Announcement of unaudited preliminary financial results for the year ended 31 March 2023

 

Bristol Water plc (the "Company") announces its unaudited results for the twelve months ending 31 March 2023.

 

The Company's interim financial results are set out below and can also be accessed via the Company's website.

 

FINANCIAL PERFORMANCE

	2022/23 (10 months trading)	2021/22 (12 months trading) restated
Revenue	£109.0m	£125.5m
Underlying revenue1,2	£115.6m	£125.5m
Underlying (loss)/profit before tax1	(£3.8m)	£15.1m
Non-underlying items before tax[1]	(£20.9m)	(£0.1m)
(Loss)/profit before tax	(£24.7m)	£15.0m
Earnings per share
Statutory loss per share	(336.7p)	(175.0p)

 

Highlights

·    The full year results include the 10 months trading of Bristol Water plc as a statutory water undertaker, to the point of the statutory transfer which transferred its licence, trading, assets and liabilities to South West Water Limited on 1^st February 2023.  All comparators are for 12 months of trading.

·    Post the statutory transfer, no transactions were recognised in the income statement except for those relating to the remaining preference shares, debentures and pension asset.  Going forward remaining obligations relating to these will be met from matching intra-group contracted assets and related receipts.

·    £115.6 million underlying Revenue - reduction reflecting 2 months fewer of trading, offset by increased tariffs in line with the regulatory mechanism.

·    £3.8 million underlying loss before tax - reduction reflecting the near-term pressures on earnings from inflation driven power pricing and financing costs.

·    Significant net non-underlying reduction in profits - delivering on our WaterShare+ commitments and cost resulting from the statutory transfer to South West Water Limited, including bond redemption costs and legal costs.

·    Statutory loss per share of 336.7 pence includes significant non-underlying items. Statutory loss per share for 2021/22 was impacted by the significant non-underlying deferred tax charge in respect of the change in corporation tax rate.

 

For further information, please contact:

Paul Boote	Group Chief Financial Officer	01392 443 168
Jennifer Cooke	Group Head of Investor Relations
James Murgatroyd Harry Worthington	FGS Global	020 7251 3801

 

 

PERFORMANCE REPORT

 

On 1 February 2023, the merger of South West Water and Bristol Water completed with Bristol Water's operating licence transferring to South West Water Limited ('SWW').  As part of the transfer scheme, the trade and majority of assets and liabilities of Bristol Water plc ('BW') were transferred to SWW.  SWW will continue to operate under the Bristol Water name in the area Bristol Water serves. From this date, the operating activities of BW ceased with only residual preference shares, debt and the pension surplus remaining in the company.  Any commitments under these instruments are fully supported by interest bearing loans receivable from SWW.  As a result of the above, the financial performance included in this announcement relates to 10 months of trade up to the point of the statutory transfer.

 

Revenue reduced in the year reflecting 2 months fewer of trading, offset by increased tariffs in line with the regulatory mechanism.  Household demand continues to reduce as the number of people working from home after COVID-19 continues to reduce, and as a result Non-household demand continues to recover towards pre-COVID-19 levels.

 

Significant levels of inflation in the year resulted in a number of costs increasing markedly.  Power prices increased significantly in the year, and while we were hedged to a high level in the first half of the year the second half resulted in cost around 50% higher than previous year.  Chemicals prices also increased by around the same proportion (including secondary power increase effects).

 

In addition the very warm summer led to increased usage of the northern area of our supply region's resources, which require more power and chemical consumption, in order to maintain resilience to our supply.

 

As a result of the high levels of inflation over the last two years, our indexation costs remained high.

 

A number of non-underlying items have been incurred this year as a result of the statutory transfer.  Customers were able to take advantage of the WaterShare+ scheme which led to £6.6 million being returned to customers as a bill credit or shares, and our index linked bond was redeemed resulting in a loss of £13.1 million.

 

 

BRISTOL WATER PLC

UNAUDITED PRELIMINARY FINANCIAL STATEMENTS

 

FOR THE YEAR ENDED 31 MARCH 2023

 

 

 

 

INCOME STATEMENT (UNAUDITED)

for the year ended 31 March 2023

 

                                                                       

				2023	2022 Restated (note 4)
	Notes			£m	£m
Revenue before non underlying items	5			115.6	125.5
Non underlying revenue	5			(6.6)	-
Total revenue				109.0	125.5
Operating costs excluding impairment losses on trade receivables	6			(84.6)	(88.8)
Impairment losses on trade receivables	6			(3.5)	(2.7)
Operating costs before non underlying items				(88.1)	(91.5)
Non underlying operating costs	6			(1.2)	(0.1)
Total net operating costs	6			(89.3)	(91.6)
Operating profit				19.7	33.9
Interest payable and similar charges before non underlying items	7		(34.0)		(22.8)
Interest receivable and similar charges before non underlying items	7			2.7	3.9
Non underlying interest payable and similar charges	7			(13.1)	-
Total net interest payable and similar charges	7			(44.4)	(18.9)
(Loss) / profit before tax				(24.7)	15.0
Taxation on profit on ordinary activities	8			4.5	(25.5)
Loss for the financial year				(20.2)	(10.5)
Loss per ordinary share	9			(336.7)p	(175.0)p
Substantially all of the Company's operations were discontinued in the year.

 

 

STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

for the year ended 31 March 2023         

 

					2023	2022 Restated (note 4)
		Notes			£m	£m
Loss for the financial year					(20.2)	(10.5)
Other comprehensive income/(loss):
Items that will not be reclassified to profit and loss
Actuarial loss on retirement benefit surplus					0.5	(1.0)
Remeasurement of defined benefit pension scheme restriction		8			(0.1)	0.4
Other comprehensive income/(loss) for the year, net of tax					0.4	(0.6)
Total comprehensive loss for the year					(19.8)	(11.1)

STATEMENT OF FINANCIAL POSITION (UNAUDITED)

at 31 March 2023

				2023	2022 Restated (note 4)
	Notes			£m	£m
Non-current assets
Property, plant and equipment				-	696.6
Intangible assets				-	12.7
Other investments - Loans to group undertakings				-	61.1
Other receivables				26.6	-
Retirement benefit surplus				8.2	8.1
				34.8	778.5
Current assets
Inventory				-	1.9
Trade and other receivables	10			144.5	29.5
Current tax asset	10		0.7		-
Cash and cash equivalents				0.1	12.0
				145.3	43.4
Total assets				180.1	821.9
Non-current liabilities
Lease liabilities				-	(1.1)
Deferred income tax liabilities				-	(99.6)
Borrowings and derivatives	11			(1.6)	(399.7)
8.75% irredeemable cumulative preference shares	11			(12.5)	(12.5)
Deferred income				-	(18.5)
Government grants				-	(0.3)
				(14.1)	(531.7)
Current liabilities
Lease liabilities				-	(0.4)
Current portion of deferred income				-	(2.7)
Trade and other payables				(0.9)	(36.7)
Current tax liability			-		(1.3)
				(0.9)	(41.1)
Total liabilities				(15.0)	(572.8)
Net assets				165.1	249.1
Equity
Called-up share capital				6.0	6.0
Share premium account				4.4	4.4
Other reserves				5.8	5.8
Retained earnings				148.9	232.9
Total Equity				165.1	249.1

                                               

STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

For the year ended 31 March 2023

 

			Called up share capital	Share premium account	Capital redemption reserve		Retained earnings	Total
			£m	£m	£m		£m	£m
Balance at 1 April 2021 (as restated) (note 4)			6.0	4.4	5.8		252.8	269.0
Loss for the year (as restated)			-	-	-		(10.5)	(10.5)
Other comprehensive loss for the year:
	Actuarial loss recognised in respect of
	retirement benefit obligations		-	-	-		(1.0)	(1.0)
	Remeasurement of defined benefit pension scheme		-	-	-		0.4	0.4
Total comprehensive loss for the year			-	-	-		(11.1)	(11.1)
Ordinary dividends			-	-	-		(8.9)	(8.9)
Share based payments							0.1	0.1
Balance as at 31 March 2022 (restated) (note 4)			6.0	4.4	5.8		232.9	249.1
Balance as at 1 April 2022 (restated) (note 4)			6.0	4.4	5.8		232.9	249.1
Loss for the year			-	-	-		(20.2)	(20.2)
Other comprehensive income for the year:
	Actuarial profit recognised in respect of
	retirement benefit obligations		-	-	-		0.5	0.5
	Remeasurement of defined benefit pension scheme		-	-	-		(0.1)	(0.1)
Total comprehensive loss for the year			-	-	-		(19.8)	(19.8)
Ordinary dividends			-	-	-		(64.3)	(64.3)
Share based payments			-	-	-		0.1	0.1
Balance as at 31 March 2023			6.0	4.4	5.8		148.9	165.1

 

 

The Board has not proposed a final dividend in respect of the financial year 2022/23 (2022: £nil).

 

 

CASH FLOW STATEMENT (UNAUDITED)

For the year ended 31 March 2023

 

			2023		2022 Restated (note 4)
		Notes		£m	£m
Cash flows from operating activities
(Loss)/profit before taxation				(24.7)	15.0
Adjustments for:
	Share based payments			0.1	0.1
	Deferred income amortisation			(3.3)	(3.2)
	Depreciation	6		21.4	25.0
	Amortisation of intangibles	6		2.9	3.9
	Difference between pension charges and
	contributions paid			0.6	0.9
	Loss / (profit) on disposal of assets	6		0.1	(0.1)
	Interest income	7		(2.4)	(3.6)
	Interest expense	7		47.1	22.8
	Pension interest income	7		(0.3)	(0.3)
	(Increase) in inventory			(0.5)	(0.2)
	Decrease/(increase) in trade and other receivables			0.5	(1.3)
	Increase/(decrease) in trade and other creditors and provisions			9.5	(0.7)
Cash generated from operations				51.0	58.3
Interest paid				(21.4)	(12.4)
Corporation taxes paid				(1.6)	(1.9)
Contributions received				2.8	2.1
Net cash generated from operating activities				30.8	46.1
Cash flows from investing activities
Purchase of property, plant and equipment and intangibles				(40.7)	(40.4)
Proceeds from sale of fixed assets				-	0.2
Interest received		7		2.4	3.6
Repayment of intercompany loan receivable				61.1	-
Disposal of trade and assets		15		(5.1)	-
Net cash used in investing activities				17.7	(36.6)
Cash flows from financing activities
Proceeds from loans and borrowings				81.1	11.0
Repayment of loans and borrowings				(75.8)	(9.0)
Payment of lease liabilities				(0.3)	(0.4)
Preference dividends paid		7		(1.1)	(1.1)
Equity dividends paid				(64.3)	(8.9)
Net cash used in financing activities				(60.4)	(8.4)
Net (decrease)/increase in cash and cash equivalents				(11.9)	1.1
Cash and cash equivalents, beginning of year				12.0	10.9
Cash and cash equivalents, end of year				0.1	12.0

 

Substantially all of the Company's operations were discontinued in the year.

NOTES TO THE FINANCIAL STATEMENTS

 

1		General information Bristol Water plc is a public company, limited by shares, with irredeemable preference shares and debenture stock listed on the London Stock Exchange.   The Company is incorporated and domiciled in England, United Kingdom. The address of its registered office is Bridgwater Road, Bristol, BS13 7AT, England.
2		Basis of preparation
		The unaudited financial statements of the Company are prepared on a historical cost basis, except for financial assets and financial liabilities (including derivative instruments) measured at fair value and in accordance with UK adopted international financial reporting standards (IFRS) in conformity with the requirements of the Companies Act 2006.   The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company's accounting policies.   New and amended standards adopted by the Company   The Company has applied the following amendments for the first time for their annual reporting period commencing 31 March 2023: • Property, Plant and Equipment: Proceeds before Intended Use - Amendments to IAS 16;  and • Annual Improvements to IFRS Standards 2018-2020.   The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods.   New standards and interpretations not yet adopted   Certain new accounting standards, amendments to accounting standards and interpretations have been published that are not mandatory for 31 March 2023 reporting periods and have not been early adopted by the Company. These standards, amendments or interpretations are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.
3	Going concern The Company's licence, trade, assets and obligations were transferred to South West Water Limited as a going concern on 1 February 2023, the consideration being the net asset carrying value of £171.1m settled via an intercompany debtor. Post the statutory transfer, no transactions were recognised in the income statement except for those relating to the remaining preference shares, debentures, pension asset and intercompany loans.  Going forward remaining obligations relating to these will be met from matching intra-group contracted assets and related receipts. The Company has received confirmation from Pennon Group plc that it will provide support to the Company should it be required, to meet its liabilities as they fall due for the foreseeable future.  As a result, the Directors have concluded that the Company has adequate resources, or the reasonable expectation of raising further resources as required, to continue in operational existence for the foreseeable future. The Company therefore continues to adopt the going concern basis in preparing its financial statements.

 

4	Change in accounting policies   As a result of the acquisition of the Company by Pennon Group Plc on 3 June 2021, the Company's accounting policies adopted for the statutory financial statements have been aligned with those of Pennon Group Plc.  This note explains the impact of these accounting policies on the Company's financial statements.
Reconciliation of equity as at 1 April 2021 and 31 March 2022
			31 March 2021 as originally presented	Change	31 March 2021 restated (unaudited)		31 March 2022 as originally presented	Change	31 March 2022 restated (unaudited)
Note			£m	£m	£m		£m	£m	£m
Non-current assets
Property, plant and equipment			682.9	-	682.9		696.6	-	696.6
Intangible assets			13.3	-	13.3		12.7	-	12.7
Investments			61.1	-	61.1		61.1	-	61.1
Deferred tax assets		B	5.9	(5.9)	-		7.9	(7.9)	-
Retirement benefit surplus			9.1	-	9.1		8.1	-	8.1
			772.3	(5.9)	766.4		786.4	(7.9)	778.5
Current assets
Inventory			1.7	-	1.7		1.9	-	1.9
Trade and other receivables			29.6	-	29.6		29.5	-	29.5
Cash and cash equivalents			10.9	-	10.9		12.0	-	12.0
			42.2	-	42.2		43.4	-	43.4
Total assets			814.5	(5.9)	808.6		829.8	(7.9)	821.9
Non-current liabilities
Lease liabilities			(1.5)		(1.5)		(1.1)	-	(1.1)
Deferred tax liabilities		B	(72.3)	(6.3)	(78.6)		(93.2)	(6.4)	(99.6)
Borrowings and derivatives			(379.2)	-	(379.2)		(399.7)	-	(399.7)
8.75% irredeemable cumulative preference shares			(12.5)	-	(12.5)		(12.5)	-	(12.5)
Deferred income		A	(82.9)	63.3	(19.6)		(83.0)	64.5	(18.5)
Government grants			(0.3)	-	(0.3)		(0.3)	-	(0.3)
			(548.7)	57.0	(491.7)		(589.8)	58.1	(531.7)
Current liabilities
Lease liabilities			(0.4)	-	(0.4)		(0.4)	-	(0.4)
Borrowings and derivatives			(9.0)	-	(9.0)		-	-	-
Deferred income		A	(1.8)	(0.9)	(2.7)		(1.9)	(0.8)	(2.7)
Trade and other payables			(35.3)	-	(35.3)		(38.0)	-	(38.0)
Provisions for liabilities			(0.5)	-	(0.5)
			(47.0)	(0.9)	(47.9)		(40.3)	(0.8)	(41.1)
Total liabilities			(595.7)	56.1	(539.6)		(630.1)	57.3	(572.8)
Net assets			218.8	50.2	269.0		199.7	49.4	249.1
Equity
Called-up share capital			6.0	-	6.0		6.0	-	6.0
Share premium account			4.4	-	4.4		4.4	-	4.4
Other reserves			5.8	-	5.8		5.8	-	5.8
Retained earnings		A,B	202.6	50.2	252.8		183.5	49.4	232.9
Total Equity			218.8	50.2	269.0		199.7	49.4	249.1

 

The impact of the above adjustments includes the correction of a presentational error whereby deferred tax assets should have been offset against deferred tax liabilities in line with IAS 12.

4	Change in accounting policies (continued)

 

Reconciliation of total comprehensive income for the year ended 31 March 2022

 

		Year to 31 March 2022 as originally presented	Change	Year to 31 March 2022 restated (unaudited)
Note		£m	£m	£m
Revenue	A	124.2	1.3	125.5
Total operating costs		(91.6)	-	(91.6)
Operating profit		32.6	1.3	33.9
Net interest payable and similar charges		(18.9)	-	(18.9)
Profit on ordinary activities before taxation		13.7	1.3	15.0
Taxation on profit on ordinary activities	B	(23.4)	(2.1)	(25.5)
Loss for the year		(9.7)	(0.8)	(10.5)
Other comprehensive loss for the year, net of tax		(0.6)	-	(0.6)
Total comprehensive loss for the year		(10.3)	(0.8)	(11.1)

Notes to the reconciliation of equity as at 1 April 2021 and 31 March 2022 and total comprehensive loss for the year ended 31 March 2022
Developer contributions The Company previously recognised all contributions received from developers in respect of network and other assets as deferred income and amortised this to revenue over a period of 60 years. This policy has been changed to align with the Pennon Group plc's policy as follows.
A	Contributions relating to connections or alterations to the water network. Where the performance obligation relates solely to a connection to the network, revenue is recognised at the point of connection when the customer is deemed to obtain control.   Contributions paid in advance where the connection has not yet completed are treated as a contract liability and are recognised in deferred income on the balance sheet.   As at 31 March 2022, £63.7m (1 April 2021: £62.4m) cumulative additional revenue has been recognised.   Revenues and profit before tax for the year ended 31 March 2023 was increased by £2.0m (31 March 2022, increased by £1.3m).
B	Taxation
	The adjustments per note A leads to different temporary taxation differences. In line with the Company's accounting policies, the Company has accounted for such differences and recognised the related net deferred tax and corporation tax liabilities.   At 31 March 2022, an increase in deferred tax liability of £14.3m (1 April 2021: £12.2m) was recognised, resulting in a reclassification from assets to liabilities on the balance sheet.