REG - United Utilities Grp - Final Results <Origin Href="QuoteRef">UU.L</Origin> - Part 3
26/05/2016 07:06
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the inflation assumption by
0.3%. Finally the mortality assumptions have been revised to increase the
long-term annual rate of improvement from 1.5% to 1.75%.
11. Assets classified as held for sale
During the year, the group entered into an agreement which will involve the
disposal of its non-household water and wastewater retail business,
principally comprising billing and customer service activities, into a new
joint venture with Severn Trent PLC. As at 31 March 2016, completion of the
disposal was expected within 12 months, subject to clearance from the
Competition and Markets Authority (CMA), and so £18.3 million of intangible
assets have been classified as held for sale. These assets have subsequently
been impaired by £2.7 million during the year to give a carrying value of
£15.6 million, which ensures that the assets are valued at fair value less
cost to sell in accordance with IFRS 5 'Non-Current Assets Held for Sale and
Discontinued Operations'. See note 18 for events occurring after the 31 March
2016.
12. Borrowings
New borrowings raised during the year ended 31 March 2016 were as follows:
· On 23 April 2015 the group issued £25.0 million index-linked notes due
April 2025 and £35.0 million index-linked notes due April 2030.
· On 27 April 2015 the group issued EUR 52.0 million fixed interest rate
notes due April 2027.
· On 16 June 2015 the group drew down the remaining £150.0 million against
its existing £500.0 million term loan facility with the European Investment
Bank, at a floating rate of interest. This loan is structured on an amortising
basis with final repayment in June 2033.
· On 26 October 2015 the group issued EUR 30.0 million fixed interest rate
notes due October 2030.
· On 8 December 2015 the group borrowed £100.0 million from an existing
relationship bank, at a floating rate of interest, due October 2022.
· On 17 December 2015 the group drew down £100.0 million, and on 1
February 2016 a further £75.0 million, against its existing £250.0 million
term index-linked loan facility with the European Investment Bank. These loans
are structured on an amortising basis with final repayments in December 2033
and February 2034 respectively.
· On 23 March 2016 the group borrowed £100.0 million, index-linked, from
an existing relationship bank, due March 2026.
The notes included in the list above were issued through private placement
under the Euro medium-term note programme.
13. Fair values of financial instruments
The fair value of financial instruments held at fair value and financial
instruments for which fair value does not approximate carrying value, are
shown in the table below.
31 March2016 31 March2015
Fair value£m Carrying value£m Fair value£m Carrying value£m
Available for sale financial assets
Investments 8.7 8.7 8.6 8.6
Financial assets at fair value through profit or loss
Derivative financial assets - fair value hedge 583.8 583.8 521.6 521.6
Derivative financial assets - held for trading 181.8 181.8 161.0 161.0
Financial liabilities at fair value through profit or loss
Derivative financial liabilities - held for trading (261.7) (261.7) (205.2) (205.2)
Financial liabilities designated as fair value through profit or loss (338.0) (338.0) (333.7) (333.7)
Financial instruments for which fair value does not approximate carrying value
Financial liabilities in fair value hedge relationships (2,293.0) (2,373.0) (2,218.0) (2,252.1)
Other financial liabilities at amortised cost (4,830.1) (4,267.0) (4,798.5) (4,059.6)
(6,948.5) (6,465.4) (6,864.2) (6,159.4)
The increase in credit spreads during the year is the principal reason for the
reduction in the difference between the fair value and carrying value of the
group's borrowings.
The group has calculated fair values using quoted prices where an active
market exists, which has resulted in 'level 1' fair value liability
measurements under the IFRS 13 'Fair value measurement' hierarchy of £2,149.5
million (31 March 2015: £2,142.6 million) for financial liabilities in fair
value hedge relationships and £1,309.9 million (31 March 2015: £2,530.3
million) for other financial liabilities at amortised cost.
The £1,213.5 million reduction (31 March 2015: £1,493.9 million increase) in
'level 1' fair value liability measurements is largely due to the maturity of
a £425.0 million bond during the year and a decrease in the number of
observable quoted bond prices at 31 March 2016. In the absence of an
appropriate quoted price, the group has applied discounted cash flow valuation
models utilising market available data which are classified as 'level 2'
valuations. More information in relation to the valuation techniques used by
the group and the IFRS 13 hierarchy can be found in the audited financial
statements of United Utilities Group PLC for the year ended 31 March 2015.
14. Net debt
Year ended31 March2016£m Year ended
31 March2015£m
At the start of the year 5,924.0 5,515.9
Net capital expenditure 681.6 709.0
Dividends (note 9) 258.7 249.4
Interest 166.8 174.6
Tax 53.1 60.6
Fair value movements* 42.4 107.2
Inflation uplift on index-linked debt (note 6) 37.9 46.6
Other 1.5 2.4
Cash generated from operations (note 15) (905.5) (941.7)
At the end of the year 6,260.5 5,924.0
* Fair value movements includes net fair value losses on debt and derivative
instruments of £26.3 million (31 March 2015: £104.7 million) less net receipts
on swaps and debt under fair value option of £16.1 million (31 March 2015:
£2.5 million).
Net debt comprises borrowings, net of cash and short-term deposits and
derivatives.
15. Cash generated from operations
Year ended31 March2016£m Year ended
31 March2015£m
Operating profit 567.9 653.3
Adjustments for:
Depreciation of property, plant and equipment 332.5 323.6
Amortisation of intangible assets 31.2 29.0
Impairment of property, plant and equipment 11.4 -
Impairment of assets classified as available for sale 2.7 -
Loss on disposal of property, plant and equipment 5.4 5.1
Loss on disposal of intangible assets - 0.5
Amortisation of deferred grants and contributions (6.9) (7.7)
Equity-settled share-based payments charge 2.3 2.9
Other non-cash movements (3.8) (1.2)
Changes in working capital:
Decrease/(increase) in inventories 11.2 (0.7)
Increase in trade and other receivables (14.1) (23.0)
Decrease in trade and other payables (4.1) (23.2)
Increase/(decrease) in provisions 2.6 (3.8)
Pension contributions paid less pension expense charged to operating profit (32.8) (13.1)
Cash generated from operations 905.5 941.7
16. Commitments and contingent liabilities
At 31 March 2016 there were commitments for future capital expenditure
contracted but not provided for of £447.3 million (31 March 2015: £396.8
million).
Details of the group's contingent liabilities are disclosed in the audited
financial statements of United Utilities Group PLC for the year ended 31 March
2015. There have been no significant developments relating to contingent
liabilities in the year ended 31 March 2016.
17. Related party transactions
There were no material related party transactions during the year ended 31
March 2016, nor were there material receivable or payable balances outstanding
as at that date.
18. Events after the reporting period
On 3 May 2016, the CMA approved the joint venture arrangement with Severn
Trent PLC (see note 11) and as a result completion is expected to occur in
June 2016.
There were no further events arising after the reporting date that required
recognition or disclosure in the financial statements for the year ended 31
March 2016.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The responsibility statement below has been prepared in connection with the
group's full annual report for the year ended 31 March 2016. Certain parts
thereof are not included within this announcement.
Responsibilities Statement
We confirm that to the best of our knowledge:
- the financial statements has been 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
Stephen A Carter
Mark Clare
Russ Houlden
Brian May
Sara Weller
This responsibility statement was approved by the board and signed on its
behalf by:
……………………….. ……………………….
Steve Mogford Russ Houlden
25 May 2016 25 May 2016
Chief Executive Officer Chief Financial Officer
This information is provided by RNS
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