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Name | Symbol | Market | Type |
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Mid Kent Wtr4% | LSE:48HO | London | Debenture |
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0.00 | 0.00% | 0 | - |
RNS Number:3035E Mid Kent Water PLC 09 June 2006 Mid Kent Water Limited Preliminary results for the year to 31 March 2006 Chairman's Statement Introduction I am pleased to present the Report and Accounts for Mid Kent Water for the year ending 31 March 2006, a year which has been dominated operationally by the drought conditions currently affecting the South East of England. The period since October 2004 has seen the lowest rainfall since 1932 with only 4 months of average or above average rainfall. This lack of rainfall severely impacted aquifer recharge through the 2004/05 winter period and meant that it was appropriate for the Company to introduce hosepipe restrictions from August 2005. A dry winter in 2005/06 further reduced aquifer and reservoir recharge. This has meant that it remained prudent to keep these restrictions in place. In addition, the Company submitted an application to the Department of the Environment, Farming and Rural Affairs for a Non Essential Use Drought Order on 20 March 2006. This application was granted by the Secretary of State on 25 May 2006. During this challenging period Mid Kent Water has focused on ensuring its customers continued to receive the excellent service they expect from the Company. In line with our Water Resource Plan, further reductions in leakage totalling 0.9 Ml/d have been achieved in the last year, and the continued timely delivery of capital schemes has ensured that Company's security of supply index score has improved as planned from 99% to 100% this year. Since November 2004, a dedicated drought team has been tasked with managing the drought and has been focused on prioritising key capital schemes to improve transfer and robustness of available supplies; refocusing operational management for sources and supply zones; and communication with customers to explain the current situation and to promote and assist the wiser use of water. Certainly communication has proven to be a key component of the Company's drought management overall, and we are in general very appreciative of the response made by our customers. I am pleased that overall levels of customer service have broadly been maintained at, and in some cases improved on, the high levels seen last year and I would like to take this opportunity to once more extend my thanks to all the Company's employees for their continuing commitment to the Company and its customers. On 28 February 2005 Utilities Trust of Australia and Hastings Diversified Utilities Fund purchased 100% of the share capital of Swan Group, Mid Kent Water's holding company. Since that time our new owners have shown themselves to be extremely supportive of the priorities for Mid Kent Water and its Board and I look forward to continuing to work with them in the continued development of the Mid Kent Water business. Results Turnover for the year was #48.1m, up by 11.1% on last year. Water income increased by 13.7% compared to last year, largely reflecting an average water service price rise of 12.45%. Non-regulated turnover was #0.4m lower than last year at #4.2m. Operating profit was #16.5m compared to #12.8m in the previous year although the prior year figure has been re-stated from the previously reported figure of #14m to reflect the impact of the new reporting standard FRS17 "Retirement Benefits". The depreciation charge increased in the year by #0.8m reflecting the Company's continued investment in its infrastructure but increases in other Operating costs were limited to a net #0.3m. Net interest payable has increased by #162,000 reflecting the increase in net debt in the business necessary to support our Capital Expenditure to enhance our infrastructure. After profit on the disposal of fixed assets of #0.2m (2005: #0.2m), profit before tax has increased to #9.1m from a restated figure of #5.2m in 2005. Chairman's Statement Dividend The Company's Dividend policy is to pay out an appropriate proportion of its profit after tax so as to provide a suitable return to its shareholders, whilst ensuring that the Company is able to continue to finance its business and meet the requirements of its license of appointment. The total dividend proposed against the profits for the year was #5.5m compared to #4.8m in 2005. With the adoption of FRS 21 "Events after the Balance Sheet Date", the accounts reflect that where past years' final dividends were declared by the Directors after the balance sheet dates, they have been accounted for in the financial years in which they were declared (see note 11). Capital Expenditure Cash payments for capital expenditure in the year were #24.0m (2005: #24.6m). Significant investment in the year was delivered in network improvements to enhance the resilience and flexibility of the Company's infrastructure and to maximize the deployable outputs of our water sources. With a potential drought looming and the forecast growth in properties and demand in the South East, Mid Kent Water's top priority has been to ensure it maximizes the water available for its customers. As such, #13m has been invested on the network, including laying 45 km of new mains to increase the water available (an increase in excess of 50% over previous years) and replacing 24 km to target leakage reduction (over twice the rate of previous years). The Company has invested #6.3m in maintaining and refurbishing its operational assets to ensure that maximum outputs are achievable, delivery is reliable and that its high level of water quality is maintained. Water Quality The quality of water we deliver to our customers' taps is of fundamental importance to the Company and I am pleased to report compliance with DWI standards at 99.96% for 2005. Non-Regulated Activity This year has seen another good performance from the Company's non-regulated commercial business with the contribution to operating profit increasing to #1.1m (2005: #1.0m). This has been achieved despite this part of the business being reorganized during the year to concentrate more acutely on utilising the core skills inherent in our staff coupled with the Mid Kent Water brand. Key revenue streams include water related consultancy services, environmental and fishery management and the provision of water operational services to the owners of private water infrastructure. Corporate Social Responsibility The community in which Mid Kent Water operates is vital to the Company and we strive to ensure that all stakeholders are consulted and involved in our plans. During the year we wrote to all domestic customers to explain how we are responding to the current drought conditions and we also visited all local councils to ensure they were fully briefed. We also support staff in a range of charitable activities and in particular in fund-raising for Water Aid. This year a staff member went with Water Aid to Burkina Faso to support the work of the charity at first hand. The Year Ahead The Board believes the Company has responded in an effective and efficient manner to the challenges posed by the current drought conditions and has ensured that customers, stakeholders and Regulators are fully briefed on the Company's plans and activities. During the year ahead we will continue to take action in line with our published Water Resource and Drought plans whilst also focusing on some of the other challenges posed by the PR04 determination. I look forward to working with the staff, my fellow Directors and our owners in ensuring that the Company efficiently continues to provide ongoing high quality customer service. Gordon Maxwell 7 June 2006 Profit and loss account Year ended 31 March 2006 Notes 2006 2005 #000 (restated) #000 2 Turnover 48,094 43,200 Operating costs (31,544) (30,424) --------- --------- Operating profit 16,550 12,776 Profit on sale of fixed assets 152 177 --------- --------- Profit on ordinary activities before interest 16,702 12,953 Interest receivable and similar income 3,777 3,383 Interest payable and similar charges (11,534) (11,372) Return on pension scheme assets 188 218 --------- --------- 3 Profit on ordinary activities before taxation 9,133 5,182 Tax (charge)/credit on profit on ordinary activities (2,179) 2,447 --------- --------- Profit on ordinary activities after taxation 6,954 7,629 --------- --------- 5 Earnings per ordinary share - basic and diluted 35.2p 40.8p --------- --------- 4 Dividends per ordinary share 35.48p 23.98p --------- --------- All turnover and operating profit is derived from continuing operations. Statement of recognised gains and losses Year ended 31 March 2006 2006 2005 #000 (restated) #000 Profit for the financial year 6,954 7,629 Pension schemes actuarial gain 2,481 2,678 --------- --------- Total recognised gains and losses relating to the year 9,435 10,307 --------- --------- Prior year adjustments: FRS 17 - Retirement Benefits (2,243) FRS 21 - Events after the Balance Sheet date 1,543 FRS 25 - Financial Instruments: Disclosure and presentation 4,507 --------- Total gains and losses recognised since last annual report 13,242 --------- Balance sheet At 31 March 2006 2006 2005 #000 (restated) #000 Fixed assets Tangible assets 198,150 184,561 --------- --------- Current assets Stocks 636 798 Debtors: amounts falling due within one year 8,870 7,704 Debtors: amounts falling due after more than one year 37,873 35,000 Investments 15,312 12,024 Cash at bank and in hand 1,229 1,136 --------- --------- Creditors: amounts falling due within one year 63,920 56,662 (22,484) (41,738) --------- --------- Net current assets 41,436 14,924 --------- --------- Total assets less current liabilities 239,586 199,485 Creditors: amounts falling due after more than one year (180,989) (142,434) Provision for liabilities and charges (11,722) (9,473) --------- --------- Net assets excluding pension asset/liability 46,875 47,578 Pension asset/(liability) 875 (2,243) --------- --------- Net assets including pension asset/liability 47,750 45,335 --------- --------- Capital and reserves Called up ordinary share capital 19,781 19,781 Share premium 5,672 5,672 Profit and loss reserve 22,297 19,882 --------- --------- Capital and reserves 47,750 45,335 --------- --------- Cash flow statement Year ended 31 March 2006 Notes 2006 2005 #000 #000 6 Net cash inflow from operating activities 24,352 22,079 7 Returns on investments and servicing of finance (6,220) (2,521) Taxation and group relief - (4,048) 7 Net capital expenditure (21,734) (22,270) Equity dividends paid (5,517) (4,507) --------- --------- Cash outflow before management of liquid resources and financing (9,119) (11,267) 7 Management of liquid resources (3,288) (1,964) 7 Financing 12,500 13,237 --------- --------- Increase in cash during the year 93 6 --------- --------- NOTES 1 Basis of preparation (i) The financial information included within this statement has been prepared on the basis of accounting policies consistent with those set out in the Report and Accounts for the year ended 31 March 2006. (ii) The information shown for the years ended 31 March 2006 and 31 March 2005 does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985 and has been extracted from the full accounts for the year ended 31 March 2006. The reports of the auditors on those accounts were unqualified and did not contain a statement under either Section 237(2) or Section 237(3) of the Companies Act 1985. The accounts for the year ended 31 March 2006 will be delivered to the Registrar of Companies in due course. (iii) The financial information included in this statement was approved by the Board on 7 June 2006. 2 Analysis of turnover 2006 2005 #000 (restated) #000 Unmeasured supplies 23,069 20,950 Measured supplies 20,858 17,691 Other activities 4,167 4,559 --------- --------- 48,094 43,200 --------- --------- 3 Corporation tax 2006 2005 #000 (restated) #000 The tax charge is made up as follows: Current tax UK Corporation tax 146 300 Tax over provided in previous years (490) (300) --------- --------- Total current tax (344) - --------- --------- Deferred tax Origination and reversal of timing differences on fixed assets 2,666 (399) Movement on pensions deferred asset 274 (2,110) Decrease/(increase) in discount (417) 62 --------- --------- Total deferred tax 2,523 (2,447) --------- --------- Total tax on profit on ordinary activities 2,179 (2,447) --------- --------- 4 Dividends A final dividend for the year ended 31 March 2005 of 7.80p per share (2005 restated: 6.83p) was paid on 23 September 2005. An interim dividend of 6.24p per share (2005: 9.65p) was also paid on 23 September 2005, a second interim dividend of 6.24p per share (2005: 7.50p) was paid on 9 December 2005 and a third interim dividend of 7.60p per share (2005: nil) was paid on 24 March 2006. A final dividend of 7.60p per share (2005 restated: nil) was paid on 8 May 2006 to shareholders on the register on 2 May 2006. This will make the total dividend for the year 35.48p per share (2005 restated: 23.98p). 5 Earnings per ordinary share - basic and diluted Earnings per ordinary share are calculated on the profit for the year of #6,954,000 (2005 restated: #7,629,000) and the weighted average number of shares in issue of 19,781,000 (2005: 18,693,000). 6 Reconciliation of operating profit to net cash inflow from operating activities 2006 2005 #000 (restated) #000 --------- --------- Operating profit 16,550 12,776 Depreciation charge 10,239 9,488 Decrease/(increase) in stocks 162 (76) Increase in debtors (1,168) (945) Decrease in creditors (708) (476) Adjustment for pension funding (723) 1,312 --------- --------- Net cash inflow from operating activities 24,352 22,079 --------- --------- 7 Analysis of cash flows for headings netted in cash flow statement 2006 2005 #000 (restated) #000 Returns on investments and servicing of finance Interest received 906 4,667 Interest paid (6,764) (7,188) Loan issue costs (362) - --------- --------- (6,220) (2,521) Net capital expenditure Purchase of tangible fixed assets (24,035) (24,568) Contributions to infrastructure assets 2,124 2,082 Sale of tangible fixed assets 177 216 --------- --------- (21,734) (22,270) --------- --------- Management of liquid resources Increase in cash deposits (3,288) (1,964) --------- --------- Financing Issue of ordinary share capital - 6,807 Loans (repaid to)/from other group undertakings - (11,070) Index linked loan 34,000 - Bank loans (21,500) 21,500 Repayment of debentures - (4,000) --------- --------- 12,500 13,237 --------- --------- 8 Analysis of net debt At Cash flow Non-cash changes At 1 April #000 #000 31 March 2005 2006 #000 #000 Cash at bank and in hand 1,136 93 - 1,229 Short term deposits 12,024 3,288 - 15,312 --------- --------- --------- --------- 13,160 3,381 - 16,541 Index linked loan (144,232) (34,000) (4,825) (183,057) Bank loans (21,500) 21,500 - - Issue costs 2,259 360 (90) 2,529 Debenture stock (461) - - (461) --------- --------- --------- --------- (150,774) (8,759) (4,915) (164,448) --------- --------- --------- --------- The above table excludes the loan to the Company's parent undertakings of #35,000,000 (2005: #35,000,000) plus capitalised interest of #2,873,000 (2005: nil). 9 Reconciliation of net cash flow to movements in net debt 2006 2005 #000 #000 --------- --------- Increase in cash in the year 93 6 Cash inflow from increase in debt financing (12,140) (6,430) Cash outflow from movement in liquid resources 3,288 1,964 --------- --------- Movement in net debt resulting from cash flows (8,759) (4,460) Loan indexation (4,825) (4,247) Amortisation of loan issue costs (90) (82) Net debt at 1 April (150,774) (141,985) --------- --------- Net debt at 31 March (164,448) (150,774) --------- --------- The above table excludes the loan to the Company's parent undertakings of #35,000,000 (2005: #35,000,000) plus capitalised interest of #2,873,000 (2005: nil). This information is provided by RNS The company news service from the London Stock Exchange END FR UWUNRNKRNRAR
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