TIDMBWRA
RNS Number : 2743I
Bristol Water PLC
11 December 2020
Announcement of unaudited interim results for the six months
ended 30 September 2020
Bristol Water plc (the "Company") announces its interim
unaudited financial statements for the six months ending 30
September 2020. The financial statements reflect, amongst other
things, the outcome of an arbitration with Canal and River Trust to
determine the price payable by the Company for its raw water supply
from the Gloucester & Sharpness Canal with effect from 1 April
2018.
The Company's interim financial results are set out below and
can also be accessed via the Company's website
www.bristolwater.co.uk
For further information contact:
Mel Karam, Chief Executive Officer
Laura Flowerdew, Chief Financial
Officer
Bristol Water plc
Tel 0117 953 6470
Or contact: Bristol Water Corporate Affairs on 0117 953 6470 during
office hours or 0800 917 8066 at any time.
FINANCIAL HIGHLIGHTS
Six months Six months
to to
30 September 30 September
2020 2019
(unaudited) (unaudited)
GBPm GBPm
Turnover 59.6 63.1
EBITDA 23.9 29.5
Profit after taxation 3.3 9.3
Net debt (excluding 8.75% irredeemable cumulative
preference shares) 377.4 349.1
Capital investment in the period 19.1 32.3
Summary
-- EBITDA decreased by 19.0% to GBP23.9m, as a result of
decreased regulatory revenue allowances and COVID-19 impacts on
non-household income. Overall operating costs remained stable year
on year but included increased bad debt costs as a result of
COVID-19 impacts on the economy, and non-recurring transformation
costs to reshape the business to support delivery of the 2020-2025
regulatory business plan. In addition, operating costs include the
accrual of additional charges resulting from the arbitrator's
ruling on the charges payable for abstraction of water from the
Gloucester and Sharpness Canal, relating to the period 1 April 2018
to 30 September 2020.
-- Underlying operating costs therefore decreased year on year,
despite a significant pressure on the business as a result of hot
weather and COVID-19. The prior 6 month period also included
GBP0.6m additional profit on disposal of assets after the sale of 2
properties.
-- GBP19.1m investment in the capital programme focussing on
improving and renewing the company's asset base. The current six
month period has seen a GBP13.2m decrease in expenditure compared
with the comparable period in 2019/20; reflecting completion of the
prior regulatory cycle and a focus on total expenditure solutions
in the current 5 year framework to offer best value solutions for
our customers.
-- Profit after taxation decreased by GBP6.0m as a result of
decreased EBITDA and increased in depreciation following capital
investment in prior years.
-- The increase on net debt principally consists of drawdowns
from committed facilities of GBP20.0m to fund our lower capital
investment and indexation applied to index linked debt of GBP4.5m.
Available undrawn committed facilities amount to GBP44.0m.
CHAIRMAN'S STATEMENT
The first six months of this year have been a challenge.
COVID-19 has had a real impact on the way we run our business and
the way we interact with customers and colleagues. But I am proud
of what we've achieved, I'm proud of every single key worker who
has continued to be out and about, and for everyone who has turned
to working from home. The spring lockdown was very much the
unknown. But we rose to the challenge.
We've also had our appeal to the Competitions and Market
Authority (CMA) to deal with and we continue to work towards an
outcome which will be best for our customers and the business. The
CMA has now confirmed that the final outcome will not be known
until February 2021. We've also been undertaking a significant
Transformation Programme aimed to streamline the business for the
future. We've made huge steps forwards in this six-month period and
there is more to come.
There have been some major operational incidents as well, with a
significant burst on our strategic main on Royate Hill in Bristol
and third-party damage to water main in Yate. Both bursts have
impacted our Customer Minutes Lost target, which was challenging to
begin with.
The recent challenges have had an impact on our health and
safety performance with an increase in Accident Frequency Rate
amongst our employees, but we have seen improvements in our
contractor's performance on health and safety.
This has certainly been a difficult period, one like nothing
I've ever known before.
Thank you to all our colleagues who have shown great public
service throughout these times.
Keith Ludeman
Chairman
10(th) December 2020
INCOME STATEMENT
For the six months ended 30 September 2020
Six months to Six months to Year to
30 September 30 September 31 March
2020 2019 2020
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
Revenue 5 59.6 63.1 125.5
Operating costs 6 (46.2) (43.8) (90.7)
Impairment losses on trade receivables (2.4) (2.0) (4.8)
============== ============== ===========
Operating costs before exceptional items (48.6) (45.8) (95.5)
Exceptional operating costs (0.9) - (7.3)
============== ============== ===========
Total net operating costs (49.5) (45.8) (102.8)
Operating profit 10.1 17.3 22.7
Net interest payable and similar charges 7 (5.3) (5.4) (12.4)
Dividends on 8.75% irredeemable cumulative preference shares 7 (0.5) (0.5) (1.1)
============== ============== ===========
Net interest payable and similar charges (5.8) (5.9) (13.5)
Profit on ordinary activities before taxation 4.3 11.4 9.2
Taxation on profit on ordinary activities 8 (1.0) (2.1) (8.7)
Profit for the period/year 3.3 9.3 0.5
============== ============== ===========
Earnings per ordinary share 9 55.0p 155.0p 8.3p
All activities above relate to the continuing activities of the
Company.
STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 September 2020
Six months to Six months to Year to
30 September 30 September 31 March
2020 2019 2020
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
Profit for the period/year 3.3 9.3 0.5
Other comprehensive income:
Items that will not be reclassified to profit and loss
Actuarial (losses)/gains on retirement benefit surplus (0.3) 0.4 0.5
Re-measurement of defined benefit pension scheme 8 0.2 (0.1) (0.1)
============== ============== ==========
Other comprehensive (expense)/income for the period/year, net of
tax (0.1) 0.3 0.4
Total comprehensive income for the period/year 3.2 9.6 0.9
============== ============== ==========
STATEMENT OF FINANCIAL POSITION
As at 30 September 2020
30 September 30 September 31 March
2020 2019 2020
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
Non-current assets
Property, plant and equipment 10 676.9 649.3 671.8
Intangible assets 11 14.4 11.4 14.0
Other investments - Loans to a UK holding
Company 65.5 68.5 65.5
Deferred tax assets 5.9 5.2 5.9
Retirement benefit surplus 12 9.4 9.7 9.7
============= ============= ===========
772.1 744.1 766.9
Current assets
Inventory 1.7 1.7 1.7
Trade and other receivables 32.5 31.1 32.0
Cash and cash equivalents 11.0 13.9 10.1
============= ============= ===========
45.2 46.7 43.8
Total assets 817.3 790.8 810.7
============= ============= ===========
Non-current liabilities
Lease liabilities 13 (1.7) - (1.9)
Deferred income tax liabilities (72.1) (63.8) (71.6)
Borrowings and derivatives 14 (386.3) (362.4) (379.0)
8.75% irredeemable cumulative preference
shares 14 (12.5) (12.5) (12.5)
Deferred income (82.2) (80.7) (81.8)
Government Grants (0.3) (0.3) (0.3)
============= ============= ===========
(555.1) (519.7) (547.1)
Current liabilities
Lease liabilities 13 (0.4) (0.6) (0.9)
Current portion of deferred income (1.8) (1.6) (1.8)
Trade and other payables (35.8) (37.5) (36.5)
Provisions for liabilities 15 (3.0) - (6.4)
============= ============= ===========
(41.0) (39.7) (45.6)
Total liabilities (596.1) (559.4) (592.7)
============= ============= ===========
Net assets 221.2 231.4 218.0
============= ============= ===========
Equity
Called-up share capital 6.0 6.0 6.0
Share premium account 4.4 4.4 4.4
Other reserves 5.8 5.8 5.8
Retained earnings 205.0 215.2 201.8
============= ============= ===========
Total Equity 221.2 231.4 218.0
============= ============= ===========
The financial statements of Bristol Water plc, registered number 2662226
on pages 4-17, were approved by the Board of directors on 10(th) December
2020 and signed on its behalf by:
Mel Karam , Director, CEO Laura Flowerdew, Director, CFO
STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 September 2020
Called up share capital Share premium Capital redemption Retained earnings Total
account reserve
GBPm GBPm GBPm GBPm GBPm
Balance at 31 March 2019 6.0 4.4 5.8 207.3 223.5
======================== ============== =================== ================== ======
Effect of adoption of
IFRS16: Leases - - - (0.1) (0.1)
Balance at 1 April 2019 as
restated 6.0 4.4 5.8 207.2 223.4
======================== ============== =================== ================== ======
Profit for the year - - - 9.3 9.3
Other comprehensive income
for the year:
Actuarial gains recognised
in respect of retirement
benefit obligations - - - 0.4 0.4
Re-measurement of defined
benefit scheme - - - (0.1) (0.1)
Total comprehensive income
for the year - - - 9.6 9.6
Ordinary dividends - - - (1.6) (1.6)
Balance as at 30 September
2019 6.0 4.4 5.8 215.2 231.4
======================== ============== =================== ================== ======
Balance at 1 April 2020 6.0 4.4 5.8 201.8 218.0
======================== ============== =================== ================== ======
Profit for the period - - - 3.3 3.3
Other comprehensive
expense for the period:
Actuarial losses
recognised in respect of
retirement
benefit obligations - - - (0.3) (0.3)
Re-measurement of defined
benefit scheme - - - 0.2 0.2
Total comprehensive
expense for the period - - - (0.1) (0.1)
Ordinary dividends - - - - -
Balance as at 30 September
2020 6.0 4.4 5.8 205.0 221.2
======================== ============== =================== ================== ======
The Board has not proposed interim dividends on the ordinary
shares in respect of the period ended 30 September 2020 (6 months
ended 30 September 2019: GBP4.6m).
CASH FLOW STATEMENT
For the six months ended 30 September 2020
Six months to Six months to Year to
30 September 30 September 31 March
2020 2019 2020
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
Cashflows from operating activities
Profit before taxation 4.3 11.4 9.2
Adjustments for:
Deferred income amortisation 5 (0.9) (0.9) (1.8)
Depreciation 6 11.9 10.8 22.3
Amortisation of intangibles 6 1.9 1.4 2.9
Impairment of tangible assets - - 0.1
Difference between pension charges and contributions paid 0.4 0.2 0.6
Profit on disposal of assets (0.1) (0.7) (0.7)
Interest income 7 (1.9) (2.1) (4.1)
Interest expense 7 7.9 8.1 18.0
Pension interest income 7 (0.2) (0.2) (0.4)
Increase in inventory - - (0.1)
Increase in trade and other receivables (0.5) (3.3) (2.8)
(Decrease)/increase in trade and other creditors and
provisions (1.1) (0.8) 5.7
============== ============== ===========
Cash generated from operations 21.7 23.9 48.9
Interest paid (6.4) (6.1) (12.3)
Corporation taxes paid (0.4) (1.3) (2.5)
Contributions received 1.3 1.6 3.8
============== ============== ===========
Net cash inflows from operating activities 16.2 18.1 37.9
============== ============== ===========
Cash flows from investing activities
Purchase of property plant and equipment and intangibles (22.1) (34.5) (71.6)
Proceeds from sale of fixed assets 0.1 0.7 0.7
Interest received 1.9 2.1 4.1
Repayment of intercompany loan receivable - - 3.0
============== ============== ===========
Net cash used in investing activities (20.1) (31.7) (63.8)
============== ============== ===========
Cash flows from financing activities
Proceeds from loans and borrowings 6.0 13.0 27.0
Transaction costs related to loans and borrowings - - -
Payment of finance lease liabilities (0.7) (0.5) (0.7)
Preference dividends paid (0.5) (0.5) (1.1)
Equity dividends paid - (1.6) (6.3)
============== ============== ===========
Net cash from financing activities 4.8 10.4 18.9
============== ============== ===========
Net increase/(decrease) in cash and cash equivalents 0.9 (3.2) (7.0)
Cash and cash equivalents, beginning of period 10.1 17.1 17.1
Cash and cash equivalents, end of period 11.00 13.9 10.1
============== ============== ===========
NOTES TO THE INTERIM ACCOUNTS
For the six months ended 30 September 2020
1 General Information
Bristol Water plc ("the Company") is a regulated Water only supply company holding an instrument
of appointment as set out by the Water Industry Act 1991. The company is the licensed monopoly
provider of water services in the Bristol area, and as such is regulated by the Water Services
Regulation Authority - Ofwat.
The Company is a public liability company, limited by shares with irredeemable preference
shares and debenture stock listed on the London Stock Exchange.
The address of its registered office is Bridgwater Road, Bristol, BS13 7AT, England.
2 Basis of preparation
The financial information contained in this interim announcement does not constitute statutory
accounts within the meaning of section 435 of the Companies Act 2006.The interim accounts
have been prepared in accordance with Financial Reporting Standard 104 "Interim Financial
Reporting" issued by the Financial Reporting Council and the Disclosure Rules and Transparency
Rules of the United Kingdom's Financial Conduct Authority.
The Company has adopted FRS 101 "Reduced disclosure framework - Disclosure exemptions from
EU-adopted IFRS for qualifying entities".
3 Accounting policies
The same accounting policies and methods of computation used in preparing the annual financial
statements as at 31 March 2020 have been used in preparing these interim accounts.
3.1 Going concern
The Company meets its day-to-day working capital requirements through its cash reserves and
borrowings. The Company's forecasts and projections show that the Company will be able to
operate within the level of its current cash reserves and borrowing facilities. After making
enquiries, the Directors have an expectation that the Company has adequate resources to continue
in operational existence for the foreseeable future. The Company therefore continues to adopt
the going concern basis in preparing its financial statements. Further information on the
Company's borrowings is given in note 13.
4 Critical accounting estimates and judgments
The preparation of interim financial statements requires management to make judgements, estimates
and assumptions that affect the application of accounting policies and the reported amounts
of assets and liabilities, income and expense. Actual results may differ from these estimates.
Estimates and judgments are continually evaluated and are based on historical experience and
other factors, including expectations of future events that are believed to be reasonable
under the circumstances
The significant judgements made by management in applying the Company's accounting policies
and the key sources of estimate uncertainty were the same as those applied to the financial
statements for the year ended 31 March 2020.
5 Revenue
Six months to Six months to Year to
30 September 2020 30 September 2019 31 March 2020
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Appointed income
Household - measured 26.0 24.2 49.0
Household - unmeasured 21.0 22.9 45.2
Non-household- measured 10.1 13.0 25.5
Non-household - unmeasured 0.1 0.2 0.3
Contributions from developers 0.9 0.9 1.8
Third party services 0.7 1.1 1.9
Rental income 0.4 0.3 0.7
=================== =================== ===============
59.2 62.6 124.4
Non-appointed income
Recreations 0.3 0.3 0.7
Rental income - 0.1 0.1
Other 0.1 0.1 0.3
=================== =================== ===============
0.4 0.5 1.1
59.6 63.1 125.5
=================== =================== ===============
6 Operating expenses
Six months to Six months to Year to
30 September 2020 30 September 2019 31 March 2020
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Operating expenses include -
Payroll cost, net of recharges to fixed assets and
including
retirement benefit costs 9.8 9.2 18.6
Depreciation and amortisation 13.8 12.2 25.2
Profit on disposal of assets (0.1) (0.7) (0.7)
Exceptional costs include -
Transformation costs 0.9 - -
Provision for legal and similar costs - - 7.3
The transformation costs relate to a restructuring programme currently in progress.
The provisions for legal costs relate to two separate legal processes the Company entered
into during the year ending 31 March 2020. See note 15.
7 Net interest payable and similar charges
Six months to Six months to Year to
30 September 2020 30 September 2019 31 March 2020
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Interest payable and similar charges:
Bank borrowings 1.1 1.1 2.2
Term loans and debentures:
interest charges 5.1 5.0 10.0
indexation 1.2 1.7 5.0
Leases 0.2 - -
Capitalisation of borrowing cost (0.2) (0.2) (0.3)
Dividends on 8.75% irredeemable cumulative
preference shares 0.5 0.5 1.1
=================== =================== ===============
7.9 8.1 18.0
Interest receivable and similar income:
Interest income in respect of retirement benefit
scheme (0.2) (0.2) (0.4)
Loan to Bristol Water Holdings UK Ltd - interest
receivable (1.9) (2.0) (4.0)
Other external investments and deposits income - - (0.1)
=================== =================== ===============
(2.1) (2.2) (4.5)
Total net interest payable and similar charges 5.8 5.9 13.5
=================== =================== ===============
The rate used to determine the amount of borrowing costs eligible for capitalisation was 3.6%
(30 September 2019: 4.2%), which is the weighted average interest rate of applicable borrowings.
Dividends on the 8.75% irredeemable cumulative preference shares are payable at a fixed rate
of 4.375% on 1 April and 1 October each year. Payment by the Company to the share registrars
is made two business days earlier. The payments are classified as interest in accordance with
IAS 39 "Financial Instruments - Recognition and Measurement".
8 Taxation Six months to Six months to Year to
30 September 2020 30 September 2019 31 March 2020
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Tax expense included in Income Statement
Current tax:
Corporation tax on profits for the period /year 0.5 1.5 1.2
Adjustment in respect of prior period - - (0.2)
=================== =================== ===============
Total current tax 0.5 1.5 1.0
Deferred tax:
Origination and reversal of timing differences 0.4 0.6 0.7
Adjustment to prior periods 0.1 - 0.2
Effect of change in UK corporation tax rate - - 6.8
=================== =================== ===============
Total deferred tax 0.5 0.6 7.7
Tax expense on profit 1.0 2.1 8.7
=================== =================== ===============
Tax income/expense (included in other comprehensive
income)
Remeasurement of post-employment benefit liability (0.2) 0.1 0.1
Total tax income included in other comprehensive
income (0.2) 0.1 0.1
=================== =================== ===============
9 Earnings per ordinary share
At At At
30 September 2020 30 September 2019 31 March 2020
(unaudited) (unaudited) (audited)
m m m
Basic earnings per ordinary share have been
calculated as follows -
Earnings attributable to ordinary shares GBP3.3 GBP9.3 GBP0.5
Weighted average number of ordinary shares 6.0 6.0 6.0
=================== =================== ===============
55.0p 155.0p 8.3p
As the Company has no obligation to issue further shares, disclosure of earnings per share
on a fully diluted basis is not relevant.
10 Property, plant and equipment
Six months to Six months to Year to
30 September 2020 30 September 2019 31 March 2020
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Net book value, beginning of period 671.8 629.4 629.4
Adjustment for change in accounting policy - 0.6 0.6
Additions 17.0 30.2 64.2
Disposals - (0.1) -
Depreciation charge for the period (11.9) (10.8) (22.3)
Impairment charge - - (0.1)
Net book value, end of period 676.9 649.3 671.8
==================== ==================== ===============
The net book value of property, plant and equipment includes GBP6.1m (30 September 2019: GBP5.9m)
of borrowing costs capitalised in accordance with IAS 23. During the six months ended 30 September
2020 GBP0.2m was capitalised using 3.6% prorated annual capitalisation rate (30 September
2019 GBP0.2m, 4.2%).
11 Intangible assets
Six months to Six months to Year to
30 September 2020 30 September 2020 31 March 2020
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Net book value, beginning of period 14.0 10.5 10.5
Additions 2.3 2.3 6.4
Disposals - - -
Amortisation charge for the period (1.9) (1.4) (2.9)
Net book value, end of period 14.4 11.4 14.0
=================== =================== ===============
12 Retirement benefits
Pension arrangements for employees have historically been provided through the Company's membership
of the Water Companies' Pension Scheme (WCPS), which provides defined benefits based on final
pensionable pay. The Company's membership of WCPS is through a separate section of the scheme.
On 7 June 2018 the Trustee of the Bristol Water Section of the WCPS purchased a bulk annuity
policy to insure the benefits for the members in the section. Following this, the method for
valuing the liabilities of the pension scheme has remained the same. However, the scheme asset,
in the form of the insurance policy, now match the value of the liabilities.
The gross pension surplus of GBP14.4m at 30 September 2020 (30 September 2019 GBP15.0m) relates
to the market value of assets still held by the scheme, and is stated after including a GBP1.0m
estimation of the liability arising to adjust certain scheme benefits to compensate for the
effect of unequal Guaranteed Minimum Pensions for men and women.
Looking ahead, we expect the insurer will take over responsibility for the payment and administration
of member benefits. Once this has happened members will no longer be members of the Section,
instead they will have individual policies with the insurer. At this point the Section will
be wound up.
In summary, assets and liabilities under IAS 19 were:
At At At
30 September 2020 30 September 2019 31 March 2020
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Fair value of section assets 198.3 202.1 171.0
Present value of liabilities (183.9) (187.1) (156.1)
=================== =================== ===============
Surplus in the section 14.4 15.0 14.9
Less: restriction of surplus (5.0) (5.3) (5.2)
Net pension asset on IAS 19 basis 9.4 9.7 9.7
=================== =================== ===============
13 Leases
a) Amounts recognised in the Statement of Financial Position
The Statement of Financial Position shows the following amounts relating to leases:
At At At
30 September 2020 30 September 2019 31 March 2020
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Included in Property, Plant and Equipment
Cost 2.5 12.7 14.5
Accumulated depreciation (0.5) (11.2) (11.5)
=================== =================== ===============
2.0 1.5 3.0
Included in Intangible assets
Cost - 1.3 1.3
Accumulated depreciation - (1.3) (1.3)
=================== =================== ===============
Net borrowings - - -
During the year a lease with a cost of GBP13.3m and a net book value of GBP0.6m of operational
assets ended. The assets have not been disposed.
13 Leases (continued)
b) Amounts recognised in the income statement
The Income Statement shows the following amounts relating to leases:
At At At
30 September 2020 30 September 2019 31 March 2020
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Depreciation charge relating to assets under leases 0.2 0.2 0.5
Interest expense (included in finance cost) 0.2 - 0.1
Expense relating to short-term leases (included in
administrative expenses) - - 0.1
14 Net borrowings
At At At
30 September 2020 30 September 2019 31 March 2020
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Net borrowings comprise -
Borrowings and derivatives due after one year 386.3 360.4 379.0
Lease liabilities due after one year 1.7 2.0 1.9
Current portion of lease liabilities 0.4 0.6 0.9
388.4 363.0 381.8
Cash and cash equivalents (11.0) (13.9) (10.1)
=================== =================== ===============
Net borrowings excluding 8.75% irredeemable
cumulative
preference shares 377.4 349.1 371.7
8.75% irredeemable cumulative preference shares 12.5 12.5 12.5
Net borrowings 389.9 361.6 384.2
=================== =================== ===============
Borrowing facilities
At the period end the Company had unutilised borrowing facilities of GBP44.0m.
Fair value of financial assets and liabilities measured at amortised cost .
The fair value of borrowings are as follows:
Six months to Six months to Year to
30 September 2020 30 September 2019 31 March 2020
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Non-current 561.2 534.1 547.3
Current 0.4 0.6 0.8
======================== ======================= ==================
520.1 534.7 548.1
======================== ======================= ==================
15 Provisions for Liabilities
Six months to Six months to Year to
30 September 2020 30 September 2019 31 March 2020
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Net book value, beginning of period 6.4 - -
Additions - - 7.3
Utilised in the year (3.4) - (0.9)
Net book value, end of period 3.0 - 6.4
====================== ===================== =================
In November 2019, the Company entered into a formal arbitration process with the Canal and
River Trust ("CRT") concerning charges for the supply of raw water to the Company from the
Gloucester and Sharpness Canal. Bristol Water is supplied raw water from the Gloucester and
Sharpness Canal, under an agreement with CRT. The agreement provides for charges payable to
CRT to be reviewed periodically and during 2018/19 CRT triggered a charges review seeking
a substantial increase. On 7 December 2020, judgement was received from the arbitrator, resulting
in an increase in the annual charge payable from 1 April 2018 onwards. The increase in the
charges has been accrued in full in the six months to 30 September 2020, based on the ruling
made. Following this ruling, clarification may be required on detail relating to the outcome
of the arbitration, as well as on the apportionment of costs arising in respect of the arbitration.
Following the publication of Ofwat's 2019 Final Determination, which sets the price and services
the Company must deliver over the 2020-2025 regulatory period, the Company requested a referral
of this Determination to the Competition and Market's Authority ("CMA") in February 2020.
The Company is seeking a re-determination of the outcomes, in order to ensure they reflect
a sustainable, financeable position for the business. The Competition and Markets Authority
(CMA) published its preliminary findings in September 2020. These findings indicated the CMA's
initial conclusions that cost of capital in particular needed to materially increase compared
with that set by Ofwat in its Final Determination. The CMA has now published a revision to
its Administrative Timetable for the completion of its redetermination. It is now anticipated
that the CMA will publish is Final Redetermination in relation to Bristol Water plc in February
2021. This represents a delay from the previous timetable, which had expected publication
in December 2020.
A provision was recognised during the year ended 31 March 2020 in respect of the estimated
costs associated with this process, of which GBP2.0m remains outstanding as at 31 March 2020.
The process is currently expected to be completed by February 2021.
16 Commitments and contingent liabilities
Capital commitments at 30 September 2020 contracted for but
not provided were GBP3.5m (2019: GBP7.2m).
17 Ultimate parent company and controlling party
The immediate parent company for this entity is Bristol Water
Core Holdings Limited, a company incorporated in England and
Wales.
As at 30 September 2020, the Directors consider, the ultimate
parent and controlling party of the Company to be iCON Infrastructure
Partners III, L.P acting through its Managing General Partner,
iCON Infrastructure Management III Limited.
The smallest and largest group in which the Company is consolidated
is Bristol Water Group Limited and copies of its consolidated
annual report are available from Suite 1, 3(rd) floor, 11-12
St James's Square, London, SW1Y 4LB.
18 Related party transactions
During the six months to 30 September 2020 the Company spent
GBP1.5m (2019: GBP1.6m) on the purchase of customer related
services from BWBSL, a joint venture company between Bristol
Water Holdings Limited and Wessex Water Services Limited. At
30 September 2020 GBP1.4m (2019: GBP0.7m) was receivable from
BWBSL and GBP1.0m (2019: GBP1.4m) was payable to BWBSL.
During the six months to 30 September 2020 the Company recognised
sales of GBP9.1m (2019 GBP10.9m) to Water 2 Business Limited
(W2B), an associate company within the Bristol Water Group Limited
group of companies. At 30 September 2020 GBP1.4m (2019: GBP1.8m)
was receivable from W2B primarily in respect of water supply
charges.
18 Circulation
This interim announcement is available on the Bristol Water
web site: http://www.bristolwater.co.uk . Paper copies are also
available from the Company's registered office at Bridgwater
Road, Bristol, BS13 7AT.
DIRECTORS' RESPONSIBILITIES FOR THE PREPARATION OF INTERIM
ACCOUNTS
The directors' confirm that these condensed interim financial
statements have been prepared in accordance with FRS104 'Interim
Financial Reporting', and that the interim management report
includes a fair review of the information required by DTR 4.2.7 and
DTR 4.2.8, namely:
-- an indication of important events that have occurred during
the first six months and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
-- material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.
The directors of Bristol Water Plc are listed in the Bristol
Water Plc Annual Report for 31 March 2020. A list of current
directors is maintained on the Bristol Water plc website:
www.bristolwater.co.uk
Going concern
The directors have a reasonable expectation that the Company has
adequate resources available to it to continue in operational
existence for the foreseeable future and have therefore continued
to adopt the going concern policy in preparing the interim
accounts. This conclusion is based upon, amongst other matters, a
review of the Company's financial projections together with a
review of the GBP11.0m cash and GBP44.0m unutilised committed
borrowing facilities available to the Company as well as
consideration of the Company's capital adequacy.
By order of the Board
H Hancock
Company Secretary
10(th) December 2020
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END
IR FFWFLSESSEEE
(END) Dow Jones Newswires
December 11, 2020 02:00 ET (07:00 GMT)
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