REG - South East Water Ltd - Half-year Report
09/12/2021 08:00
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RNS Number : 0467V South East Water Limited 09 December 2021
South East Water Limited
Condensed group financial statements
for the six months ended 30 September 2021
Chair's statement
I am pleased to present our interim report for the six months ended 30 September 2021.
Although the Covid-19 pandemic has continued to impact all aspects of society,
I am pleased to be able to report that we have made a strong operational
start to the year with significant progress being made against many of our
performance commitments and in line with our company purpose; “to provide
today’s public water service and create tomorrow’s water supply solutions,
fairly and responsibly, working with others to help society and the
environment to thrive.”
We are, of course, one of the six water only companies amongst 13 water and waste
water companies.
As a business, our focus has been very much on supporting our colleagues and
customers and adapting quickly to the imposition and easing of Covid
restrictions. This has seen us ensure that our colleagues who did not work
from home had the necessary training and equipment to work safely in all
environments, including streetworks and inside customers' houses and we have
continued to be sympathetic
to our customers in our approach to debt management
where they are struggling to pay.
High levels of household demand continue and are consistently above the levels
seen before the start of the Covid-19 pandemic. This is due to many customers
in our region continuing to work from home and therefore consuming water from
home rather than in their workplaces. Whilst this phenomenon is easing as
customers return to more normal working patterns it is not clear whether or
not our customer base will eventually return to pre-Covid patterns. In light
of these changing demand patterns, Ofwat has agreed to assess our performance
on our PCC (per capita consumption) and non-household void property
performance commitments at the end of this regulatory cycle in 2025, when the
long-term effect of Covid-19 on these measures should be better understood.
Whilst we did not experience a summer as hot as the last year, the lessons
learned in 2020 ensured that this year's summer demand was managed well and
passed without incident. Our efforts over the last 12 months have been on
delivering key projects to provide extra resilience to our network. This has
included building a new water treatment works in Aylesford, Kent, which was just eight months in
construction and delivered extra capacity quickly to cover the loss of a key strategic service reservoir in
Kent which was damaged by a sinkhole which appeared in September 2020. In
addition we have now completed the extension to the Bray Keleher water
treatment works in the western region adding an additional 23ML of new water
to the area.
We have continued to work on improving our operational response times to
unplanned interruptions using a variety of approaches, this has included the
implementation of new leakage detection software WaterNet which helps us
identify and respond to leaks faster. Furthermore, we have continued a
programme of calm valve and network optimisation training for our operational
teams and supply chain partners which includes modules on network hydraulics
and transient pressures.
This is all alongside the provision of additional resources, plant and
machinery available to deal with complex repairs.
This is the second year of the 2020 to 2025 investment period known as AMP7 in
which we are focused on delivering our purpose-led plan including capital
expenditure of £433.0 million (2017/18 prices) in improvements across the
region. We are tracking our progress against more than 30 challenging
performance commitments together with an additional 10 responsible business
commitments.
Looking ahead and in conjunction with Water Resources South East we are
developing a draft regional resilience plan which will be consulted upon
between 10 January and 7 March 2022. The revised regional plan will then form
the basis of our own draft Water Resources Management Plan 2024 which we will
consult on in the autumn of 2022, with publication due in 2023.
To support our customers we have ensured we are sympathetic to those who may
have suffered financial challenges over the last year. This includes
re-writing our credit management customer communications to ensure they
are clear, supportive and engaging.
We have also continued to promote our payment holiday and affordability
schemes. We are working with key stakeholders to offer mutual support
including our work with Kent County Council to distribute £150k of
Government Covid funding direct to our customers who were impacted financially
and struggling to pay bills.
In addition we have a scheme to auto enrol lower income households onto our
affordability
schemes through collaborative working with local councils, the first initiative of its kind in the industry.
We have also worked with independent organisations such as National Energy
Action to ensure our support meets customer needs in our region.
Covid-19 restrictions and the swift change to work from home has however provided us with an opportunity to
review our wider working practices across the business.
Now that colleagues are returning to sites and offices we have adopted a
hybrid working model with a combination of home working and on site
attendance to give greater flexibility. Of course, many roles cannot be
carried out from home, but for those colleagues we are also looking at ways
where we can provide greater flexibility.
Thriving together as a fair and responsible business
Our responsible business strategy is an intrinsic part of our corporate plan and we have four strategic
themes
across the organisation. Some of the highlights and challenges in the
first six months include:
Trusted and reliable service
How we build trust in what we do and deliver a high quality service to our customers
* 99.97% of our water quality samples have met DWI standards.
* A new, state-of-the-art water treatment works started pumping additional water
to homes in Kent in August after just eight months of construction.
* With the increased focus on optimising our distribution network and pressure
reducing valves (PRV) as part of leakage strategy to 2025, the PRV operational
field colleagues are undergoing a technical training enhancement programme
supported by many of our framework suppliers of the equipment / technology.
This takes the form of field demonstrations and competency assessments in how
to operate, set up and maintain our PRVs alongside general pressure and
network hydraulic awareness.
* We received a five star rating from global ESG benchmarking organisation,
GRESB. Increasing our score to 92 out of 100 versus a peer group average of
81, putting us in the top five companies in our sector globally.
* We have now completed the extension to the Bray Keleher water treatment works
in the western region adding an additional 23ML of new water to the area.
* All operational colleagues are undertaking calm valve training. Practical
exercises are undertaken specifically designed to simulate a water network and
demonstrate the surges that can occur through incorrect valve operations. It
also includes theory modules on network hydraulics and transients to improve
technical competence.
Thriving people
How we help the people who work with us to thrive
* A mobile app, called PikaVoid, which aims to help the company identify void
properties has been shortlisted for the employee engagement award at the
Customer Services Institute Awards. PikaVoid offers incentives to colleagues
to identify voids in their local area or while working in the field.
* A new Wellbeing strategy is in operation. It has four pillars: Mental
Wellbeing, Physical Wellbeing, Financial Wellbeing and Social Wellbeing. This
builds on previous work undertaken to promote a greater understanding of
mental health within the workplace.
* Our employee survey in September had a high overall response rate of 79%.
Of those responding, 93% felt their manager was considerate of their wellbeing
which is 8% higher than external benchmarking. In response to wellbeing, 81%
stated they were either thriving or coping.
* 91% said they were proud to work for South East Water.
* 94% said they believe that the company is committed to being ethical and
responsible and 96% said South East Water responds to the individual needs of
our different customers.
* 90% believed that they could be their authentic self at work.
Community and society focused
How we understand and respond to the needs of society
· We have concentrated on providing customers with full details of partner organisations offering support in a
variety of areas including disability, ill-health, wellbeing
and financial.
· Following a public consultation, where we received 21 responses, we published our revised dry weather plan
in September 2021. This outlines our actions in preparation
for, and during drought. We are now waiting for Defra to
approve publication of the final plan.
· An industry leading innovative data sharing project with Maidstone Borough Council has been helping identify
householders on low income who are eligible for our affordability tariffs. This project has since provided a
framework for roll out with other local authorities.
· Customer complaints in the last six months are down
15% compared to 2020/21.
· We were shortlisted in the Utility Week Awards for our work to support vulnerable customers.
Keeping
communities informed while we carry out our work has also led to being shortlisted in the Communications
Leadership category in the Street Works UK Awards 2021
Flourishing environment
How we contribute to an environment that flourishes today and tomorrow
· We published our route map to
net zero operational carbon by 2030. We will achieve this through
energy efficiency, renewable sources, avoiding direct emissions, water efficiency and investing in nature-based
solutions.
· Work has started with a third party using high definition aerial imagery to identify land use and nutrient
pollution sources within the North Kent and Stockbury catchments.
* There has been a high level of interest in this year’s capital grants
funding in Woodgarston, Boxalls Lane, Hartlake and Pembury catchments. Farmers
are working with us collaboratively to improve raw water quality and quantity.
The capital grants encourage farmers to farm in a way which is less
environmentally damaging – helping to protect current and future water
supplies as well as the wider environment too.
· More than 20 different stakeholder groups and colleagues took part in online workshops to help us develop
our draft 25 year environment plan.
· Our "let's save this summer" campaign led to 51,734
water saving devices being ordered by customers in
the first six months and we have updated our online customer portal, My Account, to include a neighbourhood
comparison for water use to encourage behaviour change. We have developed ongoing communications to customers
relevant to their specific water usage and specific circumstances.
Results and key financial performance indicators
The results published in this statement summarise our performance for the six months ended 30 September 2021.
The financial statements are prepared under International Financial Reporting
Standards ("IFRS") and incorporate the performance of South East Water
Limited and our subsidiary, South East Water (Finance) Limited.
Revenue for the period was £136.7 million compared with £133.7 million for the same period in the previous year.
The increase of £3.0 million (+2.2%) is due to the following factors:
* water demand was higher this year than last year and was due to circa 14,000
additional properties in the measured portfolio, amounting to around £1.4
million. Of this, circa 9,000 related to newly built
* properties and the remainder associated with reducing void properties through
South East Water’s new PikaVoid app.
* this additional demand was part offset by £0.4 million relating to lower
summer demand this year on existing properties although the effect of Covid-19
on demand remained high.
* also offsetting this was a reduction in the allowed average price of 0.6%,
reducing revenue by £0.6 million.
* developer contributions and other income are £2.1 million and £0.3 million
respectively higher than last year due to the reduction in Covid-19
restrictions.
Net operating costs for the period to 30 September 2021 were £91.7 million compared with £84.7 million for
the same period in the previous year. The increase of £7.0 million (+8.3%) was due to:
· the prior year costs included a one-off credit of £7.8 million in
respect of past service costs on one of the group's
defined benefit pension schemes, which was a result of changing from
RPI to CPI in measuring the liabilities of the scheme.
· increased depreciation for the six months of £1.4 million in line with
the continued investment in the group's fixed assets.
·
other inflationary pressures, particularly around consumables, adding £0.9
million of costs.
· lower contractor costs as a result of
fewer major operational incidents, saving £1.5 million.
· lower bulk supply cost driven by cost
provision reductions which delivered efficiencies of £0.7 million.
Finance costs have increased from £20.1 million to £23.2 million. This is
due to increased indexation
on our loans due to higher inflation during the period to 30 September 2021.
Profit before tax was £20.1 million compared with £29.8 million for the same period last year. This represents
14.7 per cent of revenue, down from 22.3 per cent for the corresponding period last year.
The group tax charge of £38.6 million in the period ending 30 September 2021
includes £36.0 million of deferred tax resulting from the corporation tax
rate change from 19 per cent to 25 per cent commencing
in April 2023. Excluding this deferred tax adjustment, the tax charge for the period was £2.6 million compared to £1.7
million for the same period last year. The tax expense for the period comprises £0.6 million of current tax and £2.0 million
of deferred tax.
The group has recorded a loss after tax of £18.6 million for the six months
ended 30 September 2021 compared to a profit after tax of £28.1 million in
the corresponding period in the prior year. This loss after tax in the year
is largely a result of the deferred tax charge due to the future tax rate
change from 19 per cent to 25 per cent.
In September the group successfully replaced its revolving credit facility with an increased facility of £125.0 million,
up from £90.0 million. The group had a balance of £50.0 million on the
previous facility which has been repaid from the new facility.
The outstanding balance on the credit facility will be repaid with new loan
finance of £50.0 million on 9 December 2021. The new loan is
a fixed rate 14 year loan at an interest rate of 2.04 per cent.
We continue to comply with the financial covenants set out in our
securitisation structure and continue
to hold ratings from Moody's and Standard & Poor's consistent with the requirements of both our securitisation and our instrument
of appointment.
The dividend paid for the six months ended 30 September 2021 of £4.5 million
is £1.0 million lower compared to the same period last year and this
represents a nominal dividend yield of 1.8 per cent. The dividend is in line
with our dividend policy and is lower than Ofwat's view of what is a
reasonable nominal dividend yield, which is 4 per cent.
Net cash generated from operations was £80.3 million for the six months to 30 September 2021 compared to
£63.9 million in the same period for the previous year. This is largely a
result of improved collection of revenue when compared to the prior
year.
Principal risks and uncertainties
The principal risks and uncertainties facing the business are set out in the
strategic report within the group's annual report for the financial year
ended 31 March 2021, which can be found on the South East Water website.
Going concern
We continue to comply with the financial covenants set out in our
securitisation structure and continue
to hold ratings from Moody's and Standard & Poor's consistent with the requirements of both our securitisation
and our instrument of appointment.
In preparing the financial statements the directors considered the group's
ability to meet its debts as they fall due for a period of one year from the
date of this report, especially in light of the on-going Covid-19 pandemic.
The group's business activities, together with the factors likely to affect its future development, performance and
position were set out in the strategic report included in the group's annual
report for the financial year ended 31 March 2021.
The group finances its working capital requirements through cash generated from operations and committed facilities
that can be called upon as required.
The group prepared an annual budget in March. The financial results for the
six months to 30 September 2021 are in line with our budget. The directors
are therefore satisfied that the group has sufficient resources to continue
in operation for a period of not less than 12 months from the date of
this report.
In coming to this decision the board has considered the implications of the
on-going Covid-19 pandemic and the impact this may have on the business. The
board has considered a range of plausible scenarios and is satisfied that
there is sufficient headroom on all financial covenants.
Looking ahead
While building on our good start to this financial year we will be
particularly focused on longer term
plans including the PR24 and WRMP processes. In addition we will be progressing with the 25 Year Environment
Plan, an industry first, working closely with our partners through Water Resources in the South East (WRSE) to
engage on a regional 75 year plan to ensure across the south east there is a
sustainable public water supply for the future.
In October 2021 we published our draft climate change adaptation report. This
covered 12 key risk areas including changes to rainfall patterns and rising
sea levels. The report sets out exactly how we plan to modify our approach as
the climate evolves. This consultation has now concluded and we will be
publishing our final report in December.
Through the remainder of the winter months we will continue to work with our
suppliers, industry partners
and local resilience forums to make sure we are prepared for potential impacts on our services, including winter
weather and current supply chain concerns.
Our water resources are in a very good position for this time of year
following a wet summer and an early start to the recharge season. We expect
with normal winter rainfall we will be ready for spring 2022 with
good resource levels. Water efficiency will continue to be a focus as we expect a continuation of some degree of home
working across the south east region will again influence demand during 2022.
On behalf of the board I would like to thank all the employees and business partners at South East Water for their
focused efforts over the last six months - it has seen us through a potentially challenging summer and their purpose-led energy is evident across the organisation.
I would also like to take this opportunity to say a personal thank you to
everyone at South East Water as I
will retire from the Board in March after seven years as Chair.
NICK SALMON
CHAIR
9 DECEMBER 2021
Condensed group income statement
for the six months ended 30 September 2021
Six months Six months
ended 30 September ended 30 September
2021 2020
£000 £000
Note
Revenue 6 136,727 133,736
Group net operating costs Bad debt 8 (91,691) (84,732)
(2,128) (1,146)
Group profit from operations 42,908 47,858
Finance income Finance expense 9 345 2,055
9 (23,194) (20,130)
Profit before taxation 20,059 29,783
Taxation 10 (38,631) (1,677)
(Loss)/profit for the six months (18,572) 28,106
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Remeasurements of defined benefit pension schemes' surplus or (deficit) 4,463 (19,446)
Deferred tax on defined benefit pension schemes
(1,375) 1,663
Other comprehensive income for the six months, net of tax 3,088 (17,783)
Total comprehensive income (15,484) 10,323
Six months Six months
ended 30 September ended 30 September
2021 2020
Pence Pence
Earnings per share attributable to the ordinary equity holders of the parent
Basic and diluted 12 (37.66) 57.00
Condensed group statement of financial position
as at 30 September 2021
30 September 31 March 30 September
2021 2021 2020
£000 £000 £000
Assets
Non-current assets
Property, plant and equipment 1,653,840 1,631,312 1,612,026
Right of use assets 11,525 11,952 12,440
Intangible assets 8,624 8,787 8,925
Amount due from parent undertakings - - 135,941
Defined benefit pension surplus 41,653 34,368 27,344
1,715,642 1,686,419 1,796,676
Current assets
Inventories 668 673 690
Trade and other receivables 88,821 86,735 94,293
Cash and cash equivalents 22,749 41,617 59,288
112,238 129,025 154,271
Total assets 1,827,880 1,815,444 1,950,947
Liabilities
Non-current liabilities
Trade and other payables 4,062 4,623 5,207
Loans and borrowings 1,044,540 1,038,371 1,032,213
Defined benefit pension liability 3,221 3,172 3,302
Deferred tax liability 220,122 167,228 165,553
Deferred income 3,235 3,625 4,663
1,275,180 1,217,019 1,210,938
Current liabilities
Trade and other payables 102,997 88,961 102,687
Loans and borrowings 50,324 80,318 80,324
Deferred income 6,712 5,336 3,899
Provisions 10,375 7,983 4,629
170,408 182,598 191,539
Total liabilities 1,445,588 1,399,617 1,402,477
Net assets 382,292 415,827 548,470
Issued capital and reserves attributable to owners
of the parent
Share capital 49,312 49,312 49,312
Revaluation reserve 219,922 235,774 238,893
Retained earnings 113,058 130,741 260,265
Total equity 382,292 415,827 548,470
The financial statements on pages 7 to 15 were approved and authorised for
issue by the board of directors and were signed on its behalf by:
David Hinton
Andrew Farmer
Director
Director
9 December 2021
9 December 2021
The notes on pages 11 to 15 form part of these financial statements.
Condensed group statement of changes in equity
for the six months ended 30 September 2021
Share capital Revaluation Retained earnings Total equity
£000 reserve £000 £000
Note £000
At 1 April 2021 49,312 235,774 130,741 415,827
Comprehensive income for the six months
Loss for the six months Other comprehensive income - - (18,572) (18,572)
- - 3,088 3,088
Total comprehensive income for the six months
- - (15,484) (15,484)
Dividends 11 - - (4,500) (4,500)
Transfer to retained earnings - (3,056) 3,056 -
Transfers between other reserves - (9) 9 -
Deferred tax on releases from revaluation reserve - 764 (764) -
Impact of rate change on deferred tax - (13,551) - (13,551)
- (15,852) (2,199) (18,051)
At 30 September 2021 49,312 219,922 113,058 382,292
At 1 April 2020 49,312 241,386 252,949 543,647
Comprehensive income for the six months
Profit for the six months Other comprehensive income - - 28,106 28,106
- - (17,783) (17,783)
Total comprehensive income for the six months
- - 10,323 10,323
Dividends 11 - - (5,500) (5,500)
Transfer to retained earnings - (2,953) 2,953 -
Transfers between other reserves - (11) 11 -
Deferred tax on releases from revaluation reserve - 471 (471) -
- (2,493) (3,007) (5,500)
At 30 September 2020 49,312 238,893 260,265 548,470
Condensed group statement of cash flows
for the six months ended 30 September 2021
Six months Six months
ended 30 September ended 30 September
2021 2020
£000 £000
Cash flows from operating activities
(Loss)/profit for the six months (18,572) 28,106
Adjustments for
Depreciation of property, plant and equipment 28,404 26,582
Amortisation and impairment of intangibles 1,432 1,855
Finance income (345) (2,055)
Finance expense 23,194 20,130
Loss/(gain) on sale of property, plant and equipment 67 23
Difference between pension contributions paid and amounts recognised (2,773) (10,309)
Income tax expense 38,631 1,677
Operating cashflows before movements in working capital 70,038 66,009
Movements in working capital:
Increase in trade and other receivables (1,474) (10,045)
Decrease/(increase) in inventories 5 (1)
Increase in trade and other payables 11,730 8,057
Cash generated from operations 80,299 64,020
Interest paid (14,048) (13,113)
Interest received 345 1,679
Tax (paid)/received (518) (765)
Net cash from operating activities 66,078 51,821
Cash flows from investing activities
Purchases of property, plant and equipment (48,587) (48,822)
Sale of property, plant and equipment 143 (20)
Purchase of intangibles (1,269) (1,212)
Contributions to infrastructure assets received (562) 210
Net cash used in investing activities (50,275) (49,844)
Cash flows from financing activities
Issue costs of listed debt (66) (15)
Proceeds from revolving credit facility - 50,000
Repayment of revolving credit facility (80,000) -
Proceeds from new revolving credit facility 50,000 -
Dividends paid to the holders of the parent (4,500) (5,500)
Payment of lease liabilities (105) (155)
Net cash (used in)/from financing activities (34,671) 44,330
Net cash (decrease)/increase in cash and cash equivalents (18,868) 46,307
Cash and cash equivalents at the beginning of six months 41,617 12,981
Cash and cash equivalents at the end of the six months 22,749 59,288
Notes to the condensed group financial statements
for the six months ended 30 September 2021
1. Reporting entity
South East Water Limited (the ‘company’) is a limited company incorporated
in the United Kingdom. The company’s registered office is at Rocfort Road,
Snodland, Kent, ME6 5AH. These consolidated financial statements comprise the
company and its subsidiary (collectively the ‘group’). The group’s
principal activities are the supply of water to a population of 2.3 million in
an area of 5,700 kms and the provision of certain ancillary services for
customers, developers and other bodies within the limits of the relevant
legislation.
2. Basis of preparation
The condensed consolidated financial statements for the six months ended 30
September 2021 are set out on pages 18 to 31, and have been prepared in
accordance with the Disclosure and Transparency Rules of the Financial Conduct
Authority and IAS 34 Interim Financial Reporting as endorsed by the United
Kingdom. The statements should be read in conjunction with the financial
statements for the year ended 31 March 2021, which were prepared in accordance
with international accounting standards in conformity with the requirements of
the Companies Act 2006 and International Financial Reporting Standards adopted
pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.
The condensed group financial statements are presented in sterling.
These interim financial results have not been audited or reviewed by our
auditor. The information
herein for the year ended 31 March 2021 does not comprise statutory accounts within the meaning of section 434 of
the Companies Act 2006. Statutory accounts for the year ended 31 March 2021
were approved by
the Board of Directors on 15 July 2021 and delivered to the Registrar of Companies. The report of the auditors on
those accounts was not qualified, did not include any reference to any matters
to which the auditors drew attention by way of emphasis without qualifying
the report and did not contain any statement under section 498(2) or (3) of
the Companies Act 2006.
(i) New standards, interpretations and amendments not yet effective
In April 2021, the IFRS Interpretations Committee ('IFRIC') agenda decision on the treatment of configuration and
customisation costs in a cloud computing arrangement was ratified by the
International Accounting Standards Board. The group is expecting to
reallocate some costs associated with cloud computing from capital to
operating expenditure. The group is currently investigating the quantum of the
impact from this guidance and will include any adjustments
in the financial statements for the year ending 31 March 2022.
3. Key judgements and sources of estimation uncertainty
The preparation of interim financial statements requires the application of
judgements and assumptions by management which affects the value of assets and
liabilities at the balance sheet date and income and expenditure for the six
months ended 30 September 2021. Actual results may differ from those arrived
at based on management’s judgements and assumptions. In preparing these
condensed interim financial statements, the significant judgements made by
management in applying the group’s accounting policies and the key sources
of estimation uncertainty were the same as those applied to the Group Annual
Report for the year ended 31 March 2021.
Notes to the condensed group financial statements
for the six months ended 30 September 2021
4. Going concern
The directors have, at the time of approving the financial statements, a
reasonable expectation that
the group has adequate resources to continue in operational existence for the foreseeable future. The directors have
also considered the potential impact of the cessation of LIBOR and
introduction of SONIA on the group's financial liabilities. The directors
have concluded that it is correct to continue to adopt the going concern
basis of accounting in preparing the financial statements. Further details are
provided in the Chair's statement on page 6.
5. Accounting policies
The accounting policies applied in these condensed interim financial
statements are the same as those applied in the last
annual financial statements for the year ended 31 March 2021.
6. Revenue
Six months Six months
ended 30 September ended 30 September
2021 2020
£000 £000
Revenue
Unmetered water income 10,233 9,986
Metered water income 114,556 114,222
Other sales 5,986 3,898
Total revenue 130,775 128,106
Other income
Rental income 624 579
Sundry income 5,328 5,051
Total other income 5,952 5,630
Total income 136,727 133,736
Notes to the condensed group financial statements
for the six months ended 30 September 2021
7. Segmental analysis
Wholesale activities Retail activities Other activities
£000 £000 £000 Total
£000
Period to 30 September 2021
Total income 118,226 10,280 8,221 136,727
Operating profit 39,401 1,435 2,072 42,908
Finance costs Finance income (23,194)
345
Profit before taxation Taxation 20,059
(38,631)
Profit for the period (18,572)
Period to 30 September 2020
Total income 117,494 8,835 7,407 133,736
Operating profit 45,741 616 1,501 47,858
Finance costs Finance income (20,130)
2,055
Profit before taxation Taxation 29,783
(1,677)
Profit for the period 28,106
8. Net operating costs
Six months Six months
ended 30 September ended 30 September
2021 2020
£000 £000
Employees benefits expenses 16,899 9,070
Asset expenses 29,903 28,460
Operating lease rentals:
Vehicles and office equipment 178 123
Land and buildings 8 8
Fee payable to group's auditor 239 152
Energy costs 9,708 9,643
Rates 9,235 9,187
Contractors 14,023 15,577
Bulk water supplies and abstraction licences 3,962 4,646
Chemicals 1,849 1,923
Insurance and related costs 1,600 1,432
Other 7,014 7,061
Other operating expenses charged to capital projects (2,927) (2,550)
91,691 84,732
Notes to the condensed group financial statements
for the six months ended 30 September 2021
9. Finance income and expense Six months Six months
ended 30 September ended 30 September
2021 2020
£000 £000
Finance income
Interest receivable on bank balances and short-term deposits Interest 1 53
receivable from group companies
- 344 1,620
Net interest income on defined benefit assets
382
Total finance income 345 2,055
Finance expense
Effective interest on listed debt Indexation on listed debt Interest on index 6,964 6,880
linked loans Indexation on index linked loans Other finance costs
5,048 962
Interest capitalised
6,437 6,348
982 2,096
5,039 5,167
(1,276) (1,323)
Total finance expense 23,194 20,130
10. Taxation
Six months Six months
ended 30 September ended 30 September
2021 2020
£000 £000
Current taxation charge Deferred taxation charge 663 813
37,968 864
38,631 1,677
The current tax charge is based on management's estimate of the weighted
average annual corporation tax rate expected for the full financial year.
The total deferred tax is estimated to be £38.0 million and includes a
one-off charge of £36.0 million for the impact of the change in the rate of
corporation tax from 19 per cent to 25 per cent announced in the 2021 budget.
This change in tax rate is effective from 1 April 2023.
11. Dividends
Six months Six months
ended 30 September ended 30 September
2021 2020
£000 £000
Interim dividend of 4.6 pence (2020: 5.6 pence) per Ordinary share
paid during the the six months 2,750
2,250 Interim dividend of 4.6 pence (2020: 5.6
pence) per Ordinary share
2,750
paid during the six months
2,250
4,500 5,500
Notes to the consolidated financial statements
for the six months ended 30 September 2021
12. Earnings per share
Six months Six months
ended 30 September ended 30 September
2021 2020
£000 £000
(Loss)/profit for the six months from continuing operations (18,572) 28,106
Six months Six months
ended 30 September ended 30 September
2021 2020
Number Number
Basic and diluted weighted average number of shares 49,312,354 49,312,354
Basic and diluted earnings per share from continuing operations (37.66p) 57.00p
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