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Northumbrian Water Group PLC
01 February 2010
Northumbrian Water Group plc
(the Company or the Group)
Interim Management Statement
The Company today publishes its Interim Management Statement for the period 1 October 2009 to 31 January 2010.
Total Group revenue for 2009/10 is expected to be broadly the same as in 2008/09. Water and sewerage charges at the
Group's principal subsidiary, Northumbrian Water Limited (NWL), have increased by 3% (in line with the November 2008 Retail
Prices Index). Non-household revenue continues to be affected by the current economic downturn.
Recent announcements have been made concerning two major customers on Teesside. Corus confirmed its intention to continue
operating its South Bank Coke Ovens and the Artenius plant, which ceased production in March 2009, has been acquired by a
subsidiary of KP Chemical Corporation. The loss of Artenius was incorporated in the recent final determination but Corus'
partial closure was too late to be considered. For 2010/11, non-household revenue is expected to be broadly in line with
the recent Ofwat final determination.
As previously reported, the Group is reducing its manning levels at Bran Sands and has also reviewed other parts of the
business. Efficiency savings of �3m per annum will result, with a one-off restructuring charge of around �5m in
2009/2010.
In all other respects, the Board confirms that trading has been in line with expectations and that there have been no
material events or transactions during the period.
Energy costs at NWL remain in line with the position announced with the half-yearly results on 23 November 2009, at around
�36m for 2009/10, reducing to around �30m for the following year. This reflects the full impact of the advanced anaerobic
digestion plant at Bran Sands on Teesside, which is in the final stages of commissioning, and lower commodity prices.
These savings will be sustained as NWL has now procured its entire electricity requirement through to March 2015.
Capital investment in the regulated business is continuing at the planned level with forecast expenditure of �1.1bn (on a
cash basis including investment expensed under IFRS and net of grants and contributions) for the period April 2005 to March
2010. A three year �45m contract to increase the storage capacity of Abberton reservoir was awarded in December 2009.
Further contracts for this major project will be awarded in 2010.
The Group has a strong funding position with sufficient resources to meet its requirements for the next two years. The
Group's cash position at 31 December 2009 was �250m, with undrawn committed facilities of �75m. Net debt is expected to be
around �2.26bn at 31 March 2010 and gearing levels are not forecast to be materially different from the position reported
in November.
As announced on 15 December 2009, NWL decided not to seek a referral to the Competition Commission of the price limits
published on 26 November 2009. The Group Board considered this decision and the financial performance of the Group's
non-regulated businesses and confirmed that it expects to be able to maintain its current progressive dividend policy with
annual real growth of 3% (before inflation) over the next regulatory period.
The Company also announced the appointment of Heidi Mottram as Chief Executive Officer. She will join the Company on 1
March 2010 from Northern Rail Limited, where she has been Managing Director for five years, and will become CEO on 1 April
2010. Heidi has extensive experience of a regulated business having spent over 20 years managing all aspects of rail
services. Heidi's contribution to the rail industry was recognised recently when she was awarded an OBE in the New Year's
Honours List.
Outlook
With the conclusion of the periodic review of prices for the five years to March 2015, the required regulatory outputs are
now clear and the business remains focussed on delivering these outputs and a high standard of customer service.
The Board is confident of maintaining a sound financial performance for the year ending 31 March 2010 and remains committed
to the core business of the Group.
The preliminary results for the year ending 31 March 2010 will be announced on 2 June 2010.
For further information contact:
Northumbrian Water 0191 301 6419
John Cuthbert, Managing Director
Chris Green, Finance Director
Pelham Bell Pottinger 020 7337 1509
Archie Berens
James Henderson
Pelham Bell Pottinger
Archie Berens
James Henderson
020 7337 1509
This information is provided by RNS
The company news service from the London Stock Exchange