RNS Number:7652A
Bristol Water Group PLC
31 March 2006


Bristol Water Group plc


Trading update


Ahead of entering its close period, the Board of Bristol Water Group plc (the
'Group') provides the following update. The Board plans to announce the Group's
preliminary results for the year ended 31 March 2006 on 25 May.


Having completed its disposal of all material non-regulated activities, the
Group is now focused on its regulated water business.


The regulated water business is just completing the first year of the new
regulatory period covering the five years to 2010 and is making good progress
towards delivery of the required outputs and efficiency targets specified by
Ofwat in its determination of the new price limits.


A major focus during the year has been the planning and initiation of a number
of major capital schemes and the establishment of a framework partnership
agreement to deliver them. Good progress is being made with the major capital
expenditure project to improve the security of supply for customers in the
northern part of our area. Capital expenditure for the year ended 31 March 2006
will be lower than Ofwat's assumptions due to the phasing of the expenditure. In
real terms over the five-year period the Group anticipates spending in line with
Ofwat's assumptions.


Approximately 40% of the Group's water resources come from impounding
reservoirs. These are currently approaching 90% full and no restrictions on
water use are expected in the coming year.


The agreement for the sale of Lawrence (the Group's previous contracting
subsidiary) provided for the payment of deferred consideration to the Group
dependent on the award of certain contracts to Lawrence. The first of these has
been awarded and work commenced triggering the entitlement to #2.2 million
payable in instalments over the next two years. There is the potential for a
further #0.8 million consideration dependent upon a further contract award.


The Group retained liability in respect of the defined benefit pension scheme
for its previous non-regulated businesses. At 30 September 2005, on an IAS19
basis, the scheme had a small deficit of approximately #0.1million. The Group is
considering a buy out of the liability and is investigating the cost with
insurance companies. Accordingly the Group may make an additional provision for
the buy out costs in the full year results. The Group is today making a #2m cash
payment into the non-regulated section of the Group's pension scheme.


The Group adopted Internal Financial Reporting Standards (IFRS) for its
consolidated interim accounts. As explained in the Group's IFRS transitional
statement and interim accounts, IFRS and their interpretation continue to evolve
alongside industry practice. The Group plans to review the basis of adoption of
IFRS for its full year accounts. As previously stated, adoption of IFRS at a
consolidated level has no cash impact nor does it affect dividend paying
capacity.


As previously announced, after 37 years of service to the group, Roger Wyatt,
managing director of the regulated water business retires today. His role is
being absorbed by Alan Parsons (Chief Executive) and Andy Nield (Group Finance
Director)


For further information contact:


Alan Parsons, Chief Executive
Andy Nield, Group Finance Director
Tel 0117 953 6407






                      This information is provided by RNS
            The company news service from the London Stock Exchange

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