Investors Report. Kemble Water Finance. For the period ended 30 September 2012

Transcription

1 Investors Report Kemble Water Finance For the period ended 30 September

2 IMPORTANT NOTICE This report is being distributed in fulfilment of the Kemble Water Finance Limited (the Company ) Intercreditor Agreement, which governs the Company s obligations to its bondholders and other financial creditors. It is directed to, and intended for, existing investors in the Company. No other persons should act or rely on it. The Company makes no representation as to the accuracy of forecast information (or any other information in this report, other than set out in the Facilities Agreement). These forecasts involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forecasts. This report should not be relied on as a guide to future performance, and should not be relied on in deciding whether to undertake future investment in the Company. It should be noted that the Company s auditors have not reviewed the information in this report. For the purposes of the financial promotions regime under the Financial Services and Markets Act 2000, this report is given on the basis of the exemption provided in article 69 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as it relates to bonds which are already admitted to trading on a relevant market). The report should be read in conjunction with, and is a supplement to, the Thames Water Utilities Limited Investors Report for the same period. 2

3 1 GENERAL OVERVIEW 2 FINANCING 3 DIVIDENDS 4 FINANCIAL RATIOS 3

4 1. GENERAL OVERVIEW Kemble Water Finance Limited ( KWF ) is a holding company of Thames Water Utilities Limited ( TWUL ). The principal activity of the KWF Group continues to be the provision of water and wastewater services, through TWUL. For a full report of the TWUL s operating and financial performance for the six months to 30 September 2012, please see refer to the Thames Water website The interim report and consolidated financial statements for KWF for the six months to 30 September 2012 are available from the Facility Agent or the Note Trustee. 2. FINANCING KWF raises debt either directly or through bonds issued by Thames Water Kemble Finance Plc. The bonds are structurally and contractually subordinated to debt at TWUL. Moody s Investor Services rates TWKF bonds B1 (with stable outlook). Fitch Ratings rates TWKF bonds BB (with stable outlook). On 7 April 2011, the KWF Group refinanced debt at Kemble Water Structure Limited through the creation of a new debt programme at KWF and its financing subsidiary, Thames Water (Kemble) Finance Plc ( TWKF ). Under the programme consolidated KWF Group net Debt/RCV is limited to 92.5% and debt at KWF and TWKF is capped at 750m. As at 30 September 2012, this comprised of 350m of loans and 400m of bonds. KWF debt: 150m KWF Facility A bank loan (Libor plus 4%) maturing March m KWF Facility B bank loan (Libor plus 4%) maturing March m TWKF fixed rate bond 7.75% maturing April 2019 As at 30 September 2012, the KWF Group had undrawn committed facilities in place to the value of 1,275m. These facilities, together with surplus cash, provide the Group with the necessary liquidity to fund the operation of the business for at least the next eighteen months. KWF swaps: The following interest rate swaps are in place at Kemble Water Finance: Bank Amount Rate Maturity Date Break Date ( m) JP Morgan % 30 Dec Mar 2016 Macquarie Bank % 30 Dec Mar 2016 National Australia Bank % 30 Dec Mar 2016 Royal Bank of Canada % 30 Dec Mar 2016 Royal Bank of Scotland % 30 Dec Mar 2016 Total 200 4

5 KWF Group Consolidated Net Debt Reconciliation: m Book Value Bonds including accretion TWUCF Class A 6,598.1 Book Value Bonds including accretion TWUCF Class B Book Value Bonds Thames Water Kemble Finance Total Book Value Bonds including accretion 7,848.1 USPP Notes Other Debt and Swaps (includes 2.7m creditor) 1,330.2 Leases Fees and Discounts (81.0) Intercompany loans (698.3) Subordinated loan from Kemble Water Structure 3,100.6 Consolidation Adjustment relating to debt at acquistion KWF Group Debt as per accounts at 30 September 12, Less Cash (911.1) KWF Group Net Debt as per consolidated Accounts at 30 September ,445.0 See appendix for a diagram showing Kemble Water Holdings Group debt as at 30 September DIVIDENDS The Company did not pay any dividends in the period. Interest was paid to KWF s parent company, Kemble Water Structure Limited of 92.0m in June 2012 as part of a distribution ultimately made to external shareholders. 5

6 4. FINANCIAL RATIOS We have adjustments to amounts referred in the 30 September 2012 KWF consolidated financial statements in order to arrive at the September 2012 covenants below in accordance with the terms of the Facilities Agreement 1. KWF Group Net Debt: Date 30 September 2012 KWF Net Debt per Accounts Less subordinated loan Less consolidation adjustment Add back intercompany trading asset Add back bond discounts and fees Add non KWF group cash KWF Net Debt per Compliance Certificate 11,445.0m ( m) ( 252.7m) 698.3m 81.0m 42.4m 8,913.4m 2. Adjustments to Cash Flow Calculations The following adjustments are made to Cash Flow for the purposes of the KWF Covenant Compliance Certificate Date 31 March March 2013 Net Cash Flow from Operating Activities 860.4m 946.1m Net Working Capital 217.2m 199.8m Corporation tax (paid) / received per accounts: 70.4m ( 0.5m) Customer Rebates 0.0m 45.0m Cash Flow as per Covenant Compliance Certificate 1,148.0m 1,190.4m 6

7 3. Financial Covenants The following reflects information provided in the 30 September 2012 KWF Covenant Compliance Certificate submitted to the Facility Agent and the Note Trustee. Group PMICR Default Level 31 March March 2013 Cash Flow less Capital Maintenance Expenditure divided by 599.5m 607.6m Total Interest Service Group PMICR m m 1.74 Group RAR Default Level 30 September March 2013 KWF Group Net Debt divided by RCV Group RAR 92.5% 8,913.4m 10,422.6m 85.5.% m 10,816.6m 85.7% 7

8 Thames Water - Group Debt Structure at September all amounts in millions Amount Maturity Amount Maturity Kemble Water Holdings Shareholder Loan Mar-2021 Kemble Water Eurobond Kemble Water Liberty Kemble Water Structure Term loans Kemble Water Finance Thames Water (Kemble) Finance plc RCF 0 Kemble Water Investments Kemble Water Limited Thames Water Holdings Ltd Thames Water Ltd Securitisation Ring-fenced Group Thames Water Utilities Holdings Limited Amount Maturity Revolving Credit Facilities Amount Maturity Thames Water Utilities Finance Leases Nov-17 Limited Capex Facility - Sep-16 Term Loans Sep-17 Working Capital Facility - Sep-16 RPI Term Loans Nov-43 Indexation on RPI swaps Cross Currency swaps Total RCF - Total TWUL Debt Thames Water Utilties Finance Limited Thames Water Utilties Cayman Finance Limited Amount Maturity Class A Amount Maturity 330m 6.750% Bond, Ser Nov-28 Series 1 A1 350m 1.760% RPI Bond Sep m 6.500% Bond, Ser Feb-32 Series 1 A2 200m 1.771% RPI Bond Sep m 3.375% RPI Bond, Ser Jul-21 Series 1 A3 200m 1.819% RPI Bond Sep m 4.900% Bond, Ser Jun-15 Series 1 A4 100m 1.846% RPI Bond Sep m 5.050% Bond, Ser Jun-20 Series 1 A5 50m 1.980% RPI Bond 58.6 Sep m 6.590% Bond, Ser Apr-21 Series 2 400m 7.241% Bond Apr m 1.681% RPI Bond, Ser Jul-55 Series 3 JPY20bn 3.28% Bond Aug m % RPI Bond, Ser Jul-53 Series 4 50m 3.853% LPI Bond 55.7 Dec m 5.125% Bond, Ser Sep-37 Series 5 500m 6.125% Bond Feb-13 Accretion on RPI swaps 37.8 Jun-39 Series 6 55m 2.091% RPI Bond 62.4 Oct-42 Total TWUF Class A Debt 2,776.6 Series 7 $156m FRN 96.5 Feb-15 Series 10 40m 1.974% RPI Bond 43.3 Oct-45 Series m 3.25% Bond Nov-16 cash Series m 5.50%Bond Feb-41 Total Class A Debt in Securitisation Group 8,082.8 Series m 2.30% CPI Bond 89.9 Jul-22 Total Senior Debt in Securitisation Group 9,029.4 Series m 4.375% Bond Jul-34 Total Class A Net Debt in Securitisation Group 7, % Series m 4.625% Bond Jun-46 Total Senior Net Debt in Securitisation Group 8, % USPP $150m Note 92.8 Feb-22 Total KWF Group Debt 9,779.4 USPP $200m Note Feb-24 Total KWF Group Net Debt 8, % USPP $250m Note Mar-27 Cross Currency Swaps 68.9 Accretion on RPI swaps (limit of 8%) % Accretion on RPI swaps 15.1 Feb-60 Swaps with breaks (limit of 5%) % Total Class A Debt 4,312.7 Class B RPI Swaps 1,559.6 Series 8 550m 5.375% Bond Jul-17 RPI Bonds/Loans 2,724.3 Series 9 300m 5.75% bond Sep-22 RPI Debt in Securitisation Group 4, % USPP $150m Note 92.8 Feb-19 Cross Currency Swaps 3.8 Feb-19 RCV as at 30 September ,422.6 Total Class B Debt Total TWUCF Debt 5,259.3