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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December 11, 2020 02:00 ET (07:00 GMT)