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TIDM53HO
RNS Number : 0467V
South East Water Limited
09 December 2021
South East Water Limited
Condensed group financial statements
for the six months ended 30 September 2021
Chair's statement
I am pleased to present our interim report for the six months ended 30 September 2021.
Although the Covid-19 pandemic has continued to impact all aspects of society, I am pleased to be able to report that we have made a strong operational start to the year with significant progress being made against many of our performance commitments and in line with our company purpose; "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."
We are, of course, one of the six water only companies amongst 13 water and waste water companies.
As a business, our focus has been very much on supporting our colleagues and customers and adapting quickly to the imposition and easing of Covid restrictions. This has seen us ensure that our colleagues who did not work from home had the necessary training and equipment to work safely in all environments, including streetworks and inside cu stomers' houses and we have continued to be sympathetic to our customers in our approach to debt management where they are struggling to pay.
High levels of household demand continue and are consistently above the levels seen before the start of the Covid-19 pandemic. This is due to many customers in our region continuing to work from home and therefore consuming water from home rather than in their workplaces. Whilst this phenomenon is easing as customers return to more normal working patterns it is not clear whether or not our customer base will eventually return to pre-Covid patterns. In light of these changing demand patterns, Ofwat has agreed to assess our performance on our PCC (per capita consumption) and non-household void property performance commitments at the end of this regulatory cycle in 2025, when the long-term effect of Covid-19 on these measures should be better understood.
Whilst we did not experience a summer as hot as the last year, the lessons learned in 2020 ensured that this year's summer demand was managed well and passed without incident. Our efforts over the last 12 months have been on delivering key projects to provide extra resilience to our network. This has included building a new water treatment works in Aylesford, Kent, which was just eight months in construction and delivered extra capacity quickly to cover the loss of a key strategic service reservoir in Kent which was damaged by a sinkhole which appeared in September 2020. In addition we have now completed the extension to the Bray Keleher water treatment works in the western region adding an additional 23ML of new water to the area.
We have continued to work on improving our operational response times to unplanned interruptions using a variety of approaches, this has included the implementation of new leakage detection software WaterNet which helps us identify and respond to leaks faster. Furthermore, we have continued a programme of calm valve and network optimisation training for our operational teams and supply chain partners which includes modules on network hydraulics and transient pressures.
This is all alongside the provision of additional resources, plant and machinery available to deal with complex repairs.
This is the second year of the 2020 to 2025 investment period known as AMP7 in which we are focused on delivering our purpose-led plan including capital expenditure of GBP433.0 million (2017/18 prices) in improvements across the region. We are tracking our progress against more than 30 challenging performance commitments together with an additional 10 responsible business commitments.
Looking ahead and in conjunction with Water Resources South East we are developing a draft regional resilience plan which will be consulted upon between 10 January and 7 March 2022. The revised regional plan will then form the basis of our own draft Water Resources Management Plan 2024 which we will consult on in the autumn of 2022, with publication due in 2023.
To support our customers we have ensured we are sympathetic to those who may have suffered financial challenges over the last year. This includes re-writing our credit management customer communications to ensure they are clear, supportive and engaging.
We have also continued to promote our payment holiday and affordability schemes. We are working with key stakeholders to offer mutual support including our work with Kent County Council to distribute GBP150k of Government Covid funding direct to our customers who were impacted financially and struggling to pay bills.
In addition we have a scheme to auto enrol lower income households onto our affordability schemes through collaborative working with local councils, the first initiative of its kind in the industry. We have also worked with independent organisations such as National Energy Action to ensure our support meets customer needs in our region.
Covid-19 restrictions and the swift change to work from home has however provided us with an opportunity to review our wider working practices across the business.
Now that colleagues are returning to sites and offices we have adopted a hybrid working model with a combination of home working and on site attendance to give greater flexibility. Of course, many roles cannot be carried out from home, but for those colleagues we are also looking at ways where we can provide greater flexibility.
Thriving together as a fair and responsible business
Our responsible business strategy is an intrinsic part of our corporate plan and we have four strategic themes across the organisation. Some of the highlights and challenges in the first six months include:
Trusted and reliable service
How we build trust in what we do and deliver a high quality service to our customers
-- 99.97% of our water quality samples have met DWI standards. -- A new, state-of-the-art water treatment works started pumping additional water to homes in Kent in August after just eight months of construction. -- With the increased focus on optimising our distribution network and pressure reducing valves (PRV) as part of leakage strategy to 2025, the PRV operational field colleagues are undergoing a technical training enhancement programme supported by many of our framework suppliers of the equipment / technology. This takes the form of field demonstrations and competency assessments in how to operate, set up and maintain our PRVs alongside general pressure and network hydraulic awareness. -- We received a five star rating from global ESG benchmarking organisation, GRESB. Increasing our score to 92 out of 100 versus a peer group average of 81, putting us in the top five companies in our sector globally. -- We have now completed the extension to the Bray Keleher water treatment works in the western region adding an additional 23ML of new water to the area. -- All operational colleagues are undertaking calm valve training. Practical exercises are undertaken specifically designed to simulate a water network and demonstrate the surges that can occur through incorrect valve operations. It also includes theory modules on network hydraulics and transients to improve technical competence.
Thriving people
How we help the people who work with us to thrive
-- A mobile app, called PikaVoid, which aims to help the company identify void properties has been shortlisted for the employee engagement award at the Customer Services Institute Awards. PikaVoid offers incentives to colleagues to identify voids in their local area or while working in the field. -- A new Wellbeing strategy is in operation. It has four pillars: Mental Wellbeing, Physical Wellbeing, Financial Wellbeing and Social Wellbeing. This builds on previous work undertaken to promote a greater understanding of mental health within the workplace. -- Our employee survey in September had a high overall response rate of 79%. Of those responding, 93% felt their manager was considerate of their wellbeing which is 8% higher than external benchmarking. In response to wellbeing, 81% stated they were either thriving or coping. -- 91% said they were proud to work for South East Water. -- 94% said they believe that the company is committed to being ethical and responsible and 96% said South East Water responds to the individual needs of our different customers. -- 90% believed that they could be their authentic self at work.
Community and society focused
How we understand and respond to the needs of society
-- We have concentrated on providing customers with full details of partner organisations offering support in
a variety of areas including disability, ill-health, wellbeing and financial.
-- Following a public consultation, where we received 21 responses, we published our revised dry weather plan
in September 2021. This outlines our actions in preparation for, and during drought. We are now waiting for Defra to approve publication of the final plan.
-- An industry leading innovative data sharing project with Maidstone Borough Council has been helping identify
householders on low income who are eligible for our affordability tariffs. This project has since provided a framework for roll out with other local authorities.
-- Customer complaints in the last six months are down 15% compared to 2020/21.
-- We were shortlisted in the Utility Week Awards for our work to support vulnerable customers. Keeping communities informed while we carry out our work has also led to being shortlisted in the Communications Leadership category in the Street Works UK Awards 2021
Flourishing environment
How we contribute to an environment that flourishes today and tomorrow
-- We published our route map to net zero operational carbon by 2030. We will achieve this through energy efficiency, renewable sources, avoiding direct emissions, water efficiency and investing in nature-based solutions.
-- Work has started with a third party using high definition aerial imagery to identify land use and nutrient
pollution sources within the North Kent and Stockbury catchments.
-- There has been a high level of interest in this year's capital grants funding in Woodgarston, Boxalls Lane, Hartlake and Pembury catchments. Farmers are working with us collaboratively to improve raw water quality and quantity. The capital grants encourage farmers to farm in a way which is less environmentally damaging -- helping to protect current and future water supplies as well as the wider environment too.
-- More than 20 different stakeholder groups and colleagues took part in online workshops to help us develop our draft 25 year environment plan.
-- Our "let's save this summer" campaign led to 51,734 water saving devices being ordered by customers in the first six months and we have updated our online customer portal, My Account, to include a neighbourhood comparison for water use to encourage behaviour change. We have developed ongoing communications to customers relevant to their specific water usage and specific circumstances.
Results and key financial performance indicators
The results published in this statement summarise our performance for the six months ended 30 September 2021. The financial statements are prepared under International Financial Reporting Standards ("IFRS") and incorporate the performance of South East Water Limited and our subsidiary, South East Water (Finance) Limited.
Revenue for the period was GBP136.7 million compared with GBP133.7 million for the same period in the previous year.
The increase of GBP3.0 million (+2.2%) is due to the following factors:
-- water demand was higher this year than last year and was due to circa 14,000 additional properties in the measured portfolio, amounting to around GBP1.4 million. Of this, circa 9,000 related to newly built -- properties and the remainder associated with reducing void properties through South East Water's new PikaVoid app. -- this additional demand was part offset by GBP0.4 million relating to lower summer demand this year on existing properties although the effect of Covid-19 on demand remained high. -- also offsetting this was a reduction in the allowed average price of 0.6%, reducing revenue by GBP0.6 million. -- developer contributions and other income are GBP2.1 million and GBP0.3 million respectively higher than last year due to the reduction in Covid-19 restrictions.
Net operating costs for the period to 30 September 2021 were GBP91.7 million compared with GBP84.7 million for
the same period in the previous year. The increase of GBP7.0 million (+8.3%) was due to:
-- the prior year costs included a one-off credit of GBP7.8 million in respect of past service costs on one of the group's defined benefit pension schemes, which was a result of changing from RPI to CPI in measuring the liabilities of the scheme.
-- increased depreciation for the six months of GBP1.4 million in line with the continued investment in the group's fixed assets.
-- other inflationary pressures, particularly around consumables, adding GBP0.9 million of costs.
-- lower contractor costs as a result of fewer major operational incidents, saving GBP1.5 million.
-- lower bulk supply cost driven by cost provision reductions which delivered efficiencies of GBP0.7 million.
Finance costs have increased from GBP20.1 million to GBP23.2 million. This is due to increased indexation
on our loans due to higher inflation during the period to 30 September 2021.
Profit before tax was GBP20.1 million compared with GBP29.8 million for the same
period last year. This represents
14.7 per cent of revenue, down from 22.3 per cent for the corresponding period last year.
The group tax charge of GBP38.6 million in the period ending 30 September 2021 includes GBP36.0 million of deferred tax resulting from the corporation tax rate change from 19 per cent to 25 per cent commencing in April 2023. Excluding this deferred tax adjustment, the tax charge for the period was GBP2.6 million compared to GBP1.7
million for the same period last year. The tax expense for the period comprises GBP0.6 million of current tax and GBP2.0 million
of deferred tax.
The group has recorded a loss after tax of GBP18.6 million for the six months ended 30 September 2021 compared to a profit after tax of GBP28.1 million in the corresponding period in the prior year. This loss after tax in the year is largely a result of the deferred tax charge due to the future tax rate change from 19 per cent to 25 per cent.
In September the group successfully replaced its revolving credit facility with an increased facility of GBP125.0 million, up from GBP90.0 million. The group had a balance of GBP50.0 million on the previous facility which has been repaid from the new facility.
The outstanding balance on the credit facility will be repaid with new loan finance of GBP50.0 million on 9 December 2021. The new loan is a fixed rate 14 year loan at an interest rate of 2.04 per cent.
We continue to comply with the financial covenants set out in our securitisation structure and continue to hold ratings from Moody's and Standard & Poor's consistent with the requirements of both our securitisation and our instrument of appointment.
The dividend paid for the six months ended 30 September 2021 of GBP4.5 million is GBP1.0 million lower compared to the same period last year and this represents a nominal dividend yield of 1.8 per cent. The dividend is in line with our dividend policy and is lower than Ofwat's view of what is a reasonable nominal dividend yield, which is 4 per cent.
Net cash generated from operations was GBP80.3 million for the six months to 30 September 2021 compared to GBP63.9 million in the same period for the previous year. This is largely a result of improved collection of revenue when compared to the prior year.
Principal risks and uncertainties
The principal risks and uncertainties facing the business are set out in the strategic report within the group's annual report for the financial year ended 31 March 2021, which can be found on the South East Water website.
Going concern
We continue to comply with the financial covenants set out in our securitisation structure and continue to hold ratings from Moody's and Standard & Poor's consistent with the requirements of both our securitisation and our instrument of appointment.
In preparing the financial statements the directors considered the group's ability to meet its debts as they fall due for a period of one year from the date of this report, especially in light of the on-going Covid-19 pandemic.
The group's business activities, together with the factors likely to affect its future development, performance and position were set out in the strategic report included in the group's annual report for the financial year ended 31 March 2021.
The group finances its working capital requirements through cash generated from operations and committed facilities that can be called upon as required.
The group prepared an annual budget in March. The financial results for the six months to 30 September 2021 are in line with our budget. The directors are therefore satisfied that the group has sufficient resources to continue in operation for a period of not less than 12 months from the date of this report.
In coming to this decision the board has considered the implications of the on-going Covid-19 pandemic and the impact this may have on the business. The board has considered a range of plausible scenarios and is satisfied that there is sufficient headroom on all financial covenants.
Looking ahead
While building on our good start to this financial year we will be particularly focused on longer term plans including the PR24 and WRMP processes. In addition we will be progressing with the 25 Year Environment Plan, an industry first, working closely with our partners through Water Resources in the South East (WRSE) to engage on a regional 75 year plan to ensure across the south east there is a sustainable public water supply for the future.
In October 2021 we published our draft climate change adaptation report. This covered 12 key risk areas including changes to rainfall patterns and rising sea levels. The report sets out exactly how we plan to modify our approach as the climate evolves. This consultation has now concluded and we will be publishing our final report in December.
Through the remainder of the winter months we will continue to work with our suppliers, industry partners and local resilience forums to make sure we are prepared for potential impacts on our services, including winter weather and current supply chain concerns.
Our water resources are in a very good position for this time of year following a wet summer and an early start to the recharge season. We expect with normal winter rainfall we will be ready for spring 2022 with good resource levels. Water efficiency will continue to be a focus as we expect a continuation of some degree of home
working across the south east region will again influence demand during 2022.
On behalf of the board I would like to thank all the employees and business partners at South East Water for their focused efforts over the last six months - it has seen us through a potentially challenging summer and their purpose-led energy is evident across the organisation.
I would also like to take this opportunity to say a personal thank you to everyone at South East Water as I will retire from the Board in March after seven years as Chair.
NICK SALMON
CHAIR
9 DECEMBER 2021
Condensed group income statement
for the six months ended 30 September 2021
Six months Six months ended 30 ended 30 September September 2021 2020 Note GBP000 GBP000 =============================================== ======== ======================= ======================= Revenue 6 136,727 133,736 Group net operating costs Bad debt 8 (91,691) (84,732) (2,128) (1,146) =============================================== ======== ======================= ======================= Group profit from operations 42,908 47,858 Finance income Finance expense 9 345 2,055 9 (23,194) (20,130) =============================================== ======== ======================= ======================= Profit before taxation 20,059 29,783 Taxation 10 (38,631) (1,677) =============================================== ======== ======================= ======================= (Loss)/profit for the six months (18,572) 28,106 =============================================== ======== ======================= ======================= Other comprehensive income: Items that will not be reclassified to profit or loss: Remeasurements of defined benefit pension schemes' surplus or (deficit) Deferred tax on defined benefit pension schemes 4,463 (19,446) (1,375) 1,663 =============================================== ======== ======================= ======================= Other comprehensive income for the six months, net of tax 3,088 (17,783) =============================================== ======== ======================= ======================= Total comprehensive income (15,484) 10,323 =============================================== ======== ======================= ======================= Six months Six months ended 30 ended 30 September September 2021 2020 Pence Pence =============================================== ======== ======================= ======================= Earnings per share attributable to the ordinary equity holders of the parent Basic and diluted 12 (37.66) 57.00 =============================================== ======== ======================= =======================
Condensed group statement of financial position
as at 30 September 2021
30 September 31 March 30 September 2021 2021 2020 GBP000 GBP000 GBP000 ========================================= ============ ========= ============ Assets Non-current assets Property, plant and equipment 1,653,840 1,631,312 1,612,026 Right of use assets 11,525 11,952 12,440 Intangible assets 8,624 8,787 8,925 Amount due from parent undertakings - - 135,941 Defined benefit pension surplus 41,653 34,368 27,344 ========================================== ============ ========= ============ 1,715,642 1,686,419 1,796,676 ========================================= ============ ========= ============ Current assets Inventories 668 673 690 Trade and other receivables 88,821 86,735 94,293 Cash and cash equivalents 22,749 41,617 59,288 ========================================== ============ ========= ============ 112,238 129,025 154,271 ========================================= ============ ========= ============ Total assets 1,827,880 1,815,444 1,950,947 ========================================== ============ ========= ============ Liabilities Non-current liabilities Trade and other payables 4,062 4,623 5,207 Loans and borrowings 1,044,540 1,038,371 1,032,213 Defined benefit pension liability 3,221 3,172 3,302 Deferred tax liability 220,122 167,228 165,553 Deferred income 3,235 3,625 4,663 ========================================== ============ ========= ============ 1,275,180 1,217,019 1,210,938 ========================================= ============ ========= ============ Current liabilities Trade and other payables 102,997 88,961 102,687 Loans and borrowings 50,324 80,318 80,324 Deferred income 6,712 5,336 3,899 Provisions 10,375 7,983 4,629 ========================================== ============ ========= ============ 170,408 182,598 191,539 ========================================= ============ ========= ============ Total liabilities 1,445,588 1,399,617 1,402,477 ========================================== ============ ========= ============ Net assets 382,292 415,827 548,470 ========================================== ============ ========= ============ Issued capital and reserves attributable to owners of the parent Share capital 49,312 49,312 49,312 Revaluation reserve 219,922 235,774 238,893 Retained earnings 113,058 130,741 260,265 ========================================== ============ ========= ============ Total equity 382,292 415,827 548,470 ========================================== ============ ========= ============ The financial statements on pages 7 to 15 were approved and authorised for issue by the board of directors and were signed on its behalf by: David Hinton Andrew Farmer
Director Director
9 December 2021 9 December 2021
The notes on pages 11 to 15 form part of these financial statements.
Condensed group statement of changes in equity
for the six months ended 30 September 2021
Share Revaluation Retained Total capital reserve earnings equity Note GBP000 GBP000 GBP000 GBP000 ================================== ====== =============== ============ ============== =============== At 1 April 2021 49,312 235,774 130,741 415,827 ====== Comprehensive income for the six months Loss for the six months Other comprehensive income - - (18,572) (18,572) - - 3,088 3,088 ================================== ====== =============== ============ ============== =============== Total comprehensive income for the six months - - (15,484) (15,484) ================================== ====== =============== ============ ============== =============== Dividends 11 - - (4,500) (4,500) Transfer to retained earnings - (3,056) 3,056 -
Transfers between other reserves - (9) 9 - Deferred tax on releases from revaluation reserve - 764 (764) - Impact of rate change on deferred tax - (13,551) - (13,551) ================================== ====== =============== ============ ============== =============== - (15,852) (2,199) (18,051) ================================== ====== =============== ============ ============== =============== At 30 September 2021 49,312 219,922 113,058 382,292 ================================== ====== =============== ============ ============== =============== At 1 April 2020 49,312 241,386 252,949 543,647 Comprehensive income for the six months Profit for the six months Other comprehensive income - - 28,106 28,106 - - (17,783) (17,783) ================================= ====== =============== ==================== ============= ============= Total comprehensive income for the six months - - 10,323 10,323 ================================= ====== =============== ==================== ============= ============= Dividends 11 - - (5,500) (5,500) Transfer to retained earnings - (2,953) 2,953 - Transfers between other reserves - (11) 11 - Deferred tax on releases from revaluation reserve - 471 (471) - ================================= ====== =============== ==================== ============= ============= - (2,493) (3,007) (5,500) ================================= ====== =============== ==================== ============= ============= At 30 September 2020 49,312 238,893 260,265 548,470 ================================= ====== =============== ==================== ============= =============
Condensed group statement of cash flows
for the six months ended 30 September 2021
Six months Six months ended 30 September ended 30 2021 September GBP000 2020 GBP000 ================================================ ================================= ===================== Cash flows from operating activities (Loss)/profit for the six months (18,572) 28,106 Adjustments for Depreciation of property, plant and equipment 28,404 26,582 Amortisation and impairment of intangibles 1,432 1,855 Finance income (345) (2,055) Finance expense 23,194 20,130 Loss/(gain) on sale of property, plant and equipment 67 23 Difference between pension contributions paid and amounts recognised (2,773) (10,309) Income tax expense 38,631 1,677 ================================================ ================================= ===================== Operating cashflows before movements in working capital 70,038 66,009 Movements in working capital: Increase in trade and other receivables (1,474) (10,045) Decrease/(increase) in inventories 5 (1) Increase in trade and other payables 11,730 8,057 ================================================ ================================= ===================== Cash generated from operations 80,299 64,020 Interest paid (14,048) (13,113) Interest received 345 1,679 Tax (paid)/received (518) (765) ================================================ ================================= ===================== Net cash from operating activities 66,078 51,821 ================================================ ================================= ===================== Cash flows from investing activities Purchases of property, plant and equipment (48,587) (48,822) Sale of property, plant and equipment 143 (20) Purchase of intangibles (1,269) (1,212) Contributions to infrastructure assets received (562) 210 ================================================ ================================= ===================== Net cash used in investing activities (50,275) (49,844) ================================================ ================================= ===================== Cash flows from financing activities Issue costs of listed debt (66) (15) Proceeds from revolving credit facility - 50,000 Repayment of revolving credit facility (80,000) - Proceeds from new revolving credit facility 50,000 - Dividends paid to the holders of the parent (4,500) (5,500) Payment of lease liabilities (105) (155) ================================================ ================================= ===================== Net cash (used in)/from financing activities (34,671) 44,330 ================================================ ================================= ===================== Net cash (decrease)/increase in cash and cash equivalents (18,868) 46,307 Cash and cash equivalents at the beginning of six months 41,617 12,981 ================================================ ================================= ===================== Cash and cash equivalents at the end of the six months 22,749 59,288 ================================================ ================================= =====================
Notes to the condensed group financial statements
for the six months ended 30 September 2021
1. Reporting entity
South East Water Limited (the 'company') is a limited company incorporated in the United Kingdom. The company's registered office is at Rocfort Road, Snodland, Kent, ME6 5AH. These consolidated financial statements comprise the company and its subsidiary (collectively the 'group'). The group's principal activities are the supply of water to a population of 2.3 million in an area of 5,700 kms and the provision of certain ancillary services for customers, developers and other bodies within the limits of the relevant legislation.
2. Basis of preparation
The condensed consolidated financial statements for the six months ended 30 September 2021 are set out on pages 18 to 31, and have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and IAS 34 Interim Financial Reporting as endorsed by the United Kingdom. The statements should be read in conjunction with the financial statements for the year ended 31 March 2021, which were prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.
The condensed group financial statements are presented in sterling.
These interim financial results have not been audited or reviewed by our auditor. The information herein for the year ended 31 March 2021 does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 March 2021 were approved by the Board of Directors on 15 July 2021 and delivered to the Registrar of Companies. The report of the auditors on those accounts was not qualified, did not include any reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report and did not contain any statement under section 498(2) or (3) of the Companies Act 2006.
(i) New standards, interpretations and amendments not yet effective
In April 2021, the IFRS Interpretations Committee ('IFRIC') agenda decision on the treatment of configuration and customisation costs in a cloud computing arrangement was ratified by the International Accounting Standards Board. The group is expecting to reallocate some costs associated with cloud computing from capital to operating expenditure. The group is currently investigating the quantum of the impact from this guidance and will include any adjustments in the financial statements for the year ending 31 March 2022.
3. Key judgements and sources of estimation uncertainty
The preparation of interim financial statements requires the application of judgements and assumptions by management which affects the value of assets and liabilities at the balance sheet date and income and expenditure for the six months ended 30 September 2021. Actual results may differ from those arrived at based on management's judgements and assumptions. In preparing these condensed interim financial statements, the significant judgements made by management in applying the group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the Group Annual Report for the year ended 31 March 2021.
Notes to the condensed group financial statements
for the six months ended 30 September 2021
4. Going concern
The directors have, at the time of approving the financial statements, a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. The directors have also considered the potential impact of the cessation of LIBOR and introduction of SONIA on the group's financial liabilities. The directors have concluded that it is correct to continue to adopt the going concern basis of accounting in preparing the financial statements. Further details are provided in the Chair's statement on page 6.
5. Accounting policies
The accounting policies applied in these condensed interim financial statements are the same as those applied in the last annual financial statements for the year ended 31 March 2021.
6. Revenue
Six months Six months ended 30 September ended 30 2021 September GBP000 2020 GBP000 ======================= ================================================================ ===================== Revenue Unmetered water income 10,233 9,986 Metered water income 114,556 114,222 Other sales 5,986 3,898 ======================= ================================================================ ===================== Total revenue 130,775 128,106 ======================= ================================================================ ===================== Other income Rental income 624 579 Sundry income 5,328 5,051 ======================= ================================================================ ===================== Total other income 5,952 5,630 ======================= ================================================================ ===================== Total income 136,727 133,736 ======================= ================================================================ =====================
Notes to the condensed group financial statements
for the six months ended 30 September 2021
7. Segmental analysis
Wholesale Retail Other activities activities activities Total GBP000 GBP000 GBP000 GBP000 ============================= ========================== ==================== ==================== ================= Period to 30 September 2021 Total income 118,226 10,280 8,221 136,727 ============================= ========================== ==================== ==================== ================= Operating profit 39,401 1,435 2,072 42,908 ============================= ========================== ==================== ==================== ================= Finance costs Finance income (23,194) 345 ============================= ========================== ==================== ==================== ================= Profit before taxation Taxation 20,059 (38,631) ============================= ========================== ==================== ==================== ================= Profit for the period (18,572) ============================= ========================== ==================== ==================== ================= Period to 30 September 2020 Total income 117,494 8,835 7,407 133,736 ============================= ========================== ==================== ==================== ================= Operating profit 45,741 616 1,501 47,858 ============================= ========================== ==================== ==================== ================= Finance costs Finance income (20,130) 2,055 ============================= ========================== ==================== ==================== ================= Profit before taxation Taxation 29,783 (1,677) ============================= ========================== ==================== ==================== ================= Profit for the period 28,106 ============================= ========================== ==================== ==================== =================
8. Net operating costs
Six months Six months ended 30 September ended 30 2021 September GBP000 2020 GBP000 ============================================= ============================================= ==================== Employees benefits expenses 16,899 9,070 Asset expenses 29,903 28,460 Operating lease rentals: Vehicles and office equipment 178 123 Land and buildings 8 8 Fee payable to group's auditor 239 152 Energy costs 9,708 9,643
Rates 9,235 9,187 Contractors 14,023 15,577 Bulk water supplies and abstraction licences 3,962 4,646 Chemicals 1,849 1,923 Insurance and related costs 1,600 1,432 Other 7,014 7,061 Other operating expenses charged to capital projects (2,927) (2,550) ============================================= ============================================= ==================== 91,691 84,732 ============================================= ============================================= ====================
Notes to the condensed group financial statements
for the six months ended 30 September 2021
9. Finance income and expense Six months Six months ended 30 September ended 30 2021 September GBP000 2020 GBP000 ============================================== =========================================== ===================== Finance income Interest receivable on bank balances and short-term deposits Interest receivable from group companies 1 53 Net interest income on defined benefit assets - 344 1,620 382 ============================================== =========================================== ===================== Total finance income 345 2,055 ============================================== =========================================== ===================== Finance expense Effective interest on listed debt Indexation on listed debt Interest on index linked loans Indexation on index linked loans Other finance costs 6,964 6,880 Interest capitalised 5,048 962 6,437 6,348 982 2,096 5,039 5,167 (1,276) (1,323) ============================================== =========================================== ===================== Total finance expense 23,194 20,130 ============================================== =========================================== =====================
10. Taxation
Six months Six months ended 30 ended 30 September September 2021 2020 GBP000 GBP000 ================================= ============================================================ ===================== Current taxation charge Deferred taxation charge 663 813 37,968 864 ================================= ============================================================ ===================== 38,631 1,677 ================================= ============================================================ ===================== The current tax charge is based on management's estimate of the weighted average annual corporation tax rate expected for the full financial year. The total deferred tax is estimated to be GBP38.0 million and includes a one-off charge of GBP36.0 million for the impact of the change in the rate of corporation tax from 19 per cent to 25 per cent announced in the 2021 budget. This change in tax rate is effective from 1 April 2023.
11. Dividends
Six Six months months ended 30 ended 30 September September 2021 2020 GBP000 GBP000 ====================================================================================================================== ==================== Interim dividend of 4.6 pence (2020: 5.6 pence) per Ordinary share paid during the the six months 2,250 Interim dividend 2,750 of 4.6 pence (2020: 5.6 pence) per Ordinary share paid during the six months 2,250 2,750 ====================================================================================================================== ==================== 4,500 5,500 ====================================================================================================================== ====================
Notes to the consolidated financial statements
for the six months ended 30 September 2021
12. Earnings per share Six months Six months ended 30 September ended 30 2021 September GBP000 2020 GBP000 ================================================= ======================================== ===================== (Loss)/profit for the six months from continuing operations (18,572) 28,106 ================================================= ======================================== ===================== Six months Six months ended 30 September ended 30 2021 September Number 2020 Number ================================================= ======================================== ===================== Basic and diluted weighted average number of shares 49,312,354 49,312,354 ================================================= ======================================== ===================== Basic and diluted earnings per share from continuing operations (37.66p) 57.00p ================================================= ======================================== =====================
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IR BIBDDSUGDGBI
(END) Dow Jones Newswires
December 09, 2021 02:00 ET (07:00 GMT)
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