![](/cdn/assets/images/search/clock.png)
We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Name | Symbol | Market | Type |
---|---|---|---|
Sth.e.wtr.5%db | LSE:53HO | London | Debenture |
Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0 | - |
TIDM53HO
RNS Number : 0183T
South East Water Limited
15 July 2020
South East Water Limited
Preliminary results
for the year to 31 March 2020
Chairman's Statement
Welcome to our preliminary results announcement for the year ended 31 March 2020.
This year saw the culmination of our 2015 to 2020 business plan, with excellent performance across our business commitments, and significant focus on the preparations for the next five years.
During the last five years South East Water has invested GBP437 million in the water infrastructure of the South East of England. A key success has been reducing demand for water, which must continue if we are to balance the needs of customers and the environment in the longer term. We completed our Customer Metering Programme with 90 per cent of customers now metered. Working with these customers we have encouraged water efficiency, including through our innovative use of behavioural science and delivering a "my water report" which has seen per capita consumption in our region reduce by seven per cent compared to the previous five-year period. Side by side with customers we have also continued to reduce our own leakage levels and each year met or exceeded our regulatory target - an important signal that we are taking our responsibilities to save water seriously too.
Further successes include maintaining our high water quality standards throughout the period, achieving on average above 99.95 per cent mean zonal compliance. Work included installing three new microfiltration treatment plants in Kent and East Sussex along with a programme of water mains flushing. Our award-winning environmental programme goes from strength to strength taking an industry leading approach, particularly to catchment management as we aim to improve water quality right from the source.
Our household retail team has continued to improve the service offerings for our customers. Over the last five years we have introduced a new responsive website, including the My Account service which enables customers to manage their account online, and an online map to keep people updated with work in their region.
The team also completed a significant billing project in 2018 introducing 'One Bill' meaning we now bill wastewater charges to over 465,000 customers on behalf of Southern Water.
A huge effort through the year has been put into the final stages of agreeing the Price Review 2019 (PR19) with Ofwat, with close involvement of the board throughout. Ofwat's Final Determination announced in December, which defines the prices we can charge and what we are expected to deliver over the five year period, will be extremely challenging and is forecast to result in minimal returns to shareholders. Further it did not, in our opinion, adequately reflect our customer's priorities in areas such as resilience and investment for the future. The board gave careful consideration to appealing this Determination to the Competition and Markets Authority, weighing the significant costs and diversion of resources involved in the appeal process versus the risks and uncertainty of the outcome. After much deliberation we decided not to appeal. We have now finalised a very detailed Corporate Plan for the next five years to meet the challenges as far as is possible. This will require a step change in performance and cost efficiency in all areas. The plan includes building on our innovative customer satisfaction programme, delivering high performance levels far beyond any we have committed to previously and enhanced focus on our responsible business commitments. The Managing Director's report provides details of the activities we have planned.
In the final months of the financial year these plans have had to be put on hold to a large extent with the arrival of Covid-19 which has required us to urgently adapt our operational priorities and ways of working.
None of us have ever experienced an event like the Covid-19 pandemic, however our business has worked relentlessly to deal with the emerging and ongoing threat. At all times, we have worked hard to ensure that our vital water service was maintained and at the same time ensuring that we have supported all our customers, our supply chain, the community and our employees.
Our essential role in society has never felt more important.
South East Water has drawn on the enormous strength and commitment of each and every employee. All have stepped up with professionalism and determination to confront a fast-changing and uncertain situation. Over the last few months the teams have not only moved to new ways of working but also had to manage our water network to ensure we have been able to keep up with very high levels of demand due to changing habits in water use as more people are at home due to the lockdown restrictions. The hot weather in May exacerbated this demand situation and this important work will have to continue throughout the summer. With the heavy rainfall last winter our water resources are in a good position but with the finite installed capacity of our treatment works and network there is a limit to how much fresh water we can produce and distribute on a daily basis.
We have therefore been enhancing communications to the public to use water responsibly at this time to ensure there is enough available to the NHS and other critical services.
"Clean hands, brown lawn and dirty car - protect the NHS and save lives".
Environmental, Social and Governance (ESG)
Over the last year we have made further progress with our Environmental, Social, Governance (ESG) framework. We set up a responsible business committee to help the board in defining the company's strategy in this area and to review our approach to ensure it remains relevant and effective. In September 2019 we achieved the highest award of five stars in the GRESB global ESG benchmarking, demonstrating our commitment to industry leading performance.
We have also developed a clear purpose statement which we are in the process of embedding in our articles of association:
"To provide today's public water service and create tomorrow's water supply solutions, fairly and responsibly, working with others to help society and the environment to thrive."
A clear purpose is a key step in our move to focus the business on what matters most to customers, the community and society and is integral to our plans for the 2020 to 2025 period and beyond.
We will continue to engage with customers, communities, employees, regulators and shareholders to ensure we make a positive impact today and for the future.
Our people
This year, possibly more than ever, we have seen just how important our great team spirit is.
Our employees have been exceptional in their response to Covid-19 and quite rightly, our people are proud of the roles they undertake and of their expertise in this vital social contribution. This is on top of the contribution everyone has made to the business, delivering such a good overall performance this year.
We seek to support all our employees throughout the organisation. South East Water is recognised as an Investors in People organisation, an accredited Living Wage employer and a Disability Confident Committed employer.
We are working to provide fulfilling employment opportunities across our community. This year we are signing up to the Social Mobility Pledge where we have committed to do more to boost opportunities for all through outreach, access and recruitment.
The mental health and wellbeing of our employees has been given particular focus this year. Our Mental Health Strategy, launched at an event for managers across the organisation and supply chain, ensures that colleagues know how we will support them. Working in partnership with MIND, we now have 30 mental health first aiders who are there for employees in times of crisis and can help support them to find the appropriate professional help they may need.
This year we were the first water company to sponsor the Women's Utilities Network. Women make up nearly half our workforce and we are dedicated to progressing leadership talent through the company and supporting their recruitment into senior roles.
Environment
As a major landowner and guardian of some of the region's most precious environmental resources, our teams work hard to maintain and improve many of the region's flora and fauna. This work has resulted in the successful conclusion of a ground-breaking programme to increase biodiversity at a number of our sites and improving the quality of the water catchments as part of the Water Industry National Environment Programme (WINEP). I am proud to say we have committed to almost trebling the investment in this area over the next five years.
Our Environment team won two Green Apple awards at the Houses of Parliament for their Pesticide Amnesty and Woodgarston Markets project. The awards recognise and promote environmental excellence, and as winners, we automatically become a Green World Ambassador and will be put forward to represent the UK in the Green World Awards.
We are continually reviewing how we can minimise our carbon emissions which this year included an in-depth energy management review and assessment of potential renewable options. We will build on our work so far to align our reporting with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
Governance
We have carried out an in-depth review of our corporate governance and compliance this year.
Alongside the articulation of our company purpose, we have adopted a revised corporate governance framework which has been an important part of defining our strategy in the five-year corporate plan. This helps us demonstrate that South East Water can be trusted as a provider of an essential public service into the future.
The proposed amendment to our articles of association and revised directors' duties mark our commitment to become a purpose-led organisation and promote a culture of public service and inclusiveness. This demonstrates our ambition to develop a model of corporate governance that achieves a fair balance between our interests and those of our customers, other stakeholders and the environment.
During the year there was one change to the board membership with Rachel Drew joining the team as Non-Executive Director representing our 50 per cent shareholder, UTA. She replaces Stephen Jordan, who stepped down in December 2019. I would like to thank Stephen for his service since joining the board in August 2018.
We are now preparing for Managing Director Paul Butler to retire in July 2020, having served in the role at South East Water and previously Mid Kent Water for 18 years. This is a significant moment as Paul has overseen three price reviews since the merger of South East Water and Mid Kent Water in 2007 and his strategic leadership has developed a company which puts customer satisfaction at its heart and his legacy is an organisation with a strong future. On behalf of the board and shareholders of South East Water I would like to thank Paul for his dedicated service, not just to the company, but the water industry as a whole.
David Hinton, has been promoted from the role of Asset and Regulation Director to replace Paul as CEO. He has many years' experience within the organisation and was instrumental in developing the 2020 to 2025 plan and our responsible business strategy.
In addition to David as CEO and Andrew Farmer as CFO, the top leadership team now comprises Tanya Sephton - Customer Services Director, Oliver Martin - Asset and Regulation Director and Douglas Whitfield -Operations Director. All three were promoted internally to these roles over the past several months. They each have considerable experience in the business and it is good to see we have a refreshed but experienced team to lead the business.
Financial performance
Our financial performance has been in line with expectations this year. Group turnover has increased from GBP238.3 million to GBP243.5 million. The increase of GBP5.2 million includes an increase in our tariffs which is permitted under the regulatory settlement mechanism, an allowance for RPI increases, offset by a reduction in water consumption this year. Group net operational costs, including charges for doubtful debt, have increased in the year to GBP174.3 million compared to GBP164.8 million in the prior year, an increase of GBP9.5 million. Included in this increase are additional costs of GBP3.3 million relating to depreciation on new assets, GBP3.8 million in increased supplier costs for energy, bulk water supplies and contractors and GBP2.6 million of additional bad debt provision to reflect an increase in our older debt and the potential impact of Covid-19.
When assessing the appropriate level of dividend, considerations are given to the company's actual and forecast level of gearing, the need to maintain the company's credit rating, the allowed cost of capital, and the performance of the business. The net dividend paid in the year, being the gross dividend of GBP11.0 million less the interest on the loan to parent of GBP4.5 million, was GBP6.5 million (2019: GBP22.7 million).
Outlook
Innovation is driving our company forward as we pursue first class customer service, sustainability and resilience, not only for today's customers but also for generations to come.
We have some very stretching commitments to deliver in the next five years and beyond. Our responsible business approach to governance will help us deliver our commitments to those we serve.
I look forward to the start of the new five-year chapter for South East Water and the year ahead. I have confidence in the ability of our people, our new but experienced leadership team and the strength of the business.
On behalf of the board, I would like to thank all the employees, the management team and our business partners for all their achievements during 2019/20, but especially for the passion and purpose displayed in the face of the Covid-19 challenge. We wish Paul all the best for his retirement and we will work throughout the year to continue to build an organisation where everyone can thrive.
Nick Salmon
Chairman
15 July 2020
Group income statement
for the year ended 31 March 2020
2020 2019 Notes GBP000 GBP000 Continuing operations Revenue 3 243,481 238,281 ---------- ---------------- Bad debt (4,198) (1,584) ---------- ---------------- Group net operating costs 4 (170,151) (163,257) ---------- ---------------- Other income 3 12,199 12,997 Group operating profit 81,331 86,437 Finance costs 6 (52,862) (56,110) Finance income 7 5,333 6,076 Profit before taxation 33,802 36,403 Taxation 8 (16,918) (6,992) ---------- ---------------- Profit for the year from continuing operations 16,884 29,411 Discontinued operations Profit on discontinued operations - 9,253 ---------- ---------------- Profit for the year 16,884 38,664 ---------- ---------------- Earnings per share Basic and diluted 10 34.24p 78.41p ---------- ----------------
Group statement of comprehensive income
for the year ended 31 March 2020
Notes 2020 2019 GBP000 GBP000 Profit for the year 16,884 38,664 Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit (deficit)/surplus 4,879 (3,525) Deferred tax on defined benefit pension schemes 8 (927) 600 Impact of deferred tax rate change in respect of pension schemes 8 (124) - 3,828 (2,925) --------- ---------- Total comprehensive income for the year attributable to owners of the company 20,712 35,739 --------- ----------
Group statement of financial position
as at 31 March 2020
31 March 31 March 2020 2019 GBP000 GBP000 Non-current assets Intangible assets 9,568 10,501 Property, plant and equipment 1,608,845 1,555,123 Amount due from parent undertaking 135,941 189,911 Defined benefit pension surplus 35,912 25,564 -------------- -------------- 1,790,266 1,781,099 -------------- -------------- Current assets Inventories 689 592 Trade and other receivables 84,441 86,190 Cash and cash equivalents 12,981 12,804 -------------- -------------- 98,111 99,586 -------------- -------------- Total assets 1,888,377 1,880,685 -------------- -------------- Current liabilities Loans and borrowings (30,000) (254,890) Derivative financial instruments - (108,836) Trade and other payables (97,627) (92,263) Deferred income (5,418) (7,183) Provisions (4,457) (3,972) -------------- -------------- (137,502) (467,144) -------------- -------------- Non-current liabilities Loans and borrowings (1,029,326) (717,604) Trade and other payables (4,997) (5,379) Net deferred tax liabilities (166,352) (145,395) Defined benefit pension liability (3,115) (3,154) Deferred income (3,438) (3,185) (1,207,228) (874,717) -------------- --------------
Total liabilities (1,344,730) (1,341,861) -------------- -------------- Net assets 543,647 538,824 -------------- -------------- Equity Ordinary share capital 49,312 49,312 Revaluation reserve 241,386 251,259 Retained earnings 252,949 238,253 -------------- -------------- Total equity 543,647 538,824 -------------- --------------
The accompanying notes are an integral part of this statement of financial position.
Group statement of changes in equity
for the year ended 31 March 2020
Issued share capital Revaluation Retained Total equity GBP000 reserve earnings GBP000 GBP000 GBP000 Balance at 1 April 2018 49,312 256,396 225,377 531,085 --------------- -------------- ----------- --------------- Profit for the year - - 38,664 38,664 --------------- -------------- ----------- --------------- Other comprehensive income: Remeasurement of defined benefit (deficit) - - (3,525) (3,525) Deferred tax on defined benefit pension schemes - - 600 600 Total other comprehensive income - - (2,925) (2,925) Total comprehensive income 35,739 35,739 Dividends (see note 9) - - (28,000) (28,000) Amortisation of revaluation reserve - (6,127) 6,127 - Release revaluation on disposals - (51) 51 - Deferred tax on revaluation and retained earnings transfer - 1,041 (1,041) - Balance at 31 March 2019 49,312 251,259 238,253 538,824 Profit for the year - - 16,884 16,884 --------------- -------------- ----------- --------------- Other comprehensive income: Remeasurement of defined benefit surplus - - 4,879 4,879 Deferred tax on defined benefit pension schemes - - (927) (927) Impact of deferred tax rate change in respect of pension schemes - - (124) (124) Total other comprehensive income - - 3,828 3,828 Total comprehensive income - - 20,712 20,712 Dividends (see note 9) - - (11,000) (11,000) Amortisation of revaluation reserve - (6,129) 6,129 - Release of revaluation reserve on disposals - (19) 19 - Deferred tax on revaluation and retained earnings transfer - 1,164 (1,164) - Impact of deferred tax rate change - (4,889) - (4,889) Balance at 31 March 2020 49,312 241,386 252,949 543,647 --------------- -------------- ----------- ---------------
All transactions relate to the equity holders of the group.
Group statement of cash flows
for the year ended 31 March 2020
Notes 2020 2019 GBP000 GBP000 Operating activities Net cash flow from operating activities 134,443 125,023 Interest received 4,705 5,437 Interest element of lease payments (110) - Other interest paid (41,828) (36,940) Corporation tax received/(group tax relief paid) 44 (1,314) ---------- --------- Net cash flow before investing and financing activities 97,254 92,206 ---------- --------- Investing activities Proceeds from the sale of property, plant and equipment 94 736 Purchase of property, plant and equipment (96,153) (97,132) Proceeds from the sale of non-household customer base - 9,156 Purchase of intangible assets (2,116) (2,997) Net cash flow used in investing activities (98,175) (90,237) ---------- --------- Financing activities Loan to Parent undertaking repaid 54,000 - New loans and borrowing received 295,000 35,000 Issue cost of new debt (130) (2,693) Repayment of capital element of lease liability (222) - Repayment of other loans and borrowing (336,550) - Dividends paid to shareholder 9 (11,000) (28,000) Net cash flow from financing activities 1,098 4,307 ---------- --------- Increase in cash and cash equivalents 177 6,276 Cash and cash equivalents at the beginning of the year 12,804 6,528 ---------- --------- Cash and cash equivalents at the year end 12,981 12,804 ---------- ---------
Group cash flow from operating activities
for the year ended 31 March 2020
2020 2019 GBP000 GBP000 Profit for the year 16,884 38,664 Adjustments for: Tax charge 16,918 6,992 Finance income (5,333) (6,076) Finance costs 52,862 56,110 Depreciation and impairment of property, plant and equipment 51,615 48,046 Amortisation and impairment of intangibles 3,049 3,254 Profit on disposal of fixed assets (50) (377) Proceeds from the sale of non-household customer base - (9,253) Difference between pension contributions paid and amounts recognised in the income statement (4,896) (4,086) Changes in working capital: (Increase) in trade and other receivables (1,165) (5,451) (Increase) in inventory (97) (356) Increase/(Decrease) in trade and other payables 4,656 (2,444) Net cash flow from operating activities 134,443 125,023 -------- --------
Notes
1. Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and applied in accordance with the Companies Act 2006. The financial information set out in this announcement does not constitute the Company's statutory accounts, within the meaning of section 430 of the Companies Act 2006, for the years ended 31 March 2020 or 2019, but is derived from those accounts. While the financial information included within this announcement has been prepared in accordance with the recognition and measurement criteria of IFRS, it does not comply with the disclosure requirements of IFRS. Statutory Financial Statements for the year ended 31 March 2019 have been delivered to the Registrar of Companies and those for the year ended 31 March 2020 will be delivered to the Registrar of Companies in due course. The auditor has reported on those Financial Statements; their reports were unqualified, did not draw attention to any matters by way of emphasis and did not contain statements under s498(2) or (3)
of the Companies Act 2006.
The financial statements are prepared under the historical cost convention except for pension assets that have been measured at fair value and certain assets under property, plant and equipment which were recognised at the date of transition to IFRS at deemed cost by reference to fair value.
The group financial statements are presented in Sterling and all values are rounded to the nearest thousand pounds (GBP000) except where otherwise indicated.
Going concern
The directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. In coming to this decision they have considered the implications of the on-going Covid-19 pandemic and the impact this may have on the business. The directors have concluded that it is correct to continue to adopt the going concern basis of accounting in preparing the financial statements.
Basis of consolidation
These financial statements incorporate the financial information of South East Water Limited and its subsidiary, South East Water (Finance) Limited (together the "group").
Transactions and balances between the company and its subsidiary have been eliminated fully on consolidation. Subsidiaries are consolidated from the date on which control is transferred to the group and cease to be consolidated from the date on which control is transferred out of the group.
2. Adoption of IFRS 16
The group has adopted IFRS 16 at the beginning of the financial year. The group has taken the practical expedient to apply this Standard only to contracts which were previously identified as leases when applying IAS 17 Leases and IFRIC 4 Determining whether an Arrangement Contains a Lease.
IFRS 16 has been adopted using the modified retrospective method which has led to the accumulated historical adjustments being made to opening balances at 1 April 2019.
The initial values of lease liabilities equate to the present value of future lease payments under the relevant lease contracts. The group have applied the practical expedient of using a single discount rate to leases with reasonably similar characteristics. The discount rates used in calculating the liabilities reflect the interest rates at which the group would currently be able to borrow in order to finance similar assets to those under the lease affected by the transition (the incremental borrowing rate).
The company has recently entered into loan facilities at fixed rates and with weighted average repayment maturities comparable with the lengths of the leases affected by the transition. The interest rates attached to the new facilities have, therefore, been deemed appropriate proxies for the incremental borrowing rates, as follows:
-- Lease lengths of zero to ten years remaining on transition - 2.94 per cent -- Lease lengths of ten to twenty years remaining on transition - 3.22 per cent
The right-to-use assets at the date of initial application have been measured as an amount equal to the lease liability under each lease affected by the transition.
At 1 April 2019, the group held the following operating leases previously accounted for under IAS 17 which met the criteria under IFRS 16 for such recognition. There were no long-term leases with outstanding periods of less than 12 months at the adoption date.
Values of assets and Annual liabilities rent on adoption Leased asset Start date End date GBP000 GBP000 22 May Laboratory at Farnborough 2015 21 May 2035 195 2,466 Unit at Brooke House, Larkfield 8 Aug 2018 7 Aug 2021 19 43 Water Tower at Blackhill, 19 Jan Camberley 2004 14 Jun 2022 17 52 Offices at Leithrim House, Larkfield 4 Apr 2018 4 Apr 2028 67 537 -------- ------------- 298 3,098 -------- -------------
The impact of the adoption of IFRS 16 on the group's financial statements in the period has been:
Adjustment 31 March for the 31 March 2020 adoption 2020 pre IFRS of IFRS post IFRS 16 16 16 GBP000 GBP000 GBP000 Revenue 243,481 - 243,481 Group net operating costs (174,361) 12 (174,349) Other income 12,199 - 12,199 Group operating profit 81,319 12 81,331 Finance costs (52,752) (110) (52,862) Finance income 5,333 - 5,333 Profit before taxation 33,900 (98) 33,802 Taxation (16,918) - (16,918) ----------- ----------- ------------ Profit for the period 16,982 (98) 16,884 ----------- ----------- ------------
Adoption of IFRS 16 has resulted in an adjustment to net operating costs of GBP12,000. This represents the removal of the rental charges of GBP319,000 offset by the depreciation change of GBP307,000 on the right-to-use assets, which have been included in the balance sheet at 1 April 2019.
Further, the interest chargeable on the lease finance has been accrued to 31 March 2020 resulting in a finance charge of GBP110,000.
The adoption if IFRS 16 has no material impact on EPS in the year.
The value of payments under leases in the year has been GBP332,000.
An analysis of the maturity of lease liabilities is provided below:
Year ended 31 March 2020 Within 1 - 2 2 - 5 Over 1 year years years 5 years Total GBP000 GBP000 GBP000 GBP000 GBP000 Laboratory at Farnborough 195 195 585 1,979 2,954 Unit at Brooke House, Larkfield 19 7 - - 26 Water Tower at Blackhill, Camberley 17 17 3 - 37 Offices at Leithrim House, Larkfield 68 68 204 201 541 Lenham Depot 160 160 480 741 1,541 -------- -------- -------- --------- --------- 459 447 1,272 2,921 5,099 -------- -------- -------- --------- ---------
The impact of the adoption of IFRS 16 on the Group's opening statement of financial position has been:
1 April 2019 1 April 2019 pre IFRS Adoption post IFRS 16 of IFRS 16 16 GBP000 GBP000 GBP000 Intangible assets 10,501 - 10,501 Property, plant and equipment 1,555,123 3,098 1,558,221 Amount due from parent undertaking 189,911 - 189,911 Defined benefit pension surplus 25,564 - 25,564 -------------- ------------ -------------- Non-current assets 1,781,099 3,098 1,784,197 Current assets 99,586 - 99,586 -------------- ------------ -------------- Total assets 1,880,685 3,098 1,883,783 -------------- ------------ -------------- Loans and borrowings (254,890) - (254,890) Derivative financial instruments (108,836) - (108,836) Trade and other payables (92,263) (92,263) Deferred income (7,183) - (7,183) Provision (3,972) - (3,972) -------------- ------------ -------------- Current liabilities (467,144) (467,144) -------------- ------------ -------------- Non-current liabilities Loans and borrowings (717,604) (3,098) (720,702) Trade and other payables (5,379) - (5,379) Net deferred tax liabilities (145,395) - (145,395) Defined benefit pension liability (3,154) - (3,154) Deferred income (3,185) - (3,185) (874,717) (3,098) (877,815) -------------- ------------ --------------
Total liabilities (1,341,861) (3,098) (1,344,959) -------------- ------------ -------------- Net assets 538,824 - 538,824 -------------- ------------ -------------- Equity Ordinary share capital 49,312 - 49,312 Revaluation reserve 251,259 - 251,259 Retained earnings 238,253 - 238,253 -------------- ------------ -------------- Total equity 538,824 - 538,824 -------------- ------------ --------------
The following tables show the movement in the year in the values of right-to-use assets and lease financing liabilities.
Right-to-use assets GBP000 Balance at 1 April 2019 on adoption of IFRS 16 3,098 Additions from new lease arrangements 1,585 Depreciation (307) ------------- Balance at 31 March 2020 4,376 ------------- Lease financing liabilities GBP000 Balance at 1 April 2019 on adoption of IFRS 16 3,098 Additions from new lease arrangements 1,363 Capital element of lease payments (222) ---------------- Balance at 31 March 2020 4,239 ---------------- 3. Total income 2020 2019 GBP000 GBP000 Revenue Unmetered water income 20,800 24,966 Metered water income 208,405 199,278 Metered sewerage income - (15) Other sales 14,276 14,052 ---------- ---------- Total Revenue 243,481 238,281 ---------- ---------- Other income Rental income 1,284 1,233 Sundry income 10,915 11,764 ---------- ---------- Total other income 12,199 12,997 ---------- ---------- Total income 255,680 251,278 ---------- ----------
All revenue is from customers within the United Kingdom.
Other sales includes new connections income of GBP5.8 million (2019: GBP7.7 million), infrastructure income of GBP5.8 million (2019: GBP5.2 million) and capital contributions of GBP1.4 million (2019: GBP1.0 million).
Sundry income includes charges for billing and cash collection services amounting to GBP7.6 million (2019: GBP8.1 million), and laboratory income of GBP2.5 million (2019: GBP2.3 million).
4. Net operating costs 2020 2019 GBP000 GBP000 Employee benefits expense (see note 5) 30,166 30,078 ---------- ---------- Asset expense/(income): Depreciation - owned assets 50,537 47,456 Depreciation - right-to-use 885 579 Impairment of fixed assets 193 10 Amortisation of intangible assets 3,049 3,129 Impairment of intangible assets - 126 (Profit)/loss on disposal of non-current assets (50) (377) ---------- ---------- 54,614 50,923 ---------- ---------- Other operating expenses: Operating lease rentals: vehicles and office equipment 242 211 land and buildings 14 287 Fees payable to the group's auditor (see below) 300 279 Other expenses (see below) 89,974 87,190 Other operating expenses charged to capital projects (5,159) (5,711) 85,371 82,256 ---------- ---------- Total operating costs 170,151 163,257 ---------- ---------- Fees payable to the group's auditor in respect of: Audit of the group and company financial statements 208 203 Audit of subsidiary 1 1 ---------- ---------- Total audit 209 204 ---------- ---------- Regulatory accounts 49 50 Other assurance services 37 15 ---------- ---------- 86 65 ---------- ---------- Services relating to taxation 5 10 Total non-audit services 91 75 ---------- ---------- Total fees payable to the group's auditor 300 279 ---------- ---------- 2020 2019 GBP000 GBP000 Other expenses comprise: Energy costs 18,346 16,440 Rates 18,186 17,770 Contractors 26,218 23,768 Bulk water supplies and abstraction licences 8,619 9,195 Chemicals 3,524 3,300 Insurance and related costs 2,646 3,083 Other 12,435 13,634 Total other expenses 89,974 87,190 --------- --------- 5. Directors and employees
The average monthly number of employees, including salaried directors, of the group in the year was:
2020 2019 Number Number Operations 434 440 Management and administration 525 510 --------- --------- 959 950 --------- --------- GBP000 The aggregate payroll costs of these persons were: Wages and salaries 31,124 30,193 Social security costs 2,550 3,049 Pension costs for defined benefit schemes 710 1,067 Pension costs for unfunded pensions - 266 Pension costs for defined contribution schemes 2,385 2,143 36,769 36,718 Less: direct salary costs charged to capital projects (6,603) (6,640) --------- --------- 30,166 30,078 --------- ---------
Emoluments of the directors, who are the group's key management, were:
2020 2019 GBP000 GBP000 Aggregate emoluments including bonuses 1,666 1,071 Company contributions to defined contribution scheme 10 39 -------- -------- 1,676 1,110 -------- -------- Emoluments of the highest paid director were: Aggregate emoluments including bonuses 647 395 -------- --------
Retirement benefits are accruing to one director (2019: one) under the defined benefit pension schemes and two directors (2019: two) under a defined contribution scheme.
6. Finance Costs 2020 2019 GBP000 GBP000 Debenture interest 42 42 Effective interest on listed debt 18,411 22,842 Fair value movements on interest rate swap 2,713 4,668 Indexation on variable rate bonds 4,378 4,564 Bank interest and other finance charges 5,068 975 Financing guarantee fees 1,430 1,289 Interest payable on index linked loans 12,500 12,174 Indexation on index linked loans 10,444 11,487 Lease interest 110 - Amortisation of loan issue costs 594 546 Interest and related fees payable 55,690 58,587 Interest capitalised (2,828) (2,477) -------- -------- 52,862 56,110 -------- --------
Interest capitalised during the year amounted to GBP2.8 million (2019: GBP2.5 million) and is calculated using the weighted average interest rate of the group's long-term lending of 4.25% (2019: 4.44%).
7. Finance income 2020 2019 GBP000 GBP000 Interest receivable on bank balances and short-term deposits 201 135 Interest receivable from group undertakings 4,499 5,305 Pension fund finance income 633 636 -------- -------- 5,333 6,076 -------- -------- 8. Taxation
Major components of the group's tax expense for the years ended 31 March 2020 and 2019 are:
2020 2019 GBP000 GBP000 Group income statement Current tax: Current UK tax charge 2,042 878 Amounts over provided in previous years (141) - -------- -------- 1,901 878 -------- -------- Deferred tax: Relating to origination and reversal of temporary differences 3,052 6,017 Relating to impact of change in tax rate 11,965 - 15,017 6,017 -------- -------- Tax charge reported in the group income statement 16,918 6, 895 -------- -------- Tax charge/(credits) to equity Deferred tax on defined benefit pension schemes 927 (600) Impact of rate change on pension scheme 124 - Tax reported in comprehensive income statement 1,051 (600) -------- --------
Factors affecting the tax charge for the year
The tax for the year is lower than the standard rate of corporation tax in the UK. The differences are explained below:
2020 2019 GBP000 GBP000 Profit for the year on Continued operation 33,802 36,403 --------- --------- Profit multiplied by the rate of corporation tax in the UK of 19% (2019: 19%) 6,423 6,917 Effects of: Adjustments to current tax charge in respect (141) - of previous years Adjustment to deferred tax in respect of rate 11,965 - change Adjustments to deferred tax charge in respect of previous years (1,846) ( 451 ) Expenses not deductible for tax purposes 534 594 Tax effect of income not taxable in determining taxable profit (10) ( 68 ) Other - RD depreciation allowed (7) - Total tax charge reported in the group income statement 16,918 6, 992 --------- ---------
The adjustments to deferred tax in respect of previous years represents the changes between the year end and submitted computations and, in respect of the prior year, a revision of the corporation tax rate from 17% to 19%. The expenses not deductible for tax purposes are made up of the movement on general provisions, entertainment expenses and depreciation on non-qualifying capital expenditure.
2020 2019 GBP000 GBP000 Profit for the year on discontinued operation - 9,156 --------- -------- Profit multiplied by the rate of corporation tax in the UK of 19% (2019: 19%) - 1,739 Effects of: Tax effect of income not taxable in determining taxable profit - (1,836) Total tax charge reported in the group income statement - (97) --------- --------
Deferred tax
The movement on the net deferred tax liability is as shown below:
2020 2019 GBP000 GBP000 At 1 April 145,395 140,085 Charge to the income statement 15,017 6,017 (Credit)/Charge to equity 927 (600) Impact of rate change on pension scheme 124 - Impact of IFRS taken to Reserves 4,889 (107) ---------- ----------- At 31 March 166,352 145, 395 ---------- -----------
Deferred tax assets have been recognised in respect of all tax losses and other temporary differences giving rise to deferred tax assets because it is probable that these assets will be recovered by giving relief against future taxable profits.
The movements in deferred tax assets and liabilities during the year are shown below:
Accelerated tax depreciation Pension provision GBP000 GBP000 Total GBP000 Deferred tax liabilities At 1 April 2018 138,239 3,607 141,846 Charge to the income statement 4,034 800 4, 834 Charge to equity - (600) (600) At 1 April 2019 142, 273 3,807 146,080 Charge to the income statement 13,157 1,373 14,530 Charge to equity - 927 927 Impact of rate change on deferred taxation on the revaluation reserve 4,889 124 5,013 At 31 March 2020 160,319 6,231 166,550 ------------------ -------------------- ---------- Fair value Other provision swap GBP000 Total GBP000 GBP000 Deferred tax assets At 1 April 2018 1,502 259 1,761 (Charge)/credit to the income statement (1, 100 ) 24 (1, 076 ) At 1 April 2019 402 283 685 Credit/(charge) to the income statement (402) (85) (487) At 31 March 2020 - 198 198 ----------- ---------------- ----------
Deferred tax assets and liabilities are only offset where there is a legally enforceable right of offset and there is an intention to settle the balances net. All of the deferred tax assets were available for offset against deferred tax liabilities and hence the net deferred tax liability at 31 March 2020 was GBP166.4 million (2019: GBP145.4 million).
Capital investment is expected to remain at similar levels and the group expects to be able to claim capital allowances in excess of depreciation in future years, allowing for any group relief arrangements within the HDF (UK) Holdings Ltd group of companies.
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 19%. The reversal of the 17% (back to 19%) tax rate previously enacted by Finance Act 2016 to take effect from 1 April 2020 has resulted in an additional deferred tax provision of GBP17.0 million (included in the charge to income statement) attributed to the impact of corporation tax rate change.
For the year ended 31 March 2020 a UK corporation tax rate of 19% has been used as enacted by the March 2020 Budget. The deferred tax on temporary differences as at 31 March 2020 have been calculated at the current rate applicable.
9. Dividends 2020 2019 GBP000 GBP000 Equity dividends paid during the year: First interim dividend of 5.58p per ordinary share (2019: 14.20p per ordinary share) 2,750 7,000 Second interim dividend of 5.58p per ordinary share (2019: 14.20p per ordinary share) 2,750 7,000 Third interim dividend of 5.58p per ordinary share (2019: 14.20p per ordinary share) 2,750 7,000 Final dividend of 5.58p per ordinary share (2019: 14.20p per ordinary share) 2,750 7,000 --------- --------- 11,000 28,000 --------- ---------
There were no dividends proposed for approval as at 31 March 2020 and 31 March 2019.
10. Earnings per ordinary share
Basic earnings per share amounts are calculated by dividing profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year. The following reflects the income and shares data used in the basic and diluted earnings per share computations:
2020 2019 GBP000 GBP000 Profit for the year from continuing operations 16,884 29,411 ----------- ----------- Profit/(loss) for the year from discontinued operations - 9,253 2020 2019 Number Number Basic and diluted weighted average number of shares 49,312,354 49,312,354 ----------- ----------- Basic and diluted earnings per share from continuing operations 34.24p 59.64p ----------- ----------- Basic and diluted earnings per share from discontinued operations - 18.77p ----------- -----------
There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of completion of these financial statements.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
FR FFFEFDFISLII
(END) Dow Jones Newswires
July 15, 2020 02:00 ET (06:00 GMT)
1 Year Sth.e.wtr.5%db Chart |
1 Month Sth.e.wtr.5%db Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
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