REG - Pennon Group PLC - Annual Report and Accounts and Notice of AGM <Origin Href="QuoteRef">PNN.L</Origin> - Part 2
16/07/2015 13:39
- Part 2: For the preceding part double click ID:nRSA8701Ra
funding at lower effective average interest rates compared with many other companies in its sector and
is well placed to meet the funding requirements of both South West Water and Viridor in the
foreseeable future.
Unfavourable outcome from Competition and Markets Authority (CMA) review of our acquisition of Bournemouth Water. Robust case being made to CMA setting out anticipated net benefits for customers from the merger. The acquisition of Bournemouth Water was post year-end
PENSIONS
RISK MITIGATION 2013/14 2014/15 DIRECTION
Pension costs may increase due to higher costs for future service and growing deficits in relation to past service in the defined benefit schemes. All defined benefit schemes (apart from the Greater Manchester Waste PFI scheme) have been closed to Green Green ↓
new entrants since April 2008. Employee and employer contributions are kept under review and a formal
actuarial valuation is being undertaken as at 31March 2013. Pension trustees keep investment policies
under review anduse professional investment advisers to seek to maximiseinvestment returns at an
appropriate level of risk.
DIRECTORS' RESPONSIBILITIES STATEMENTS
(This statement is extracted from the governance section of the Annual Report
2015 and page numbers referred to are those in the Annual Report 2015.)
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 4 to 51) and the Directors' report
(pages 53 to 95) 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 45 to the Financial Statements set out in the Annual
Report 2015.)
During the year Group companies entered into the following transactions with
joint ventures and associate related parties who are not members of the
Group:
2015 £m 2014
£m
Sales of goods and services
Viridor Laing (Greater Manchester) Limited INEOS Runcorn (TPS) Limited 99.05.6 104.6-
Purchase of goods and services
Lakeside Energy from Waste Limited INEOS Runcorn (TPS) Limited 12.61.1 9.2-
Dividends received
Lakeside Energy from Waste Holdings Limited 6.0 8.5
Year-end balances
2015 £m 2014
£m
Receivables due from related parties
Viridor Laing (Greater Manchester) Limited (loan balance) 57.2 50.7
Lakeside Energy from Waste Limited (loan balance) 9.3 9.5
INEOS Runcorn (TPS) Limited (loan balance) 31.4 28.0
97.9 88.2
Viridor Laing (Greater Manchester) Limited (trading balance)Lakeside Energy from Waste Limited (trading balance) 12.81.0 18.10.9
INEOS Runcorn (TPS) Limited (trading balance) 5.6 -
19.4 19.0
Payables due to related parties
Lakeside Energy for Waste Limited (trading balance) 1.1 1.5
INEOS Runcorn (TPS) Limited (trading balance) 0.1 -
The £97.9 million (2014 £88.2 million) receivable relates to loans to related
parties included within receivables and due for repayment in instalments
between 2015 and 2033. Interest is charged at an average of 13.0% (2014
13.0%).
Company
The following transactions with subsidiary undertakings occurred in the year:
2015 £m 2014
£m
Sales of goods and services (management fees) 9.5 9.7
Purchase of goods and services (support services) 0.5 0.5
Interest receivable 35.6 34.9
Interest payable 0.1 0.1
Dividends received 311.6 162.1
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
2015 £m 2014
£m
Receivables due from subsidiary undertakings
Loans 936.6 834.1
Trading balances 8.5 9.6
Interest on £70.5 million of the loans has been charged at a fixed rate of
4.5%, on £332.5 million at a fixed rate of 6.0% and on £0.5 million at a fixed
rate of 1.4% (2014 £128.7 million at 4.5% and £288.4 million at 6.0%).
Interest on £403.1 million of the loans is charged at 12 month LIBOR +1.5%.
These loans are due for repayment in instalments over the period 2015 to
2041.
Interest on £130.0 million of the loans has been charged at 1-month LIBOR +
1.0%. This loan will be repaid in 2015/16.
During the year there were no provisions (2014 nil) in respect of loans to
subsidiaries not expected to be repaid.
2015 £m 2014
£m
Payables due to subsidiary undertakings
Loans 283.2 283.2
Trading balances 14.6 14.4
The loans from subsidiary undertakings are unsecured and interest-free without
any terms for repayment.
1 July 2015
www.pennon-group.co.uk
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