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RNS Number : 1176Q
Northumbrian Water Group PLC
29 July 2010
29 July 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 April 2010 to 28 July 2010. The Board
confirms that trading has been in line with expectations and that there have been no material events or transactions during
the period.
Water and sewerage charges at the Group's principal subsidiary, Northumbrian Water Limited, have increased by 5.3% for
2010/11 (in line with the application of the K factor of 5% and 0.3% in respect of the November 2009 Retail Price Index).
Operating costs for the 12 months to 31 March 2011 are forecast to increase by around 4% (excluding restructuring costs in
2009/10). This reflects increased depreciation, rates, hired services and pension costs, offset by savings on power, which
is bought forward to March 2015. We remain focused on the delivery of high operational standards and continue to identify
and drive further efficiencies throughout the business.
At 31 March 2010, the Group's debt structure included �455m of index-linked borrowings whose principal grows in line with
the July Retail Price Index (RPI). The RPI adjustment for July 2009 was negative (at 1.4%) and current forecasts for the
July 2010 RPI indicate a positive range of 4.6 to 4.9%. This increase, coupled with reduced interest receivable on surplus
cash, is partially offset by a credit for the defined benefit pension scheme and a �4.6m credit in respect of the
acquisition of the remaining 25% subordinated loan stock in Caledonian Environmental Services, which results in a year on
year increase in the interest charge for 2010/11 of around �20m.
The Emergency Budget announced by the Government on 22 June contained changes to the rates of UK corporation tax and
capital allowances. The changes will have no impact on the Group's current tax in 2010/11 as they do not begin to take
effect until April 2011. Over the remainder of the period to 31 March 2015, it is estimated that the changes will be
broadly neutral. In the current year, it will be necessary to restate deferred tax using a tax rate of 27%. It is
expected that the Group's deferred tax liability at 31 March 2010 of �606m (based on a rate of 28%) will be reduced by
around �21m. Further restatements will be necessary on an annual basis if, as stated in the Budget, the tax rate falls to
24% by April 2014.
Capital investment in the regulated business is progressing in line with the final determination. A �12m contract has been
awarded for the Wormingford to Abberton pipeline associated with the Abberton reservoir expansion scheme. Contracts for the
remaining section of the pipeline and the pumping stations will be awarded in 2010/11 according to programme requirements.
In addition to Abberton, we have also awarded a number of major Framework Agreements associated with the water distribution
and maintenance networks. These cover work in both our operating areas and will cover all our water networks requirements
to 31 March 2015.
The Group continues to have a strong funding position with sufficient resources to meet all the requirements of the
business to the end of 2011. Discussions with the European Investment Bank for a new loan facility of �150m are at an
advanced stage. The Group's cash position at 30 June 2010 was �200m. Net debt is expected to be around �2.3bn at 31 March
2011 and gearing levels are not forecast to be materially different from the position reported in June.
At the Annual General Meeting to be held later today, we are proposing a final dividend of 8.85p per share, giving a full
year ordinary dividend of 13.24 pence per share (an increase of 3.5%), which will be payable on 10 September 2010 to
shareholders on the register as at 13 August 2010.
The half-yearly results for the six months ending 30 September 2010 will be announced on 30 November 2010.
Note:
Information in this announcement is based upon unaudited management accounts. This announcement includes certain forward
looking statements which are based on current expectations and are subject to uncertainties and risks that could cause
actual results to differ materially from any expected future events or results referred to in these forward looking
statements. Unless otherwise required by applicable law, regulation or accounting standard, we do not undertake any
obligation to update or revise any forward looking statements, whether as a result of new information, future developments
or otherwise.
For further information contact:
Northumbrian WaterHeidi Mottram, Chief Executive OfficerChris Green, Finance Director 0191 301 64620191 301 6419
Pelham Bell PottingerArchie BerensZoe Sanders 020 7861 3112020 7861 3887
This information is provided by RNS
The company news service from the London Stock Exchange