RNS Number:8311L
East Surrey Holdings PLC
03 June 2003
East Surrey Holdings PLC
EAST SURREY ACHIEVES ALL ITS TARGETS
East Surrey Holdings plc, ("East Surrey"), the water and gas utility company,
has today announced its preliminary results for the year ended 31 March 2003.
Highlights
Up 11%
* Operating profit up to #13.0 million (2002: #11.7 million)
Up 4%
* Turnover, including joint venture, up to #55.5 million (2002: #53.3 million)
Up 5%
* Earnings per share up to 29.5p (2002: 28.1p)
Up 17%
* Earnings per share after exceptional items and prior year tax adjustment 15.4p (2002: 13.1p)
* Phoenix Natural Gas reports first annual profit
Up 3.3%
* Final dividend of 9.3p recommended (2002: 9.0p)
Up 3%
* Dividend for the year up to 13.9p (2002: 13.5p)
Pat Barrett, Chairman commented;
" East Surrey is in excellent health. The core business is performing very well
and Phoenix Natural Gas in Northern Ireland is on target and has recorded its
first annual profit."
" We continue to focus on achieving our goals and deliver dividend growth for
our shareholders."
" Looking forward, the prospects for the Group continue to be very good. Our
businesses are robust, and offer long-term growth potential."
-ends-
Date: 3 June 2003
For further information contact:
East Surrey Holdings plc City Profile
Phil Holder, Managing Director Simon Courtenay
Nick Fisher, Finance Director Ed Senior
Tel: 01737-772000 Tel: 020-7448-3244
Web: www.eastsurreyholdings.com
Chairman's Statement
It has been another good year for East Surrey Holdings, with significant
progress being made in our strategy to develop the Company as a regulated
infrastructure business with strong and stable operations in both water and gas
transportation.
Over the past 12 months we have ensured that Sutton and East Surrey Water has
continued to meet its economic and customer service targets while, in Northern
Ireland, Phoenix Natural Gas is fulfilling all our expectations for growth and
profitability. In its first year of full operation, ES Pipelines (ESP) has also
started to prove itself with several significant new projects under
construction. We did, however, conclude that Classic Water did not fit our
long-term plans, and this has been sold for a healthy profit.
We remain well positioned to develop the business further, holding substantial
cash balances within the context of a stable regulatory environment. The Board
's primary aim continues to be to invest in our two core infrastructure
activities, water and gas, and our key goals for the coming years are:
* To deliver consistently excellent levels of service to our customers
* To provide progressive real dividend growth for our shareholders once Phoenix
Natural Gas has started to generate cash.
Operating profits for the Group, in the year to 31 March, rose by 11 per cent to
#13.0 million (#11.7 million) on a turnover of #55.5million (#53.3 million).
Operating profits for Sutton and East Surrey Water advanced from #11.5 million
to #12.0 million. Measured water volumes increased so that income from that
source improved by 5 per cent, and we achieved additional rental income of #0.2m
from letting all our surplus office space in Redhill.
However, we have had to face additional infrastructure (#0.6 million), pension
(#0.4 million)and insurance costs (#0.2 million).It has been necessary to
discuss further and clarify the various regulatory capital expenditure
programmes required of us. This has delayed some projects and deferred others,
resulting in capital expenditure of #16.5 million during the year, which was
less than we had expected. This is a trend, which we expect to continue,
resulting in our spending less than planned in the period to 2005. As regards
pricing, the number of customers opting to switch to a metered supply remains
below the levels allowed for in our price determination, and we have agreed with
Ofwat a corresponding price reduction of 1.21 per cent for 2003/04.
Ofwat has confirmed that we have continued to provide an excellent service to
customers, that we have achieved our leakage targets and have met exacting
quality standards for our water.
Phoenix Natural Gas has had a very successful year, exceeding all its
operational and financial targets. It has achieved profits for the first time
and those profits exceed the amortisation of goodwill. These milestones are in
accordance with our expectation at the time we invested in Phoenix. Customers
and connections are both rising at an impressive rate and the company has been
in discussions with the Regulator about ways to increase its licensed area
around Belfast, and possible expansion into other regions of Northern Ireland.
We remain very positive about these prospects, and are full of admiration for
the progress achieved by a hard-working management team. We continue to believe
that Phoenix Natural Gas will deliver real long-term growth to our Group.
In its first year of full operation, ESP - an independent gas transportation
company - has made inroads into the market for in-fill projects, where we
believe that there are better long-term prospects than in the new homes sector.
Schemes completed or underway include bringing gas to the Muir of Ord, West
Alness, St Osyth and four villages adjacent to the gas pipeline supplying the
Cleveland Potash mine. We are also working on an extension to the network, which
we have already installed, at the new BAe Systems Airbus plant at Broughton. A
further 30 projects, which satisfy our investment criteria, are under
consideration, reinforcing our belief that this is a suitable market on which to
focus our expertise.
Our non-regulated businesses continue to progress despite some difficult trading
conditions. Advanced Minerals, our aggregates and specialist minerals company,
has consolidated its position and is making headway in a very competitive
market. Sutton and East Surrey Water Services, which provides plumbing services,
again increased its plumbing and heating turnover and also re-launched its
insured household emergency and gas scheme. Finally Allmat, our building
materials distributor had a good year, achieving an increase in turnover and
maintaining its improved gross margins.
During the year we decided that Classic Water did not fit within our strategic
objectives and the business was disposed of for #3.3 million, yielding a profit
of #2.4 million. That, plus #1.8 million profit from the sale of surplus land at
Kenley in Surrey has contributed exceptional profits of #4.2 million.
These transactions and the tight control of the Group's finances have left us
with healthy cash balances totalling #68.8 million (#73.5 million). Under the
terms of our index-linked bond, #37.9 million is held within Sutton and East
Surrey Water in order to fund future capital investment, while #30.9 million is
available for non-water activities. The Board is determined to manage this cash
actively, consolidating the business for the long-term benefit of customers and
shareholders alike.
In accordance with our policy to grow dividends in line with inflation and to
provide real increases as Phoenix Natural Gas becomes cash generative we propose
to increase the final dividend in line with inflation to 9.3p per share (9.0p),
making a total for the year of 13.9p (13.5p).
I believe that, once again, the Group can look to the coming year with
confidence. We have a well-balanced portfolio of interests, strong management
throughout the business and very good prospects that we feel sure will deliver
further growth. That the Group is faring so well is a tribute to its management
and employees at every level. I am very pleased that over 40% of the employees
have decided to invest in the group through the Share Incentive Plan we launched
this year. I would like to thank all the employees for all their hard work and
dedication during the past year.
Pat Barrett
Chairman
3 June 2003
Consolidated Profit and Loss Account
For the year ended 31 March 2003
2003 2003 2002 2002
Note #000 #000 #000 #000
____________________________________ _________ _______ ________ ________
Turnover: Group and share of joint venture 2 55,550 53,324
Less: Share of joint venture turnover (9,007) (6,746)
____________________________________ _______ ________
Group Turnover 46,543 46,578
Operating costs 3 (33,567) (33,834)
____________________________________ _______ ________
Group Operating Profit 12,976 12,744
Joint venture
Share of operating profit/(loss) 596 (529)
Amortisation of licence (176) (166)
____________________________________ _________ ________
420 (695)
Amortisation of goodwill (347) (347)
____________________________________ _________ ________
Total operating profit/(loss) of joint venture 73 (1,042)
____________________________________ _______ ________
Total operating profit - Group and share of joint 13,049 11,702
venture
Investment income - 734
Exceptional items
Profit/(loss) on sale of subsidiary 4 2,414 (464)
Profit on disposal of investment 4 - 2,217
Profit on disposal of tangible fixed assets 4 1,815 5,364
____________________________________ _________ ________
Net exceptional profits 4,229 7,117
Net interest (payable)/receivable and other similar
charges
- Group (2,127) (2,289)
- Joint Venture 38 53
____________________________________ _________ ________
5 (2,089) (2,236)
____________________________________ _______ ________
Profit on ordinary activities before taxation 15,189 17,317
Taxation on profit on ordinary activities 6 515 (2,334)
____________________________________ _______ ________
Profit on ordinary activities after taxation 15,704 14,983
Dividends - equity and non-equity shares 7 (7,914) (7,714)
____________________________________ _______ ________
Retained profit for the financial year 7,790 7,269
____________________________________ _______ ________
Earnings per share - basic and diluted 8 29.5p 28.1p
- before exceptional items 8 21.6p 13.8p
- before exceptional items and 8 15.4p 13.1p
prior year tax adjustment
____________________________________ _______ ________
The turnover, operating profit and exceptional profits of the Group arise solely
from continuing operations.
Reported profits are equivalent to historic cost profits.
Consolidated Balance Sheet
At 31 March 2003
2003 2003 2002 2002
Note #000 #000 #000 #000
________________________________________ ________ _______ ________ _______
Fixed assets
Intangible assets 116 475
Tangible assets 117,821 107,023
Investment in joint venture Share of gross assets 61,647 57,186
Share of gross liabilities (7,989) (7,603)
Goodwill 4,496 4,816
______ ______
Total investment in joint venture 58,154 54,399
________________________________________ ______ ______
176,091 161,897
Current assets
Stock 1,104 977
Debtors 7,114 8,428
Cash at bank and in hand 68,763 73,504
________________________________________ ________ ________
76,981 82,909
Creditors: amounts falling due within one year (19,626) (22,938)
________________________________________ ________ ________
Net current assets 57,355 59,971
________________________________________ _______ _______
Total assets less current liabilities 233,446 221,868
Creditors: amounts falling due after more than one year 11 (93,631) (89,589)
Provision for liabilities and charges 12 (6,759) (7,041)
________________________________________ _______ _______
Net assets 133,056 125,238
________________________________________ _______ _______
Share capital and reserves
Called up share capital 15,212 15,212
Share premium account 13,674 13,674
Capital and redemption reserves 1,876 1,876
Profit and Loss account 102,038 94,248
________________________________________ _______ _______
132,800 125,010
Shareholders' funds
Equity 120,078 112,288
Non-equity 12,722 12,722
________________________________________ ________ ________
132,800 125,010
________________________________________ ________ ________
Minority interest - non-equity 256 228
________________________________________ _______ _______
133,056 125,238
________________________________________ _______ _______
Group Cash Flow Statement
For the year ended 31 March 2003
Note 2003 2003 2002 2002
#000 #000 #000 #000
Net cash inflow from operating activities 18,246 22,149
Returns on investments and servicing of
finance
Interest received 3,440 2,170
Interest paid (3,035) (2,246)
Interest element in finance lease rentals (73) (28)
Investment income - 734
Preference dividends to shareholders (992) (992)
Dividends to minority interest - (40)
______________________________ ________ ________
Net cash (outflow) from returns on (660) (402)
investments and servicing of finance
UK corporation tax paid (1,771) (3,153)
Capital expenditure and financial investment:
Purchase of tangible fixed assets (18,556) (15,170)
Sale of tangible fixed assets 705 205
Exceptional proceeds on disposal of fixed 2,799 23,810
asset investments
Exceptional proceeds on disposal of tangible 4,095 3,084
fixed assets
______________________________ ________ ________
Net cash (outflow)/inflow from capital (10,957) 11,929
expenditure and financial investment
Acquisitions and disposals
Purchase of business and assets - (202)
Investment in joint venture (3,969) (5,118)
Net cash (disposed) with subsidiary (2) (27)
______________________________ ________ ________
Net cash outflow from acquisitions (3,971) (5,347)
Equity dividends paid (6,772) (6,622)
______________________________ ________ ________
Net cash inflow before management of liquid (5,885) 18,554
resources and financing
Management of liquid resources 1,760 (16,216)
Financing:
Issue of shares - 19
Bank loans received 1,411 -
Bank loans repaid (79) -
Loan notes repaid (31) (14)
Capital element of finance lease rental (157) (142)
payments
______________________________ ________ ________
Net cash inflow/(outflow) from financing 1,144 (137)
______________________________ ________ ________
(Decrease)/increase in cash in year 14 (2,981) 2,201
______________________________ ________ ________
Consolidated Statement of Total Recognised Gains and Losses
For the year ended 31 March 2003
2003 2002
Note #000 #000
_______________________________________________ ________ _______
Profit for the financial year 15,704 14,983
Warrant reserve - 1,556
________ _______
Total recognised gains and losses relating to the financial year 15,704 16,539
Prior Year Adjustment - YE 31 March 2002
Implementation of FRS 19 - Deferred Tax - (6,912)
_______________________________________________ ________ _______
Total gains and losses recognised since the last annual report 15,704 9,627
_______________________________________________ ________ _______
Notes to the financial statements
1. Basis of consolidation
The Group financial statements consolidate the financial statements of East
Surrey Holdings plc and all its subsidiary, joint venture and associated
undertakings. These financial statements are prepared up to 31 March 2003.
a. The consolidation of the results of Sutton and East Surrey Water plc and The
Cheam Group Plc were effected in accordance with the principles of merger
accounting set out In Financial Reporting Standard No 6 and Schedule 4 of
the Companies Act 1985.
b. A joint venture is an undertaking in which the group has a long-term interest
and over which it exercises joint control. The group's share of the profits
less losses of joint ventures is included in the consolidated profit and
loss account and its interest in their net assets plus the goodwill arising
on acquisition of joint ventures is included in the investments in the
consolidated balance sheet.
c. For all other subsidiaries the acquisition method of accounting has been
adopted. Under this method, the results of subsidiary undertakings acquired
in the year are included in the Consolidated Profit and Loss Account from
the date of acquisition.
d. Future business combinations will only be accounted for in accordance with
FRS6.
In the Company's financial statements, the investments in Sutton and East Surrey
Water plc and The Cheam Group Plc are stated at fair value to the Group at their
date of acquisition. As permitted by sections 131 and 133 of the Companies Act
1985, the premiums arising on the Ordinary Shares issued in connections with
these transactions have not been credited to the shares premium account but were
credited originally to merger reserve. Investments in other subsidiary
undertakings are stated at cost (less any impairment). Where there is clear
evidence of material impairments, such investments are written down to their
recoverable amount. Dividends received and receivable are credited to the
Company's Profit and Loss Account to the extent that they represent a realised
profit for the Company.
The Company has taken advantage of Section 230/(4) of the Companies Act 1985
allowing it not to publish a separate Profit and Loss account.
Water Gas Joint Other 2003
Venture Total
#000 #000 #000 #000
2. Segmental analysis
Turnover 37,167 9,007 9,376 55,550
_______________________________________ ________ ________ ________ ________
Operating profit 12,016 596 960 13,572
Amortisation of goodwill and other intangible assets - (523) - (523)
Interest (payable) / receivable (3,262) 38 1,135 (2,089)
Investment income - - - -
Exceptional items - - 4,229 4,229
_______________________________________ ________ ________ ________ ________
Profit on ordinary activities before taxation 8,754 111 6,324 15,189
_______________________________________ ________ ________ ________ ________
_______________________________________ ________ ________ ________ ________
Net assets 58,478 58,154 16,424 133,056
_______________________________________ ________ ________ ________ ________
Water Gas Joint Other 2003
Venture Total
#000 #000 #000 #000
Turnover 36,017 6,746 10,561 53,324
_______________________________________ ________ ________ ________ ________
Operating profit 11,533 (529) 1,211 12,215
Amortisation of goodwill and other intangible assets - (513) - (513)
Interest (payable) / receivable (2,985) 53 696 (2,236)
Investment income - - 734 734
Exceptional items - - 7,117 7,117
_______________________________________ ________ ________ ________ ________
Profit/(loss) on ordinary activities before taxation 8,548 (989) 9,758 17,317
_______________________________________ ________ ________ ________ ________
_______________________________________ ________ ________ ________ ________
Net assets 53,691 54,399 17,148 125,238
_______________________________________ ________ ________ ________ ________
3. Operating costs 2003 2002
#000 #000
__________________________________________________________ ________ ________
Wages and salaries 8,276 8,452
Social security costs 681 727
Other pension costs 1,043 612
Raw materials and consumables 3,768 4,588
Depreciation of owned assets 4,443 4,434
Depreciation of leased assets 200 326
Depreciation of infrastructure assets 2,553 1,961
Amortisation of goodwill 19 51
Operating lease payments - other assets 18 145
Auditors' remuneration - audit (parent company: #36,000 (2002: #22,000)) 72 90
Other fees paid to the auditors and their associates for further assurance services 29 47
Other operating charges 13,861 13,619
___________________________________________________________ ________ ________
34,963 35,052
Other operating income (1,396) (1,218)
____________________________________________________________ ________ ________
33,567 33,834
___________________________________________________________ ________ ________
4. Exceptional items
Profit/(loss) on disposal of subsidiary
The Classic Water Company Ltd was sold on 23 July 2002 producing a profit of
#2,414,000. There is no tax liability arising from this disposal. On 15 January
2002 Estec Environmental Ltd was sold producing a loss of #464,000. This loss
included #254,000 off goodwill previously written of through reserves.
Profit on disposal of investment - YE 31 March 2002 #2,217,000
This was the profit arising upon on the sale of shares in Brockhampton Holdings
plc. This is not expected to produce a tax liability because of the impact of
indexation.
Profit on disposal of tangible fixed assets
Land at Kenley was sold producing a profit of #1,815,000. Within the tax charge
a provision of #291,000 has been made relating to this profit. During the year
ended 31 March 2002 land at Woodmansterne was sold producing a profit of
#5,364,000. This is not expected to produce a tax liability due to rollover
relief.
5. Net Interest
2003 2002
#000 #000
Interest payable:
Bond - interest (2,956) (2,898)
- indexation (1,525) (1,642)
- amortisation of costs (456) (456)
__________________________________ ________ ________
Total bond costs (4,937) (4,996)
Bank loans and overdrafts (36) -
Other loans (64) (39)
__________________________________ ________ ________
(5,037) (5,035)
Finance leases (74) (28)
__________________________________ ________ ________
Total interest payable and similar charges (5,111) (5,063)
__________________________________ ________ ________
Interest receivable and similar income - Group 2,984 2,774
- Joint venture 38 53
__________________________________ ________ ________
Total interest receivable and similar income 3,022 2,827
__________________________________ ________ ________
Net interest payable and similar charges (2,089) (2,236)
__________________________________ ________ ________
6. Taxation on profit on ordinary activities 2003 2003 2002 2002
#000 #000 #000 #000
UK Corporation tax
Current tax on income in the period 2,546 2,537
Adjustments in respect of prior periods (3,124) (363)
__________________________________ ______ ______
Total current tax (578) 2,174
Deferred Tax
Origination/reversal of timing differences (1,267) 646
Changes in the amount of discount deducted 1,005 (434)
Adjustment in respect of previous year - 6
__________________________________ ______ ______
(262) 218
Share of joint venture deferred tax 325 (58)
__________________________________ ______ ______
63 160
__________________________________ ______ ______
Tax (credit)/charge on profit on ordinary activities (515) 2,334
__________________________________ ______ ______
Factors affecting the tax charge for the current period
The current tax charge for the period is 34% lower (17% lower) than the standard
rate of corporation tax in the UK of 30% (30%).
The differences are explained below.
2003 2002
#000 #000
__________________________________ ______ ______
Current Tax Reconciliation 15,189 17,317
Profit on ordinary activities before tax
__________________________________ ______ ______
Current tax at 30% 4,557 5,195
Effects of:
Expenses not deductible for tax purposes 643 381
Investment income not taxable - (313)
Profit on disposal of fixed assets 44 67
Losses carried forward - 150
Finance lease rentals (47) (43)
Capital allowances for period in excess of depreciation (1,470) (626)
Exceptional profit on disposal of investment - (665)
Exceptional profit on disposal of property (1,181) (1,609)
Adjustments to tax charge in respect of previous periods (3,124) (363)
_________________________________ ______ ______
Total current tax charge (578) 2,174
_________________________________ ______ ______
The adjustment in respect of prior periods relates to the Inland Revenue accepting computations for
the years ended 1998/1999, 1999/2000 and 2000/01.
7. Dividends 2003 2002
#000 #000
_________________________________ ______ ______
Interim 4.6p (4.5p) 2,291 2,240
Final 9.3p (9.0p) - proposed 4,631 4,482
_________________________________ ______ ______
Ordinary shares - Equity 13.9p (13.5p) 6,922 6,722
Preference shares - Non-equity 992 992
_________________________________ ______ ______
7,914 7,714
_________________________________ ______ ______
Dividends paid to minority interests, on ordinary shares of #nil (#40,000) and
on preference shares of #7,000 (#7,000) are included within operating costs
because they are not considered material.
8. Earnings per ordinary share
Earnings per share is the profit in pence attributable to each Ordinary Share.
There are two adjusted earnings per share figures provided of which both exclude
exceptional items and one also excludes the prior year tax adjustment. These
have been calculated to show the return on the on going business.
2003 2002
#000 #000
Profit on ordinary activities after taxation 15,704 14,983
Preference dividends (992) (992)
_________________________________ ________ ________
Earnings attributable to ordinary shareholders 14,712 13,991
Exceptional items (net of tax) (3,938) (7,117)
_________________________________ ________ ________
Earnings excluding exceptional items 10,774 6,874
Less prior year tax adjustment (see note 6) (3,124) (363)
_________________________________ ________ ________
Earnings excluding exceptional items and prior year tax adjustment 7,650 6,511
________ ________
2003 2002
000's 000's
_________________________________ ________ ________
Weighted average number of shares in issue 49,798 49,789
__________________________________ ________ ________
9. Pensions
The fair value of the scheme's assets, which are not intended to be realised in
the short term and may be subject to significant change before they are
realised, and the present value of the scheme's liabilities, which are derived
from cash flow projections over long period and thus inherently uncertain, were:
Value as at Value as at
31/03/03 31/03/02
#000 #000
____________________________________________ _____________ _____________
Equities 32,254 45,620
Bonds 3,252 6,627
Corporate bonds 4,205 2,630
Property 977 1,716
Cash 3,431 945
____________________________________________ _____________ _____________
44,119 57,538
Present value of scheme liabilities (52,800) (46,759)
____________________________________________ _____________ _____________
(Deficit)/surplus in the scheme - Pension (liability)/asset (8,681) 10,779
Related deferred tax asset/(liability) 2,604 (3,234)
____________________________________________ _____________ _____________
Net pension (liability)/asset (6,077) 7,545
____________________________________________ _____________ _____________
The amount of this net pension (liability)/asset would have a consequential
effect on reserves.
2003
#000
___________________________________________________________ _____________
Analysis of amount charged to operating profit
Employer's part of current service cost 1,200
___________________________________________________________ _____________
Analysis of the amount credited to other finance income
Expected return on pension scheme assets 4,410
Interest on pension scheme liabilities (2,830)
___________________________________________________________ _____________
Net return - credit 1,580
___________________________________________________________ _____________
Analysis of amount recognised in STRGL
Actual return less expected return on pension scheme assets (16,700)
Experience gains arising on scheme liabilities 330
Changes in assumptions underlying the present value of scheme liabilities (4,400)
___________________________________________________________ _____________
Actuarial loss recognised in STRGL (20,770)
___________________________________________________________ _____________
Movement in scheme surplus during the year
Surplus in scheme as at 1 April 02 10,779
Movement in year
Current service costs (1,470)
Aggregate contributions 1,200
Other finance income 1,580
Actuarial loss recognised in STRGL (20,770)
___________________________________________________________ _____________
Deficit in scheme as at 31 March 03 (8,681)
___________________________________________________________ _____________
10. Joint venture
The joint venture was acquired on 19 March 2001 and represents 24.5% of the net
assets of Phoenix Natural Gas Limited. A further #4.0 million was invested
during the year.
The total purchase consideration was #50.2 million, of which #29.2 million was
attributed to the fair value of tangible net assets acquired. Of the remainder,
#16.0 million was attributed to the distribution licence and #5.1 million to
general goodwill associated with the supply business. The former is being
amortised over the 31 year term of the licence in proportion to forecast gas
volumes and the latter on a straight-line basis over an estimated useful
economic life of 15 years.
Group's shares of balance sheet of joint venture 31 March
2003
#000
_________________________________________ ________
Intangible fixed asset - licence 15,974
Tangible fixed assets 39,477
Trade debtors 889
Other debtors 2,001
Deferred tax debtor 2,857
Cash at bank 818
Capital creditors (1,288)
Trade and other creditors (3,240)
Deferred income - grants (3,461)
_________________________________________ ________
54,027
Goodwill 5,201
Share of post acquisition retained loss 106
_________________________________________ ________
59,334
_________________________________________ ________
Phoenix Natural Gas Ltd. 2002 2001
Audited results for the year ended 31 December #000 #000
__________________________________ ________ ________
Turnover 33,080 24,945
Profit/(loss) on ordinary activities before tax 733 (2,701)
__________________________________ ________ ________
11. Creditors: amounts falling due after more than one year
2003 2002
#000 #000
Debenture loans:
2.874% Secured Index-linked Bond 2027-2031 90,419 88,439
3.25% Irredeemable stock 50 50
5% Irredeemable stock 52 52
_________________________________________ ________ ________
90,521 88,541
Bank loans and overdrafts 1,050 -
Obligations under finance leases: 400 573
_________________________________________ ________ ________
Loans and other borrowings 91,971 89,114
Amounts due to joint venture 583 -
Other creditors 1,077 475
_________________________________________ ________ ________
93,631 89,589
_________________________________________ ________ ________
12. Provisions for liabilities and charges
2003 2002
#000 #000
Deferred tax
Balance brought forward 7,041 6,829
Amount (credited) / charged in the profit and loss account (262) 218
Sale of subsidiary (20) (6)
____________________________________ ______ ______
6,759 7,041
____________________________________ ______ ______
The amount provided for deferred taxation primarily represents timing
differences caused by the excess of tax allowances over depreciation.
The elements of deferred taxation are as follows:
2003 2002
#000 #000
Difference between accumulated depreciation, amortisation and 12,375 13,638
capital allowances
Other timing differences 1,462 1,486
____________________________________ ______ ______
Undiscounted provision 13,837 15,124
Discount (7,078) (8,083)
____________________________________ ______ ______
Deferred tax liability 6,759 7,041
____________________________________ ______ ______
13. Financial instruments
Financial instrument policies
The principle risks arising from the group's financial instruments relate to
liquidity, inflation and interest rates. The group aims to manage these risks to
an acceptable level. Borrowing facilities are maintained at a level that is
forecast to provide a reasonable surplus beyond the future needs of the group.
Short-term debtors and creditors, as defined in FRS13:Derivatives and financial
instruments disclosure, have been omitted from all of the financial instrument
disclosure.
2003 2002
#000 #000
a) Loans and other borrowings
Maturities
____________________________________
Loans and other borrowings (including obligations under finance
leases)
- Between one and two years 472 173
- Between two and five years 978 400
- More than five years 90,521 88,541
____________________________________ ______ ______
Creditors: amounts falling due after more than one year 91,971 89,114
Creditors: amounts falling due within one year 455 157
____________________________________ ______ ______
92,426 89,271
____________________________________ ______ ______
Net obligations under finance leases 2003 2002
#000 #000
____________________________________ ______ ______
- Between one and two years 190 173
- Between two and five years 210 400
____________________________________ ______ ______
Creditors: amounts falling due after more than one year 400 573
Creditors: amounts falling due within one year 173 157
____________________________________ ______ ______
573 730
____________________________________ ______ ______
Other Loans 2003 2002
#000 #000
3.25% Irredeemable Debentures 50 50
5% Irredeemable Debentures 52 52
1.5% above bank base rate bank loans 1,332 -
2.874% Secured Index-linked Bond 2027-2031 90,419 88,439
____________________________________ ______ ______
Creditors: amounts falling due after more than one year 91,853 88,541
____________________________________ ______ ______
The #100 million bond was issued on 21 March 2001 and is secured upon the shares
of Sutton and East Surrey Water plc. The bond monies were used by Sutton and
East Surrey Water plc to repay an intercompany loan and to finance future
capital expenditure. In the event of default the interest and capital payments
are insured by Financial Security Assurance Ltd. The capital value of the Bond
is adjusted by the change in the Retail Price Index from year to year. The fees
associated with the issue of the 2.874% Secured Index-linked Bond of #13.5
million, are amortised over the life of the bond; the amount owing on the bond
is stated net of the unamortised issue fees and credit insurance premiums.
The bond interest is calculated by adjusting the value of the bond by the RPI
and then charging interest on this inflated amount at 2.874% per annum.
During the year medium-term asset finance loans were arranged for E.S.Pipelines
Ltd, to finance their capital expenditure programme. East Surrey Holdings plc is
guarantor for these loans and the outstanding balance at the year-end was
#1,332,000. The intention of the loans is to allow E.S.Pipelines Ltd. to
function as an independent commercial entity.
b) Undrawn committed borrowing facilities
Undrawn borrowing facilities available to the Group are set out below. The
facilities available at the balance sheet date are unsecured.
2003 2002
#000 #000
____________________________________ ______ ______
Expiring in one year or less 2,000 5,200
____________________________________ ______ ______
c) Interest rate risk
The Bond and Debentures are at fixed rates and any borrowings made under the
current facilities will be related to bank base rates. The loans at
E.S.Pipelines Ltd are on a variable interest rate at 1.5% above the bank base
rate.
d) Currency risk
The Group's borrowings are all denominated in Sterling.
e) Fair value
The fair value of financial assets and liabilities is the same as the book
value.
14. Reconciliation of net cash flow to movement in net debt
2003 2002
#000 #000
(Decrease)/increase in cash in year (2,981) 2,201
Cash (inflow)/outflow from (decrease)/increase in liquid resources (1,760) 16,216
Cash (inflow)/outflow from (increase)/decrease in debt and lease (1,144) 156
finance
____________________________________ ______ ______
Change in net debt resulting from cash flows (5,885) 18,573
Non cash movement (1,980) (1,967)
____________________________________ ______ ______
Movement in net debt in year (7,865) 16,606
As at 1 April 2002 (15,811) (32,417)
____________________________________ ______ ______
As at 31 March 2003 (23,676) (15,811)
____________________________________ ______ ______
15. The figures for the year ended 31 March 2003 have been extracted form
the full audited accounts for the year, which have not yet been delivered to the
Registrar of Companies. The figures have been prepared and compiled in
accordance with applicable accounting standards under the historical cost
convention. The comparative figures for the year ended 31 March 2002 have been
taken from, but do not constitute, the group's statutory accounts for the year.
Those statutory accounts have been reported on by the group's auditors and
delivered to the Registrar of Companies. The report of the auditors was
unqualified and did not contain a statement under section 237 (2) or (3) of the
Companies Act 1985.
16. The dividend will be paid on 14 August 2003 to shareholders on the
register on 11 July 2003.
17. Copies of the annual report and accounts will be posted to shareholders
shortly. Further copies will be available from the Company's registered office;
East Surrey Holdings plc, London Road, Redhill, Surrey, RH1 1LJ. They will also
be on our web site www.eastsurreyholdings.com.
This information is provided by RNS
The company news service from the London Stock Exchange
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