Interim Management Statement

RNS Number : 2187L

Northumbrian Water Group PLC

28 July 2011

 



28 July 2011

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 2011 to 27 July 2011.  The Board confirms that trading has been in line with expectations and that, other than the matter referred to in the following paragraph, there have been no material events or transactions during the period.

On 1 July 2011 the Company announced that it had received a non-binding indicative proposal from Cheung Kong Infrastructure Holdings Limited (CKI) regarding a possible cash offer for the Company.  On 11 July 2011 the Company announced that CKI had made a revised non-binding proposal at 465 pence in cash per ordinary share for the Company and that the Group Board had agreed to grant CKI a limited period to undertake confirmatory due diligence.  There can be no certainty that any offer will be made for the Company, nor as to the terms on which any offer might be made.  A further announcement on this matter will be made as and when appropriate.

Water and sewerage charges at the Group's principal subsidiary, Northumbrian Water Limited (NWL), have increased by 8.5% for 2011/12 (in line with the application of the K factor of 3.8% and 4.7% in respect of the November 2010 Retail Price Index).

Operating costs for the 12 months to 31 March 2012 are forecast to increase by around 3%, reflecting inflationary pressures and new commitments resulting from the adoption of private drains and sewers and the Carbon Reduction Commitment, partially offset by efficiencies.  Delivery of our efficiency programme is on schedule and, as a result, we are ahead of the final determination profile in spite of these new commitments.

Net interest payable for 2011/12 is expected to be at a similar level to 2010/11, after removing the benefit of one-off credits of £7.5m last year.  NWL signed a new loan facility of £150m with the European Investment Bank on 15 June 2011 which remains undrawn.  The Group continues to have a strong funding position with sufficient resources to meet the requirements of the business to the end of March 2014.  Net debt is expected to be around £2.4bn at 31 March 2012 and gearing levels are not forecast to be materially different from the position reported in June.

Capital investment in the regulated business is expected to progress in line with the final determination for the year.  We are pleased that our major projects for the expansion of Abberton reservoir and construction of an advanced anaerobic digestion plant at Howdon are progressing well and remain on schedule.

The transfer of certain private drains and sewers into water company ownership will take place on 1 October 2011.  This will increase the network owned and maintained by NWL by about 85%.  Plans to manage this transfer are well advanced.

We were disappointed to miss our leakage target in the North in 2010/11 as a result of the most severe December weather for over a hundred years.  In order to improve performance in this area we have implemented an action plan and we are pleased to report that we are ahead of our targets for the year to date and are well positioned to meet our annual targets.  We are also performing well against the other key performance measures in our balanced scorecard.

At the Annual General Meeting to be held later today, we are proposing a final dividend of 9.57 pence per share which will be payable on 9 September 2011 to shareholders on the register as at 12 August 2011.

The half-yearly results for the six months ending 30 September 2011 will be announced on 30 November 2011.

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 Water Heidi Mottram, Chief Executive Officer Chris Green, Finance Director Alistair Baker, Communications & PR Manager	0191 301 6419 0191 301 6851
Pelham Bell Pottinger Archie Berens Zoe Sanders	020 7861 3112 020 7861 3887

 

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