REG - United Utilities Grp - Final Results <Origin Href="QuoteRef">UU.L</Origin> - Part 3

United UtilitiesAnnouncement

15/07/2015 18:43

- Part 3: For the preceding part double click  ID:nRSU8492Nb 

shareholders' equity comprise:  
 Interim dividend                                          85.6        81.9        
 Final dividend                                            163.8       156.0       
                                                           249.4       237.9       
 
 
The proposed final dividends for the years ended 31 March 2015 and 31 March
2014 were subject to approval by equity holders of United Utilities Group PLC
and hence have not been included as liabilities in the consolidated financial
statements as at 31 March 2015 and 31 March 2014 respectively. 
 
The final dividend of 25.14 pence per ordinary share (2014: 24.03 pence per
ordinary share) is expected to be paid on 3 August 2015 to shareholders on the
register at the close of business on 26 June 2015. The ex-dividend date for
the final dividend is 25 June 2015. 
 
The interim dividend of 12.56 pence per ordinary share (2014: 12.01 pence per
ordinary share) was paid on 2 February 2015 to shareholders on the register as
at the close of business on 19 December 2014. 
 
8. Retirement benefit surplus/(obligations) 
 
The main financial assumptions used by the actuary to calculate the defined
benefit surplus/(obligations) of the United Utilities Pension Scheme (UUPS)
and the United Utilities PLC Group of the Electricity Supply Pension Scheme
(ESPS) were as follows: 
 
                                                    Year ended  Year ended  
                                                    31 March    31 March    
                                                    2015        2014        
                                                    %pa         %pa         
                                                                            
 Discount rate                                      3.1         4.3         
 Pensionable salary growth and pension increases    3.0         3.3         
 Price inflation                                    3.0         3.3         
 
 
The net pension expense before taxation recognised in the income statement in
respect of the defined benefit schemes is summarised as follows: 
 
                                                            Year ended  Year ended  
                                                            31 March    31 March    
                                                            2015        2014        
                                                            £m          £m          
 Continuing operations                                                              
 Current service cost                                       (18.1)      (17.2)      
 Curtailments/settlements                                   (5.5)       (1.7)       
 Administrative expenses                                    (2.6)       (2.2)       
 Pension expense charged to operating profit                (26.2)      (21.1)      
 Net pension interest (expense) (note 4)/income (note 3)    (7.0)       1.3         
 Net pension expense charged before taxation                (33.2)      (19.8)      
 
 
The reconciliation of the opening and closing net pension
surplus/(obligations) included in the statement of financial position is as
follows: 
 
                                                   Year ended  Year ended  
                                                   31 March    31 March    
                                                   2015        2014        
                                                   £m          £m          
                                                                           
 At the start of the year                          (177.4)     15.1        
 Expense recognised in the income statement        (33.2)      (19.8)      
 Contributions paid                                39.3        28.1        
 Remeasurement gains/(losses) gross of taxation    250.5       (200.8)     
 At the end of the year                            79.2        (177.4)     
 
 
Under the prescribed IAS19 basis, pension scheme liabilities are calculated
based on current accrued benefits. Expected cash flows are projected forward
allowing for RPI and the current member mortality assumptions. These projected
cash flows are then discounted by an AA corporate bond rate which comprises an
underlying interest rate and a credit spread. 
 
The group has de-risked its pension scheme through hedging strategies applied
to the underlying interest rate and the forecast RPI. The underlying interest
rate has been largely hedged through external market swaps, the value of which
is included in the scheme assets, and the forecast RPI has been largely hedged
through the Inflation Funding Mechanism (IFM), with RPI in excess of 3.0% p.a.
being funded through an additional schedule of deficit contribution. 
 
As a consequence, the reported statement of financial position under IAS19
remains volatile to changes in credit spread which have not been hedged,
primarily due to the difficulties in doing so over long durations; changes in
inflation, as the IFM results in changes to the IFM deficit contributions
rather than a change in the schemes' assets; and, to a lesser extent, changes
in mortality as management has decided not to hedge this exposure due to its
lower volatility in the short-term and the relatively high hedging costs. 
 
In contrast, the scheme specific funding basis, which forms the basis for
regular (non-IFM) deficit repair contributions, is unlikely to suffer from
volatility due to credit spread or inflation. This is because a prudent, fixed
credit spread assumption is applied, and inflation linked contributions are
included within the IFM. 
 
In the IAS19 assessment of financial position at 31 March 2015, price
inflation fell by 0.3% and although the discount rate has fallen by 1.2%, this
masks a credit spread increase of 0.1%. The price inflation reduction and
credit spread increase results in substantially all of the reported £256.6
million improvement. During the year ended 31 March 2015, there has not been
any significant change in the deficits on a scheme specific funding basis that
impact the level of deficit repair contributions. 
 
The closing surplus/(obligations) at each reporting date are analysed as
follows: 
 
                                                 31 March   31 March   
                                                 2015       2014       
                                                 £m         £m         
                                                                       
 Present value of defined benefit obligations    (3,054.5)  (2,554.4)  
 Fair value of schemes' assets                   3,133.7    2,377.0    
 Net retirement benefit surplus/(obligations)    79.2       (177.4)    
 
 
9. Related party transactions 
 
Transactions between the company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed in this
note. 
 
The following transactions were carried out with the group's joint ventures
and other investments: 
 
                                    Year ended  Year ended  
                                    31 March    31 March    
                                    2015        2014        
                                    £m          £m          
                                                            
 Sales of services                                          
 Joint ventures                     1.0         1.5         
 Other investments                  0.1         0.1         
                                    1.1         1.6         
 Purchases of goods and services                            
 Joint ventures                     0.8         0.8         
                                    0.8         0.8         
 
 
Sales of services to related parties were on the group's normal trading
terms. 
 
Amounts owed by the group's joint ventures and other investments are as
follows: 
 
                                    31 March  Restated   
                                    2015      31 March   
                                    £m        2014       
                                              £m         
                                                         
 Amounts owed by related parties                         
 Joint ventures                     2.8       2.6        
 Other investments                  -         0.1        
                                    2.8       2.7        
                                                         
 
 
The amounts outstanding are unsecured and will be settled in accordance with
normal credit terms.  The group has issued guarantees of £4.7 million (2014:
£5.2 million) in support of its joint ventures. 
 
No expense or allowance has been made for bad and doubtful receivables in
respect of the amounts owed by related parties (2014: £nil). 
 
10. Contingent liabilities 
 
The group has entered into performance guarantees as at 31 March 2015 where a
financial limit has been specified of £9.7 million (2014: £47.1 million). 
 
11. Changes in circumstances significantly affecting the fair value of
financial assets and financial liabilities 
 
From 1 April 2014 to 31 March 2015 market interest rates have decreased, which
has increased the fair value of the group's borrowings and derivative assets. 
 
The group's borrowings have a carrying amount of £6,645.4 million (2014
restated: £6,041.5 million). The fair value of these borrowings is £7,350.2
million (2014 restated: £6,308.6 million). The group's derivatives measured at
fair value are a net asset of £477.4 million (2014: £409.8 million). 
 
12. Events after the reporting period 
 
There were no events arising after the reporting date that required
recognition or disclosure in the financial statements for the year ended 31
March 2015. 
 
STATEMENT OF DIRECTORS' RESPONSIBILITIES 
 
The responsibility statement below has been prepared in connection with the
company's full annual report for the year ended 31 March 2015. Certain parts
thereof are not included within this announcement. 
 
Responsibility statement 
 
We confirm that to the best of our knowledge: 
 
·     the financial statements, prepared in accordance with IFRS as adopted by
the European Union, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the company and the undertakings
included in the consolidation taken as a whole; 
 
·     the strategic report includes a fair review of the development and
performance of the business and the position of the issuer and the
undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they face; and 
 
·     the directors consider the annual report, taken as a whole, is fair,
balanced and understandable and provides the information necessary for
shareholders to assess the group's performance, business model and strategy. 
 
The directors of United Utilities Group PLC at the date of this announcement
are listed below: 
 
Dr John McAdam 
 
Steve Mogford 
 
Dr Catherine Bell CB 
 
Stephen A Carter                      (appointed 1 September 2014) 
 
Mark Clare 
 
Russ Houlden 
 
Brian May 
 
Sara Weller 
 
This responsibility statement was approved by the board and signed on its
behalf by: 
 
 ………………………..                ……………………….                
 Steve Mogford 20 May 2015  Russ Houlden 20 May 2015  
 Chief Executive Officer    Chief Financial Officer   
 
 
This information is provided by RNS
The company news service from the London Stock Exchange