REG - Pennon Group PLC - Annual Report and Accounts 2017 and Notice of AGM <Origin Href="QuoteRef">PNN.L</Origin> - Part 2

PennonAnnouncement

02/06/2017 09:30

- Part 2: For the preceding part double click  ID:nRSB9855Ga 

                                                                                                                                                                                                                                                                                                                                                                  information security framework, cyber security awareness campaigns, plus internal and                                                                                                                                      
                                                                                                                                                                                                                                                                                                                                                                                   external testing and formal ISO accreditation. Ensure all possible measures are in                                                                                                                                        
                                                                                                                                                                                                                                                                                                                                                                                   place, aligned to guidance issued by the National Cyber Security Centre (NCSC),                                                                                                                                           
                                                                                                                                                                                                                                                                                                                                                                                   commensurate with the fast changing cyber risk landscape.                                                                                                                                                                 
 
 
DIRECTORS' RESPONSIBILITIES STATEMENTS 
 
(This statement is extracted from the governance section of the Annual Report
2017 and page numbers referred to are those in the Annual Report 2017.) 
 
The Directors are responsible for preparing the annual report, the Directors'
remuneration report and the financial statements in accordance with applicable
law and regulations. 
 
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have prepared the Group and
Company financial statements 
 
in accordance with International Financial Reporting Standards (IFRSs) as
adopted by the European Union. 
 
Under company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Group and the Company and of the profit or loss of the Group
for the year. 
 
In preparing these financial statements the Directors are required to: 
 
•     select suitable accounting policies and then apply them consistently 
 
•     make judgements and accounting estimates which are reasonable and
prudent 
 
•     state whether applicable IFRSs as adopted by the European Union have
been followed, subject to any material departures disclosed and explained in
the financial statements. 
 
The Directors confirm that they have complied with the above requirements in
preparing the financial statements. 
 
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions, and disclose with
reasonable accuracy at any time the financial position of the Group and the
Company; and enable them to ensure that the financial statements and the
Directors' remuneration report comply with the Companies Act 2006 and, as
regards the Group financial statements, Article 4 of the International
Accounting Standards (IAS) Regulation. They are also responsible for
safeguarding the assets of the Group and the Company and hence for taking
reasonable steps for the prevention and detection of fraud and other
irregularities. 
 
Each of the Directors, whose names and functions are listed on pages 56 and
57, confirms that, to the best of his or her knowledge: 
 
i)    The financial statements, which have been prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the European
Union, give a true and fair view of the assets, liabilities, financial
position and profit of the Group and of the Company. 
 
ii)   The strategic report (pages 1 to 51) and the Directors' report (pages
100 to 103) include a fair review of the development and performance of the
business during the year and the position of the Company and the Group at the
year end, together with a description of the principal risks and uncertainties
they face. 
 
iii)   Following receipt of advice from the Audit Committee, that the annual
report, taken as a whole, is fair, balanced and understandable, and provides
the information necessary for the shareholders to assess the Group's
performance, business model and strategy. 
 
The Directors are responsible for the maintenance and integrity of the
Company's website 
 
www.pennon-group.co.uk 
 
. 
 
Legislation in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions. 
 
RELATED PARTY TRANSACTIONS 
 
(The following is Note 44 to the Financial Statements set out in the Annual
Report 2017.) 
 
During the year Group companies entered into the following transactions with
joint ventures and associate related parties who are not members of
the Group: 
 
                                              2017£m  2016£m  
 Sales of goods and services                                  
 Viridor Laing (Greater Manchester) Limited   80.1    87.3    
 INEOS Runcorn (TPS) Limited                  15.8    18.5    
 Purchase of goods and services                               
 Viridor Laing (Greater Manchester) Limited   -       0.3     
 Lakeside Energy from Waste Limited           10.4    12.1    
 INEOS Runcorn (TPS) Limited                  6.6     4.3     
 Dividends received                                           
 Lakeside Energy from Waste Holdings Limited  4.5     6.0     
 
 
Year-end balances 
 
                                                               2017£m  2016£m  
 Receivables due from related parties                                          
 Viridor Laing (Greater Manchester) Limited (loan balance)     40.2    36.8    
 Lakeside Energy from Waste Limited (loan balance)             8.6     8.9     
 INEOS Runcorn (TPS) Limited (loan balance)                    37.8    35.5    
                                                               86.6    81.2    
 Viridor Laing (Greater Manchester) Limited (trading balance)  15.3    11.3    
 Lakeside Energy from Waste Limited (trading balance)          1.0     1.0     
 INEOS Runcorn (TPS) Limited (trading balance)                 1.3     2.7     
                                                               17.6    15.0    
 Payables due to related parties                                               
 Lakeside Energy for Waste Limited (trading balance)           2.7     2.3     
 INEOS Runcorn (TPS) Limited (trading balance)                 1.5     1.6     
                                                               4.2     3.9     
 
 
The £86.6 million (2016 £81.2 million) receivable relates to loans to related
parties included within receivables and due for repayment in instalments
between 2017 and 2033. Interest is charged at an average of 13.0% (2016
13.0%). 
 
Company 
 
The following transactions with subsidiary undertakings occurred in the year: 
 
                                                    2017£m  2016£m  
 Sales of goods and services (management fees)      11.2    10.5    
 Purchase of goods and services (support services)  0.5     0.4     
 Interest receivable                                39.6    38.6    
 Interest payable                                   0.1     0.1     
 Dividends received                                 247.0   140.7   
 
 
Sales of goods and services to subsidiary undertakings are at cost. Purchases
of goods and services from subsidiary undertakings are under normal commercial
terms and conditions which would also be available to unrelated third
parties. 
 
Year-end balances 
 
                                               2017£m   2016£m  
 Receivables due from subsidiary undertakings                   
 Loans                                         1,124.3  965.6   
 Trading balances                              13.4     8.6     
 
 
Interest on £70.0 million of the loans has been charged at a fixed rate of
4.5%, on £428.0 million at a fixed rate of 5.0% and on £28.0 million at a
fixed rate of 6.0% (2016 £70.0 million at 4.5%, £373.6 million nil at 5.0%,
£28.0 million at 6.0% and £0.5 million at 1.4%). Interest on £497.8 million of
the loans is charged at 12 month LIBOR +1.0% (2016 £443.5 million) and on £0.5
million at base rate +1.0%. These loans are due for repayment in instalments
over the period 2016 to 2043. 
 
Interest on £100.0 million of the loans has been charged at 1 month LIBOR +
1.0% (2016 £50.0 million). This loan is expected to be repaid in 2017/18.
During the year there were no provisions (2016 nil) in respect of loans to
subsidiaries not expected to be repaid. 
 
                                          2017£m  2016£m  
 Payables due to subsidiary undertakings                  
 Loans                                    322.0   287.2   
 Trading balances                         9.5     14.6    
 
 
The loans from subsidiary undertakings are unsecured and interest-free without
any terms for repayment. 
 
2 June 2017 
 
www.pennon-group.co.uk 
 
End transmission 
 
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