Annual Report 2016 - Page 37

Annual Report 2016 the benefit of higher total sales being partly offset by the nonrecurrence of some significant projects completed last year. Also, Group EBITDA (before infrastructure renewals expenditure and exceptional items), an important financial KPI of the Group, increased by £4.0m (5.1%) to £82.0m in the year, demonstrating the strength of the Group’s financial performance in the year. Tax The Group’s current corporation tax charge increased by £0.8m to £5.7m, mainly reflecting higher Group taxable profits. The total tax charge for the year (after deferred tax) reduced to £2.5m largely due to a non-cash reduction to deferred tax liabilities arising from a reduction to future corporation tax rates (£4.3m) partly offset by the higher current taxes. As expected, there was an increase in net finance charges in the year (£0.7m) to £12.3m largely due to the part year effect of interest rate swaps put in place on debt refinanced in previous years with cash flows on these swaps commencing from October 2015 and non-cash indexation on index-linked debt in South Staffs Water. However, these charges were lower than had been budgeted reflecting stronger than planned cash flows generated and therefore lower than budgeted net debt throughout the year. Exceptional items Included within the total Group operating profit for the year is a non-cash exceptional operating credit of £3.6m relating to a reduction in the year in the book value of liabilities relating to the South Staffordshire Section of the Water Companies Pension Scheme. This one-off reduction in the liabilities has arisen as a result of the cessation of future accrual of the defined benefits within the section during the year. The item has been disclosed separately as exceptional due to its non-recurring and significant nature. Overall, Group profit before tax and exceptional items (see below) grew by an encouraging 7.6% to £35.1m (2015 as restated: £32.7m). Analysis of Group operating profit South Staffs Water 78% Non-regulated 22% 35