanced the previous GBP9.0 million revolving credit facility, which had been committed until 31 March 2016. In order to secure future financing for the Group and to support the AMP6 investment plan, the Group entered into a five-year GBP30.0 million facility on 15 May 2015. This facility ensures committed funding for the Group through to 2020, with an option for a two year extension if required, providing flexible and cost effective financing. At 31 March 2016 this facility was undrawn (2015: GBP6.0 million drawn on the previous facility). The interest rate is fixed at the date of each drawdown.
Whilst the majority of the Group's borrowings are at a fixed rate, the Group holds a significant RPI linked long-term borrowing and is therefore exposed to movements in this index. The original loan of GBP35 million was drawn in 2002 and has a 30 year term. At 31 March 2016 the total outstanding liability had increased, with indexation, to GBP52.2 million (2015: GBP51.7 million).
Cash Flow
Net cash flow from operating activities was GBP12.0 million, GBP1.0 million lower than the prior year (GBP13.0 million), primarily due to the reduction in operating profit.
Drawings on the revolving credit facility reduced by GBP6.0 million year-on-year and re-financing fees totalled GBP0.3 million. These items, offset by a reduction in capital expenditure (down GBP1.1 million to GBP5.6 million) resulted in a GBP6.3 million fall in net cash in comparison to the prior year.
Capital Structure
The Group's current capital structure was established in 2002 following a Scheme of Arrangement and return of funds to shareholders. In view of the stable and predictable nature of the Group's cash flows, the Board considers that gearing at the current level is both appropriate and financially efficient.
Board Membership
The Group's Finance Director, Andrew Bickerton, resigned from the Board on 25 April 2016. The Board is progressing the recruitment of a successor and, during this interim period, have appointed an interim non-Board Finance Director until a successor is in post.
Principal Risks and Uncertainties
All of the company's risks are identified and managed through a continuous corporate risk management process. Risks are recorded on a risk register which details the nature of the risk, an assessment of the probability of it materialising and the potential impact using standardised procedures. Mitigation is assessed as part of this process.
The Executive Directors keep the risk register under continuous review and this register is also reviewed by the Audit Committee on an annual basis as part of a wider review of the effectiveness of the Group's system of internal control. The Board also monitors key risk and performance indicators at each Board meeting.
Risks are considered across the various areas of the Group's activities and includes areas such as:
-- Health and safety; -- Environmental; -- Operational; -- Reputational; -- Business and financial; and -- Regulatory and statutory
Where appropriate, the table below contains a summary of the principal risks and uncertainties of the Group:
Risk What Does It Mitigation Mean ------------------------ --------------------------- ----------------------------------- Regulation and compliance ------------------------------------------------------------------------------------------ Ongoing Our operational We have developed strong regulatory environment is relationships within reform and highly regulated. the Welsh Government the potential Our policies and take part in relevant increase and procedures consultations - particularly in policy ensure compliance those which may impact divergence with the regulatory policy and Regulation. between framework. But We maintain close links the English market reform with the supply area's and Welsh and the potential Members of Parliament governments for differences and Assembly Members in policy between and the business community. the two governments All are aware of Dee creates risks. Valley's unique position Regulatory changes as a cross-border water may increase only supplier. costs of administration, We are active within reduce income our trade body and and margin and other forums and contribute lead to greater to the debate about variability of our industry's future. returns. We liaise and engage with Government, our regulators and other stakeholders to ensure we understand and can contribute to the future direction of policy. ------------------------ --------------------------- ----------------------------------- Implementation As our water As a Welsh company of the recommendations supply area is we are committed to outlined mainly in Wales, working proactively by the Silk we are currently with the Welsh Government Commission Governed by Welsh to develop its water with respect Government policy strategy for its people. to alignment across our entire We participate actively of political water supply in the Wales Water and regulatory area, some of Forum and have opened boundaries which is in England. dialogue with local The Silk Commission and national Welsh recommended an Assembly Members to alignment of develop this discussion political and to benefit customers. regulatory boundaries, We believe that changes creating a risk in regulatory practice that we could should bring proven be forced to benefits to customers adopt Welsh Government and the wider environment. policy for our We are engaging with Welsh customers the Welsh Government, and English Government Natural Resources Wales, policy for our the Drinking Water English customers Inspectorate, the Environment if these recommendations Agency and Ofwat to are adopted. ensure that the focus This would effectively remains on benefit split the business. to customers as they The cost of compliance consider possible implementation. with two policy regimes could be significant, increasing customer bills and leading to a customer loss of confidence and reputational damage. ------------------------ --------------------------- ----------------------------------- Failure Ofwat has set Our review of processes, to meet the company some systems and equipment regulatory challenging operational is ongoing and investments performance performance targets are being made to deliver targets for PR14. significant improvements Delivery of the in the quality of product Legacy alternative and service. scheme within We have a series of the permitted internal measures that timeframe is enable us to proactively a significant monitor performance example of this. and take prompt corrective Failure to complete action when and where the scheme in necessary. the agreed timeframe would lead to potentially significant financial penalties and a loss of credibility with key regulators. ------------------------ --------------------------- ----------------------------------- Customer Service ------------------------------------------------------------------------------------------ Failure Ofwat's regulatory We have re-shaped our to meet processes place customer service to the customer customers at ensure the customer service the heart of is at our heart. We standards the business. have also invested expected Failure to meet in training and new by our customers these higher technology to enable standards will us to better understand lead to customer the needs of our customers dissatisfaction and to overhaul all and SIM penalties of our customer facing imposed by Ofwat, services. all of which Our performance - as will damage the measured by Ofwat's company's reputation. SIM and independent surveys - has improved significantly in the year. We are committed to continuing this and achieving upper quartile performance in this AMP period. ------------------------ --------------------------- ----------------------------------- Operational ------------------------------------------------------------------------------------------ Failure Failure of certain Assets are managed to maintain important assets through condition monitoring a constant could cause widespread and maintenance. When supply of loss of supply appropriate, risk-based
water to to customers asset investment planning part of with the risk identifies assets for the supply of regulatory replacement, which area sanction, loss is a continuing process. of reputation Planning is progressing and higher operating for a flood protection costs. scheme for a vulnerable Failure of assets river intake. could be through Contingency plans provide structural or for major failures. equipment failure These include bringing or extreme events, in water from other particularly parts of the supply flooding. There area; providing emergency is no operational supplies and mutual back-up for some aid agreements with assets. other water companies. ------------------------ --------------------------- ----------------------------------- Recurrent Water quality The Drinking Water discoloured failures caused Safety Plan addresses water incidents by an historical the management of risks resulting issue could result throughout the supply in a failure in regulatory system from catchment to comply sanctions, adversely to customer. with the affect our reputation This ensures there wholesomeness and cause an are adequate mitigations of water increase in our in place for all risks, requirement costs. including discolouration in the Drinking in the form of operational Water Standards procedures, processes, maintenance, monitoring and appropriately trained staff. Risk-based investment planning plays an important part by ensuring equipment performs effectively and emerging risks are addressed. There is a strategy in place to deal with the discoloured water problem specifically, with improvements seen in the current year and the decommissioning of the Legacy site due to be delivered by December 2017. ------------------------ --------------------------- ----------------------------------- Business Loss or corruption The cyber threat is interruption of computer systems constantly evolving and/or data or data is a - as are our efforts loss resulting real and growing to counter it. As a from cyber threat and potentially, vital utility we take threats could have far the threat very seriously reaching effects, and receive support particularly and guidance at Government within our administrative level and from other and equipment support structures. operations. Our review of our existing systems and controls is underway and our people are being trained to be more security aware. As a precaution, we have robust incident response, business continuity and disaster recovery procedures in place and regularly test our ability to recover from systems failure. We also maintain insurance cover for loss and liability. ------------------------ --------------------------- ----------------------------------- Health & Safety ------------------------------------------------------------------------------------------ The nature Our work requires We continually review of the activities our employees our H&S strategies we undertake and contractors and working practices creates to use equipment to look for improvements. a potential and carry out Our assets are subject to cause tasks which have to regular monitoring harm to the potential and maintenance though our employees, to cause serious proactive and reactive contractors harm. In addition, programmes of work. and the we undertake Our reservoirs are general a lot of work independently inspected public in dynamic public and then maintained places such as by our staff to ensure busy streets. that they remain safe. We take every We recognise that the precaution to key to a safer organisation prevent injury, is the behaviour of however the failure staff. As such, we of a procedure encourage near miss or the breakdown reporting across the of an asset could organisation as we lead to injury. believe this ensures we review incidents to address the root causes of incidents. We have commenced the development of a new management system that will improve behavioural safety across all business areas, and we have reviewed and improved our risk management system, including a new reporting system. Senior leaders drive this new system and carry out a number of audits on key risk areas each year. ------------------------ --------------------------- ----------------------------------- Financial ------------------------------------------------------------------------------------------ There is In line with An annual review of a risk that, the licence arrangements bad and doubtful debt due to the for other UK provisioning is conducted economic regulated water by the Board and an environment companies, the assessment of appropriateness
and the Group is obliged of the current provisioning demographic to supply water is made. Following of the Group's to customers a review, the bad debt customer regardless of provision was increased base, customers their credit last year to provide will not worthiness which fully for all debts pay debts could result in excess of two years as they in a bad debt old and to provide fall due recovery risk. for customers' debts Non-recovery based on historic non-payment. of bad and doubtful Furthermore the Group debts or an inappropriate operates extensive provisioning debt management and policy will result payment plans for customers in reduced operating to allow for greater cash flow and recovery. income statement volatility. ------------------------ --------------------------- ----------------------------------- There is The pension scheme The annual business a risk that is in deficit planning process provides the costs on a funding a platform for the associated basis, with a Board to review financeability with managing repair plan of and affordability. the Defined 7 years at 31 Pension strategy and Benefit March 2014. evaluation remains Pension The pension scheme a key focus area for Scheme affect is also subject the Board. the Group's to a triennial operating valuation which, cash flow depending on economic conditions, can result in increased funding costs. Deficit repair costs are forecast to be GBP0.5m per annum for AMP6 and ongoing contributions are around GBP0.6m. Ofwat has allowed in the FD an annual contribution of GBP0.2m for deficit repair but only until 31 March 2020 when this allowance will cease. Such significant values, plus potential future volatility, means that the pension scheme poses significant risk to operational cash flows. ------------------------ --------------------------- -----------------------------------
Group Income Statement
for the year ended 31 March 2016
2016 2015 Notes GBP000 GBP000 ---------------------------- ------ --------- --------- Revenue 23,149 24,599 Other operating income 2,300 2,459 Other operating expenses (net) (18,875) (19,605) ---------------------------- ------ --------- --------- Profit from operations 6,574 7,453 ---------------------------- ------ --------- --------- Finance income 4 275 269 Finance expenses 4 (2,605) (3,264) ---------------------------- ------ --------- --------- Profit before tax 4,244 4,458 Taxation 5 411 (968) Profit for the year 4,655 3,490 ---------------------------- ------ --------- --------- Basic and diluted earnings per ordinary share 6 100.5p 75.3p ---------------------------- ------ --------- ---------
All results arise from continuing operations.
Group Statement of Comprehensive Income
for the year ended 31 March 2016
2016 2015 Notes GBP000 GBP000 --------------------------------------- ------ -------- -------- Profit for the year 4,655 3,490 --------------------------------------- ------ -------- -------- Items that will not be reclassified to profit or loss Actuarial gain on defined benefit pension scheme 10 1,264 1,698 Deferred tax charge on actuarial gain (228) (340) Effect of change in corporation tax rate on accumulated actuarial gains 75 - --------------------------------------- ------ -------- -------- Other comprehensive income for the year 1,111 1,358 --------------------------------------- ------ -------- -------- Total comprehensive income for the year net of tax 5,766 4,848 --------------------------------------- ------ -------- --------
Group Balance Sheet
as at 31 March 2016
2016 2015 Notes GBP000 GBP000 -------------------------------- ------ --------- --------- Assets Non-current assets Goodwill 5,381 5,381 Property, plant and equipment 97,521 96,131 Retirement benefit surplus 10 9,689 7,866 Investments 2 2 ---------------------------------- ------ --------- --------- 112,593 109,380 Current assets Inventories - raw materials and consumables 373 341 Trade receivables 3,477 3,461 Other receivables 2,053 1,953 Cash and cash equivalents 8 3,099 8,737 ---------------------------------- ------ --------- --------- 9,002 14,492 -------------------------------- ------ --------- --------- Total assets 121,595 123,872 ---------------------------------- ------ --------- --------- Liabilities Current liabilities Interest-bearing loans and borrowings 9 1,263 7,391 Trade and other payables 12,403 11,924 Current income tax liabilities 164 347 ---------------------------------- ------ --------- --------- 13,830 19,662 -------------------------------- ------ --------- --------- Non-current liabilities Interest-bearing loans and borrowings 9 52,297 51,772 Deferred income 9,880 8,980 Deferred tax 13,330 14,071 ---------------------------------- ------ --------- --------- 75,507 74,823 -------------------------------- ------ --------- --------- Total liabilities 89,337 94,485 ---------------------------------- ------ --------- --------- Net assets 32,258 29,387 ---------------------------------- ------ --------- --------- Issued share capital 232 232 Other reserves 6,329 6,201 Retained earnings 25,697 22,954 ---------------------------------- ------ --------- --------- Total equity 32,258 29,387 ---------------------------------- ------ --------- ---------
Group Statement of Changes in Equity
Capital Fair Share redemption Other value Retained capital reserve reserves reserve earnings Total equity Notes GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 ------------------------ ------ --------- ------------ ---------- --------- ---------- ------------- Balance at 1 April 2014 232 30,541 (32,316) 7,943 21,034 27,434 Profit - - - - 3,490 3,490 Actuarial gain (net of deferred tax) on defined benefit pension scheme - - - - 1,358 1,358 ------------------------ ------ --------- ------------ ---------- --------- ---------- ------------- Total comprehensive income for
the year - - - - 4,848 4,848 ------------------------ ------ --------- ------------ ---------- --------- ---------- ------------- Repayment of B shares 9 - 33 - - (33) - Dividends 7 - - - - (2,895) (2,895) ------------------------ ------ --------- ------------ ---------- --------- ---------- ------------- Total contributions by, and distributions to, owners of the Company - 33 - - (2,928) (2,895) ------------------------ ------ --------- ------------ ---------- --------- ---------- ------------- Balance at 1 April 2015 232 30,574 (32,316) 7,943 22,954 29,387 ------------------------ ------ --------- ------------ ---------- --------- ---------- ------------- Profit - - - - 4,655 4,655 Actuarial gain (net of deferred tax) on defined benefit pension scheme - - - - 1,036 1,036 Effect of change in corporation tax rate on accumulated actuarial gains - - - - 75 75 ------------------------ ------ --------- ------------ ---------- --------- ---------- ------------- Total comprehensive income for the year - - - - 5,766 5,766 ------------------------ ------ --------- ------------ ---------- --------- ---------- ------------- Repayment of B shares 9 - 128 - - (128) - Dividends 7 - - - - (2,895) (2,895) ------------------------ ------ --------- ------------ ---------- --------- ---------- ------------- Total contributions by, and distributions to, owners of the Company - 128 - - (3,023) (2,895) Balance at 31 March 2016 232 30,702 (32,316) 7,943 25,697 32,258 ------------------------ ------ --------- ------------ ---------- --------- ---------- -------------
Group Cash Flow Statement
for the year ended 31 March 2016
2016 2015 Notes GBP000 GBP000 ------------------------------- ------ --------- --------- Cash flows from operating activities Profit before tax 4,244 4,458 Adjustments for: Depreciation 4,790 4,505 (Profit)/ loss on disposal of assets (1) 154 Net finance costs 4 2,330 2,995 --------------------------------- ------ --------- --------- 11,363 12,112 ------------------------------- ------ --------- --------- (Increase)/ decrease in inventories (32) 14 Decrease/ (increase) in trade and other receivables 175 (413) Increase in trade and other payables 798 1,675 Increase in retirement benefit surplus (292) (354) --------------------------------- ------ --------- --------- Cash generated from operating activities 12,012 13,034 --------------------------------- ------ --------- --------- Interest paid 4 (2,022) (1,992) Tax paid (666) (726) --------------------------------- ------ --------- --------- Net cash from operating activities 9,324 10,316 --------------------------------- ------ --------- --------- Cash flows from investing activities Purchase of property, plant and equipment (5,626) (6,725) Proceeds from sale of plant and equipment 1 54 Interest received 4 8 9 --------------------------------- ------ --------- --------- Net cash used in investing activities (5,617) (6,662) --------------------------------- ------ --------- --------- Cash flows from financing activities Repayment of B shares (101) (33) Equity dividends paid 7 (2,895) (2,895) Repayment of short-term borrowings 9 (6,000) - Re-financing costs (349) - ------------------------------- ------ --------- --------- Net cash used in financing activities (9,345) (2,928) --------------------------------- ------ --------- --------- Net (decrease)/ increase in cash and cash equivalents (5,638) 726 Cash and cash equivalents at beginning of year 8 8,737 8,011 --------------------------------- ------ --------- --------- Cash and cash equivalents at end of year 8 3,099 8,737 --------------------------------- ------ --------- ---------
Notes
1 The Board of Directors approved this annual results announcement on 9 June 2016. 2 Basis of Preparation
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amount of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing this annual results announcement, the significant judgements made by management in applying the Group's accounting policies and key sources of estimation uncertainty were the same as those applied to the consolidated financial statements for the year ended 31 March 2015.
Contents of this Report
The financial information set out above does not constitute the Group's statutory accounts for the year ended 31 March 2016 or 31 March 2015 but is derived from those statutory accounts.
Statutory accounts for the year ended 31 March 2015 have been delivered to the Registrar of Companies. The auditor, Deloitte LLP, has reported on the 2015 statutory accounts; the report was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.
The statutory accounts for the year ended 31 March 2016 will be delivered to the Registrar of Companies following the Annual General Meeting. The auditor, Deloitte LLP, have reported on these statutory accounts; the report was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.
The Annual Report and Financial Statements for the year ended 31 March 2016 will be posted out to shareholders on 16 June 2016. The Annual Report and Financial Statements will be available on the Group's website at www.deevalleygroup.co.uk on 16 June 2016.
While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs. The Group will publish full financial statements that comply with IFRSs on the dates listed above.
Going Concern
The Financial Statements have been prepared on the going concern basis. The Group has considerable financial resources together with a customer monopoly in its area of supply. Consequently, the Directors believe that the Group is well placed to manage its business risks successfully over the forthcoming twelve months.
During the year the Group refinanced the previous GBP9.0m revolving credit facility, which had been committed until 31 March 2016. In order to secure future financing for the Group and to support the AMP6 investment plan, the Group entered into a five-year GBP30.0 million facility on 15 May 2015. This facility ensures committed funding for the Group through to 2020, with an option for a two year extension if required, providing flexible and cost effective financing.
At 31 March 2016 this facility was undrawn (2015: GBP6.0 million undrawn on previous facility).
The Directors therefore have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and consider that the going concern basis continues to be appropriate in preparing the Financial Statements.
3 Change in Accounting Policy
In the current financial year, no new accounting policies which have been adopted have had a material impact on the financial statements.
At the date of authorisation of these financial statements, the Group has not applied the following new and revised IFRSs that have been issued but are not yet effective and in some cases had not yet been adopted by the EU:
-- IFRS 9 Financial Instruments -- IFRS 15 Revenue from Contracts with Customers -- IFRS 16 Leases -- IAS 1 (amendments) Disclosure Initiative
-- IAS 16 and IAS 38 (amendments) Clarification of Acceptable Methods of Depreciation and Amortisation
-- Annual Improvements to IFRSs: Amendments to IFRS 5 Non-current Assets Held for Sale and Discontinued
-- 2012-2014 Cycle Operations, IFRS 7 Financial Instruments: Disclosures, IAS 19 Employee Benefits and IAS 34 Interim Financial Reporting
The directors do not expect that the adoption of the Standards listed above will have a material impact on the financial statements of the Group in future periods with the exception of IFRS 9. However, it is not practicable to provide a reasonable estimate of the effect of IFRS 9, IFRS 15 and IFRS 16 until a detailed review has been completed.
4 Finance Income and Finance Expenses 2016 2015 GBP000 GBP000 ------------------------------------ -------- -------- Finance income: Demand deposits 8 9 Net expected return on pension scheme assets 267 260 ------------------------------------- -------- -------- 275 269 ------------------------------------ -------- -------- Finance expenses: Loan interest 1,972 1,938 Loan indexation 525 1,272 Fixed dividend on B shares 50 54 Amortisation of deferred financing costs 58 - ------------------------------------ -------- -------- 2,605 3,264 ------------------------------------ -------- -------- 5 Taxation 2016 2015 GBP000 GBP000 ----------------------------------- -------- -------- (a) Analysis of (credit)/charge in the year Current year tax Current tax expense - continuing operations 570 716 Adjustment in respect of prior years (87) (41) ------------------------------------ -------- -------- Current tax charge 483 675 ------------------------------------ -------- -------- Deferred tax Accelerated capital allowances: Current year 212 130 Prior years 126 40 Effect of substantive enactment of change in rate of corporation tax (1,250) - ----------------------------------- -------- -------- (912) 170 ----------------------------------- -------- -------- Retirement benefits: Current year 101 123 Effect of substantive enactment of change in rate of corporation tax (83) - ----------------------------------- -------- -------- 18 123 ----------------------------------- -------- -------- Deferred tax (credit)/charge (894) 293 ------------------------------------ -------- -------- Total tax (credit)/charge (411) 968 ------------------------------------ -------- --------
A reduction in the UK corporation tax rate from 20% to 19% (effective from 1 April 2017) and subsequently to 18% (effective from 1 April 2020) was announced in the July 2015 budget and substantively enacted on 18 November 2015. The full impact of this change has been reflected in the deferred tax charge for the period ended 31 March 2016. The deferred tax liability at 31 March 2016 has been calculated based on the rate of 18% substantively enacted at the balance sheet date (2015: 20%).
6 Earnings per Ordinary Share
Basic and diluted earnings per ordinary share (EPS) have been calculated on the basis of the weighted average number of ordinary shares in issue during the year of 4,632,170 (2015: 4,632,170).
The net profit for the year used in the calculation of EPS was as follows:
2016 2015 GBP000 GBP000 ------------------------ -------- -------- Continuing operations 4,655 3,490 ------------------------ -------- -------- 7 Dividends
The following dividends were paid by the Group during the financial year:
2016 2015 Pence 2016 Pence 2015 per share GBP000 per share GBP000 ------------------------------- ----------- -------- ----------- -------- Ordinary shares Previous year final dividend 42.0 1,739 42.0 1,739 Current year interim dividend 20.5 848 20.5 848 Non-voting ordinary shares Previous year final dividend 42.0 207 42.0 207 Current year interim dividend 20.5 101 20.5 101 ------------------------------- ----------- -------- ----------- -------- 2,895 2,895 ------------------------------- ----------- -------- ----------- --------
The final dividend for the year ended 31 March 2016 of GBP1,946,000 (equivalent to 42.0 pence per share) will be proposed for approval at the Annual General Meeting on 21 July 2016 and has not been provided for as a liability at 31 March 2016.
8 Cash and Cash Equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprised the following at 31 March:
2016 2015 Current GBP000 GBP000 --------------------- --------- --------- Cash at bank and in hand 195 128 Demand deposits 2,904 8,609 3,099 8,737 --------------------- --------- --------- 9 Interest-bearing Loans and Borrowings 2016 2015 Current GBP000 GBP000 ------------------ --------- --------- B shares 1,263 1,391 Short term loans - 6,000 1,263 7,391 ------------------ --------- --------- Maturity 2016 2015 Non-Current date GBP000 GBP000 -------------------------------- ---------- --------- -------- 3.5% Irredeemable Consolidated Debenture Stock 99 99 3.635% Secured Index-Linked Loan: Principal 2032 35,000 35,000 Indexation 2032 17,198 16,673 --------------------------------- --------- --------- -------- 52,297 51,772 ------------------------------------------- --------- --------
During the year, the Company redeemed 55,625 (2015: 14,179) B shares, representing 0.40% (2015: 0.10%) of the original issued capital. The nominal value and consideration amounted to GBP127,938 (2015: GBP32,612).
10 Pension Schemes
The Group offers stakeholder pension schemes. For the year ended 31 March 2016 employer contributions to such schemes amounted to GBP217,000 (2015: GBP194,000).
The Group's trading company, Dee Valley Water plc (DVW), participates in a defined benefit pension scheme, the Water Companies Pension Scheme, for qualifying employees. This is a sectionalised scheme and DVW participates in the Dee Valley Water plc Section of the Scheme. Under the scheme, each member's pension at retirement is related to their pensionable service and their pensionable salary history.
The Section funds are administered by trustees and are independent of DVW's finances. Contributions are paid to the Section in accordance with the recommendations of an independent actuarial adviser. The Section is closed to new entrants.
The weighted average duration of the expected benefit payments from the Section is around 17 years.
The funding target is for the Section to hold assets equal to the value of the accrued benefits allowing for future increases in those benefits. If there is a shortfall against this target, DVW and trustees will agree on deficit contributions to meet this deficit over a period. There is a risk that adverse experience could lead to a requirement for DVW to make additional contributions to recover any deficit that arises.
Contributions are based on funding valuations typically carried out every three years; the next formal actuarial valuation is due to be carried out at 31 March 2017. Over the year to 31 March 2016, employer contributions of GBP848,000 (2015: GBP884,000) were paid to the Section. The estimated amount of total employer contributions expected to be paid to the Section during the year ended 31 March 2017 is GBP850,000.
The results of the latest formal actuarial valuation as at 31 March 2014 were updated to the accounting date by an independent qualified actuary in accordance with IAS 19.
Remeasurements are recognised immediately through other comprehensive income.
The amounts included in the balance sheet arising from obligations in respect of the Section were as follows:
2016 2015 2014 GBP000 GBP000 GBP000 ------------------------------ --------- --------- --------- Fair value of Section assets 60,168 61,241 52,585 Present value of defined benefit obligation (50,479) (53,375) (47,031) Net asset recognised in the balance sheet 9,689 7,866 5,554 ------------------------------ --------- --------- ---------
The Group has concluded that it can recognise the full amount of this surplus on the grounds that it could gain sufficient economic benefit from the refund of the surplus assets that would be available to it following the final payment to the last beneficiary of the Section.
The amounts recognised in the Group Income Statement were as follows:
2016 2015 GBP000 GBP000 Employer's part of current service cost 433 405 Section expenses 123 125 Net interest credit (267) (260) Total profit and loss charge 289 270 ------------------------------------ -------- -------- 10 Pension Schemes (continued)
The amounts recognised immediately in other comprehensive income are as follows:
2016 2015 GBP000 GBP000 Net actuarial (gains)/losses in the year due to: * Changes in financial assumptions (2,124) 6,060 * Changes in demographic assumptions - (268) * Experience adjustments on benefit obligations (1,008) 403 Actuarial loss/(gain) on assets relative to interest on assets 1,868 (7,893) Gain to recognise in other comprehensive income (1,264) (1,698) ----------------------------------------------------------- -------- --------
The following table sets out the key IAS 19 assumptions used in the Section.
2016 2015 2014 Assumptions (per annum) GBP000 GBP000 GBP000 ----------------------------------------- -------- -------- -------- Retail Prices Index inflation 3.1% 3.2% 3.6% Consumer Prices Index inflation 2.1% 2.2% 2.6% Discount rate 3.4% 3.2% 4.3% Pension increases in payment * Uncapped CPI 2.2% 2.2% 2.6% * CPI capped at 5% per annum 2.2% 2.2% 2.6% General salary increases (capped at 2% per annum) 1.8% 1.8% 1.9% Life expectancy of a male aged 60 at the balance sheet 27.8 27.7 27.4 date years years years Life expectancy of a female aged 60 at the balance sheet 29.7 29.6 29.7 date years years years Life expectancy of a male aged 60, twenty five years 30.8 30.6 29.9 after the balance sheet date years years years Life expectancy of a female aged 60, twenty five years 32.2 32.1 31.8 after the balance sheet date years years years ----------------------------------------- -------- -------- --------
The following table illustrates the sensitivities of the defined benefit obligation to some of the significant assumptions as at 31 March 2016.
Indicative change Assumption in liabilities Key financial assumptions adopted Sensitivity % GBPm --------------------------- ------------ -------------- ----------------- ---------- Discount rate 3.4% p.a. +/- 0.5% -7%/+8% -3.7/+4.1 Consumer Prices Index (CPI) inflation 2.1% p.a. +/-0.5% +7%/-6% +3.4/-3.0 Life expectancy: Current male pensioner aged 60 in 2016 27.8 years Current female pensioner aged 60 in 2016 29.7 years Future male pensioner aged 60 in 2041 30.8 years Future female pensioner aged 60 in 2041 32.2 years Sensitivity +1 year 3% 1.5 ----------------------------------------- -------------- ----------------- ---------- 10 Pension Schemes (continued)
These sensitivities have been calculated to show the movement in the defined benefit obligation in isolation, and assuming no other changes in market conditions at the accounting dates. This is unlikely in practice - for example, a change in discount rate is unlikely to occur without any movement in the value of the assets held by the Section.
11 Related Party Transactions
During the year ended 31 March 2016, key management (i.e. Directors) received remuneration in the form of salaries, fees, benefits and pensions amounting to GBP427,000. Details in respect of Director's pension entitlements are set out in the Report of the Remuneration Committee contained in the Annual Report.
12 Responsibility Statement
The Directors confirm that to the best of their knowledge:
-- The Financial Statements, prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and
-- The management report includes a fair review of the development and performance of the business and the position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
Cautionary statement regarding forward-looking statements
This document contains statements that are, or may be deemed to be, 'forward-looking statements' with respect to the Group's financial condition, results of operations and business and certain of the Group's plans and objectives with respect to these items.
Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such words as 'anticipates', 'aims', 'due', 'could', 'may', 'will', 'would', 'should', 'expects', 'believes', 'intends', 'plans', 'projects', 'potential', 'reasonably possible', 'targets', 'goal' or 'estimates' and, in each case, their negative or other variations or comparable terminology. Any forward-looking statements in this document are based on the Group's current expectations and, by their very nature, forward-looking statements are inherently unpredictable, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future.
Forward-looking statements are not guarantees of future performance and no assurances can be given that the forward-looking statements in this document will be realised. There are a number of factors, many of which are beyond the Group's control that could cause actual results, performance and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to: the Principal Risks; changes in the economies and markets in which the group operates; changes in the regulatory and competition frameworks in which the group operates; the impact of legal or other proceedings against or which affect the group; and changes in interest and exchange rates.
All written or verbal forward-looking statements, made in this document or made subsequently, which are attributable to the Group or any other member of the group or persons acting on their behalf are expressly qualified in their entirety by the factors referred to above. Subject to compliance with applicable laws and regulations, the Group does not intend to update these forward-looking statements and does not undertake any obligation to do so.
Nothing in this document should be regarded as a profits forecast.
End
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SSSFWUFMSEFM
(END) Dow Jones Newswires
June 10, 2016 02:00 ET (06:00 GMT)
1 Year Dee Valley Grp Chart |
1 Month Dee Valley Grp Chart |
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions