At 1 April 201775.2
Share of profits of joint ventures2.3
Dividends received from joint ventures(3.3)
Currency translation differences1.0
At 31 March 201875.2
Share of profits of joint ventures6.7
Dividends received from joint ventures(2.2)
Currency translation differences(0.7)
At 31 March 201979.0

The group's interests in joint ventures mainly comprise its interests in Water Plus Group Limited (Water Plus) and AS Tallinna Vesi (Tallinn Water). Water Plus is jointly owned and controlled by the group and Severn Trent PLC under a joint venture agreement. Joint management of Tallinn Water is based on a shareholders' agreement.

As at 31 March 2019, the carrying value of the group's equity interest in Water Plus was £36.7 million (2018: £37.3 million), which includes £16.9 million (2018: £16.9 million) representing the group's 50 per cent share of goodwill included in Water Plus's statement of financial position.

Following a deterioration in the working capital position of Water Plus since the non-household water retail market in England opened to competition on 1 April 2017, the carrying value of the group's interest in the Water Plus joint venture has been assessed relative to its estimated recoverable amount in order to determine whether it is impaired. In performing this assessment, consideration has been given to information provided by Water Plus, including the results of its own impairment testing carried out in respect of its goodwill and intangible assets in accordance with IAS 36 'Impairment of Assets'. Having reviewed and challenged this information, the group estimates that the recoverable amount of the Water Plus joint venture is in excess of its carrying value and therefore no impairment is required.

The recoverable amount has been calculated based on Water Plus's value in use, which is determined by discounting the estimated future cash flows of the Water Plus business to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the business, for which estimates of future cash flows have not been adjusted.

The cash flows used in the value in use assessment go out to 31 March 2024, with a terminal growth rate of 2.0 per cent applied at this date based on long-term projections of CPIH, to which Water Plus's cash flows tend to be aligned. These cash flows were based on Water Plus's five-year business plan as agreed with its board, and were discounted using a pre-tax discount rate of 8.0 per cent based on a CAPM model underpinned by observable inputs.

The key assumptions to which the recoverable amount is most sensitive are the forecast future cash flows, which are subject to the delivery of Water Plus's business plan, and the discount rate. These therefore represent key areas of estimation uncertainty. At 31 March 2019, the estimated recoverable amount of the group's interest in the Water Plus joint venture exceeded its carrying amount by £59.5 million. An increase in the discount rate to 10.4 per cent or a reduction in forecast cash flows of 25 per cent, both of which are considered reasonably possible, would have, in isolation, led to an impairment loss being recognised for the year ended 31 March 2019.

In addition to the equity interest in the Water Plus joint venture, the group has issued loans of £142.1 million to Water Plus, further details of which can be found in note A6. At 31 March 2019, these loans were deemed to be fully recoverable.

As at 31 March 2019, the carrying value of the group's 35.3 per cent interest in Tallinn Water was £42.4 million (2018: £38.0 million). Tallinn Water has disclosed a contingent liability of EUR 28.6 million in its latest financial statements relating to possible third-party claims. If this contingent liability materialises in the future, this would impact the group's share of profits of the joint venture and the joint venture's carrying value under the equity method of accounting. In addition, Tallinn Water is currently involved in a regulatory dispute, the outcome of which is currently uncertain. At this stage, the group does not consider this to be an indicator that its interest in Tallinn Water may be impaired.

There are no restrictions on the ability of the group's joint ventures to transfer funds to the group in the form of cash dividends, or to repay loans or advances made by the group.

Details of transactions between the group and its joint ventures are disclosed in note A6.


The company had no investments in joint ventures at either 31 March 2019 or 31 March 2018.