REG - United Utilities Grp - Final Results <Origin Href="QuoteRef">UU.L</Origin> - Part 2
15/07/2015 18:43
- Part 2: For the preceding part double click ID:nRSU8492Na
Deferred tax credit - change in tax rate - (156.8)
Agreement of prior years' UK tax matters (0.7) (154.3)
Tax in respect of adjustments to underlying profit before tax (22.2) 32.6
Underlying profit after tax 354.1 304.9
Earnings per share
£m £m
Profit after tax per published results (a) 271.2 738.6
Underlying profit after tax (b) 354.1 304.9
Weighted average number of shares in issue, in millions (c) 681.9m 681.9m
Earnings per share per published results, in pence (a/c) 39.8p 108.3p
Underlying earnings per share, in pence (b/c) 51.9p 44.7p
1The comparatives have been restated to reflect the requirements of IFRS 11
'Joint Arrangements'. See note 1 for details.
2 Relates to restructuring costs within the business.
Underlying operating profit reconciliation
The table below provides a reconciliation between group underlying operating
profit and United Utilities Water Limited (UUW) historical cost regulatory
underlying operating profit (non-GAAP measures) as follows:
Continuing operationsUnderlying operating profit Year ended31 March 2015£m Restated1Year ended31 March 2014£m
Group underlying operating profit 664.3 634.6
Underlying operating profit not relating to UUW 2.5 (0.4)
UUW statutory underlying operating profit 666.8 634.2
Revenue recognition 9.8 (0.2)
Infrastructure renewals accounting 30.6 52.9
Other differences (including non-appointed business) (5.9) (5.3)
UUW regulatory underlying operating profit 701.3 681.6
1The prior year has been restated to reflect the requirements of IFRS11 'Joint
Arrangements' and to reflect that UUW now reports in accordance with IFRS
accounting standards, rather than UK GAAP previously.
PRINCIPAL RISKS AND UNCERTAINTIES
We have developed a sophisticated approach to the assessment, management and
reporting of risks, with a process aligned to ISO31000:2009 and a
well-established governance structure for the group board to review the nature
and extent of the risks that the group faces and for the audit committee to
review process effectiveness. This process is supported by a central database,
tools, templates and guidance to drive consistency.
Our risk profile currently illustrates circa 200 event-based risks. All event
types (strategic, financial, operational, compliance and hazard) are
considered in the context of our strategic themes (best service to customers;
lowest sustainable cost; and responsible manner). For internal or external
drivers, each event is assessed for the likelihood of occurrence and the
negative financial or reputational impact on the company and its objectives,
should the event occur.
Responsibility for the assessment and management of the risk (including
monitoring and updating) is assigned to the appropriate individual manager who
is also responsible for reporting on assessment, management and control /
mitigation at least twice a year, in line with the reporting to the group
board at full and half-year statutory accounting reporting periods.
By their nature, event-based risks in the context of our strategic themes will
include all combinations of high to low likelihood and high to low impact.
Heat maps are typically used in various managerial and group reports either as
a method to collectively evaluate the extent of all risks within a certain
profile or to illustrate the effectiveness of mitigation for a single risk by
plotting the gross, current (net of existing controls) and the selected target
position in an individual risk statement.
However, reporting a small number of event-based risks ranked by combined
event likelihood and potential impact could distort principal risk disclosure
as it would overlook other risks with a lesser individual exposure that, if
they materialised individually or in aggregate, could have a material impact
on the business model, future performance, solvency or liquidity of the group.
Equally, event-based risks identified as part of our internal assessment
process can be commercially sensitive, the disclosure of which could be
detrimental to competitive advantage or our ability to mitigate risk over the
longer term.
In order to address this, further understand the nature and extent of our
entire profile and support the disclosure of principal risks, event-based
risks are categorised (based on the event), when recorded onto the central
database, into areas that define business activity or contributing factors
where value can be lost. These categories have been set out under 'Risks'
below to reflect the principal risks (aggregated), together with associated
issues or areas of uncertainty, potential for material effect and the extent
of control/mitigation.
Key features, developments over the last year and looking ahead
As expected, following the 2014 price determination the group's risk profile
is returning to one based more on operational performance, compliance and
delivery risk. We have challenging demands on customer benefits, operational
performance and investment requirements in light of population growth, climate
change and strict legal/regulatory requirements. Competition and market reform
remain high on the agenda however, with the ongoing development of the
non-household market and uncertainty surrounding the impact of upstream
competition for water and wastewater services.
There continue to be two ongoing pieces of material litigation worthy of note
but, based on the facts currently known to us and the provisions in our
statement of financial position, our directors remain of the opinion that the
likelihood of these having a material adverse impact on the group's financial
position is remote.
• In February 2009, United Utilities International Limited (UUIL) was served
with notice of a multiparty 'class action' in Argentina related to the
issuance and payment default of a US$230 million bond by Inversora Eléctrica
de Buenos Aires S.A. (IEBA), an Argentine project company set up to purchase
one of the Argentine electricity distribution networks which was privatised in
1997. UUIL had a 45 per cent shareholding in IEBA which it sold in 2005. The
claim is for a non-quantified amount of unspecified damages and purports to be
pursued on behalf of unidentified consumer bondholders in IEBA. UUIL has filed
a defence to the action and will vigorously resist the proceedings given the
robust defences that UUIL has been advised that it has on procedural and
substantive grounds.
• In March 2010, Manchester Ship Canal Company (MSCC) issued proceedings
seeking, amongst other relief, damages alleging trespass against UUW in
respect of UUW's discharges of water and treated effluent into the canal.
Whilst the matter has not reached a final conclusion, the Supreme Court has
found substantively in UUW's favour on a significant element of the claim and
referred the remainder of the proceedings back to the High Court.
Risks
1. The regulatory environment and framework
Current key risks, issues or areas of uncertainty include:
i) Market reform including non-household and upstream competition
ii) A possible change from using the retail prices index to the consumer
prices index for regulatory indexation
Potential impacts
Changes to regulation and the regulatory regime (either through political or
regulatory events) may increase costs of administration, reduce income and
margin and lead to greater variability of returns.
Control mitigation
We engage in relevant government and regulatory consultations which may affect
policy and regulation in the sectors where we operate. We also consult with
customers to understand their requirements and proactively consider all the
opportunities and threats associated with any potential change, exploiting
opportunities and mitigating risks where appropriate.
2. Corporate governance and legal compliance
Current key risks, issues or areas of uncertainty include:
i) Competition law and regulatory compliance whilst preparing for and
operating within a changing competitive market
ii) Material litigation (see above)
iii) New higher fine levels for environmental offences
Potential impacts
Non-compliance with existing or future UK or international laws or regulations
(especially given the highly regulated environment we operate in) could result
in additional workload and operating costs in justifying or defending our
position and financial penalties (including of up to 10 per cent of relevant
regulated turnover for extreme events) and compensation following litigation
is also possible, together with additional capital/operating expenditure as a
result of the imposition of enforcement orders. In more remote but extreme
circumstances, impacts could ultimately include licence revocation or the
appointment of a special administrator.
Control mitigation
Legislative and regulatory developments are continually monitored. Risk-based
training of employees is undertaken and we participate in consultations to
influence legislative and regulatory developments. Funding for any additional
compliance costs in the regulated business is sought as part of the price
determination process. The group also robustly defends litigation where
appropriate and seeks to minimise its exposure by establishing provisions and
seeking recovery wherever possible.
3. Water and wastewater service
Current key risks, issues or areas of uncertainty include:
i) Dealing with the impacts of population growth, climate change and weather
conditions
ii) Meeting infrastructure investment requirements and balancing supply and
demand
iii) Expected change to the abstraction licensing regime
Potential impacts
Operational performance problems or service failures can lead to increased
regulatory scrutiny, regulatory penalties and/or additional operating or
capital expenditure. In more extreme situations the group could also be fined
for breaches of statutory obligations, be held liable to third parties and
sustain reputational damage.
Control mitigation
Mitigation is provided through core business processes, including forecasting,
quality assurance procedures, risk assessments and rigorous sampling/testing
regimes. Ongoing integration of water and wastewater networks improves service
provision and measures of success have been developed to monitor performance.
We also undertake customer education programmes, seeking to minimise related
operational issues.
4. Security, assets and operational resilience
Current key risks, issues or areas of uncertainty include:
i) The threat of cybercrime and/or terrorism affecting our assets or
operations
Potential impacts
Our resources, assets and infrastructure are exposed to various threats
(malicious or accidental) and natural hazards which could impact the provision
of vital services to the public and commercial business.
Control mitigation
Physical and technological security measures combined with strong governance
and inspection regimes aim to protect infrastructure, assets and operational
capability. Ongoing integration of water and wastewater networks improves
operational resilience and we maintain robust incident response, business
continuity and disaster recovery procedures. We also maintain insurance cover
for loss and liability and the licence of the regulated business also contains
a 'shipwreck' clause that, if applicable, may offer a degree of recourse to
Ofwat/customers in the event of a catastrophic incident.
5. Human and IT resource
Current key risks, issues or areas of uncertainty include:
i) Delivering required employee engagement, talent management, technological
innovation and IT asset management
Potential impacts
Capacity, capability and effectiveness problems associated with human and IT
resource will impact the efficiency and effectiveness of business activity,
the ability to make appropriate decisions and ultimately meet targets. This
can also affect the ability to recruit and retain knowledge/expertise or to
recover effectively following an incident. In remote but extreme circumstances
there is also the potential for higher levels of regulatory scrutiny,
financial penalties, reputational damage and missed commercial opportunities.
Control mitigation
Developing our people with the right skills and knowledge, combined with
delivering effective technology are important enablers to support the business
to meet its objectives. Employees are kept informed regarding business
strategy and progress through various communication channels. Training and
personal development programmes exist for all employees in addition to talent
management programmes and apprentice and graduate schemes. We focus on change
programmes and innovative ways of working to deliver better, faster and more
cost-effective operations.
6. Tax, treasury and financial control
Current key risks, issues or areas of uncertainty include:
i) Stability of financial institutions and the world economy
ii) The speed of economic recovery
iii) Inflation/deflation
iv) Financial market conditions, interest rates and funding costs
Potential impacts
The failure of financial counterparties could result in additional financing
cost, an adverse impact on the income statement and potential reputational
damage. Variability in inflation (as measured by the UK Retail Prices Index)
and changes in interest rates, funding costs and other market risks could
adversely impact the economic return on the regulatory capital value (RCV) and
affect our pension schemes with a requirement for the group to make additional
contributions. In extreme but remote cases adverse market conditions could
affect our access to debt capital markets and subsequently available liquidity
and credit ratings.
Control mitigation
Refinancing is long-term with staggered maturity dates to minimise the effect
of short-term downturns. Counterparty credit, exposure and settlement limits
exist to reduce any potential future impacts. These are based on a number of
factors, including the credit rating and the size of the asset base of the
individual counterparty. The group also employs hedging strategies to
stabilise market fluctuation for inflation, interest rates and commodities
(notably energy prices). Sensitivity analysis is carried out as part of the
business planning process, influencing the various financial limits employed.
Continuous monitoring of the markets takes place including movements in credit
default swap prices and movements in equity levels.
7. Programme delivery
Current key risks, issues or areas of uncertainty include:
i) Supply chain security of supply and delivery of solutions, quality and
innovation
ii) New contract delivery partnerships for the 2015-2020 period with a new
approach to construction and design
Potential impacts
Failure to deliver capital or change programmes against relevant time, cost or
quality measures could result in a failure to secure competitive advantage or
operating performance efficiency and cost benefits. There is also the risk of
increased delivery costs or a failure to meet our obligations and customer
outcomes which, depending on the nature and extent of failure, could result in
an impact at future price reviews, regulatory or statutory penalties and
negative reputational impact with customers and regulators.
Control mitigation
We have a developed and clear view of our investment priorities which are
built into our programmes, projects and integrated business and asset plans.
We have created better alignment and integration between our capital delivery
partners and engineering service provider including alignment with our
operating model. Our programme and project management capabilities are well
established with strong governance and embedded processes to support delivery,
manage risks and achieve business benefits. We utilise a time, cost and
quality index (TCQi) as a key performance indicator and enhance our
performance through a dedicated programme change office to deliver change in a
structured and consistent way. Supply chain management is utilised to deliver
end-to-end contract management which includes contract strategy and tendering,
category management, security of supply, price and price volatility and
financial and operational service level performance.
8. Revenues
Current key risks, issues or areas of uncertainty include:
i) Socio-economic deprivation in the North West
ii) Welfare reform and the impact on domestic bad debt
iii) Competition in the water and wastewater market and competitor
positioning
iv) The standards of service to our customers
Potential impacts
Poor service to customers can result in financial penalties issued by the
regulator through components of the service incentive mechanism for domestic
customers and loss of revenue associated with commercial churn for commercial
customers using 5 megalitres and above per annum. The proposed opening of the
market for retail services to all non-household customers in England from 2017
generates both opportunities and risk associated with market share, scale and
margin erosion. There is also much uncertainty surrounding the form of
upstream reform which is now anticipated to materialise post-2019.
Control mitigation
For domestic retail there is a transformation plan in place covering a wide
range of initiatives and activities to improve customer service, with a number
of controls in place to monitor achievement against the plan. Similarly, we
look to retain existing and acquire new commercial customers by striving to
meet their needs more effectively. We monitor competitor activity and target a
reduction in operating costs.
9. Health, safety and environmental
Current key risks, issues or areas of uncertainty include:
i) Risks associated with excavation, tunnelling and construction work and
working with water and wastewater
ii) Weather conditions
Potential impacts
Working with and around water, sewage, construction and excavation sites,
plant and equipment exposes employees, contractors and visitors to various
man-made and naturally occurring hazards which could cause harm to people and
the environment. Depending on the circumstances the group could be fined for
breaches of statutory obligations, be held liable to third parties and sustain
reputational damage.
Control mitigation
We have developed a strong health, safety and environmental culture supported
by strong governance and management systems which include policies and
procedures which are certified to OHSAS 18001 and ISO 14001.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This financial report contains certain forward-looking statements with respect
to the operations, performance and financial condition of the group. By their
nature, these statements involve uncertainty since future events and
circumstances can cause results and developments to differ materially from
those anticipated. The forward-looking statements reflect knowledge and
information available at the date of preparation of this financial report and
the company undertakes no obligation to update these forward-looking
statements. Nothing in this financial report should be construed as a profit
forecast.
Certain regulatory performance data contained in this financial report is
subject to regulatory audit.
Consolidated income statement
Year ended Restated*
31 March Year ended
2015 31 March
2014
£m £m
Continuing operations
Revenue 1,720.2 1,688.8
Employee benefits expense:
- excluding restructuring costs (134.1) (129.3)
- restructuring costs (11.0) (4.4)
Total employee benefits expense (145.1) (133.7)
Other operating costs (424.3) (425.6)
Other income 3.3 2.7
Depreciation and amortisation expense (352.6) (336.9)
Infrastructure renewals expenditure (148.2) (165.1)
Total operating expenses (1,066.9) (1,058.6)
Operating profit 653.3 630.2
Investment income (note 3) 1.0 6.8
Finance expense (note 4) (317.8) (98.7)
Investment income and finance expense (316.8) (91.9)
Share of profits of joint ventures 5.1 5.0
Profit before taxation 341.6 543.3
Current taxation (charge)/credit (47.1) 65.7
Deferred taxation charge (23.3) (27.2)
Deferred taxation credit - change in taxation rate - 156.8
Taxation (note 5) (70.4) 195.3
Profit after taxation from continuing operations 271.2 738.6
Discontinued operations
Profit after taxation from discontinued operations - 0.8
Profit after taxation 271.2 739.4
Earnings per share from continuing and discontinued operations (note 6)
Basic 39.8p 108.4p
Diluted 39.7p 108.2p
Earnings per sharefrom continuing operations (note 6)
Basic 39.8p 108.3p
Diluted 39.7p 108.1p
Dividend per ordinary share (note 7) 37.70p 36.04p
* The comparatives have been restated to reflect the requirements of IFRS 11
'Joint Arrangements'. See note 1 for details.
Consolidated statement of comprehensive income
Year ended Year ended
31 March 31 March
2015 2014
£m £m
Profit after taxation 271.2 739.4
Other comprehensive income
Remeasurement gains/(losses) on defined benefit pension schemes (note 8) 250.5 (200.8)
Taxation on items taken directly to equity (note 5) (50.1) 40.9
Foreign exchange adjustments (3.1) (1.2)
Total comprehensive income 468.5 578.3
Consolidated statement of financial position
31 March Restated*
2015 31 March
£m 2014
£m
ASSETS
Non-current assets
Property, plant and equipment 9,716.3 9,318.5
Intangible assets 144.9 110.2
Interests in joint ventures 31.7 35.6
Investments 8.6 6.9
Trade and other receivables 2.5 2.4
Retirement benefit surplus (note 8) 79.2 -
Derivative financial instruments 681.6 456.0
10,664.8 9,929.6
Current assets
Inventories 40.5 39.8
Trade and other receivables 353.3 330.4
Cash and short-term deposits 244.0 115.8
Derivative financial instruments 1.0 56.9
638.8 542.9
Total assets 11,303.6 10,472.5
LIABILITIES
Non-current liabilities
Trade and other payables (480.0) (451.0)
Borrowings (6,067.3) (5,929.2)
Retirement benefit obligations (note 8) - (177.4)
Deferred taxation liabilities (1,123.8) (1,050.4)
Derivative financial instruments (196.6) (52.3)
(7,867.7) (7,660.3)
Current liabilities
Trade and other payables (381.2) (382.1)
Borrowings (578.1) (112.3)
Current tax liabilities (21.1) (34.8)
Provisions (12.5) (16.3)
Derivative financial instruments (8.6) (50.8)
(1,001.5) (596.3)
Total liabilities (8,869.2) (8,256.6)
Total net assets 2,434.4 2,215.9
EQUITY
Share capital 499.8 499.8
Share premium account 2.9 2.9
Other reserve - 158.8
Cumulative exchange reserve (8.7) (5.6)
Merger reserve 329.7 329.7
Retained earnings 1,610.7 1,230.3
Shareholders' equity 2,434.4 2,215.9
*The comparatives have been restated to reflect the requirement of IFRS 11
'Joint Arrangements'. See note 1 for details.
Consolidated statement of changes in equity
Year ended 31 March 2015
Share capital Share premium Other Cumulative exchange reserve Merger reserve Retained earnings Total
account reserve
£m £m £m £m £m £m £m
At 1 April 2014 499.8 2.9 158.8 (5.6) 329.7 1,230.3 2,215.9
Profit after taxation - - - - - 271.2 271.2
Other comprehensive (expense)/income
Remeasurement gains on defined benefit pension schemes (note 8) - - - - - 250.5 250.5
Taxation on items taken directly to equity (note 5) - - - - - (50.1) (50.1)
Foreign exchange adjustments - - - (3.1) - - (3.1)
Total comprehensive (expense)/income - - - (3.1) - 471.6 468.5
Dividends (note 7) - - - - - (249.4) (249.4)
Transfer of other reserve - - (158.8) - - 158.8 -
Equity-settled share-based payments - - - - - 2.9 2.9
Exercise of share options - purchase of shares - - - - - (3.5) (3.5)
At 31 March 2015 499.8 2.9 - (8.7) 329.7 1,610.7 2,434.4
Year ended 31 March 2014
Share capital Share premium account Other reserve Cumulative exchange reserve Merger reserve Retained earnings Total
£m £m £m £m £m £m £m
At 1 April 2013 499.8 2.9 158.8 (4.4) 329.7 885.1 1,871.9
Profit after taxation - - - - - 739.4 739.4
Other comprehensive (expense)/income
Remeasurement losses on defined benefit pension schemes (note 8) - - - - - (200.8) (200.8)
Taxation on items taken directly to equity (note 5) - - - - - 40.9 40.9
Foreign exchange adjustments - - - (1.2) - - (1.2)
Total comprehensive (expense)/income - - - (1.2) - 579.5 578.3
Dividends (note 7) - - - - - (237.9) (237.9)
Equity-settled share-based payments - - - - - 4.4 4.4
Exercise of share options - purchase of shares - - - - - (0.8) (0.8)
At 31 March 2014 499.8 2.9 158.8 (5.6) 329.7 1,230.3 2,215.9
On the group's transition to IFRS in the year ended 31 March 2006, the other
reserve arose from the uplift to fair value of
the infrastructure assets. This reserve is a component of retained earnings
and, as such, has been transferred and presented
within retained earnings during the year.
Consolidated statement of cash flows
Year ended Restated*
31 March Year ended
2015 31 March
2014
£m £m
Operating activities
Cash generated from continuing operations 941.7 931.9
Interest paid (175.6) (168.7)
Interest received and similar income 1.0 2.7
Tax paid (61.9) (64.2)
Tax received 1.3 95.5
Net cash generated from operating activities (continuing operations) 706.5 797.2
Net cash used in operating activities (discontinued operations) - (0.8)
Investing activities
Purchase of property, plant and equipment (665.7) (661.7)
Purchase of intangible assets (63.4) (39.4)
Proceeds from sale of property, plant and equipment 2.0 2.8
Grants and contributions received 18.1 16.4
Purchase of investments (0.8) (1.9)
Proceeds from sale of investments - 0.1
Dividends received from joint ventures 4.9 5.1
Net cash used in investing activities (continuing operations) (704.9) (678.6)
Financing activities
Proceeds from borrowings 411.2 372.0
Repayment of borrowings (19.1) (344.8)
Dividends paid to equity holders of the company (note 7) (249.4) (237.9)
Exercise of share options - purchase of shares (3.5) (0.8)
Net cash generated from/(used in) financing activities (continuing operations) 139.2 (211.5)
Net increase/(decrease) in cash and cash equivalents (continuing operations) 140.8 (92.9)
Net decrease in cash and cash equivalents (discontinued operations) - (0.8)
Cash and cash equivalents at beginning of the year 78.9 172.6
Cash and cash equivalents at end of the year 219.7 78.9
*The comparatives have been restated to reflect the requirements of IFRS 11
'Joint Arrangements'. See note 1 for details.
Cash generated from continuing operations
Year ended Restated*
31 March Year ended
2015 31 March
2014
£m £m
Operating profit 653.3 630.2
Adjustments for:
Depreciation of property, plant and equipment 323.6 312.9
Amortisation of intangible assets 29.0 24.0
Loss on disposal of property, plant and equipment 5.1 6.4
Loss on disposal of intangible assets 0.5 -
Amortisation of deferred grants and contributions (7.7) (7.4)
Equity-settled share-based payments charge 2.9 4.4
Other non-cash movements (1.2) (2.0)
Changes in working capital:
Increase in inventories (0.7) (2.1)
Increase in trade and other receivables (23.0) (7.4)
Decrease in trade and other payables (23.2) (24.2)
(Decrease)/increase in provisions (3.8) 4.1
Pension contributions paid less pension expense charged to operating profit (13.1) (7.0)
Cash generated from continuing operations 941.7 931.9
(13.1)
(7.0)
Cash generated from continuing operations
941.7
931.9
* The comparatives have been restated to reflect the requirements of IFRS 11
'Joint Arrangements'. See note 1 for details.
NOTES
1. Basis of preparation and accounting policies
The condensed consolidated financial statements for the year ended 31 March
2015 have been prepared in accordance with the Disclosure and Transparency
Rules of the Financial Conduct Authority.
The accounting policies, presentation and methods of computation have been
prepared on a basis consistent with the United Utilities Group PLC audited
financial statements for the year ended 31 March 2015, which are prepared in
accordance with International Financial Reporting Standards (IFRSs) as adopted
by the European Union (EU).
The adoption of the following standards and interpretations, at 1 April 2014,
has had no material impact on the group's financial statements.
IFRS 11 'Joint Arrangements'
The standard replaces IAS 31 'Interests in Joint Ventures' and removes the
option previously taken by the group to proportionately consolidate its joint
ventures, requiring instead the application of the equity method. Under the
equity method, the group's interests in the profit after taxation and net
assets of its joint ventures are presented as one line in the consolidated
income statement and the consolidated statement of financial position
respectively. The application of the standard is retrospective and, hence,
requires the restatement of the comparative period ended 31 March 2014. The
impacts on the consolidated income statement, the consolidated statement of
financial position and the consolidated statement of cash flows are detailed
below.
Impact on the consolidated income statement
Year ended
31 March2014£m
Decrease in revenue (15.7)
Decrease in total operating expenses 9.0
Decrease in operating profit (6.7)
Decrease in investment income and finance expense 0.3
Increase in share of profits of joint ventures 5.0
Decrease in profit before taxation (1.4)
Increase in taxation credit 1.4
Net impact on profit after taxation -
Impact on the consolidated statement of financial position
31 March2014£m
Increase in interests in joint ventures* 35.6
Decrease in other non-current assets (52.0)
Decrease in current assets (19.2)
Decrease in non-current liabilities 28.4
Decrease in current liabilities 7.2
Net impact on net assets -
*Includes £4.9 million of goodwill previously reported separately.
Impact on the consolidated statement of cash flows
Year ended
31 March2014£m
Decrease in net cash generated from operating activities (8.1)
Decrease in net cash used in investing activities 6.5
Net decrease in cash and cash equivalents (1.6)
The condensed consolidated financial statements do not include all of the
information and disclosures required for full annual financial statements, do
not comprise statutory accounts within the meaning of section 434 of the
Companies Act 2006 and should be read in conjunction with the group's annual
report and financial statements for the year ended 31 March 2015.
The comparative figures for the year ended 31 March 2014 do not comprise the
group's statutory accounts for that financial year. Those accounts have been
reported upon by the group's auditor and delivered to the registrar of
companies. The report of the auditor was unqualified and did not include a
reference to any matters to which the auditor drew attention by way of
emphasis without qualifying their report and did not contain a statement under
section 498(2) or (3) of the Companies Act 2006.
Going concern
The directors have a reasonable expectation that the group has adequate
resources for a period of at least 12 months from the date of approval of the
financial statements and have therefore assessed that the going concern basis
of accounting is appropriate in preparing the financial statements and that
there are no material uncertainties to disclose. This conclusion is based upon
a review of the resources available to the group, taking account of the
group's financial projections together with available cash and committed
borrowing facilities as well as consideration of the group's capital adequacy,
consideration of the primary legal duty of United Utilities Water Limited's
economic regulator to ensure that water and wastewater companies can finance
their functions, and any material uncertainties. In reaching this conclusion,
the board has considered the magnitude of potential impacts resulting from
uncertain future events or changes in conditions, the likelihood of their
occurrence and the likely effectiveness of mitigating actions that the
directors would consider undertaking.
2. Segment reporting
The board of directors of United Utilities Group PLC (the board) is provided
with information on a single segment basis for the purposes of assessing
performance and allocating resources. The board reviews revenue, underlying
operating profit, operating profit, assets and liabilities, regulatory capital
expenditure and RCV gearing at a consolidated level. In light of this, the
group has a single segment for financial reporting purposes and therefore no
further detailed segmental information is provided in this note.
3. Investment income
Year ended Restated
31 March Year ended
2015 31 March
£m 2014
£m
Continuing operations
Interest receivableInterest receivable on tax settlement 1.0 1.0
- 4.5
Net pension interest income (note 8) - 1.3
1.0 6.8
4. Finance expense
Continuing operations Year ended Restated
31 March Year ended
2015 31 March
£m 2014
£m
Interest payable (206.1) (227.9)
Net fair value (losses)/gains on debt and derivative instruments (104.7) 129.2
(310.8) (98.7)
Net pension interest expense (note 8) (7.0) -
(317.8) (98.7)
The group fixed interest costs for a substantial proportion of the group's net
debt for the duration of the 2010-15 regulatory pricing period. In addition,
the group hedges currency exposures at inception, for the term of each
relevant debt instrument. The group has hedged its position through the use of
interest rate and cross currency swap contracts where applicable.
The underlying net finance expense for the continuing group of £222.0 million
(31 March 2014 restated: £251.5 million) is derived as shown in the table
below.
Continuing operations Year ended Restated
31 March Year ended
2015 31 March
£m 2014
£m
Finance expense (317.8) (98.7)
Investment income 1.0 6.8
Investment income and finance expense (316.8) (91.9)
Adjustments:
Net fair value losses/(gains) on debt and derivative instruments 104.7 (129.2)
Interest on swaps and debt under fair value option 4.0 8.1
Net pension interest expense/(income) (note 8) 7.0 (1.3)
Capitalised borrowing costs (20.9) (19.4)
Release of tax interest accrual - (13.3)
Interest receivable on tax settlement - (4.5)
Underlying net finance expense (222.0) (251.5)
5. Taxation
Continuing operations Year ended Restated
31 March Year ended
2015 31 March
£m 2014
£m
Current taxation
UK corporation taxation 56.8 75.3
Adjustments in respect of prior years (9.7) (141.0)
Total current taxation charge/(credit) for the year 47.1 (65.7)
Deferred taxation
Current year 14.3 40.5
Adjustments in respect of prior years 9.0 (13.3)
23.3 27.2
Change in taxation rate - (156.8)
Total deferred taxation charge/(credit) for the year 23.3 (129.6)
Total taxation charge/(credit) for the year 70.4 (195.3)
The current taxation credit for the year ended 31 March 2014 includes a credit
of £141.0 million, and an associated deferred taxation credit of £13.3 million
relating to agreed matters in relation to prior years covering a period of
over 10 years in total. In addition, deferred taxation credits for the year
ended 31 March 2014 include a credit of £156.8 million, reflecting the staged
reductions in the mainstream rate of corporation tax from 23 per cent in the
year ended 31 March 2014 to 20 per cent effective from 1 April 2015.
Taxation on items taken directly to equity
The taxation charge/(credit) relating to items taken directly to equity is as
follows:
Continuing operations Year ended Year ended
31 March 31 March
2015 2014
£m £m
Current taxation
Relating to other pension movements - (1.9)
Deferred taxation
On remeasurement gains/(losses) on defined benefit pension schemes 50.1 (40.2)
Relating to other pension movements - 1.7
Change in taxation rate - (0.5)
50.1 (39.0)
Total taxation charge/(credit) on items taken directly to equity 50.1 (40.9)
6. Earnings per share
Basic and diluted earnings per share are calculated by dividing profit after
taxation by the following weighted average number of shares in issue:
Basic Diluted
million million
Year ended 31 March 2015 681.9 683.3
Year ended 31 March 2014 681.9 683.2
The difference between the weighted average number of shares used in the basic
and diluted earnings per share calculations represents those ordinary shares
deemed to have been issued for no consideration on the conversion of all
potential dilutive ordinary shares in accordance with IAS 33 'Earnings per
Share'.
The basic and diluted earnings per share are as follows:
Year ended Year ended
31 March 31 March
2015 2014
From continuing and discontinued operations
Basic 39.8p 108.4p
Diluted 39.7p 108.2p
From continuing operations
Basic 39.8p 108.3p
Diluted 39.7p 108.1p
7. Dividends
Year ended Year ended
31 March 31 March
2015 2014
£m £m
Dividends relating to the year comprise:
Interim dividend 85.6 81.9
Final dividend 171.4 163.9
257.0 245.8
Year ended Year ended
31 March 31 March
2015 2014
£m £m
Dividends deducted from
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