Bristol Wtr.8t% Regulatory News (BWRA)

For further information contact:

Mel Karam, Chief Executive Officer

Paul Boote, Chief Financial Officer

Bristol Water plc

Tel 0117 953 6470

Or contact:

Bristol Water Corporate Affairs on 0117 953 6470 during office hours or 0800 917 8066 at any time.

Six months to

30 September 2022

Six months to

30 September 2021

restated

(unaudited)

(unaudited)

£m

£m

Turnover

69.7

62.8

EBITDA

32.9

31.2

Profit before taxation

0.4

11.2

Profit after taxation

0.3

(14.1)

Net debt (excluding 8.75% irredeemable cumulative preference shares)

400.5

378.3

Capital investment in the period

23.9

17.6

Six months to

30 September

2022

(unaudited)

Six months to

30 September

2021

restated*

(unaudited)

Year to

31 March

2022

restated*

(unaudited)

Note

£m

£m

£m

Revenue

6

69.7

62.8

125.5

Operating costs

7

(49.1)

(44.2)

(88.8)

Impairment losses on trade receivables

(2.1)

(1.5)

(2.7)

Operating costs before exceptional items

(51.2)

(45.7)

(91.5)

Exceptional operating costs

-

(0.1)

(0.1)

Total net operating costs

(51.2)

(45.8)

(91.6)

Operating profit

18.5

17.0

33.9

Net interest payable and similar charges

8

(17.6)

(5.3)

(17.8)

Dividends on 8.75% irredeemable cumulative preference shares

8

(0.5)

(0.5)

(1.1)

Net interest payable and similar charges

(18.1)

(5.8)

(18.9)

Profit on ordinary activities before taxation

0.4

11.2

15.0

Taxation on profit on ordinary activities

9

(0.1)

(25.3)

(25.5)

Profit/(loss) for the period/year

0.3

(14.1)

(10.5)

Earnings per ordinary share

10

5p

(235.0)p

(175.0)p

Six months to

30 September

2022

Six months to

30 September

2021

restated*

Year to

31 March

2022

restated*

(unaudited)

(unaudited)

(unaudited)

Note

£m

£m

£m

Profit/(loss) for the period/year

0.3

(14.1)

(10.5)

Other comprehensive expense:

Items that will not be reclassified to profit and loss

Actuarial losses on retirement benefit surplus

0.1

(0.8)

(1.0)

Re-measurement of defined benefit pension scheme

9

-

0.3

0.4

Other comprehensive income/(expense) for the period/year, net of tax

0.1

(0.5)

(0.6)

Total comprehensive income/(expense) for the period/year

0.4

(14.6)

(11.1)

30 September

2022

(unaudited)

30 September

2021

restated*

(unaudited)

31 March

2022

restated*

(unaudited)

Note

£m

£m

£m

Non-current assets

Property, plant and equipment

11

689.6

687.0

696.6

Intangible assets

12

13.3

12.8

12.7

Other investments - Loans to a UK holding Company

61.1

61.1

61.1

Deferred tax assets

0.1

0.1

0.1

Retirement benefit surplus

13

8.0

8.4

8.1

772.1

769.4

778.6

Current assets

Inventory

2.2

1.7

1.9

Trade and other receivables

35.9

33.0

29.5

Cash and cash equivalents

14.3

14.8

12.0

52.4

49.5

43.4

Total assets

824.5

818.9

822.0

Non-current liabilities

Lease liabilities

14

(0.9)

(1.3)

(1.1)

Deferred income tax liabilities

(93.9)

(101.6)

(99.5)

Borrowings and derivatives

15

(413.5)

(382.4)

(399.7)

8.75% irredeemable cumulative preference shares

15

(12.5)

(12.5)

(12.5)

Deferred income

(1.6)

(19.3)

(18.5)

Government Grants

(0.3)

(0.3)

(0.3)

(522.7)

(517.4)

(531.6)

Current liabilities

Lease liabilities

14

(0.4)

(0.4)

(0.4)

Current portion of borrowings and derivatives

-

(9.0)

-

Current portion of deferred income

(2.7)

(2.7)

(2.7)

Trade and other payables

(48.9)

(36.3)

(38.0)

(52.0)

(48.4)

(41.1)

Total liabilities

(574.7)

(565.8)

(572.7)

Net assets

249.8

253.1

249.3

Equity

Called-up share capital

6.0

6.0

6.0

Share premium account

4.4

4.4

4.4

Other reserves

5.8

5.8

5.8

Retained earnings

233.6

236.9

233.1

Total Equity

249.8

253.1

249.3

* See note 5 for details of the restatement due to a change in accounting policies.

The notes on pages 8 to 19 form part of this condensed half year financial information.

Called up share capital

Share premium

account

Capital redemption

reserve

Retained earnings

Total

£m

£m

£m

£m

£m

Balance at 1 April 2021 (restated*)

6.0

4.4

5.8

253.0

269.2

Loss for the year

-

-

-

(14.1)

(14.1)

Other comprehensive expense for the year:

Actuarial losses recognised in respect of retirement

-

-

-

(0.8)

(0.8)

benefit obligations

Re-measurement of defined benefit scheme

-

-

-

0.3

0.3

Total comprehensive expense for the year

-

-

-

(0.5)

(0.5)

Ordinary dividends

-

-

-

(1.5)

(1.5)

Balance as at 30 September 2021

6.0

4.4

5.8

236.9

253.1

Balance at 1 April 2022 (restated*)

6.0

4.4

5.8

233.1

249.3

Profit for the period

-

-

-

0.3

0.3

Other comprehensive expense for the period:

Actuarial losses recognised in respect of retirement

-

-

-

0.1

0.1

benefit obligations

Re-measurement of defined benefit scheme

-

-

-

-

-

Total comprehensive expense for the period

-

-

-

0.4

0.4

Ordinary dividends

-

-

-

-

-

Share-based payments

-

-

-

0.1

0.1

Balance as at 30 September 2022

6.0

4.4

5.8

233.6

249.8

Six months to

30 September

2022

(unaudited)

Six months to

30 September

2021

restated*

(unaudited)

Year to

31 March

2022

restated*

(unaudited)

Note

£m

£m

£m

Cashflows from operating activities

Profit before taxation

0.4

11.2

15.0

Adjustments for:

Share based payments

0.1

-

0.1

Deferred income amortisation

6

(2.0)

(1.5)

(3.2)

Depreciation

7

12.7

12.3

25.0

Amortisation of intangibles

7

1.7

1.9

3.9

Difference between pension charges and contributions paid

0.2

0.4

0.9

Profit on disposal of assets

-

-

(0.1)

Interest income

8

(1.8)

(1.8)

(3.6)

Interest expense

8

20.1

7.7

22.8

Pension interest income

8

(0.2)

(0.1)

(0.3)

Increase in inventory

(0.3)

-

(0.2)

Increase in trade and other receivables

(4.4)

(4.0)

(1.3)

Increase /(decrease) in trade and other creditors and provisions

5.7

2.0

(0.7)

Cash generated from operations

32.2

28.1

58.3

Interest paid

(7.2)

(6.2)

(12.4)

Corporation taxes paid

(1.5)

(1.6)

(1.9)

Contributions received

1.5

1.2

2.1

Net cash inflows from operating activities

25.0

21.5

46.1

Cash flows from investing activities

Purchase of property plant and equipment and intangibles

(23.0)

(19.2)

(40.4)

Proceeds from sale of fixed assets

-

-

0.2

Interest received

-

1.8

3.6

Net cash used in investing activities

(23.0)

(17.4)

(36.6)

Cash flows from financing activities

Proceeds from loans and borrowings

8.0

2.0

11.0

Repayment of loans and borrowings

(7.0)

-

(9.0)

Payment of finance lease liabilities

(0.2)

(0.2)

(0.4)

Preference dividends paid

(0.5)

(0.5)

(1.1)

Equity dividends paid

-

(1.5)

(8.9)

Net cash from financing activities

0.3

(0.2)

(8.4)

Net increase in cash and cash equivalents

2.3

3.9

1.1

Cash and cash equivalents, beginning of period

12.0

10.9

10.9

Cash and cash equivalents, end of period

14.3

14.8

12.0

1

General Information

Bristol Water plc ("the Company") is a regulated Water only supply company holding an instrument of appointment as set out by the Water Industry Act 1991. The company is the licensed monopoly provider of water services in the Bristol area, and as such is regulated by the Water Services Regulation Authority - Ofwat.

The Company is a public liability company, limited by shares with irredeemable preference shares and debenture stock listed on the London Stock Exchange. The address of its registered office is Bridgwater Road, Bristol, BS13 7AT, England.

2

Basis of preparation

The financial information contained in this interim announcement does not constitute statutory accounts within the meaning of section 435 of the Companies Act 2006. The interim accounts have been prepared in accordance with Financial Reporting Standard 104 "Interim Financial Reporting" issued by the Financial Reporting Council and the Disclosure Rules and Transparency Rules of the United Kingdom's Financial Conduct Authority.

The Company has adopted FRS 101 "Reduced disclosure framework - Disclosure exemptions from EU-adopted IFRS for qualifying entities".

3

Accounting policies

The same accounting policies and methods of computation used in preparing the annual financial statements as at 31 March 2022 have been used in preparing these interim accounts, except as disclosed in note 5.

3.1

Going concern

The Company meets its day-to-day working capital requirements through its cash reserves and borrowings. The Company's forecasts and projections show that the Company will be able to operate within the level of its current cash reserves and borrowing facilities. After making enquiries, the Directors have an expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. The Company therefore continues to adopt the going concern basis in preparing its financial statements. Further information on the Company's borrowings is given in note 15.

4

Critical accounting estimates and judgments

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances

The significant judgements made by management in applying the Company's accounting policies and the key sources of estimate uncertainty were the same as those applied to the financial statements for the year ended 31 March 2022, except as disclosed in note 5.

5

Change in accounting policies

As a result of the acquisition of the Company by Pennon Group Plc on 3 June 2021, the Company's accounting policies adopted for the statutory financial statements have been aligned with those of Pennon Group Plc. This note explains the impact of these accounting policies on the Company's financial statements. 

Reconciliation of equity as at 1 April 2021 and 31 March 2022

31 March 2021

as originally presented

change

31 March 2021

restated

(unaudited)

31 March 2022

as originally presented

change

31 March 2022

restated

(unaudited)

Note

£m

£m

£m

£m

£m

£m

Non-current assets

Property, plant and equipment

A

682.9

-

682.9

696.6

-

696.6

Intangible assets

13.3

-

13.3

12.7

-

12.7

Investments

61.1

-

61.1

61.1

-

61.1

Deferred tax assets

C

5.9

(5.8)

0.1

7.9

(7.8)

0.1

Retirement benefit surplus

9.1

-

9.1

8.1

-

8.1

772.3

(5.8)

766.5

786.4

(7.8)

778.6

Current assets

Inventory

1.7

-

1.7

1.9

-

1.9

Trade and other receivables

29.6

-

29.6

29.5

-

29.5

Cash and cash equivalents

10.9

-

10.9

12.0

-

12.0

42.2

-

42.2

43.4

-

43.4

Total assets

814.5

(5.8)

808.7

829.8

(7.8)

822.0

Non-current liabilities

Lease liabilities

(1.5)

(1.5)

(1.1)

-

(1.1)

Deferred tax liabilities

C

(72.3)

(6.2)

(78.5)

(93.2)

(6.3)

(99.5)

Borrowings and derivatives

(379.2)

-

(379.2)

(399.7)

-

(399.7)

8.75% irredeemable cumulative preference shares

(12.5)

-

(12.5)

(12.5)

-

(12.5)

Deferred income

B

(82.9)

63.3

(19.6)

(83.0)

64.5

(18.5)

Government grants

(0.3)

-

(0.3)

(0.3)

-

(0.3)

(548.7)

57.1

(491.6)

(589.8)

58.2

(531.6)

Current liabilities

Lease liabilities

(0.4)

-

(0.4)

(0.4)

-

(0.4)

Borrowings and derivatives

(9.0)

-

(9.0)

-

-

-

Deferred income

B

(1.8)

(0.9)

(2.7)

(1.9)

(0.8)

(2.7)

Trade and other payables

(35.3)

-

(35.3)

(38.0)

-

(38.0)

Provisions for liabilities

(0.5)

-

(0.5)

(47.0)

(0.9)

(47.9)

(40.3)

(0.8)

(41.1)

Total liabilities

(595.7)

56.2

(539.5)

(630.1)

57.4

(572.7)

Net assets

218.8

50.4

269.2

199.7

49.6

249.3

Equity

Called-up share capital

6.0

-

6.0

6.0

-

6.0

Share premium account

4.4

-

4.4

4.4

-

4.4

Other reserves

5.8

-

5.8

5.8

-

5.8

Retained earnings

A,B,C

202.6

50.4

253.0

183.5

49.6

233.1

Total Equity

218.8

50.4

269.2

199.7

49.6

249.3

5

Change in accounting policies (continued)

Reconciliation of equity as at 30 September 2021

30 September 2021

as originally presented

change

30 September 2021

restated

(unaudited)

Note

£m

£m

£m

Non-current assets

Property, plant and equipment

A

687.0

-

687.0

Intangible assets

12.8

-

12.8

Investments

61.1

-

61.1

Deferred tax assets

C

7.8

(7.7)

0.1

Retirement benefit surplus

8.4

-

8.4

777.1

(7.7)

769.4

Current assets

Inventory

1.7

-

1.7

Trade and other receivables

33.0

-

33.0

Cash and cash equivalents

14.8

-

14.8

49.5

-

49.5

Total assets

826.6

(7.7)

818.9

Non-current liabilities

Lease liabilities

(1.3)

-

(1.3)

Deferred tax liabilities

C

(95.2)

(6.4)

(101.6)

Borrowings and derivatives

(382.4)

-

(382.4)

8.75% irredeemable cumulative preference shares

(12.5)

-

(12.5)

Deferred income

B

(83.1)

63.8

(19.3)

Government grants

(0.3)

-

(0.3)

(574.8)

57.4

(517.4)

Current liabilities

Lease liabilities

(0.4)

(0.4)

Current portion of borrowings and derivatives

(9.0)

-

(9.0)

Deferred income

B

(1.9)

(0.8)

(2.7)

Trade and other payables

(36.3)

-

(36.3)

(47.6)

(0.8)

(48.4)

Total liabilities

(622.4)

56.6

(565.8)

Net assets

204.2

48.9

253.1

Equity

Called-up share capital

6.0

-

6.0

Share premium account

4.4

-

4.4

Other reserves

5.8

-

5.8

Retained earnings

A,B,C

188.0

48.9

236.9

Total Equity

204.2

48.9

253.1

5

Changes in accounting policies (continued)

Year to

31 March 2022

as originally presented

change

Year to

31 March 2022

restated

(unaudited)

Period to 30

 September 2021

as originally presented

change

Period to 30 Sept 2021

restated

(unaudited)

Note

£m

£m

£m

£m

£m

£m

Revenue

B

124.2

1.3

125.5

62.2

0.6

62.8

Total operating costs

(91.6)

-

(91.6)

(45.8)

-

(45.8)

Operating profit

32.6

1.3

33.9

16.4

0.6

17.0

Net interest payable and similar charges

(18.9)

-

(18.9)

(5.8)

-

(5.8)

Profit on ordinary activities before taxation

13.7

1.3

15.0

10.6

0.6

11.2

Taxation on profit on ordinary activities

C

(23.4)

(2.1)

(25.5)

(23.2)

(2.1)

(25.3)

Profit for the period /year

(9.7)

(0.8)

(10.5)

(12.6)

(1.5)

(14.1)

Other comprehensive income for the year, net of tax

(0.6)

-

(0.6)

(0.5)

-

(0.5)

Total comprehensive income for the year

(10.3)

(0.8)

(11.1)

(13.1)

(1.5)

(14.6)

Notes to the reconciliation of equity as at 1 April 2021 and 31 March 2022 and total comprehensive income for the year ended 31 March 2022

Developer contributionsThe Company previously recognised all contributions received from developers in respect of network and other assets as deferred income and amortised this to revenue over a period of 60 years. This policy has been changed to align with the Pennon Group plc's policy. 

A

Contributions relating to the construction of infrastructure network assets

These contributions are now recognised in property, plant and equipment along with the asset to which they relate, with amortisation being recognised in depreciation. 

Where assets are constructed or provided by the Company or assets transferred to the Company, it is considered that there is an explicit or implied performance obligation to provide an ongoing water service, with the result that the revenue is recognised over a time no longer than the economic life of assets provided by or transferred to the company.

Contributions relating to assets not yet completed are treated as a contract liability and are recognised in deferred income on the balance sheet.

Notes to the reconciliation of equity as at 1 April 2021 and 31 March 2022 and total comprehensive income for the year ended 31 March 2022 (continued)

It was impracticable to determine the period-specific or cumulative effect of the prior periods presented and therefore the new accounting policy has been applied from the 1 April 2022 onwards with none of the comparative periods restated.

£16.4m has been reclassified from deferred income to property, plant and equipment as at 30 September 2022. £0.2m of amortisation relating to these assets has been reclassified from revenue to depreciation for the 6months ending 30 September 2022.

B

 Contributions relating to connections or alterations to the water network

Where the performance obligation relates solely to a connection to the network, revenue is recognised at the point of connection when the customer is deemed to obtain control.

Contributions paid in advance where the connection has not yet completed are treated as a contract liability and are recognised in deferred income on the balance sheet.

As at 31 March 2022, £63.7m (1 April 2021: £62.4m and 30 September 2021: £63.0m) additional revenue has been recognised.

Revenues and profit before tax for the year ended 31 March 2022 in the comparative Income Statement was increased by £1.3m (30 September 2021 £0.6m). 

C

Taxation

The adjustments per notes A and B lead to different temporary taxation differences. In line with the Company's accounting policies, the Company has accounted for such differences and recognised the related net deferred tax and corporation tax liabilities.

At 31 March 2022, an increase in deferred tax liability of £14.1m (1 April 2021: £12.0m and 30 September 2021: £14.1m) was recognised, resulting in a reclassification from assets to liabilities on the balance sheet.

6

Revenue

Six months to

30 September 2022

(unaudited)

Six months to

30 September 2021

restated

(unaudited)

Year to

31 March 2022

restated

(audited)

£m

£m

£m

Appointed income

Household - measured

30.6

28.1

55.3

Household - unmeasured

21.6

20.8

40.9

Non-household- measured

13.2

10.3

22.2

Non-household - unmeasured

0.2

0.2

0.3

Contributions from developers

2.0

1.5

3.2

Third party services

0.9

0.8

1.4

Rental income

0.6

0.5

1.0

69.1

62.2

124.3

Non-appointed income

Recreations

0.3

0.3

0.7

Rental income

0.1

0.1

0.2

Other

0.2

0.2

0.3

0.6

0.6

1.2

69.7

62.8

125.5

7

Operating expenses

Six months to

30 September 2022

(unaudited)

Six months to

30 September 2021

(unaudited)

Year to

31 March 2022

(audited)

£m

£m

£m

Operating expenses include -

Payroll cost, net of recharges to fixed assets and including

retirement benefit costs

8.6

8.6

17.0

Depreciation and amortisation

14.4

14.2

28.9

Profit on disposal of assets

-

-

(0.1)

Exceptional costs include -

Acquisition costs

-

0.1

0.1

The acquisition costs relate to costs incurred in relation to the acquisition of the Company by Pennon Group plc and the review of the acquisition by the Competition and Markets Authority.

8

Net interest payable and similar charges

Six months to

30 September 2022

(unaudited)

Six months to

30 September 2021

(unaudited)

Year to

31 March 2022

(audited)

£m

£m

£m

Interest payable and similar charges:

Bank borrowings

1.7

1.0

2.0

Term loans and debentures:

interest charges

5.6

5.1

10.4

indexation

12.8

1.2

9.6

Leases

-

-

0.1

Capitalisation of borrowing cost

(0.5)

(0.1)

(0.4)

Dividends on 8.75% irredeemable cumulative

preference shares

0.5

0.5

1.1

20.1

7.7

22.8