REG - United Utilities Grp - Half Yearly Report <Origin Href="QuoteRef">UU.L</Origin> - Part 2
25/11/2015 07:01
- Part 2: For the preceding part double click ID:nRSY8515Ga
Earnings per share
£m £m
Profit after tax per published results (a) 171.9 162.8
Underlying profit after tax (b) 163.2 175.8
Weighted average number of shares in issue, in millions (c) 681.9m 681.9m
Earnings per share per published results, in pence (a/c) 25.2p 23.9p
Underlying earnings per share, in pence (b/c) 23.9p 25.8p
1 Relates to market reform restructuring costs incurred preparing the business
for open competition in the business retail market
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 around 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. The Group Board receive a risk
report twice a year, detailing the most significant risks identified by the
business. This is made up of the ten highest ranked risks (based on likelihood
x impact), a further five risks due to the potential severity of their impact
and a number of risks that fall outside of these categories, but are worthy of
note due to reputational impact or new/emerging circumstances.
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 are also summarised to the Group
Board biannually and have been set out under 'Risks' on pages 54 and 55 of the
2015 United Utilities Group PLC Annual Report and Financial statements to
reflect the principal risks (aggregated), together with associated issues or
areas of uncertainty, potential for material effect and the extent of
control/mitigation. These categories are (1) the regulatory environment and
framework; (2) corporate governance and legal compliance; (3) water service
(4) wastewater service; (5) security, assets and operational resilience; (6)
human and IT resource; (7) tax, treasury and financial control; (8) programme
delivery; (9) revenues; and (10) health, safety and environmental.
Key features, developments over the last year and looking ahead
As expected, following the 2014 price determination the group's risk profile
highlights greater exposure regarding 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, strict legal/regulatory requirements and a recent water quality
incident (relating to the Water Service principal risk). Competition, market
reform and changes in the regulatory landscape remain high on the agenda
however, with the ongoing development of the non-household market, uncertainty
surrounding the impact of upstream competition for water and wastewater
services and significant uncertainty about the methodology and outcome of the
next price review.
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.
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
Six months ended Six months ended Year ended
30 September 30 September 31 March
2015 2014 2015
£m £m £m
Revenue 857.0 859.4 1,720.2
Employee benefits expense (note 3) (72.6) (69.6) (145.1)
Other operating costs (note 4) (247.0) (203.4) (424.3)
Other income 1.6 1.3 3.3
Depreciation and amortisation expense (185.1) (172.7) (352.6)
Infrastructure renewals expenditure (75.6) (74.5) (148.2)
Total operating expenses (578.7) (518.9) (1,066.9)
Operating profit 278.3 340.5 653.3
Investment income (note 5) 2.5 0.6 1.0
Finance expense (note 6) (67.4) (138.9) (317.8)
Investment income and finance expense (64.9) (138.3) (316.8)
Share of profits of joint ventures Profit before tax 2.2 2.5 5.1
215.6 204.7 341.6
Current tax charge (22.5) (24.4) (47.1)
Deferred tax charge (21.2) (17.5) (23.3)
Tax (note 7) (43.7) (41.9) (70.4)
Profit after tax 171.9 162.8 271.2
All of the results shown above relate to continuing operations.
Earnings per share (note 8)
Basic 25.2p 23.9p 39.8p
Diluted 25.2p 23.8p 39.7p
Dividend per ordinary share (note 9) 12.81p 12.56p 37.70p
Consolidated statement of comprehensive income
Six months ended30 September2015 Six months ended30 September2014 Year ended
31 March
2015
£m £m £m
Profit after tax 171.9 162.8 271.2
Other comprehensive income
Remeasurement gains on defined benefit pensionschemes (note 10) 33.4 59.1 250.5
Tax on items taken directly to equity (note 7) (6.7) (11.7) (50.1)
Foreign exchange adjustments 0.3 (1.8) (3.1)
Total comprehensive income 198.9 208.4 468.5
Consolidated statement of financial position
30 September 30 September 31 March
2015 2014 2015
£m £m £m
ASSETS
Non-current assets
Property, plant and equipment 9,845.7 9,509.3 9,716.3
Intangible assets 157.5 119.4 144.9
Interests in joint ventures 29.8 31.3 31.7
Investments 8.5 7.5 8.6
Trade and other receivables 2.5 4.5 2.5
Retirement benefit surplus (note 10) 126.2 - 79.2
Derivative financial instruments 663.3 508.2 681.6
10,833.5 10,180.2 10,664.8
Current assets
Inventories 38.4 40.7 40.5
Trade and other receivables 379.9 352.6 353.3
Cash and short-term deposits 356.4 110.6 244.0
Derivative financial instruments - 53.1 1.0
774.7 557.0 638.8
Total assets 11,608.2 10,737.2 11,303.6
LIABILITIES
Non-current liabilities
Trade and other payables (503.0) (461.1) (480.0)
Borrowings (note 11) (5,997.7) (6,158.1) (6,067.3)
Retirement benefit obligations (note 10) - (115.2) -
Deferred tax liabilities (1,151.7) (1,080.3) (1,123.8)
Derivative financial instruments (186.2) (67.0) (196.6)
(7,838.6) (7,881.7) (7,867.7)
Current liabilities
Trade and other payables (428.0) (434.8) (381.2)
Borrowings (note 11) (845.3) (91.3) (578.1)
Current tax liabilities (16.9) (23.0) (21.1)
Provisions (18.5) (8.3) (12.5)
Derivative financial instruments (3.4) (39.6) (8.6)
(1,312.1) (597.0) (1,001.5)
Total liabilities (9,150.7) (8,478.7) (8,869.2)
Total net assets 2,457.5 2,258.5 2,434.4
EQUITY
Share capital 499.8 499.8 499.8
Share premium account 2.9 2.9 2.9
Other reserve - 158.8 -
Treasury shares (0.4) - -
Cumulative exchange reserve (8.4) (7.4) (8.7)
Merger reserve 329.7 329.7 329.7
Retained earnings 1,633.9 1,274.7 1,610.7
Shareholders' equity 2,457.5 2,258.5 2,434.4
Consolidated statement of changes in equity
Six months ended 30 September 2015
Share capital Share premium account Treasury shares Cumulative exchange reserve Merger reserve Retained earnings Total
£m £m £m £m £m £m £m
At 1 April 2015 499.8 2.9 - (8.7) 329.7 1,610.7 2,434.4
Profit after tax - - - - - 171.9 171.9
Other comprehensive income/(expense)
Remeasurement gains on defined benefit pension schemes (note 10) - - - - - 33.4 33.4
Tax on items taken directly to equity (note 7) - - - - - (6.7) (6.7)
Foreign exchange adjustments - - - 0.3 - - 0.3
Total comprehensive income - - - 0.3 - 198.6 198.9
Dividends (note 9) - - - - - (171.4) (171.4)
Purchase of shares - - (0.4) - - - (0.4)
Equity-settled share-based payments - - - - - 1.2 1.2
Exercise of share options - purchase of shares - - - - - (5.2) (5.2)
At 30 September 2015 499.8 2.9 (0.4) (8.4) 329.7 1,633.9 2,457.5
Six months ended 30 September 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 2014 499.8 2.9 158.8 (5.6) 329.7 1,230.3 2,215.9
Profit after tax - - - - - 162.8 162.8
Other comprehensive (expense)/income
Remeasurement gains on defined benefit pension schemes (note 10) - - - - - 59.1 59.1
Tax on items taken directly to equity (note 7) - - - - - (11.7) (11.7)
Foreign exchange adjustments - - - (1.8) - - (1.8)
Total comprehensive (expense)/income - - - (1.8) - 210.2 208.4
Dividends (note 9) - - - - - (163.8) (163.8)
Equity-settled share-based payments - - - - - 1.5 1.5
Exercise of share options - purchase of shares - - - - - (3.5) (3.5)
At 30 September 2014 499.8 2.9 158.8 (7.4) 329.7 1,274.7 2,258.5
Year ended 31 March 2015
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 2014 499.8 2.9 158.8 (5.6) 329.7 1,230.3 2,215.9
Profit after tax - - - - - 271.2 271.2
Other comprehensive (expense)/income
Remeasurement gains on defined benefit pension schemes (note 10) - - - - - 250.5 250.5
Tax on items taken directly to equity (note 7) - - - - - (50.1) (50.1)
Foreign exchange adjustments - - - (3.1) - - (3.1)
Total comprehensive (expense)/income - - - (3.1) - 471.6 468.5
Dividends (note 9) - - - - - (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
Consolidated statement of cash flows
Six months ended Six months ended Year ended
30 September 30 September 31 March
2015 2014 2015
£m £m £m
Operating activities
Cash generated from operations (note 14) 461.6 471.6 941.7
Interest paid (65.9) (68.0) (175.6)
Interest received and similar income 1.0 0.6 1.0
Tax paid (26.7) (36.8) (61.9)
Tax received - 1.3 1.3
Net cash generated from operating activities 370.0 368.7 706.5
Investing activities
Purchase of property, plant and equipment (299.4) (323.9) (665.7)
Purchase of intangible assets (27.1) (22.9) (63.4)
Proceeds from sale of property, plant and equipment 0.5 1.0 2.0
Grants and contributions received 8.4 8.0 18.1
Purchase of investments - (0.6) (0.8)
Dividends received from joint ventures 4.6 4.9 4.9
Net cash used in investing activities (313.0) (333.5) (704.9)
Financing activities
Proceeds from borrowings 261.3 160.4 411.2
Repayment of borrowings (34.1) (6.4) (19.1)
Dividends paid to equity holders of the company (note 9) (171.4) (163.8) (249.4)
Exercise of share options - purchase of shares (5.6) (3.5) (3.5)
Net cash generated from/(used in) financing activities 50.2 (13.3) 139.2
Net increase in cash and cash equivalents 107.2 21.9 140.8
Cash and cash equivalents at beginning of the period 219.7 78.9 78.9
Cash and cash equivalents at end of the period 326.9 100.8 219.7
NOTES
1. Basis of preparation and accounting policies
The condensed consolidated financial statements for the six months ended 30
September 2015 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 2015 and are prepared in
accordance with International Financial Reporting Standards (IFRSs) as adopted
by the European Union (EU).
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 2015 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
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 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. Employee benefits expense
Included within employee benefits expense were £0.1 million (30 September
2014: £2.6 million, 31 March 2015: £11.0 million) of restructuring costs.
4. Other operating costs
Six months ended Six months ended Re-presented*
30 September 30 September Year ended
2015 2014£m 31 March
£m 2015
£m
Hired and contracted services 53.2 43.6 93.4
Property rates 46.4 41.3 80.5
Materials 34.2 31.5 58.5
Power 30.4 32.5 69.1
Charge for bad and doubtful receivables 19.7 23.1 52.9
Regulatory fees 10.4 19.6 29.2
Third party wholesale charges 6.5 4.9 10.8
Other 46.2 6.9 29.9
247.0 203.4 424.3
* The comparatives have been re-presented to allocate accommodation costs (30
September 2014: £2.4 million, 31 March 2015: £7.0 million) and movement in
other provision costs (30 September 2014: £6.7 million, 31 March 2015: £3.4
million) to categories which better reflect the underlying nature of these
costs. In addition, a separate category for third party wholesale charges has
been presented, which were previously within other costs.
During the period there were £24.8 million (30 September 2014: £nil, 31 March
2015: £nil) of expenses incurred in relation to a large water quality incident
and £5.4 million (30 September 2014: £nil, 31 March 2015: £1.1 million) in
relation to market reform restructuring costs incurred preparing the business
for open competition in the business retail market.
5. Investment income
Six months ended Six months ended Year ended
30 September 30 September 31 March
2015 2014 2015
£m £m £m
Interest receivable 1.1 0.6 1.0
Net pension interest income (note 10) 1.4 - -
2.5 0.6 1.0
6. Finance expense
Six months ended Six months ended Year ended
30 September 30 September 31 March
2015 2014 2015
£m £m £m
Interest payable 104.3 115.4 206.1
Net fair value (gains)/losses on debt and derivative instruments (36.9) 19.9 104.7
67.4 135.3 310.8
Net pension interest expense (note 10) - 3.6 7.0
67.4 138.9 317.8
Interest payable is stated net of £10.8 million (30 September 2014: £11.1
million, 31 March 2015: £20.9 million) borrowing costs capitalised in the cost
of qualifying assets within property, plant and equipment and intangible
assets during the period. Interest payable includes a £23.8 million (30
September 2014: £37.6 million, 31 March 2015: £46.6 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 £7.9
million (30 September 2014: £1.5 million, 31 March 2015: £4.0 million) due to
interest on swaps and debt under fair value option.
7. Tax
The total effective tax charge for each period was in line with the mainstream
rate of corporation tax, currently 20 per cent (30 September 2014: 21 per
cent, 31 March 2015: 21 per cent). The split of the total tax charge between
current and deferred tax was due to ongoing timing differences in relation to
tax deductions on pension contributions, capital investment and unrealised
gains and losses on treasury derivatives.
For each period, 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 2015 for the
purpose of the basic earnings per share was 681.9 million (30 September 2014:
681.9 million, 31 March 2015: 681.9 million) and for the diluted earnings per
share was 682.8 million (30 September 2014: 683.3 million, 31 March 2015:
683.3 million).
9. Dividends
Six months ended Six months ended Year ended
30 September 30 September 31 March
2015 2014 2015
£m £m £m
Dividends relating to the period comprise:
Interim dividend 87.3 85.6 85.6
Final dividend - - 171.4
87.3 85.6 257.0
Dividends deducted from shareholders' equity comprise:
Interim dividend - - 85.6
Final dividend 171.4 163.8 163.8
171.4 163.8 249.4
The interim dividends for the six months ended 30 September 2015 and 30
September 2014 and the final dividend for the year ended 31 March 2015 have
not been included as liabilities in the consolidated half-yearly financial
statements at 30 September 2015, 30 September 2014 and the consolidated
financial statements at 31 March 2015 respectively.
The interim dividend of 12.81 pence per ordinary share (2014: interim dividend
of 12.56 pence per ordinary share, final dividend of 25.14 pence per ordinary
share) is expected to be paid on 1 February 2016 to shareholders on the
register at the close of business on 18 December 2015. The ex-dividend date
for the interim dividend is 17 December 2015.
10. Retirement benefit surplus/(obligations)
The main financial assumptions used by the company's 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:
Six months ended Six months ended Year ended
30 September 30 September 31 March
2015 2014 2015
%pa %pa %pa
Discount rate 3.4 3.8 3.1
Pensionable salary growth and pension increases 3.0 3.1 3.0
Price inflation 3.0 3.1 3.0
The net pension expense before tax in the income statement in respect of the
defined benefit schemes is summarised as follows:
Six months ended Six months ended Year ended
30 September 30 September 31 March
2015 2014 2015
£m £m £m
Current service cost 11.4 9.0 18.1
Curtailments/settlements 0.3 0.9 5.5
Administrative expenses 1.3 1.1 2.6
Pension expense charged to operating profit 13.0 11.0 26.2
Net pension interest (income) (note 5)/expense (note 6) (1.4) 3.6 7.0
Net pension expense charged before tax 11.6 14.6 33.2
The reconciliation of the opening and closing net pension
surplus/(obligations) included in the statement of financial position is as
follows:
Six months ended Six months ended Year ended
30 September 30 September 31 March
2015 2014 2015
£m £m £m
At the start of the period 79.2 (177.4) (177.4)
Expense recognised in the income statement (11.6) (14.6) (33.2)
Contributions paid 25.2 17.7 39.3
Remeasurement gains gross of tax 33.4 59.1 250.5
At the end of the period 126.2 (115.2) 79.2
The closing surplus/(obligations) at each reporting date are analysed as
follows:
30 September 30 September 31 March
2015 2014 2015
£m £m £m
Present value of defined benefit obligations (2,834.7) (2,727.0) (3,054.5)
Fair value of schemes' assets 2,960.9 2,611.8 3,133.7
Net retirement benefit surplus/(obligations) 126.2 (115.2) 79.2
In the six month period ended 30 September 2015 the discount rate increased by
0.3 per cent, which includes a 0.2 per cent increase in credit spreads. The
£33.4 million remeasurement gain has resulted from the impact of the increase
in credit spreads and actual inflation during the period being lower than the
inflation assumption, both of which have reduced the IAS 19 'Employee
benefits' defined benefit obligation, partially offset by underperformance on
the schemes' assets. Further details on the approach to managing pension
scheme risk are set out in the audited financial statements of United
Utilities Group PLC for the year ended 31 March 2015.
11. Borrowings
New borrowings raised during the six month period ended 30 September 2015 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.
The notes were issued through private placement under the Euro medium-term
note programme.
12. 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.
30 September 30 September 31 March
2015 2014 2015
Fair Carrying value Fair Carrying value Fair Carrying value
value £m value £m value £m
£m £m £m
Available for sale financial assets
Investments 8.5 8.5 7.5 7.5 8.6 8.6
Financial assets at fair value through profit or loss
Derivative financial assets- fair value hedge 509.7 509.7 441.7 441.7 521.6 521.6
Derivative financial assets- held for trading 153.6 153.6 119.6 119.6 161.0 161.0
Financial liabilities at fair value through profit or lossDerivative financial liabilities- fair value hedge (2.3) (2.3) - - - -
Derivative financial liabilities- held for trading (187.3) (187.3) (106.6) (106.6) (205.2) (205.2)
Financial liabilities designated as fair value through profit or loss (312.2) (312.2) (294.0) (294.0) (333.7) (333.7)
Financial instruments for which fair value does not approximate carrying value
Financial liabilities in fair value hedge relationships (2,211.1) (2,253.2) (2,161.2) (2,157.1) (2,218.0) (2,252.1)
Other financial liabilities at amortised cost (4,775.5) (4,277.6) (4,270.3) (3,798.3) (4,798.5) (4,059.6)
(6,816.6) (6,360.8) (6,263.3) (5,787.2) (6,864.2) (6,159.4)
From 1 April 2015 to 30 September 2015 credit spreads have increased,
decreasing the fair 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 £1,927.8
million (30 September 2014: £1,852.0 million, 31 March 2015: £2,142.6 million)
for financial liabilities in fair value hedge relationships and £1,126.5
million (30 September 2014: £1,105.4 million, 31 March 2015: £2,530.3 million)
for other financial liabilities at amortised cost. 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.
13. Net debt
Six months ended Six months ended Year ended
30 September 30 September 31 March
2015 2014 2015
£m £m £m
Net debt at start of the period 5,924.0 5,515.9 5,515.9
Net capital expenditure 317.6 337.8 709.0
Dividends (note 9) 171.4 163.8 249.4
Interest and tax 91.6 102.9 235.2
Non-cash movements and other (30.1) 35.3 156.2
Cash generated from operations (note 14) (461.6) (471.6) (941.7)
Net debt at end of the period 6,012.9 5,684.1 5,924.0
Net debt comprises borrowings, net of cash and short-term deposits and
derivatives.
14. Cash generated from operations
Six months ended Six months ended Year ended
30 September 30 September 31 March
2015 2014 2015
£m £m £m
Operating profit 278.3 340.5 653.3
Adjustments for:
Depreciation of property, plant and equipment 170.3 159.1 323.6
Amortisation of intangible assets 14.8 13.6 29.0
Loss on disposal of property, plant and equipment 2.6 1.5 5.1
Loss on disposal of intangible assets - - 0.5
Amortisation of deferred grants and contributions (3.3) (3.8) (7.7)
Equity-settled share-based payments charge 1.2 1.5 2.9
Other non-cash movements (2.4) (1.1) (1.2)
Changes in working capital:
Decrease/(increase) in inventories 2.1 (0.9) (0.7)
Increase in trade and other receivables (26.5) (24.3) (23.0)
Increase/(decrease) in trade and other payables 30.7 0.2 (23.2)
Increase/(decrease) in provisions 6.0 (8.0) (3.8)
Pension contributions paid less pension expense charged to operating profit (12.2) (6.7) (13.1)
Cash generated from operations 461.6 471.6 941.7
15. Commitments and contingent liabilities
At 30 September 2015 there were commitments for future capital expenditure
contracted but not provided for of £450.7 million (30 September 2014: £383.7
million, 31 March 2015: £396.8 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
2015. There have been no significant developments relating to contingent
liabilities in the period ended 30 September 2015.
16. Related party transactions
There were no material related party transactions during the period ended 30
September 2015, nor were there material receivable or payable balances
outstanding as at that date.
17. Events after the reporting period
On 26 October 2015 the Finance Bill 2015-16 was substantively enacted. Under
the Bill there will be a phased reduction in the rate of UK corporation tax
which will reduce from 20 per cent to 18 per cent by 1 April 2020. This rate
reduction will result in a decrease in the group's deferred tax liability and
an associated income statement credit of c£120.0 million. In accordance with
IAS 10 'Events after the reporting period' no changes have been made to the
group's interim financial statements as this is a non-adjusting event after
the reporting period. As such, the impact will be recognised in the second
half of this financial year.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the DTR of the UK FCA.
Responsibilities Statement
We confirm that to the best of our knowledge:
- the condensed set of financial statements has been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by the EU;
- the interim management report includes a fair review of the information
required by:
· DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication
of important events that have occurred during the first six months of the
financial year and their impact on the condensed set of financial statements;
and a description of the principal risks and uncertainties for the remaining
six months of the year; and
· DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position or
performance of the entity during that period; and any changes in the related
party transactions described in the last annual report that could do so.
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
24 November 2015 24 November 2015
Chief Executive Officer Chief Financial Officer
INDEPENDENT REVIEW REPORT TO UNITED UTILITIES GROUP PLC
Introduction
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
September 2015 which comprises the consolidated income statement, the
consolidated statement of comprehensive income, the consolidated statement of
financial position, the consolidated statement of changes in equity, the
consolidated statement of cash flows and the related explanatory notes. We
have read the other information contained in the half-yearly financial report
and considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
This report is made solely to the company in accordance with the terms of our
engagement to assist the company in meeting the requirements
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