Bristol Wtr.8t% Regulatory News (BWRA)

£m

Profit after tax for year ended 31 March 2011

6.8

Significant changes between periods:

Increase in revenue mainly due to RPI increase and K factor

7.3

Increase in depreciation charge on infrastructure assets

(1.9)

Increase in debt indexation cost

(2.1)

Increase in tax charge

(3.1)

All other changes

0.2

Profit after tax for year ended 31 March 2012

7.2

Summary

·; Stable underlying financial and operational performance

·; High customer satisfaction levels - 97% based on our monthly research

·; Leakage at the lowest level in the company's history - 15% below our target level

·; No water use restrictions imposed or expected in 2012

·; The largest investment in one year in the company's history - £60.4m investment on capital expenditure

·; Increase in revenue due to RPI and K factor

·; Increase in depreciation on infrastructure assets

·; Increase in debt indexation charge mainly relating to the £40m bond issued in March 2011

·; Increase in tax charge mainly relating to the deferred tax discounting due to fall in the UK gilt yields

For further information contact:

Miquel Anglada, Director

Bristol Water plc

Tel 0117 953 6407

Or contact:

Bristol Water Corporate Affairs on 0117 953 6470 during office hours or 07831518964 / 07770533238 at any time.

2012

2011

Note

£m

£m

Turnover

2

108.0

100.7

Operating costs

3

(83.5)

(82.1)

24.5

18.6

Other net interest payable and similar charges

4

(12.3)

(9.5)

Dividends on 8.75% irredeemable cumulative preference

 shares

4

(1.1)

(1.1)

Interest in respect of retirement benefit scheme

4

-

(0.4)

Net interest payable and similar charges

(13.4)

(11.0)

Profit on ordinary activities before taxation

11.1

7.6

Taxation on profit on ordinary activities

5

(3.9)

(0.8)

Profit on ordinary activities after taxation

7.2

6.8

Earnings per ordinary share

6

120.0p

113.3p

Dividends per ordinary share

12

 - declared or proposed in respect of the period

116.5p

48.4p

 - paid during the period

116.5p

48.4p

There is no difference between the profit on ordinary activities before taxation and the retained profit for the financial year stated above and their historical cost equivalents.

2012

2011

Note

£m

£m

Profit attributable to Bristol Water plc shareholders

7.2

6.8

Actuarial gains recognised in respect of

 retirement benefit obligations

1.2

1.4

10

(0.1)

(0.4)

(0.8)

0.1

10

0.1

-

7.6

7.9

Note

2012

2011

£m

£m

7.6

7.9

12

(7.0)

(2.9)

0.6

5.0

Shareholders' funds at 1 April

89.9

84.9

90.5

89.9

2012

2011

Note

£m

£m

Fixed assets

7

264.4

240.7

Other investments - Loans to a UK holding

 company

68.5

68.5

Current assets

Stocks

1.4

1.1

Debtors

27.3

22.3

Cash on deposit

8

64.5

77.3

Cash at bank and in hand

7.8

2.4

101.0

103.1

Creditors: amounts falling due within one year

Current portion of long-term borrowings

9

(18.4)

(2.8)

Other creditors

(40.6)

(25.3)

(59.0)

(28.1)

Net current assets

42.0

75.0

Total assets less current liabilities

374.9

384.2

Creditors: amounts falling due after more than one year

Borrowings and derivatives

9

(246.9)

(257.3)

8.75% irredeemable cumulative preference shares

9

(12.5)

(12.5)

Deferred income

(9.3)

(9.8)

Provisions for liabilities

10

(24.7)

(22.3)

Retirement benefit surplus

11

9.0

7.6

Net assets

90.5

89.9

Capital and reserves

Called-up share capital

6.0

6.0

Share premium account

4.4

4.4

Other reserves

4.4

5.1

Profit and loss account

75.7

74.4

90.5

89.9

2012

2011

Note

£m

£m

Net cash inflow from operating activities

13(a)

55.8

49.0

Returns on investments and servicing of finance

Interest received

4.6

4.2

Interest paid on term loans and debentures

(9.9)

(8.6)

Interest paid on finance leases

(0.5)

(0.3)

Dividends paid on 8.75% irredeemable cumulative

 preference shares

(1.1)

(1.1)

(6.9)

(5.8)

Taxation

Corporation tax paid

(2.0)

(4.0)

Capital expenditure and investing activities

Purchase of tangible fixed assets

(48.7)

(24.4)

Contributions received

3.9

3.8

Proceeds from disposal of tangible fixed assets

0.1

0.2

Decrease/(increase) in cash deposits maturing after three

 months from the balance sheet date

26.5

(46.8)

(18.2)

(67.2)

Equity dividends paid

12

(7.0)

(2.9)

Cash inflow/(outflow) before management of liquid resources and financing

21.7

(30.9)

Management of liquid resources being

 increase in liquid resources

(13.7)

(5.5)

Financing

New term loan

-

39.5

Capital element of lease repayments

(2.6)

(2.5)

(2.6)

37.0

Increase in cash in the year

13(b)

5.4

0.6

Cash, beginning of year

2.4

1.8

Cash, end of year

7.8

2.4

1.

ACCOUNTING POLICIES

The significant accounting policies adopted in the preparation of the accounts have been applied consistently. The significant accounting policies adopted in the preparation of the accounts are set out below.

(a)

Accounting convention

The accounts of the company are prepared under the historical cost convention and in accordance with applicable accounting standards in the United Kingdom (UK GAAP) and with the provisions of the Companies Act 2006, except for the treatment of certain capital contributions as explained in sub-note (e) below.

In January 2012, the ASB re-exposed its proposals in relation to the future of financial reporting in the UK as FREDs 46 to 48. The final standards, which are anticipated to be issued by the end of 2012, will be issued as:

·; FRS 100 'Application of Financial Reporting Requirements' (FRED 46);

·; FRS 101 'Reduced Disclosure Framework' (under EU IFRS) (FRED 47);

·; FRS 102 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland' ('FRSUKI', formerly the 'FRSME') (FRED 48).

The proposed effective date is periods beginning on or after 1 January 2015, with early adoption permitted for periods beginning on or after the date of issue of the standards.

The company has not adopted the above for its financial statements for the year ended 31 March 2012, and has no current plans to do so before the proposed effective date.

(b)

Going concern

In assessing the going concern basis, the directors have considered the cash flow and financial ratios projections of the company for the foreseeable future.

The key risks to the company are regulatory requirements and developments, operational events and performance problems. The company is well placed to respond to the near future events, with cash and cash deposits of £72.3m and a £30.0m unutilised committed borrowing facility.

The company is not immune to the continuing financial market uncertainties in the medium term, which have the potential to impact its ability to obtain appropriate financing to deliver the current and future capital programmes.

The directors report that, after making enquiries, they have concluded that the company has adequate resources or the reasonable expectation of raising further resources as required to continue in operation for the foreseeable future.

Accordingly, they continue to adopt the going concern basis in preparing the accounts.

(c)

Turnover

Turnover comprises charges to and accrued income from customers for water and other services, exclusive of VAT. Turnover is recognised upon delivery of water or completion of other services.

Income from metered supplies is based upon actual volumes of water invoiced plus estimated volumes of un-invoiced water delivered to customers during the year.

(d)

Tangible fixed assets and depreciation

Tangible fixed assets comprise infrastructure assets and other assets:

Infrastructure assets

Infrastructure assets comprise the integrated network of impounding and pumped raw water storage reservoirs and water mains and associated underground pipework. Expenditure on such assets relating to increases in capacity, enhancements or planned maintenance of the network is treated as an addition to fixed assets and is included at cost. The cost of infrastructure assets is their purchase cost together with incidental expenses of acquisition and directly attributable labour costs which are incremental to the company.

Other assets

Other assets include land and buildings, operational structures, fixed and mobile plant, equipment and motor vehicles. All are included at cost. The cost of other assets is their purchase cost together with incidental expenses of acquisition and any directly attributable labour costs which are incremental to the company.

Depreciation

Depreciation is charged, where appropriate, on a straight-line basis on the original cost of assets over their expected economic lives. Freehold land is not depreciated. Depreciation of long-life assets commences when the assets are brought into use.

Depreciation of infrastructure assets under renewals accounting takes account of planned expenditure levels in the long term to maintain the operating capability of the company's infrastructure assets in perpetuity.

Other assets are depreciated after commissioning over the following estimated economic lives:

Operational properties and structures

15 to 100 years

Treatment, pumping and general plant

20 to 24 years

Computer hardware, software, communications, meters and

 telemetry equipment

3 to 15 years

Vehicles and mobile plant

5 to 7 years

Assets under construction are not depreciated.

Impairment

The values of fixed assets are reviewed regularly to determine whether their carrying amounts exceed their fair values in use. Where such an excess is believed to exist it is treated as an impairment loss and charged to the profit and loss account.

(e)

Grants and contributions

Contributions received in respect of enhancing the infrastructure network are deducted from the cost of the related fixed assets. This treatment is required by Statement of Standard Accounting Practice Number 4 but is a departure from the Companies Act 2006 which requires that such contributions be shown as deferred income.

In the directors' opinion, this treatment is necessary to show a true and fair view as the related assets do not have determinable finite lives and therefore no basis exists for the amortisation of the contributions.

Prior to 1 April 2010, a type of contribution called "Infrastructure Charges" was partially attributed to the non-infrastructure assets and was treated as deferred income which is amortised in the profit and loss account over the expected useful lives of the related assets.

Subsequently, all such contributions have been attributed to infrastructure assets.

Grants and contributions in respect of expenditure charged to the profit and loss account are netted against such expenditure as received.

(f)

Leased assets

Assets financed by leasing agreements that transfer substantially all the risks and rewards of ownership of an asset to the lessee are capitalised and depreciated over the shorter of their estimated useful lives and the lease term. The capital portion of the lease commitment is included in current or non-current creditors as appropriate. The capital element of the lease rental is deducted from the obligation to the lessor as paid. The interest element of lease rentals and the depreciation of the relevant assets are charged to the profit and loss account.

Operating lease rental payments are charged to the profit and loss account as incurred over the term of the lease.

(g)

Pension costs

The company operates both defined benefit and defined contribution pension arrangements. Defined benefit pension arrangements are provided through the company's membership of the Water Companies' Pension Scheme ("WCPS") via a separate section.

Defined benefit scheme liabilities are measured by an independent actuary using the projected unit method and discounted at the current rate of return on high quality corporate bonds of equivalent term and currency to the liability. The increase in the present value of the liabilities of the company's defined benefit pension scheme expected to arise from employee service in the period is charged to operating profit. The expected return on the scheme's assets and the increase during the period in the present value of the scheme's liabilities, arising from the passage of time, is included in other finance income or cost.

Past service costs are recognised in profit or loss on a straight-line basis over the vesting period or immediately if the benefits have vested. When a settlement or a curtailment occurs the change in the present value of the scheme liabilities and the fair value of the plan assets reflects the gain or loss which is recognised in the profit and loss account. Losses are measured at the date that the company becomes demonstrably committed to the transaction and gains when all parties whose consent is required are irrevocably committed to the transaction.

Actuarial gains and losses arising from experience adjustments, changes in actuarial assumptions and amendments to pension plans are charged or credited direct to the statement of total recognised gains and losses.

Costs of defined contribution pension schemes are charged to the profit and loss account in the period in which they fall due. Administration costs of defined contribution schemes are borne by the company.

(h)

Research and development

Research and development expenditure is charged to the profit and loss account as incurred.

(i)

Taxation

Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Advance Corporation Tax (ACT) in respect of dividends in previous years is written off to the profit and loss account unless it can be recovered against mainstream corporation tax in the current year or with reasonable assurance in the future. Credit is taken for ACT previously written off when it is recovered against mainstream corporation tax liabilities.

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. Timing differences are differences between the company's taxable profits and its results as stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are recognised in the financial statements.

Deferred tax is measured at the tax rates that are expected to apply in the periods in which the timing differences are expected to reverse based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax is measured on a discounted basis to reflect the time value of money over the period between the balance sheet date and the dates on which it is estimated that the underlying timing differences will reverse. The discount rates used reflect the post-tax yields to maturity that can be obtained on the UK government bonds with similar maturity dates and currencies to those of the deferred tax assets or liabilities.

(j)

Distributions to shareholders

Dividends and other distributions to shareholders are reflected in financial statements when approved by shareholders in a general meeting, except for interim dividends which are included in financial statements when paid by the company. Accordingly, proposed dividends are not included as a liability in the financial statements.

(k)

Cash on deposit

Cash on deposit represents short-term deposits having maturity up to one year from the balance sheet date.

(l)

Stocks

Stocks are valued at the lower of cost and net realisable value. Following established practice in the water industry no value is included in the accounts in respect of water held in store.

(m)

Financial instruments

The company has entered into an interest rate swap effective from 22 October 2008. In accordance with the provisions of FRS25, 'Financial Instruments: Presentation', and FRS26, 'Financial Instruments: Recognition and Measurement', the company values its interest-rate swap on the balance sheet. The effective portion of the swap is deferred through the statement of total recognised gains and losses. Should there be any ineffectiveness, any gain or loss relating to the ineffective portion would be recognised immediately in the profit and loss account within finance charges.

The net costs of issue of loans (being expenses incurred less premiums received) where material are amortised over the lives of the respective loans and disclosed within net borrowings. Immaterial amounts are written off as incurred. Index-linked loans are considered to be effective economic hedges and are valued at cost plus accrued indexation.

(n)

Hedge accounting

The company documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking a hedge transaction. The company also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair value or cash flows of hedged items.

The effective portion of the swap is deferred through the statement of total recognised gains and losses. Should there be any ineffectiveness, any gain or loss relating to the ineffective portion would be recognised immediately in the profit and loss account within finance charges.

Amounts deferred in the statement of total recognised gains and losses are recognised in the profit and loss account in the periods when the hedged item is recognised in the profit and loss account, in the same line as the recognised hedged item.

Hedge accounting is discontinued when the company revokes the hedging relationship, the hedging instrument expires, is terminated or exercised, or no longer qualifies for hedge accounting.

(o)

Provisions

A provision is recognised when the company has a legal or constructive obligation as a result of past event and it is probable that an outflow of economic benefits will be required to settle the obligation. The effect of the time value of money, except in case of deferred tax as mentioned in sub-note (i) above, is not material and therefore the provisions are not discounted.

2.

TURNOVER

Turnover is wholly derived from water supply and related activities in the United Kingdom. The maximum level of prices the company may levy for the majority of water charges is controlled by the Water Services Regulation Authority (Ofwat) through the RPI +/- K price formula.

3.

2012

2011

£m

£m

12.2

12.3

39.1

39.9

32.2

29.9

83.5

82.1

4.

2012

2011

£m

£m

£m

£m

Net interest payable and similar charges relate to:

Bank borrowings

1.0

1.0

Term loans and debentures

- interest charges

8.8

7.5

- indexation and amortisation of fees and premium on loans

7.0

4.9

Finance leases

0.2

0.3

17.0

13.7

Less:

Loan to Bristol Water Holdings UK Ltd (formerly known as Agbar UK Ltd) - interest receivable

(4.0)

(4.0)

Other external investments and deposits

(0.7)

(0.2)

(4.7)

(4.2)

Total other net interest payable and similar charges

12.3

9.5

Dividends on 8.75% irredeemable cumulative preference shares

1.1

1.1

Net Interest charge in respect of retirement benefit scheme

-

0.4

13.4

11.0

Dividends on the 8.75% irredeemable cumulative preference shares are payable at a fixed rate of 4.375% on 1 April and 1 October each year. Payment by the company to the share registrars is made two business days earlier. The payments are classified as interest in accordance with FRS25.

5.

2012

2011

£m

£m

Analysis of charge for the year, all arising in the

United Kingdom:

Corporation tax at 26% (2011: 28%)

1.4

1.0

Adjustment to prior periods

(0.1)

(0.1)

1.3

0.9

Current year movement

1.7

1.4

Effect of corporation tax rate change

(2.9)

(3.0)

Adjustment to prior periods

0.1

0.1

(1.1)

(1.5)

Effect of discounting

3.7

1.4

2.6

(0.1)

3.9

0.8

The charge for corporation tax includes amounts for group relief surrendered by other group companies. Group relief is charged at the mainstream corporation tax rate in the applicable year.

The government has announced further progressive reductions in corporation tax rates. The tax rate used in calculating the 31 March 2012 deferred tax balance was 24% (2011: 26%). The beneficial effect is £2.9m (2011: £3.0m) on an undiscounted basis and £1.4m (2011: £1.8m) on a discounted basis.

Discounting rates decreased during the current year (2011: decreased). Within the effect of discounting in 2012, a decrease in the beneficial effect of discounting of £3.1m (2011: decrease of £0.4m) has been recognised in respect of the restatement of the opening balance at the recognised tax rates, increasing (2011: increasing) the overall deferred tax charge.

The 2012 Budget announced that the rate would decrease from 23% on 1 April 2013 to 22% on 1 April 2014. The effect of these reductions would have reduced the discounted deferred tax liability of the company by £2.2m (£3.2m reduction on an undiscounted basis) which has not been reflected in these accounts.

6.

2012

2011

m

m

Earnings per ordinary share have been calculated as follows -

On average number of ordinary shares in issue during the year -

Earnings attributable to ordinary shares

£7.2

£6.8

Weighted average number of ordinary shares

6.0

6.0

As the company has no obligation to issue further shares, disclosure of earnings per share on a fully diluted basis is not relevant.

7.

TANGIBLE FIXED ASSETS

2012

2011

£m

£m

Net book value, beginning of year

240.7

251.2

Additions

60.4

23.9

Disposals

(0.1)

(0.2)

Grants and contributions

(3.9)

(3.8)

Depreciation

(32.7)

(30.4)

Net book value, end of year

264.4

240.7

8.

2012

2011

£m

£m

Cash on deposit matures:

-up to three months from the balance

sheet date

44.2

30.5

- after three months of the balance sheet date

20.3

46.8

64.5

77.3

Cash deposits maturing up to three months from the balance sheet date are considered as liquid resources for the purposes of the Cash Flow statement.

9.

NET BORROWINGS AND DERIVATIVES

2012

2011

£m

£m

Cash on deposit

64.5

77.3

Cash at bank and in hand

7.8

2.4

Current portion of long-term borrowings

(18.4)

(2.8)

Borrowings due after one year including interest rate swap

(246.9)

(257.3)

Net borrowings and derivatives excluding 8.75% irredeemable cumulative preference shares

(193.0)

(180.4)

8.75% irredeemable cumulative preference shares

(12.5)

(12.5)

Net borrowings and derivatives including 8.75%

 irredeemable cumulative preference shares

(205.5)

(192.9)

10.

2012

2011

£m

£m

Provision for deferred tax comprises -

Accelerated capital allowances and capital element of finance leases

38.1

39.5

Deferred income

(1.2)

(1.4)

Short-term timing differences

(0.2)

(0.2)

Retirement benefit obligations

2.9

2.7

Interest rate swap

(0.4)

(0.3)

39.2

40.3

Effect of discounting

(11.6)

(15.3)

Net provision, including deferred tax on retirement benefit obligations

27.6

25.0

Less, attributable to retirement benefit obligations

(2.9)

(2.7)

Net provision, excluding deferred tax on retirement benefit obligations

24.7

22.3

Deferred tax movement:

2012

2011

£m

£m

Provision at 1 April

25.0

24.7

Charge/(credit) to Profit and Loss Account (note 5)

2.6

(0.1)

Charge/(credit) to Statement of Total Recognised Gains and Losses in respect of:

Retirement benefit obligations

0.1

0.4

Interest rate swap

(0.1)

-

Provision at 31 March

27.6

25.0

11.

The following table sets out the key assumptions used for the valuation of the company's section of WCPS. The table also sets out as at the accounting date the fair value of the assets, a breakdown of the assets into the main asset classes, the present value of the section's liabilities, and the resulting surplus.

Expected long-term

Market values of

rate of return

section assets

2012

2011

2010

2012

2011

2010

£m

£m

£m

Equities

7.3%

7.8%

8.0%

21.2

26.2

34.5

Diversified growth funds

6.6%

7.3%

n/a*

7.0

6.6

-

Bonds

3.3%

3.9%

4.1%

137.8

116.6

108.4

Cash

0.7%

2.1%

2.0%

0.7

0.1

0.2

Market value of section assets

166.7

149.5

143.1

Present value of liabilities

(135.3)

(122.8)

(134.3)

Surplus on FRS17 basis

31.4

26.7

8.8

Amount not recognised due to asset

 recognition limit

(19.5)

(16.4)

 -

Recognised surplus in the section

11.9

10.3

8.8

Deferred taxation at 24% (2011: 26%,

2010: 28%)

(2.9)

(2.7)

(2.5)

Net pension asset on FRS17 basis

9.0

7.6

6.3

The overall expected rate of return on assets was 4.7% per annum (2011: 5% per annum). This rate was derived by taking the weighted average of the long term expected rate of return on each of the above asset classes.

The actual return on the section's assets during the year was a gain of £20.8m (2011: a gain of £8.8m).

* There was no investment in "Diversified growth funds" in year ended 31 March 2010.

12.

2012

2011

£m

£m

• Dividend in respect of 2011:

First interim dividend of 24.27 pence per share,

approved by the Board on 29 September 2010

-

1.5

Second interim dividend of 24.14 pence per share,

approved by the Board on 17 March 2011

-

1.4

• Dividend in respect of 2012:

First interim dividend of 24.95 pence per share,

approved by the Board on 22 September 2011

1.5

-

Second interim dividend of 66.69 pence per share,

approved by the Board on 24 November 2011

4.0

-

Third interim dividend of 24.81 pence per share,

approved by the Board on 29 March 2012

1.5

-

7.0

2.9

The Board has proposed a final dividend of £4.8m in respect of the year ended 31 March 2012 (31 March 2011: nil).

13.

SUPPLEMENTARY CASH FLOW INFORMATION

(a)

Reconciliation of operating profit to net cash inflow from operating activities -

2012

2011

£m

£m

Operating profit

24.5

18.6

Depreciation, net of amortisation of deferred income

32.2

29.9

Difference between pension charges and normal

 contributions

0.1

0.3

Cash flow from operations

56.8

48.8

Working capital movements -

Stocks

(0.3)

(0.1)

Debtors

(4.8)

0.8

Creditors and provisions

4.6

0.4

Additional contributions to pension scheme

(0.5)

(0.9)

Net cash inflow from operating activities

55.8

49.0

(b)

Reconciliation of net cash flow to movement in net borrowings -

2012

2011

£m

£m

Increase in cash in the year

5.4

0.6

Cash used to repay borrowings

2.6

2.5

Cash from new borrowings

-

(39.5)

(Decrease)/increase in cash deposits in the year

(12.8)

52.3

(4.8)

15.9

Indexation of debt and amortisation of fees and premium

 not affecting cash flow

(7.0)

(4.9)

Fair value of interest rate swap not affecting cash flow

(0.8)

0.1

Net borrowings at 1 April including 8.75% irredeemable

 cumulative preference shares

(192.9)

(204.0)

Net borrowings at 31 March including 8.75%

 irredeemable cumulative preference shares

(205.5)

(192.9)

14.

CONTINGENT LIABILITY

The company is a member of a VAT group and is jointly liable for the VAT liabilities of Bristol Water Holdings UK Ltd (formerly known as Agbar UK Ltd) and certain other companies within the Bristol Water Holdings UK Ltd group. Other than as shown in this statement the directors are not aware of any other contingent liabilities that require disclosure.

15.

ULTIMATE PARENT COMPANY AND CONTROLLING PARTY

Until 4 October 2011 the ultimate parent company was considered by the directors to be Suez Environnement Company S.A., a company incorporated in France. On 5 October CSE Water UK Ltd, a company incorporated in England and Wales and wholly owned by Capstone Infrastructure Corporation, a company incorporated in Canada, acquired 70% of the shares of Bristol Water Holdings UK Ltd (formerly known as Agbar UK Ltd), UK ultimate parent company until 4 October. From 5 October the ultimate parent company is considered by the directors to be Capstone Infrastructure Corporation. This view has not changed following the sale by Capstone Infrastructure Corporation of an indirect share of 20% in the company to Itochu Corporation of Japan, a company incorporated in Japan, on 10 May 2012.

The group in which this company is consolidated is Capstone Infrastructure Corporation and copies of its consolidated annual report are available from 155 Wellington Street West, Suite 2930 Toronto, ON M5V 3H1, Canada.

16.

FINANCIAL INFORMATION

The financial information set out above does not constitute the company's statutory accounts for the years ended 31 March 2012 or 2011, but is derived from those accounts. Statutory accounts for 2011 have been delivered to the Registrar of Companies and those for 2012 will be delivered following the company's annual general meeting. The auditors have reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis and did not contain statements under s498 (2) or (3) Companies Act 2006 or equivalent preceding legislation.