REG - United Utilities Grp - Half-year Report <Origin Href="QuoteRef">UU.L</Origin> - Part 2
22/11/2017 07:07
- Part 2: For the preceding part double click ID:nRSV1612Xa
including: water
abstraction; supply and treatment capability; drainage and sewer capacity; and
wastewater treatment and discharge efficiency and effectiveness.
Material Litigation
There continue to be two ongoing pieces of material litigation worthy of note,
as outlined on page 47 of the 2017 United Utilities Group PLC Annual Report
and Financial Statements. However, 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.
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.
This announcement contains inside information, disclosed in accordance with
the Market Abuse Regulation which came into effect on 3 July 2016 and for UK
Regulatory purposes the person responsible for making the announcement is
Simon Gardiner, Company Secretary.
LEI 2138002IEYQAOC88ZJ59
Classification - Half Year Results
Consolidated income statement
Six months ended30 September2017 Six months ended30 September2016 Year ended
31 March 2017
£m £m £m
Revenue 876.0 853.0 1,704.0
Employee benefits expense (note 3) (74.4) (78.2) (151.9)
Other operating costs (note 4) (205.2) (222.3) (435.1)
Other income 1.7 1.6 4.2
Depreciation and amortisation expense (185.3) (178.0) (364.9)
Infrastructure renewals expenditure (71.0) (72.5) (150.8)
Total operating expenses (534.2) (549.4) (1,098.5)
Operating profit 341.8 303.6 605.5
Investment income (note 5) 5.2 6.6 13.7
Finance expense (note 6) (109.8) (174.6) (202.7)
Investment income and finance expense (104.6) (168.0) (189.0)
Profit on disposal of business - 20.9 22.1
Share of profits of joint ventures 5.1 1.9 3.8
Profit before tax 242.3 158.4 442.4
Current tax charge (24.4) (6.5) (31.5)
Deferred tax charge (20.5) (6.4) (35.2)
Deferred tax credit - change in tax rate - 57.1 58.2
Tax (note 7) (44.9) 44.2 (8.5)
Profit after tax 197.4 202.6 433.9
All of the results shown above relate to continuing operations.
Earnings per share (note 8)
Basic 28.9p 29.7p 63.6p
Diluted 28.9p 29.7p 63.5p
Dividend per ordinary share (note 9) 13.24p 12.95p 38.87p
Consolidated statement of comprehensive income
Six months ended30 September2017 Six months ended30 September2016 Year ended31 March 2017
£m £m £m
Profit after tax 197.4 202.6 433.9
Other comprehensive income
Remeasurement losses on defined benefit pensionschemes (note 10) (52.4) (83.8) (76.7)
Tax on items taken directly to equity (note 7) 9.4 18.0 17.3
Foreign exchange adjustments 0.7 4.1 3.7
Total comprehensive income 155.1 140.9 378.2
Consolidated statement of financial position
30 September2017£m 30 September2016£m 31 March2017£m
ASSETS
Non-current assets
Property, plant and equipment 10,589.0 10,196.2 10,405.5
Intangible assets 192.3 179.8 187.7
Interests in joint ventures 78.3 70.2 75.2
Investments 7.8 9.1 9.0
Trade and other receivables 131.6 51.7 112.3
Retirement benefit surplus (note 10) 219.8 214.8 247.5
Derivative financial instruments 418.3 937.6 731.0
11,637.1 11,659.4 11,768.2
Current assets
Inventories 19.6 29.2 22.4
Trade and other receivables 284.6 337.2 303.9
Current tax asset 7.6 7.8 7.1
Cash and short-term deposits 87.6 237.4 247.8
Derivative financial instruments 331.4 0.3 76.7
730.8 611.9 657.9
Total assets 12,367.9 12,271.3 12,426.1
LIABILITIES
Non-current liabilities
Trade and other payables (611.5) (567.3) (589.3)
Borrowings (note 11) (6,778.2) (7,014.5) (7,058.4)
Deferred tax liabilities (1,047.3) (998.0) (1,031.5)
Derivative financial instruments (111.0) (328.3) (235.5)
(8,548.0) (8,908.1) (8,914.7)
Current liabilities
Trade and other payables (342.0) (365.2) (323.0)
Borrowings (note 11) (649.6) (302.4) (326.1)
Provisions (22.8) (18.6) (26.5)
Derivative financial instruments (7.1) (6.7) (14.2)
(1,021.5) (692.9) (689.8)
Total liabilities (9,569.5) (9,601.0) (9,604.5)
Total net assets 2,798.4 2,670.3 2,821.6
EQUITY
Share capital 499.8 499.8 499.8
Share premium account 2.9 2.9 2.9
Cumulative exchange reserve (1.3) (1.6) (2.0)
Merger reserve 329.7 329.7 329.7
Retained earnings 1,967.3 1,839.5 1,991.2
Shareholders' equity 2,798.4 2,670.3 2,821.6
Consolidated statement of changes in equity
Six months ended 30 September 2017
Share capital£m Share premium account£m Cumulative exchange reserve£m Merger reserve£m Retained earnings£m Total£m
At 1 April 2017 499.8 2.9 (2.0) 329.7 1,991.2 2,821.6
Profit after tax - - - - 197.4 197.4
Other comprehensive income
Remeasurement losses on defined benefit pension schemes (note 10) - - - - (52.4) (52.4)
Tax on items taken directly to equity (note 7) - - - - 9.4 9.4
Foreign exchange adjustments - - 0.7 - - 0.7
Total comprehensive income - - 0.7 - 154.4 155.1
Dividends (note 9) - - - - (176.7) (176.7)
Equity-settled share-based payments - - - - 1.2 1.2
Exercise of share options - purchase of shares - - - - (2.8) (2.8)
At 30 September 2017 499.8 2.9 (1.3) 329.7 1,967.3 2,798.4
Six months ended 30 September 2016
Share capital£m Share premium account£m Cumulative exchange reserve£m Merger reserve£m Retained earnings£m Total£m
At 1 April 2016 499.8 2.9 (5.7) 329.7 1,878.8 2,705.5
Profit after tax - - - - 202.6 202.6
Other comprehensive income
Remeasurement losses on defined benefit pension schemes (note 10) - - - - (83.8) (83.8)
Tax on items taken directly to equity (note 7) - - - - 18.0 18.0
Foreign exchange adjustments - - 4.1 - - 4.1
Total comprehensive income - - 4.1 - 136.8 140.9
Dividends (note 9) - - - - (174.8) (174.8)
Equity-settled share-based payments - - - - 1.1 1.1
Exercise of share options - purchase of shares - - - - (2.4) (2.4)
At 30 September 2016 499.8 2.9 (1.6) 329.7 1,839.5 2,670.3
Year ended 31 March 2017
Share capital£m Share premium account£m Cumulative exchange reserve£m Merger reserve£m Retained earnings£m Total£m
At 1 April 2016 499.8 2.9 (5.7) 329.7 1,878.8 2,705.5
Profit after tax - - - - 433.9 433.9
Other comprehensive income/(expense)
Remeasurement losses on defined benefit pension schemes (note 10) - - - - (76.7) (76.7)
Tax on items taken directly to equity (note 7) - - - - 17.3 17.3
Foreign exchange adjustments - - 3.7 - - 3.7
Total comprehensive income - - 3.7 - 374.5 378.2
Dividends (note 9) - - - - (263.1) (263.1)
Equity-settled share-based payments - - - - 3.4 3.4
Exercise of share options - purchase of shares - - - - (2.4) (2.4)
At 31 March 2017 499.8 2.9 (2.0) 329.7 1,991.2 2,821.6
Consolidated statement of cash flows
Six months ended30 September2017 Six months ended30 September2016 Year ended31 March 2017
£m £m £m
Operating activities
Cash generated from operations (note 14) 499.4 517.4 1,018.1
Interest paid (71.1) (77.5) (161.0)
Interest received and similar income 3.5 1.7 4.9
Tax paid (20.2) (21.9) (42.4)
Tax received - - 1.2
Net cash generated from operating activities 411.6 419.7 820.8
Investing activities
Purchase of property, plant and equipment (323.5) (315.0) (672.4)
Purchase of intangible assets (15.7) (29.8) (52.4)
Proceeds from sale of property, plant and equipment 0.2 0.8 4.1
Grants and contributions received 10.5 14.3 29.0
Loans to joint ventures (12.6) (46.0) (109.0)
Investment in joint ventures - (10.0) (13.5)
Proceeds from disposal of non-household retail business 6.5 4.1 3.3
Dividends received from joint ventures 3.4 5.4 5.4
Proceeds from investments 0.6 0.4 0.9
Net cash used in investing activities (330.6) (375.8) (804.6)
Financing activities
Proceeds from borrowings 129.1 505.4 736.2
Repayment of borrowings (178.0) (341.9) (448.7)
Dividends paid to equity holders of the company (note 9) (176.7) (174.8) (263.1)
Exercise of share options - purchase of shares (2.8) (2.4) (2.4)
Net cash (used in)/generated from financing activities (228.4) (13.7) 22.0
Net (decrease)/increase in cash and cash equivalents (147.4) 30.2 38.2
Cash and cash equivalents at beginning of the period 220.3 182.1 182.1
Cash and cash equivalents at end of the period 72.9 212.3 220.3
NOTES
1. Basis of preparation and accounting policies
The condensed consolidated financial statements for the six months ended 30
September 2017 have been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Conduct Authority and International
Accounting Standard 34 'Interim Financial Reporting' (IAS 34).
The accounting policies, presentation and methods of computation are
consistent with those applied in the audited financial statements of United
Utilities Group PLC for the year ended 31 March 2017 and are prepared in
accordance with International Financial Reporting Standards (IFRSs) as adopted
by the European Union (EU).
No new accounting standards, interpretations or amendments have been adopted
during the six months ended 30 September 2017.
As at the date of approval of the condensed financial statements the relevant
major accounting standards that were in issue but not yet effective were IFRS
9 'Financial Instruments', IFRS 15 'Revenue from Contracts with Customers',
and IFRS 16 'Leases'. The directors anticipate that the group will adopt these
standards on their effective date. Further detail of the expected impact of
adopting these standards can be found in the group's annual report and
financial statements for the year ended 31 March 2017. Detailed transition
work in relation to each of these new standards remains ongoing.
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 2017.
The comparative figures for the year ended 31 March 2017 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, 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
condensed financial statements, and have therefore assessed that the going
concern basis of accounting is appropriate in preparing the condensed
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. Segmental 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 regulatory capital value 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. Employee benefits expense
Included within employee benefits expense were £1.3 million (30 September
2016: £4.6 million, 31 March 2017: £10.1 million) of restructuring costs.
Employee benefits expense is stated net of £nil (30 September 2016: £3.1
million, 31 March 2017: £4.0 million) costs recharged under transitional
service agreements at nil margin to Water Plus, a joint venture established
between the group and Severn Trent PLC.
4. Other operating costs
Six months ended30 September 2017 £m Six months ended30 September 2016 £m Year ended31 March 2017 £m
Hired and contracted services 47.7 51.0 101.5
Property rates 42.6 47.2 91.6
Materials 33.2 37.4 67.7
Power 31.9 33.2 68.7
Regulatory fees 14.9 17.4 28.6
Charge for bad and doubtful receivables 14.8 17.7 29.9
Cost of properties disposed 7.7 0.1 8.6
Legal and professional expenses 2.2 3.6 6.5
Loss on disposal of property, plant and equipment 2.2 1.9 3.3
Operating leases payable 2.0 2.4 4.4
Third party wholesale charges - 3.0 3.0
Impairment of property, plant and equipment - - 0.2
Amortisation of deferred grants and contributions (3.1) (3.1) (6.7)
Compensation from insurers (3.5) (7.6) (12.3)
Other expenses 12.6 18.1 40.1
205.2 222.3 435.1
As a result of two significant flooding incidents caused by Storms Desmond and
Eva in December 2015, there were £3.4 million (30 September 2016: £8.5
million, 31 March 2017: £13.8 million) of expenses incurred during the period,
comprising £2.2 million (30 September 2016: £7.3 million, 31 March 2017: £11.1
million) of operating costs, £1.2 million (30 September 2016: £0.3 million, 31
March 2017: £2.5 million) of infrastructure renewals expenditure and £nil (30
September 2016: £0.9 million, 31 March 2017: £0.2 million) impairment of
property, plant and equipment. Insurance compensation of £3.5 million (30
September 2016: £7.6 million, 31 March 2017: £12.3 million) relating to the
flooding incidents has been recognised as part of a final settlement of the
insurance claim. The group does not expect there to be any further recovery of
the flooding incident costs under its insurance cover in the year ending 31
March 2018, though a small level of additional cost is expected to be incurred
in relation to the incidents as further remedial work is undertaken.
In addition, there were £1.0 million (30 September 2016: £3.4 million, 31
March 2017: £5.8 million) of market reform restructuring costs incurred
preparing the business for open competition in the non-household retail
market.
Total other operating costs are stated net of £0.9 million (30 September 2016:
£6.7 million, 31 March 2017: £14.5 million) of costs recharged to Water Plus
at nil margin under transitional service agreements.
5. Investment income
Six months ended30 September 2017 £m Six months ended30 September 2016 £m Year ended31 March2017£m
Interest receivable 1.9 1.8 3.5
Net pension interest income (note 10) 3.3 4.8 10.2
5.2 6.6 13.7
6. Finance expense
Six months ended30 September2017£m Six months ended30 September2016£m Year ended
31 March 2017 £m
Interest payable 144.3 119.8 227.0
Net fair value (gains)/losses on debt and derivative instruments (34.5) 54.8 (24.3)
109.8 174.6 202.7
Interest payable is stated net of £21.2 million (30 September 2016: £15.9
million, 31 March 2017: £29.2 million) borrowing costs capitalised in the cost
of qualifying assets within property, plant and equipment and intangible
assets during the period. Interest payable includes an £83.0 million (30
September 2016: £45.4 million, 31 March 2017: £80.7 million) non-cash,
inflation uplift charge in relation to the group's index-linked debt.
Net fair value (gains)/losses on debt and derivative instruments includes
£8.8m income (30 September 2016: £8.5 million, 31 March 2017: £15.4 million)
due to net interest on swaps and debt designated at fair value.
7. Tax
The total effective tax rate for the current period was in line with the
headline rate of 19 per cent. After adjusting for prior year tax adjustments,
non-taxable business disposals, and deferred tax credits for changes in the
headline rate of tax, the total effective tax rate for prior periods was
similarly in line with the headline rate. The split of the total tax charge
between current and deferred tax was due to ongoing timing differences in
relation to tax deductions on capital investment, pension contributions, and
unrealised gains and losses on treasury derivatives.
The tax adjustments taken to equity primarily relate to remeasurement
movements on the group's defined benefit pension schemes.
8. Earnings per share
Basic and diluted earnings per share are calculated by dividing profit after
tax by the weighted average number of shares in issue during the period. The
weighted average number of shares in issue as at 30 September 2017 for the
purpose of the basic earnings per share was 681.9 million (30 September 2016:
681.9 million, 31 March 2017: 681.9 million) and for the diluted earnings per
share was 683.0 million (30 September 2016: 682.9 million, 31 March 2017:
683.0 million).
9. Dividends
Six months ended30 September2017£m Six months ended30 September2016£m Year ended
31 March 2017£m
Dividends relating to the period comprise:
Interim dividend 90.3 88.3 88.3
Final dividend - - 176.7
90.3 88.3 265.0
Dividends deducted from shareholders' equity comprise:
Interim dividend - - 88.3
Final dividend 176.7 174.8 174.8
176.7 174.8 263.1
At March 2017, the proposed final dividend was £176.8 million although the
final dividend amount actually paid was £176.7 million. This difference is due
to a higher than anticipated number of shares purchased cum-dividend to
satisfy the dividend reinvestment plan. Dividends in relation to these shares
are waived.
The interim dividends for the six months ended 30 September 2017 and 30
September 2016, and the final dividend for the year ended 31 March 2017, have
not been included as liabilities in the respective condensed consolidated
financial statements at 30 September 2017 and 30 September 2016, and the
consolidated financial statements at 31 March 2017, because they were approved
after the reporting date.
The interim dividend of 13.24 pence per ordinary share (2016: interim dividend
of 12.95 pence per ordinary share, final dividend of 25.92 pence per ordinary
share) is expected to be paid on 1 February 2018 to shareholders on the
register at the close of business on 22 December 2017. The ex-dividend date
for the interim dividend is 21 December 2017.
10. Retirement benefit surplus
The main financial assumptions used by the company's actuary to calculate the
defined benefit surplus of the United Utilities Pension Scheme (UUPS) and the
United Utilities PLC Group of the Electricity Supply Pension Scheme (ESPS)
were as follows:
Six months ended30 September2017% p.a. Six months ended30 September2016% p.a. Year ended31 March2017% p.a.
Discount rate 2.7 2.3 2.55
Pensionable salary growth and pension increases 3.4 3.3 3.40
Price inflation 3.4 3.3 3.40
Mortality in retirement is assumed to be in line with the Continuous Mortality
Investigation's (CMI) S2PA (30 September 2016: S1NA, 31 March 2017: S2PA) year
of birth tables, with scaling factor of 108 per cent for males and 102 per
cent for females (30 September 2016: one-year age rating for males in the UUPS
only, 31 March 2017: same as 30 September 2016), reflecting actual mortality
experience; and CMI 2016 (30 September 2016: CMI 2014, 31 March 2017: CMI
2015) long-term improvement factors, with a long-term annual rate of
improvement of 1.75 per cent (30 September 2016 and 31 March 2017: 1.75 per
cent).
The net pension expense before tax in the income statement in respect of the
defined benefit schemes is summarised as follows:
Six months ended30 September2017£m Six months ended30 September2016£m Year ended31 March2017£m
Current service cost 14.0 10.2 19.7
Curtailments/settlements 0.2 1.7 3.1
Administrative expenses 1.2 1.6 2.7
Pension expense charged to operating profit 15.4 13.5 25.5
Net pension interest income credited to investment income (note 5) (3.3) (4.8) (10.2)
Net pension expense charged before tax 12.1 8.7 15.3
The reconciliation of the opening and closing net pension surplus included in
the statement of financial position is as follows:
Six months ended30 September2017£m Six months ended30 September2016£m Year ended31 March2017£m
At the start of the period 247.5 275.2 275.2
Expense recognised in the income statement (12.1) (8.7) (15.3)
Contributions paid 36.8 32.1 64.3
Remeasurement losses gross of tax (52.4) (83.8) (76.7)
At the end of the period 219.8 214.8 247.5
The closing surplus at each reporting date is analysed as follows:
30 September2017£m 30 September2016£m 31 March 2017£m
Present value of defined benefit obligations (3,487.9) (3,762.0) (3,615.5)
Fair value of schemes' assets 3,707.7 3,976.8 3,863.0
Net retirement benefit surplus 219.8 214.8 247.5
In the six month period ended 30 September 2017 the discount rate has
increased by 0.15 per cent, which comprises a 0.25 per cent increase in swap
yields and a 0.10 per cent decrease in credit spreads over the period. The
£52.4 million remeasurement loss has largely resulted from a reduction in
credit spreads, offset by a favourable impact from updating mortality
assumptions. Further details on the approach to managing pension scheme risk
are set out in the audited consolidated financial statements of United
Utilities Group PLC for the year ended 31 March 2017.
Member data used in arriving at the liability figure included within the
overall IAS 19 surplus has been based on the finalised actuarial valuation as
at 31 March 2016 for both the group's ESPS and UUPS schemes.
11. Borrowings
New borrowings raised during the six month period ended 30 September 2017 were
as follows:
· On 21 July 2017 the group drew down £100.0 million against its £250.0
million term loan facility signed in April 2016 with the European Investment
Bank. This floating rate loan is structured on an amortising basis with final
repayment in July 2035.
New borrowings raised following the six month period ended 30 September 2017,
which have not been recognised in the statement of financial position at that
date, were as follows:
· On 2 October 2017 the group drew down the remaining £75.0 million
against its existing £250.0 million term facility signed in April 2016 with
the European Investment Bank. This floating rate loan is structured on an
amortising basis with final repayment in October 2035.
· On 4 October 2017 the group issued HKD 830.0 million fixed interest rate
notes due October 2027.
· On 5 October 2017 the group issued £32.0 million CPI index-linked notes
due October 2048 and £33.0 million CPI index-linked notes due October 2057.
The issue of these notes is connected to the partial close out of £50.0
million RPI index-linked notes due April 2043 with a nominal value of £30.0
million (carrying value £41.3 million) at a fair value of £64.4 million. The
purchase of the RPI index-linked notes results in a £23.1 million fair value
loss, which has not been recognised in the income statement for the period
ended 30 September 2017.
· On 6 October 2017 the group issued EUR 28.0 million fixed interest rate
notes due October 2032.
The notes were issued through private placement under the Euro medium-term
note programme.
12. Fair values of financial instruments
The fair values of financial instruments are shown in the table below.
30 September2017 30 September2016 31 March2017
Fair value£m Carryingvalue£m Fair value£m Carryingvalue£m Fair value£m Carryingvalue£m
Available for sale financial assets
Investments 7.8 7.8 9.1 9.1 9.0 9.0
Financial assets at fair value through profit or loss
Derivative financial assets - fair value hedge 543.1 543.1 694.9 694.9 591.1 591.1
Derivative financial assets - held for trading 206.6 206.6 243.0 243.0 216.6 216.6
Financial liabilities at fair value through profit or loss
Derivative financial liabilities - fair value hedge (5.7) (5.7) - - - -
Derivative financial liabilities - held for trading (112.4) (112.4) (335.0) (335.0) (249.7) (249.7)
Financial liabilities designated as fair value through profit or loss (367.7) (367.7) (379.6) (379.6) (375.5) (375.5)
Financial instruments for which fair value does not approximate carrying value
Financial liabilities in fair value hedge relationships (2,492.1) (2,449.8) (2,631.3) (2,609.9) (2,544.6) (2,522.4)
Other financial liabilities at amortised cost (5,761.8) (4,610.3) (5,567.4) (4,327.4) (5,682.8) (4,486.6)
(7,982.2) (6,788.4) (7,966.3) (6,704.9) (8,035.9) (6,817.5)
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 £1,708.1
million (30 September 2016: £2,162.4 million, 31 March 2017: £1,766.1 million)
for financial liabilities in fair value hedge relationships and £2,253.7
million (30 September 2016: £1,669.0 million, 31 March 2017: £937.9 million)
for other financial liabilities at amortised cost.
The £1,257.8 million increase (30 September 2016: £372.0 million increase, 31
March 2017: £755.4 million reduction) in 'level 1' fair value liability
measurements is largely due to an increase in the number of observable quoted
bond prices in active markets at 30 September 2017. 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 2017.
13. Net debt
Six months ended30 September2017£m Six months ended30 September2016£m Year ended31 March2017£m
At the start of the period 6,578.7 6,260.5 6,260.5
Net capital expenditure 328.5 329.7 691.7
Dividends (note 9) 176.7 174.8 263.1
Interest 67.6 75.8 156.1
Loans to joint ventures 12.6 46.0 109.0
Inflation uplift on index-linked debt (note 6) 83.0 45.4 80.7
Fair value movements (52.9) 34.9 (9.9)
Tax 20.2 21.9 41.2
Other (6.4) 5.0 4.4
Cash generated from operations (note 14) (499.4) (517.4) (1,018.1)
At the end of the period 6,708.6 6,476.6 6,578.7
Net debt comprises borrowings, net of cash and short-term deposits and
derivatives.
Fair value movements includes net fair value gains on debt and derivative
instruments of £34.5 million (30 September 2016: £54.8 million loss, 31 March
2017: £24.3 million gain) less net payments on swaps and debt designated at
fair value of £18.4 million (30 September 2016: £19.9 million net payment, 31
March 2017: £14.4 million net receipt).
During the period the group paid £106.8 million in settlement of certain
interest rate swap liabilities (30 September 2016 and 31 March 2017: received
£70.0 million on settlement of a cross currency swap asset) as part of an
exercise to better align the existing hedging profile with the group's target
hedge ratios and to manage swap counterparty positions to facilitate future
treasury activity. This payment is included within 'Repayment of borrowings'
in the statement of cash flows.
14. Cash generated from operations
Six months ended30 September 2017£m Six months ended30 September 2016£m Year ended
31 March 2017£m
Operating profit 341.8 303.6 605.5
Adjustments for:
Depreciation of property, plant and equipment 172.5 164.5 336.2
Amortisation of intangible assets 12.8 13.5 28.7
Impairment of property, plant and equipment - - 0.2
Loss on disposal of property, plant and equipment 2.2 1.9 3.3
Loss on disposal of intangible assets - - 0.5
Amortisation of deferred grants and contributions (3.1) (3.1) (6.7)
Equity-settled share-based payments charge 1.2 1.1 3.4
Other non-cash movements (1.6) (1.4) (3.0)
Changes in working capital:
Decrease in inventories 2.9 0.1 6.9
Decrease in trade and other receivables 3.7 43.6 71.1
(Decrease)/increase in trade and other payables (8.0) 8.7 (0.6)
(Decrease)/increase in provisions (3.6) 3.5 11.4
Pension contributions paid less pension expense charged to operating profit (21.4) (18.6) (38.8)
Cash generated from operations 499.4 517.4 1,018.1
15. Commitments and contingent liabilities
At 30 September 2017 there were commitments for future capital expenditure
contracted but not provided for of £325.8 million (30 September 2016: £425.8
million, 31 March 2017: £336.9 million).
Details of the group's contingent liabilities were disclosed in the audited
financial statements of United Utilities Group PLC for the year ended 31 March
2017. There have been no significant developments relating to contingent
liabilities in the period ended 30 September 2017.
16. Related party transactions
The related party trading transactions with the group's joint ventures during
the period and amounts outstanding at the period end date were as follows:
Represented*
Six months ended30 September2017£m Six months ended30 September2016£m Year ended31 March2017£m
Sales of services 264.9 159.8 404.3
Purchases of goods and services 0.2 0.3 0.7
Costs recharged at nil margin under transitional service agreements 0.9 9.8 18.5
Interest income and fees recognised on loans to related parties 1.2 1.0 2.6
- More to follow, for following part double click ID:nRSV1612XcRecent news on United Utilities
See all newsREG - United Utilities Grp UnitedUtilitiesWater - Publication of Amended and Restated Final Terms
AnnouncementREG - United Utilities Grp - Director Declaration
AnnouncementREG - Stock Exch Notice - Admission to Trading - 02/03/2026
AnnouncementREG - United Utilities Grp Untd Ut Water Fin UnitedUtilitiesWater - Publication of Final Terms
AnnouncementREG - United Utilities Grp - Director/PDMR Shareholding
Announcement