RNS Number:6727U
Mid Kent Water PLC
25 November 2005
25 November 2005
MID KENT WATER
INTERIM STATEMENT
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2005
CHAIRMAN'S STATEMENT
Mid Kent Water began the current reporting period against a backdrop of the
lowest level of winter rainfall and aquifer recharge since 1975 and with
resource and related initiatives dominating the agenda. Continued low rainfall
and increasing demand during the summer made it prudent for the Company, along
with other South East England based water companies, to introduce hosepipe
restrictions for the first time since 1995. These restrictions, along with the
benefits from critical capital schemes and operational initiatives, ensured that
all customers received uninterrupted supplies of drinking water throughout the
summer. I would like to take this opportunity of thanking our customers for the
understanding shown and for their on-going support whilst the restrictions
continue. Rainfall and aquifer recharge are continually monitored by the company
and we will only remove the current restrictions if conditions allow.
Against this difficult operational backdrop the six months was also a period of
progress and development in the relationship with our Company's new owners. This
has been very successful and, I believe, all parties look forward to a long-term
successful partnership.
During this period the Company's financial performance has been strong with
Profit before tax up 11% compared to the same period last year. The Company's
operation of its Regulatory contract continues to be our priority. I am
delighted to see that the figures announced by OFWAT show that the Company has
once more improved its Overall Performance Assessment (OPA) performance with
improvements both in actual score (283 out of a maximum of 287) and its ranking
(joint 5th). The continuing success of the Company would not be achievable
without the commitment and the efforts of our staff and I would like to thank
them all for their hard work and dedication.
Financial Performance
Turnover in the half year to 30 September 2005 was #23.9m compared to #21.3m for
the same period last year, an increase of just under 12%. Water income rose by
12.4% to #21.7m, consistent with the increase of 9% and RPI of 3.45% allowed by
OFWAT.
Operating profit for the period was #7.6m, up 8.5% on last year, reflecting the
re-commencement of the Company's pension contributions to the Mid Kent Group
Pension Scheme. Net interest cost rose by #145k to #3.3m as a result of
increased debt although the rise was mitigated by equity received from the
Company's new owners in the Spring and the negotiation of new banking facilities
at favourable rates. The Company has now secured facilities sufficient to ensure
the financing of the Company's capital programme into the next Price Review
period.
The net effect of the above is that profit before tax in the half year to 30
September 2005 was #4.4m, in line with the Company's plan, compared to #3.9m for
the same period last year.
Capital Expenditure
Cash payments for capital expenditure in the period amounted to #11.1m, compared
to #12.8m for the same period last year.
The period saw the final elements of work on the Ford pumping station and this
was formally opened by our local MPs, Roger Gale and Julian Brazier, in
September.
Water Quality
Water Quality is of fundamental performance to the Company and I am pleased to
report that once again the Company has improved its compliance position with a
reported compliance for 2004 of 99.97%, the highest it has ever achieved.
Non Regulated Activity
The Company's commercial activities continue to develop with some notable
successes for the Drinking Water Services consultancy brand.
Gordon Maxwell
Chairman
25 November 2005
INTERIM STATEMENT
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2005
PROFIT AND LOSS ACCOUNT
Notes Half year Half year Year
ended ended ended
30 30 31
September September March
2005 2004 2005
(unaudited) (unaudited) #000
#000 #000
4 Turnover 23,887 21,343 43,200
Operating costs (16,244) (14,297) (29,112)
5 Operating profit 7,643 7,046 14,088
Profit on sale of fixed assets 36 46 177
-------------------------- ------------ ----------- -----------
Profit on ordinary activities before 7,679 7,092 14,265
interest
Interest receivable 1,786 1,626 3,383
Interest payable and similar (5,111) (4,806) (11,372)
charges ------------ ----------- -----------
--------------------------
3 Profit on ordinary activities before 4,354 3,912 6,276
taxation
Tax on profit on ordinary (1,000) (1,104) 337
activities ------------ ----------- -----------
--------------------------
Profit on ordinary activities after 3,354 2,808 6,613
taxation
Proposed dividends (2,471) (1,800) (4,776)
-------------------------- ------------ ----------- -----------
Retained profit for the period 883 1,008 1,837
-------------------------- ------------ ----------- -----------
Earnings per ordinary share - 17.0p 15.1p 35.4p
basic ------------ ----------- -----------
--------------------------
Dividends per ordinary share 12.49p 9.65p 24.95p
-------------------------- ------------ ----------- -----------
INTERIM STATEMENT
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2005
SUMMARISED BALANCE SHEET
Half year Half year Year
ended ended ended
30 30 31
September September March
2005 2004 2005
(unaudited) (unaudited) #000
#000 #000
Fixed assets
Tangible assets 190,061 180,170 184,561
-------------------------- ------------ ----------- -----------
Current assets
Stocks 717 830 798
Debtors - amounts falling due within 9,422 8,918 7,704
one year
Debtors - amounts falling due after
more than one year 36,451 35,000 35,000
Investments 15,000 8,800 12,024
Cash at bank and in hand 5,162 4,121 1,136
-------------------------- ------------ ----------- -----------
66,752 57,669 56,662
Creditors: amounts falling due within (21,644) (48,929) (43,281)
one year ------------ ----------- -----------
--------------------------
Net current assets 45,108 8,740 13,381
-------------------------- ------------ ----------- -----------
Total assets less current 235,169 188,910 197,942
liabilities
Creditors: amounts falling due after (177,778) (141,037) (142,434)
more than one year
Provision for deferred taxation (10,473) (9,474) (9,473)
-------------------------- ------------ ----------- -----------
Net assets 46,918 38,399 46,035
-------------------------- ------------ ----------- -----------
Capital and reserves
Attributable to equity interests
Called up share capital 19,781 18,646 19,781
Share premium 5,672 - 5,672
Profit and loss account 21,465 19,753 20,582
-------------------------- ------------ ----------- -----------
Equity shareholders' funds 46,918 38,399 46,035
-------------------------- ------------ ----------- -----------
INTERIM STATEMENT
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2005
SUMMARISED CASH FLOW STATEMENT
Half year Half year Year
ended ended ended
30 30 31
September September March
2005 2004 2005
(unaudited) (unaudited) #000
#000 #000
Net cash inflow from operating 11,399 4,859 22,079
activities
Returns on investments and servicing (3,568) (102) (2,521)
of finance
Taxation and group relief - 6 (4,048)
Capital expenditure (10,551) (10,833) (22,270)
Equity dividends paid (2,778) (2,629) (4,507)
-------------------------- ------------ ----------- -----------
Cash outflow before management of (5,498) (8,699) (11,267)
liquid resources and financing
Management of liquid resources (2,976) 1,260 (1,964)
-------------------------- ------------ ----------- -----------
Financing 12,500 10,430 13,237
-------------------------- ------------ ----------- -----------
Increase/(decrease) in cash 4,026 2,991 6
-------------------------- ------------ ----------- -----------
Notes 6 and 9 are part of this statement.
Notes
1 The figures for the year ended 31 March 2005 do not constitute the Company's
statutory accounts for that period but have been extracted from the
statutory accounts, which have been filed with the Registrar of Companies.
The auditors have reported on those accounts and that report was unqualified
and did not contain a statement under Section 237 (2) of the Companies Act.
The accounts for the six months ended 30 September 2005 have not been
audited, nor have the accounts for the equivalent period in 2004. They
comply with relevant accounting standards and have been prepared on a
consistent basis using accounting policies set out in the 2005 Annual
Report.
-------------------------------------------------------
2 All recognised gains and losses are included in the profit and loss account
for the period.
-------------------------------------------------------
3 The tax charge for the period ended 30 September 2005 has been based on the
estimated effective rate for the full year.
-------------------------------------------------------
Half year Half year Year
ended ended ended
30 30 31
September September March
2005 2004 2005
(unaudited) (unaudited) #000
#000 #000
4 Analysis of turnover
Unmeasured supplies 11,671 10,533 20,950
Measured supplies 10,039 8,780 17,691
Other activities 2,177 2,030 4,559
-------------------------- ------------ ----------- -----------
23,887 21,343 43,200
-------------------------- ------------ ----------- -----------
5 Operating profit
-------------------------- ------------ ----------- -----------
Operating profit is stated after 25 50 82
charging
Refinancing costs
-------------------------- ------------ ----------- -----------
6 Reconciliation of operating profit to operating cash flow
Operating profit 7,643 7,046 14,088
Depreciation charge 5,040 4,607 9,488
Decrease/(increase) in stocks 81 (108) (76)
Increase in debtors (1,714) (2,089) (945)
Increase/(decrease) in creditors 349 (4,597) (476)
-------------------------- ------------ ----------- -----------
11,399 4,859 22,079
-------------------------- ------------ ----------- -----------
7 Analysis of cash flows
Returns on investment and servicing
of finance
Interest received 331 2,840 4,667
Interest paid (3,899) (2,942) (7,188)
-------------------------- ------------ ----------- -----------
(3,568) (102) (2,521)
-------------------------- ------------ ----------- -----------
Capital expenditure
-------------------------- ------------ ----------- -----------
Purchase of tangible fixed assets (11,054) (12,838) (24,568)
Contributions to infrastructure 456 1,941 2,082
assets
Sale of tangible fixed assets 47 64 216
-------------------------- ------------ ----------- -----------
(10,551) (10,833) (22,270)
-------------------------- ------------ ----------- -----------
Notes (continued)
Half year Half year Year
ended ended ended
30 30 31
September September March
2005 2004 2005
(unaudited) (unaudited) #000
#000 #000
7 Analysis of cash flows (continued)
Management of liquid resources
(Increase)/decrease in cash (2,976) 1,260 (1,964)
deposits ------------ ----------- -----------
--------------------------
Financing
Issue of ordinary share capital - - 6,807
Loans repaid to other group - (9,570) (11,070)
undertakings
Bank loans (repaid)/draw down (21,500) 20,000 21,500
Repayment of debentures - - (4,000)
Index linked loan 34,000 - -
-------------------------- ------------ ----------- -----------
12,500 10,430 13,237
-------------------------- ------------ ----------- -----------
At Cash Non-cash At
1 April Flow changes 30
September
2005 2005
#000 #000 #000 #000
-------------------------- --------- --------- --------- ---------
8 Analysis of net debt 1,136 4,026 - 5,162
Cash at bank and in hand 12,024 2,976 - 15,000
Short term deposits
-------------------------- --------- --------- --------- ---------
Bank loans 13,160 7,002 - 20,162
Index linked loan (21,500) 21,500 - -
Issue costs (144,232) (34,000) (1,677) (179,909)
Debenture stock 2,259 378 (45) 2,592
(461) - - (461)
-------------------------- --------- --------- --------- ---------
(150,774) (5,120) (1,722) (157,616)
-------------------------- --------- --------- --------- ---------
Half year Half year Year
ended ended ended
30 September 30 September 31 March
2005 2004 2005
(unaudited) (unaudited) #000
#000 #000
9 Reconciliation of net cash flow to movement in net debt
Increase/(decrease) in cash in the 4,026 2,991 6
period
Cash inflow from increase in debt (12,122) (10,430) (6,430)
and lease financing (net of issue
costs paid)
Cash (inflow)/outflow from movement 2,976 (1,260) 1,964
in liquid resources ------------ ----------- -----------
--------------------------
Movement in net debt resulting from (5,120) (8,699) (4,460)
cash flows ------------ ----------- -----------
--------------------------
Loan indexation (1,677) (1,391) (4,247)
Amortisation of issue costs (45) (41) (82)
Net debt at start of period (150,774) (106,985) (141,985)
-------------------------- ------------ ----------- -----------
Net debt at end of period (157,616) (117,116) (150,774)
-------------------------- ------------ ----------- -----------
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END
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