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