RNS-PRN : 92A8
United Utilities PLC
Part 2 : For preceding part double-click [nPRL192A8] |
| |
| Change in net debt resulting from cash |
|
(36.3 |
) |
(92.9 |
) |
(255.7 |
) |
| Exchange adjustments |
|
(0.2 |
) |
1.5 |
|
1.3 |
|
|
|
---------- |
|
---------- |
|
---------- |
|
| Movement in net debt |
|
(36.5 |
) |
(91.4 |
) |
(254.4 |
) |
| Opening net debt |
|
(3,060.8 |
) |
(2,806.4 |
) |
(2,806.4 |
) |
|
|
---------- |
|
---------- |
|
---------- |
|
| Closing net debt |
|
(3,097.3 |
) |
(2,897.8 |
) |
(3,060.8 |
) |
|
|
---------- |
|
---------- |
|
---------- |
|
| STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES |
|
|
Six months ended |
|
Year ended |
|
|
|
30 September 2002 |
|
30 September 2001 |
|
31 March 2002 |
|
|
|
|
|
(restated) |
|
(restated) |
|
|
|
£ |
|
£ |
|
£ |
|
| Profit for the period: |
| Group |
|
127.8 |
|
126.8 |
|
265.6 |
|
| Joint ventures |
|
(0.2 |
) |
(2.6 |
) |
(3.8 |
) |
|
|
---------- |
|
---------- |
|
---------- |
|
|
|
127.6 |
|
124.2 |
|
261.8 |
|
| Exchange adjustments |
|
(7.2 |
) |
- |
|
(77.7 |
) |
|
|
---------- |
|
---------- |
|
---------- |
|
|
|
120.4 |
|
124.2 |
|
184.1 |
|
| Prior period adjustment - Pre-contractcosts |
|
(12.6 |
) |
|
|
|
|
| Prior period adjustment - Telecommunications network capacity sales |
|
(4.5 |
) |
|
|
|
|
|
|
---------- |
|
|
|
|
|
| Total gains and losses recognised since last annual report |
|
103.3 |
|
|
|
|
|
|
|
---------- |
|
|
|
|
|
| RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS |
|
|
Six months ended |
|
Year ended |
|
|
|
30 September 2002 |
|
30 September 2001 |
|
31 March 2002 |
|
|
|
|
|
(restated) |
|
(restated) |
|
|
|
£ |
|
£ |
|
£ |
|
| Profit for the period |
|
127.6 |
|
124.2 |
|
261.8 |
|
| Dividends |
|
(86.2 |
) |
(84.7 |
) |
(260.9 |
) |
|
|
---------- |
|
---------- |
|
---------- |
|
| Retained profit for the period |
|
41.4 |
|
39.5 |
|
0.9 |
|
| New share capital issued |
|
0.4 |
|
1.2 |
|
18.0 |
|
| Capitalisation of reserves in respect of shares issued |
|
- |
|
- |
|
(5.0 |
) |
| Goodwill on business disposals |
|
0.9 |
|
- |
|
- |
|
| Exchange adjustments |
|
(7.2 |
) |
- |
|
(77.7 |
) |
|
|
---------- |
|
---------- |
|
---------- |
|
| Net increase/(decrease) in equity shareholders' funds for the period |
|
35.5 |
|
40.7 |
|
(63.8 |
) |
| Opening equity shareholders' funds as restated (see below) |
|
2,519.2 |
|
2,583.0 |
|
2,583.0 |
|
|
|
---------- |
|
---------- |
|
---------- |
|
| Equity shareholders' funds |
|
2,554.7 |
|
2,623.7 |
|
2,519.2 |
|
|
|
---------- |
|
---------- |
|
---------- |
|
| Effect of prior period adjustments on opening equity shareholders' funds |
|
|
Six months ended |
|
Year ended |
|
|
|
30 September 2002 |
|
30 September 2001 |
|
31 March 2002 |
|
|
|
£ |
|
£ |
|
£ |
|
| Opening equity shareholders' funds as previously stated |
|
2,536.3 |
|
2,597.5 |
|
2,597.5 |
|
| Prior period adjustment - Pre-contract costs |
|
(12.6 |
) |
(11.9 |
) |
(11.9 |
) |
| Prior period adjustment - Telecommunications network capacity sales |
|
(4.5 |
) |
(2.6 |
) |
(2.6 |
) |
|
|
---------- |
|
---------- |
|
---------- |
|
| Opening equity shareholders' funds as restated |
|
2,519.2 |
|
2,583.0 |
|
2,583.0 |
|
|
|
---------- |
|
---------- |
|
---------- |
|
| NET CASH INFLOW FROM OPERATING ACTIVITIES |
|
|
Six months ended |
|
Year ended |
|
|
|
30 September 2002 |
|
30 September 2001 |
|
31 March 2002 |
|
|
|
|
|
(restated) |
|
(restated) |
|
|
|
£ |
|
£ |
|
£ |
|
| Group operating profit |
|
239.6 |
|
265.9 |
|
520.9 |
|
| Exceptional items within group operating profit |
|
28.5 |
|
- |
|
11.9 |
|
|
|
---------- |
|
---------- |
|
---------- |
|
| Group operating profit before exceptional items |
|
268.1 |
|
265.9 |
|
532.8 |
|
| Depreciation |
|
170.8 |
|
158.5 |
|
316.7 |
|
| Amortisation of goodwill and intangible assets |
|
3.8 |
|
4.3 |
|
8.1 |
|
| Profit on disposal of tangible fixed assets |
|
(0.7 |
) |
(0.7 |
) |
(3.6 |
) |
| Stocks (increase)/decrease |
|
(2.5 |
) |
(3.3 |
) |
0.5 |
|
| Debtors (increase)/decrease |
|
(37.1 |
) |
(48.5 |
) |
3.4 |
|
| Creditors decrease |
|
(31.4 |
) |
(78.7 |
) |
(41.1 |
) |
| Outflow related to exceptional items |
|
(3.9 |
) |
- |
|
(17.0 |
) |
|
|
---------- |
|
---------- |
|
---------- |
|
| Net cash inflow from operating activities |
|
367.1 |
|
297.5 |
|
799.8 |
|
|
|
---------- |
|
---------- |
|
---------- |
|
| SEGMENTAL ANALYSIS BY CLASS OF BUSINESS |
|
|
Six months ended |
|
Year ended |
|
|
|
30 September 2002 |
|
30 September 2001 |
|
31 March 2002 |
|
|
|
|
|
(restated) |
|
(restated) |
|
|
|
£ |
|
£ |
|
£ |
|
| Turnover |
| Licensed multi-utility operations |
|
604.1 |
|
601.1 |
|
1,208.9 |
|
| Asset management services |
|
175.4 |
|
175.0 |
|
385.9 |
|
| Customer management outsourcing |
|
142.8 |
|
134.3 |
|
282.9 |
|
| Telecommunications |
|
79.3 |
|
73.4 |
|
150.4 |
|
| Other activities |
|
- |
|
2.5 |
|
4.6 |
|
|
|
---------- |
|
---------- |
|
---------- |
|
|
|
1,001.6 |
|
986.3 |
|
2,032.7 |
|
| Inter-business eliminations |
|
(86.8 |
) |
(76.1 |
) |
(161.1 |
) |
|
|
---------- |
|
---------- |
|
---------- |
|
|
|
914.8 |
|
910.2 |
|
1,871.6 |
|
|
|
---------- |
|
---------- |
|
---------- |
|
|
|
Six months ended |
|
Year ended |
|
|
|
30 September 2002 |
|
30 September 2001 |
|
31 March 2002 |
|
|
|
|
|
(restated) |
|
(restated) |
|
|
|
£ |
|
£ |
|
£ |
|
| Profit /(loss) before non-operating items, interest and tax |
| Licensed multi-utility operations |
|
251.7 |
|
261.8 |
|
529.6 |
|
| Asset management services |
|
28.0 |
|
15.1 |
|
30.0 |
|
| Customer management outsourcing |
|
8.6 |
|
7.0 |
|
14.1 |
|
| Telecommunications |
|
(10.2 |
) |
(12.6 |
) |
(23.8 |
) |
| Other activities |
|
2.2 |
|
5.6 |
|
7.4 |
|
| Corporate costs |
|
(2.3 |
) |
(2.0 |
) |
(4.0 |
) |
|
|
---------- |
|
---------- |
|
---------- |
|
|
|
278.0 |
|
274.9 |
|
553.3 |
|
| Goodwill amortisation |
|
(3.5 |
) |
(4.3 |
) |
(8.0 |
) |
|
|
---------- |
|
---------- |
|
---------- |
|
| Continuing operations, before exceptional charges |
|
274.5 |
|
270.6 |
|
545.3 |
|
| Business restructuring |
|
(3.0 |
) |
- |
|
(11.9 |
) |
| FRS 11 adjustment to the carrying value of telecoms assets |
|
(25.5 |
) |
- |
|
- |
|
|
|
---------- |
|
---------- |
|
---------- |
|
| Profit before non-operating items, interest and tax |
|
246.0 |
|
270.6 |
|
533.4 |
|
|
|
---------- |
|
---------- |
|
---------- |
|
NOTES
1. Basis of preparation
The interim figures for the six months ended 30 September 2002, which are unaudited, have been prepared on the basis of accounting policies consistent with those set out in the annual report to shareholders for the year ended 31 March 2002, with the exception of the application of UITF Abstract No. 34 Pre-contract costs and a change in the accounting policy for telecommunications network capacity sales, as detailed below.
The financial information set out in this statement relating to the year ended 31 March 2002 does not constitute statutory accounts for that period. Full audited accounts of United Utilities PLC in respect of that financial period (which received an unqualified audit opinion and did not contain a statement under either section 237(2) or (3) of the Companies Act 1985) have been delivered to the Registrar of Companies.
The board of directors approved this interim statement on 5 December 2002.
2. Changes in accounting policies
i. Pre-contract costs
In this interim financial statement the group has adopted Urgent Issues Task Force (UITF) Abstract 34, Pre-contract costs. The application of UITF 34 is reflected in the current period and has also resulted in changes to the prior period reported results.
UITF 34 requires that pre-contract costs should only be recognised as an asset after the point where it is virtually certain that a contract will be entered into with net cash inflows that will recover the costs capitalised. Previously, the group's policy was to capitalise and fully provide against pre-contract costs until their recovery was considered to be secured by profitable contracts. Once the contract was secured, the provision was released and capitalised costs amortised over the expected life of the contract. The impact of adopting UITF 34 is to reduce the profit for the period by £1.0m (net of tax). The results for the previous periods have also been amended to reflect the requirements of UITF 34, with the results for the six months ended 30 September 2001 increased by £0.2m, and the year ended 31 March 2002 reduced by £1.4 million (net of tax).
ii. Telecommunications network capacity sales
Your Communications owns a telecommunication network. Where there is excess capacity it may sell this capacity to third parties. Previously, where substantially all of the risks and rewards of ownership were transferred to the purchaser over the economic life of the asset, these transactions had been accounted for as a sale and recognised in turnover when all relevant conditions of the contract had been met.
Having reviewed current accounting practice, the group concluded that an accounting policy which treats such transactions as grants of operating leases (unless legal title passes) rather than as sales, is more appropriate as it reflects the long-term nature of the transaction. The impact of the change in accounting policy on the results for the period to 30 September 2002 is a reduction in profit of £0.8 million (net of tax), and a reduction in turnover, of £1.3 million.
The results for the previous periods have also been amended to reflect this change in accounting policy, with the profit for the six months ended 30 September 2001 reduced by £1.2 million (net of tax) and turnover reduced by £ 1.9 million. For the year ended 31 March 2002 profit reduced by £1.8 million (net of tax) and turnover reduced by £4.8 million.
3. Exceptional items |
|
|
Six months ended |
|
Six months ended |
|
Year ended |
|
|
|
30 September 2002 |
|
30 September 2001 |
|
31 March 2002 |
|
|
|
£ |
|
£ |
|
£ |
|
| Withdrawal from asset management services in the Americas (note 3 (i)) |
|
34.0 |
|
- |
|
- |
|
| FRS 11 adjustment to carrying value of telecoms assets (note 3 (ii)) |
|
(25.5 |
) |
- |
|
- |
|
| Business restructuring (note 3 (iii)) |
|
(3.0 |
) |
- |
|
(11.9 |
) |
|
|
---------- |
|
---------- |
|
---------- |
|
| Exceptional credit/(charge) |
|
5.5 |
|
- |
|
(11.9 |
) |
|
|
---------- |
|
---------- |
|
---------- |
|
(i) Withdrawal from asset management services in the Americas
IEBA, the Argentine electricity utility for which United Utilities is technical operator, and in which the group has a minority interest, defaulted on its repayments to bondholders in September. There is no recourse to United Utilities in respect of these debts and the group has no further balance sheet exposure to IEBA. Following the Argentine Government's dissolution of the Peso/US Dollar link, the subsequent devaluation of the Argentine Peso and the restrictions placed on the utility's pricing policies, there is no expectation of a financial restructuring of the utility in which United Utilities would choose to participate. United Utilities has notified IEBA and its majority shareholder, Gruppo Camuzzi, that it will neither inject any additional equity into the company nor, with the exception of meeting the group's obligations under the technical support contract, participate in the future management of IEBA and its operating subsidiary, EDEA. United Utilities has therefore concluded that it no longer has a participating interest in IEBA. The accounting provision that existed at 31 March 2002 in respect of the investment in Argentina has been taken to the profit and loss account which, along with the disposal of US Water and costs associated with withdrawing from asset management services in the Americas, gives rise to an exceptional credit of £34.0m.
(ii) FRS 11 review of telecoms assets
In accordance with FRS 11 `Impairment of fixed assets and goodwill' the group has carried out a review to determine whether there has been an impairment of its tangible and intangible fixed assets within its telecommunications business, Your Communications. The carrying values of tangible and intangible fixed assets of each of Your Communications' income generating units have been compared to their recoverable amounts, being their values in use to the group. The values in use of the income generating units have been calculated using discounted cash flow projections using a discount rate of 16% on a pre-tax basis.
The review has resulted in an exceptional charge to operating profit of £25.5m (of which £10.9m relates to intangible fixed assets and £14.6m relates to tangible fixed assets) and an exceptional tax credit of £5.8m.
(iii) Business restructuring
An exceptional charge of £3.0m, reflecting a reduction in headcount associated with the transition of Your Communications from its network building phase to a more mature revenue-generating business, was recorded in the period.
4. Taxation |
|
|
Six months ended |
|
Six months ended |
|
Year ended |
|
|
|
30 September 2002 |
|
30 September 2001 |
|
31 March 2002 |
|
|
|
|
|
(restated) |
|
(restated) |
|
|
|
£ |
|
£ |
|
£ |
|
| Ordinary taxation: |
| UK corporation tax |
|
(7.0 |
) |
4.5 |
|
13.6 |
|
| Overseas tax |
|
- |
|
0.1 |
|
0.4 |
|
| Share of joint ventures' tax |
|
0.4 |
|
1.0 |
|
2.4 |
|
| Deferred tax |
|
49.4 |
|
27.4 |
|
23.0 |
|
|
|
---------- |
|
---------- |
|
---------- |
|
|
|
42.8 |
|
33.0 |
|
39.4 |
|
| Exceptional tax (note 3 (ii)): |
| Current tax |
|
(2.6 |
) |
- |
|
- |
|
| Deferred tax |
|
(3.2 |
) |
- |
|
- |
|
|
|
---------- |
|
---------- |
|
---------- |
|
| Tax charge for the period |
|
37.0 |
|
33.0 |
|
39.4 |
|
|
|
---------- |
|
---------- |
|
---------- |
|
5. Earnings per share
Earnings per share on the net basis, and diluted earnings per share, is calculated by dividing profit for the period and the adjusted profit for the period (see note 6) by the following weighted average number of shares in issue:
|
|
Basic |
Diluted |
| (i) |
Period ended 30 September 2002 |
556.0 million |
557.6 million |
| (ii) |
Period ended 30 September 2001 |
553.0 million |
555.1 million |
| (iii) |
Year ended 31 March 2002 |
553.5 million |
555.2 million |
The difference between the weighted average number of shares used in the basic and the diluted earnings per share calculations represents those ordinary shares deemed to have been issued for no consideration on the conversion of all potential dilutive ordinary shares in accordance with FRS 14 (Earnings per Share).
6. Adjusted earnings per share
The adjusted earnings per share calculations are stated after excluding:
- Period ended 30 September 2002 - £3.0 million charge in respect of restructuring costs, £34.0 million in respect of an exceptional credit on withdrawal from asset management services in the Americas, £19.7 million exceptional charge (net of tax) from the FRS11 adjustment to the carrying value of the telecoms assets and £3.5 million in respect of goodwill amortisation;
- Period ended 30 September 2001 - £4.3 million in respect of goodwillamortisation;
- Year ended 31 March 2002 - £11.9 million charge in respect of restructuring costs and £8.0 million in respect of goodwill amortisation.
7. Interest cover
Interest cover is calculated as the number of times the interest charge for the period is covered by profit from continuing operations before exceptional items, non-operating items, interest and tax.
8. Adjusted dividend cover
Adjusted dividend cover is calculated by dividing adjusted earnings per share by dividends per share.
9. Dividend
The interim dividend of 15.5 pence per share will be paid on 10 February 2003 to shareholders on the register on 20 December 2002. The provisional ex dividend date is 18 December 2002.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This interim results statement contains certain forward-looking statements with respect to the financial condition, results of operations and business of the company.
Statements that are not historical facts, including statements about the company's beliefs and expectations, are forward-looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995. Words such as "expects", "anticipates", "intends", "plans", "believes", "seeks", "estimates", "potential", "reasonably possible" and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are based on current plans, estimates and projections, and therefore investors should not rely on them. Forward-looking statements speak only as of the date they are made, and the company undertakes no obligation to update publicly any of them in the light of new information or future events. Forward-looking statements involve inherent risks and uncertainties. The company cautions investors that a number of important factors could cause actual results to differ materially from those anticipated or implied in any forward-looking statements. These factors include: (i) the effect of, and changes in, regulation and government policy; (ii) the effects of competition and price pressures; (iii) the ability of the company to achieve cost savings and operational synergies; (iv) the ability of the company to service its future operations and capital requirements; (v) the timely development and acceptance of new products and services by the company; (vi) the effect of technological changes; and (vii) the company's success at managing the risks of the foregoing. The company cautions that the foregoing list of important factors does not address all the factors that could cause the results to differ materially.
INDEPENDENT REVIEW REPORT TO UNITED UTILITIES PLC
Introduction
We have been instructed by the company to review the financial information for the six months ended 30 September 2002 which comprises the profit and loss account, the statement of total recognised gains and losses, the balance sheet, the cash flow statement and related notes 1 to 9 together with the reconciliation of movement in net debt, the reconciliation of movements in equity shareholders' funds, the net cash inflow from operating activities and the segmental analysis by class of business. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom auditing standards and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 September 2002.
Deloitte & Touche
Chartered Accountants
Manchester
5th December 2002
END |