(DVW) Dee Valley Grp

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Mon 07:00

Dee Valley Group PLC - Interim Management Statement

RNS

23-11-11

Dee Valley Group PLC - Half Yearly Report

RNS

RNS Number : 5766S

Dee Valley Group PLC

23 November 2011

DEE VALLEY GROUP PLC

INTERIM RESULTS FOR THE HALF YEAR ENDED

30 SEPTEMBER 2011

Financial Highlights

	2011	2010
Revenue (£000)	11,171	10,649
Profit before tax and additional depreciation (£000)	2,636	2,380
Additional depreciation (£000)	(734)	-
Profit before tax (£000)	1,902	2,380
Earnings per share (pence)	37.5	39.5
Interim dividend per ordinary share (pence)	19.1	18.1

Enquiries

Dee Valley Group plc

Tel. 01978 846946

Norman Holladay (Managing Director)

David Guest (Finance Director)

Evolution Securities Ltd.

Tel. 0207 071 4300

Tim Worlledge

Tim Redfern

Jeremy Ellis

Interim Management Report

Revenue for the six months ended 30 September 2011 was up 4.9% on the same period last year. This was due to an average annual increase in charges of 5.3% offset by slightly lower consumption by measured customers in both household and commercial sectors and reduced revenue from households switching from unmeasured to measured charging.

Operating costs increased by £232,000 (4.2%) compared to the same period last year. The increase includes provision for carbon reduction commitment costs for the first time and costs arising from a restructuring that is expected to achieve a reduction in operating costs from the next financial year.

Pre-tax profit for the period reduced by £478,000. This was mainly due to the accelerated depreciation charge in the period of £734,000 on the Llwyn Onn treatment works as a result of the current rebuilding programme. This will show as an additional charge of £1.5 million in both the current year and 2012/13. The indexation charge on the long term loan also increased by £182,000.

Earnings per share for the period reduced slightly from 39.5p to 37.5p. The Board announces an interim dividend of 19.1 pence per ordinary share (2010 - 18.1p), which is in accordance with the Board's policy of at least maintaining dividends in real terms over the five years to 2015.

Capital expenditure in the first half year, at £2.1 million (net), was higher than the same period last year, and reflects increasing activity on the contract for the rebuilding of the Llwyn Onn treatment works. This is the major project in the five year capital investment programme to 2015 and it is now moving into the construction phase on schedule. Renewal of water mains and other capital projects are also continuing on programme.

Risks and Outlook

There are early signs that last year's recovery in consumption by commercial and industrial customers, after a steadily falling trend over the previous four years, could be reversing as a result of the adverse economic conditions.

The contract for the rebuilding of the Llwyn Onn treatment works represents a major risk in terms of possible cost over-run or operational problems. A strong internal team is managing the contract and the form of contract and the contracting partner have been carefully selected to control these risks.

Overall the Directors consider that the Group is well placed to manage its business risks and opportunities despite the current economic climate.

Condensed Group Interim Income Statement (unaudited)

for the half year ended 30 September 2011

	Notes	2011 £000	2010 £000
Continuing operations
Revenue		11,171	10,649
Other income		966	950
Raw materials and consumables used		(306)	(294)
Employee benefits expense		(2,168)	(2,182)
Other operating expenses		(3,343)	(3,109)
Profit before depreciation and finance costs		6,320	6,014
Depreciation		(2,584)	(1,874)
Finance income		1,268	1,215
Finance costs		(3,102)	(2,975)
Profit before tax		1,902	2,380
Taxation	4	(166)	(549)
Profit for the period on continuing operations		1,736	1,831
Basic and diluted earnings per ordinary share
Continuing operations	5	37.5p	39.5p

Interim dividend per ordinary share	7	19.1p	18.1p

Condensed Group Interim Statement of

Comprehensive Income (unaudited)

for the half year ended 30 September 2011

	Notes	2011 £000	2010 £000
Profit for the period		1,736	1,831
Actuarial (loss)/gain on defined benefit pension scheme	9	(655)	485
Deferred tax on actuarial loss/(gain)		164	(136)
Other comprehensive (expense)/income for the period		(491)	349
Total comprehensive income for the interim period		1,245	2,180

Condensed Group Interim Balance Sheet (unaudited)

	Notes	30 September 2011 £000	31 March 2011 £000	30 September 2010 £000
ASSETS
Non-current assets
Goodwill		5,381	5,381	5,381
Property, plant and equipment	6	73,802	74,260	74,746
Retirement benefit surplus		3,616	3,999	-
Investments		2	2	2
		82,801	83,642	80,129
Current assets
Inventories - raw materials and consumables		158	154	175
Trade receivables		6,540	2,605	5,551
Other receivables		1,419	1,869	1,224
Cash and cash equivalents	8	11,244	9,290	8,651
		19,361	13,918	15,601
Total assets		102,162	97,560	95,730

LIABILITIES
Current liabilities
Interest-bearing loans and borrowings	8	1,651	1,668	2,418
Trade and other payables		14,503	9,988	12,990
Current income tax liabilities		551	658	231
		16,705	12,314	15,639
Non-current liabilities
Interest-bearing loans and borrowings	8	46,322	45,232	44,082
Retirement benefit obligation		-	-	1,475
Deferred tax		16,673	16,930	17,015
		62,995	62,162	62,572
Total liabilities		79,700	74,476	78,211
Net assets		22,462	23,084	17,519

EQUITY
Issued share capital		232	232	232
Other reserves		5,941	5,924	5,674
Retained earnings		16,289	16,928	11,613
Total equity		22,462	23,084	17,519

Group Statement of Changes in Equity (unaudited)

	Share Capital £000	Capital Redemption Reserve £000	Other Reserves £000	Fair Value Reserve £000	Retained Earnings £000	Total £000
At 1 April 2010	232	30,036	(32,316)	7,943	11,212	17,107
Profit for the period	-	-	-	-	1,831	1,831
Actuarial gain (net of deferred tax) on defined benefit pension scheme	-	-	-	-	349	349
Repayment of B shares (held as current liabilities)	-	11	-	-	(11)	-
Equity dividends paid	-	-	-	-	(1,768)	(1,768)
At 30 September 2010	232	30,047	(32,316)	7,943	11,613	17,519
At 1 April 2011	232	30,297	(32,316)	7,943	16,928	23,084
Profit for the period	-	-	-	-	1,736	1,736
Actuarial loss (net of deferred tax) on defined benefit pension scheme	-	-	-	-	(491)	(491)
Repayment of B shares (held as current liabilities)	-	17	-	-	(17)	-
Equity dividends paid	-	-	-	-	(1,867)	(1,867)
At 30 September 2011	232	30,314	(32,316)	7,943	16,289	22,462

Condensed Group Interim Cash Flow Statement (unaudited)

for the half year ended 30 September 2011

	Notes	2011 £000	2010 £000
Cash flows from operating activities
Profit before taxation		1,902	2,380
Adjustments for:
Depreciation		2,584	1,874
Profit on disposal of assets		(1)	(7)
Net finance costs		1,834	1,760
		6,319	6,007
(Increase) in inventories		(4)	(23)
(Increase) in trade and other receivables		(3,487)	(2,361)
Increase in trade and other payables		4,591	2,985
(Decrease)/increase in retirement benefit obligations		(74)	72

Cash generated from operations		7,345	6,680
Interest paid		(921)	(843)
Tax paid		(655)	(642)
Net cash from operating activities		5,769	5,195

Cash flows from investing activities
Purchase of property, plant and equipment		(2,125)	(1,195)
Proceeds from sale of plant and equipment		2	17
Interest received		192	19
Net cash used in investing activities		(1,931)	(1,159)

Cash flows from financing activities
Repayment of B shares		(17)	(11)
Equity dividends paid	7	(1,867)	(1,768)
Net cash used in financing activities		(1,884)	(1,779)

Net increase in cash and cash equivalents		1,954	2,257
Cash and cash equivalents at 1 April		9,290	5,894
Cash and cash equivalents at 30 September	8	11,244	8,151

Notes to the Accounts

for the half year ended 30 September 2011

Reporting Entity

Dee Valley Group plc is a company domiciled in the United Kingdom. The condensed Group interim financial statements of the Company as at 30 September 2011 comprise the Company and its subsidiaries (together, the "Group").

The consolidated financial statements of the Group as at 31 March 2011 are available on request from the Company's registered office at Packsaddle, Wrexham Road, Rhostyllen, Wrexham LL14 4EH or at www.deevalleygroup.com

Basis of Preparation

These condensed Group interim financial statements have been prepared in accordance with the Disclosure and Transparency Rules of the UK Financial Services Authority and in accordance with International Financial Reporting Standard IAS 34 as adopted by the EU. The accounting policies applied are consistent with those adopted in the 2011 Annual Report.

These financial statements have not been audited nor reviewed by the auditors, and do not include all the information required for full annual financial statements. The comparative figures for the financial year ended 31 March 2011 are not the Company's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditors was (i) unqualified, (ii) did not include reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

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. In preparing these condensed Group interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 March 2011, other than the pension scheme assumptions disclosed in note 9.

The Group has considerable financial resources together with a customer monopoly in its area of supply. Consequently the Directors consider that the Group is well placed to manage its business risks successfully despite the current economic outlook.

The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and consider that the going concern basis continues to be appropriate in preparing the financial statements.

These condensed Group interim financial statements are the responsibility of the Directors and were approved by the Board on 23 November 2011.

Statement of Directors' Responsibilities

The Directors named below confirm, to the best of their knowledge, that this condensed set of Group interim financial statements has been prepared in accordance with IAS 34 as adopted by the European Union and that the Interim Management Report includes a fair review of the information required by sections 4.2.7 and 4.2.8 of the Disclosure and Transparency Rules of the United Kingdom Financial Services Authority.

Directors

G R Scott

N C Holladay

D J Guest

D T Weir

J H Schofield

Chairman

Managing Director

Finance Director

Senior Non-Executive Director

Non-Executive Director

4. Income Tax Expense

The taxation charge is an estimate based on the anticipated rate of tax for the year ending 31 March 2012.

	2011 £000	2010 £000
Current tax expense - continuing operations	635	417
Current tax expense - adjustment in respect of prior periods	(213)	(79)
Deferred tax - charge for the period	124	211
Deferred tax - effect of change in corporation tax rate from 26% to 25%	(380)	-
Total tax expense	166	549

The effective rate of tax of 9% in 2011 is lower than the standard rate of 26% due to an adjustment in respect of prior periods relating to the capital allowances claimed on the refurbishment of Boughton treatment works.

The Chancellor has announced a reduction in the main rate of UK corporation tax to 25% with effect from April 2012. This change has been substantively enacted and therefore the lower rate creates a reduction in the deferred tax charge that is shown in the figures above.

Earnings per Ordinary Share

Basic and diluted earnings per ordinary share ("EPS") have been calculated on the basis of the weighted average number of ordinary shares in issue during the half year of 4,632,170 (half-year ended 30 September 2010 - 4,632,170).

The net profit used in the calculation of EPS was £1,736,000 (half-year ended 30 September 2010 - £1,831,000).

Property, Plant & Equipment

During the half-year ended 30 September 2011 the Group acquired assets with a net cost of £2,125,000 (half-year ended 30 September 2010 - £1,195,000).

7.	Dividends The Group has paid the following dividends during the financial period:

	2011 Pence per share	2011 £000	2010 Pence per share	2010 £000
Ordinary shares
Previous year final dividend	40.3	1,668	38.2	1,580
Non-voting ordinary shares
Previous year final dividend	40.3	199	38.2	188
		1,867		1,768

The following dividends are proposed in respect of the financial period under review:

	2011 Pence per share	2011 £000	2010 Pence per share	2010 £000
Ordinary shares
Current year interim dividend proposed	19.1	791	18.1	749
Non-voting ordinary shares
Current year interim dividend proposed	19.1	94	18.1	89
		885		838

The interim dividend for 2011, applicable to both ordinary and non-voting ordinary shares, was approved by the Board on 23 November 2011, but has not been included as a liability as at 30 September 2011, in accordance with IAS 10 'Events after the balance sheet date'.

The interim dividend for 2011 will be paid on 6 January 2012 to shareholders on the register at the close of business on 9 December 2011.

8.	Analysis of Changes in Net Debt

	At 1 April 2011 £000	Cash Flow £000	Non-cash Movements £000	At 30 September 2011 £000
Demand and short term deposits	9,340	1,844	-	11,184
Cash at bank and in hand	-	60	-	60
Bank overdrafts	(50)	50	-	-
Cash and cash equivalents	9,290	1,954	-	11,244
Current borrowings
B shares	(1,668)	17	-	(1,651)
Non-current borrowings
Secured index-linked loan 2032	(45,133)	-	(1,090)	(46,223)
3.5% irredeemable consolidated debenture stock	(99)	-	-	(99)
	(45,232)	-	(1,090)	(46,322)
Net debt	(37,610)	1,971	(1,090)	(36,729)

9.	Pension Schemes The Company participates in a defined benefit pension scheme, the Water Companies Pension Scheme. This is a sectionalised scheme and the Company participates in the Dee Valley Water plc section of the Scheme. The fair value of assets at 30 September 2011 is an estimate calculated by projecting the bid-price asset value as at 31 August 2011 assuming increases in line with the performance of the Scheme's invested assets in September 2011 taking into account estimated cash flows to and from the Section during September. The value of the defined benefit obligation at 30 September 2011 has been projected forward from 31 March 2011, the date of the last valuation of the Section, in a manner intended to be consistent with the movement in asset value. The value of the defined benefit obligation at 31 March 2011 was based on the results of the formal actuarial valuation as at 31 March 2008, updated to the accounting date by an independent qualified actuary. The major assumptions used by the actuaries were as follows:
		Assumptions (per annum)	30 September 2011	31 March 2011
		Retail Prices Index inflation	3.40%	3.70%
		Consumer Prices Index inflation	2.70%	3.00%
		Discount rate	5.20%	5.50%
		Pension increases in payment:
		uncapped	2.70%	3.00%
		capped at 5% per annum	2.70%	3.00%
		General salary increases	4.40%	4.95%

The mortality assumptions remain consistent with those disclosed in the 2011 Annual Report.

The amounts included in the balance sheet arising from obligations in respect of the Section are as follows:

	30 September 2011 £000	31 March 2011 £000
Present value of defined benefit obligation	40,407	40,387
Fair value of assets	(44,023)	(44,386)
(Asset) recognised in the balance sheet	(3,616)	(3,999)

The amounts included in other comprehensive income are as follows:

	2011 £000	2010 £000
Actuarial (losses)/gains on Section assets	(1,408)	105
Change in assumptions on liabilities	136	380
Experience gains on liabilities	617	-
	(655)	485

10.	Related Parties During the half-year ended 30 September 2011, key management (Directors) received remuneration in the form of salaries, fees and benefits amounting to £153,000 (half-year ended 30 September 2010 - £149,000).

This information is provided by RNS

The company news service from the London Stock Exchange

END

IR PGGUUGUPGGQP

18-10-11

Dee Valley Group PLC - Holding(s) in Company

RNS

16-08-11

Dee Valley Group PLC - Interim Management Statement

RNS

RNS Number : 4046M

Dee Valley Group PLC

16 August 2011

DEE VALLEY GROUP PLC ("THE GROUP")

INTERIM MANAGEMENT STATEMENT

Dee Valley Group plc today publishes its Interim Management Statement for the period from 1 April 2011 to date.

Group revenue to date is in line with expectations and reflects the 5.3% price increase for 2011/12. Water consumption has remained steady in comparison with the same period last year.

Profit for the year before exceptional items is expected to be in line with market expectations with a higher-than-forecast indexation charge on the long term loan for the second six months of the year offsetting a reduced pension financing charge.

As part of a drive to reduce costs and improve performance through more efficient working practices, Dee Valley Water has commenced a collective consultation process with employee representatives which may result in some redundancies. The exceptional charge for restructuring costs in the year is expected to be around £0.5 million and will result in a reduction in operating costs from the next financial year.

Capital investment in the regulated business continues as planned with forecast net expenditure of £7.2 million for the financial year.

Following extremely low rainfall earlier in the year, the water resources situation has recovered steadily in recent months and no restrictions on use are expected during 2011.

Other than the information contained in this Interim Management Statement there have been no material events or transactions in the period affecting the outcome for the current financial year.

Enquiries

Dee Valley Group plc Norman Holladay (Managing Director)

Tel. 01978 846946 David Guest (Finance Director)

Evolution Securities Ltd. Tim Redfern/Patrick Castle/Jonathan Wynn

Tel. 020 7071 4300

This information is provided by RNS

The company news service from the London Stock Exchange

END

IMSGGUCGRUPGGQA

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(DVW) Dee Valley Grp

Summary

DEE VALLEY GROUP PLC

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30 September 2011

31 March 2011

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