REG - Pennon Group PLC - Pennon Group Full Year Results 2016/17 <Origin Href="QuoteRef">PNN.L</Origin> - Part 2
24/05/2017 07:07
- Part 2: For the preceding part double click ID:nRSX0435Ga
increasing capacity at our wastewater
treatment works, specifically at Fluxton in Devon and Hayle in Cornwall
· improvements in the sewerage network reducing the impact of saline
infiltration
· investment to improve bathing waters in Plymouth began during the year.
Bathing water improvement, despite tougher EU standard
Our legacy of major investment to protect bathing waters continues to be
reflected in extremely positive results for the 2016 bathing water season,
which was assessed under tougher new EU standards. Of the 143 bathing waters
tested in the South West Water region, 141 (98.6%) were classified
'sufficient' or better, with more than 81% classified as 'excellent'. Of the
two bathing waters rated as 'poor' these were not attributed to any failure of
South West Water's assets.
Targeting investment to reduce sewer flooding
Whilst the number of external flooding incidents has reduced by c.5% from last
year, a penalty is still expected to be incurred. South West Water continues
to invest in improvement schemes, ongoing capital maintenance, and we are
working to improve our response times to flooding incidents. In addition to
the significant schemes completed last year at three key catchments, further
investments in flooding improvements continued in 2016/17 across a number of
smaller areas including St Columb in Cornwall.
Furthermore South West Water has also invested over £1 million supporting the
Exeter Flood Defence Scheme at our Countess Wear wastewater treatment works.
Board matters
Ian McAulay stepped down as the Chief Executive Officer of Viridor during the
year and we thank him for his contribution and wish him well for the future.
Phil Piddington was appointed to the new role of Managing Director of Viridor
in September 2016. The change in management team and structure at Viridor,
which mirrors the arrangements in place at South West Water, better reflects
the objectives of the Group and will drive stronger accountability. Moreover,
the appointment of Phil Piddington demonstrates that the Group is adding new
skills and executing succession planning well.
Chris Loughlin
Group Chief Executive Officer
23 May 2017
Financial Timetable
(YEAR ENDED 31 MARCH 2017 AND UPCOMING EVENTS)
24 May 2017 Full Year Results 2016/17
Early June 2017 Annual Report & Accounts published
6 July 2017 Annual General Meeting
6 July 2017* Ordinary shares quoted ex-dividend
7 July 2017* Record date for final dividend
14 August 2017* Scrip election date for final dividend
1 September 2017* Final cash dividend paid and Scrip shares issued
25 September 2017 Trading Statement
29 November 2017 Half Year Results 2017/18
26 March 2018 Trading Statement
25 May 2018 Full Year Results 2017/18
* These dates are provisional and, in the case of the final dividend subject to obtaining shareholder approval at the 2017 Annual General Meeting.
CAUTIONARY STATEMENT IN RESPECT OF FORWARD-LOOKING STATEMENTS
This Report contains forward-looking statements relating to the Pennon Group's
operations, performance and financial position based on current expectations
of, and assumptions and forecasts made by, Pennon Group management which may
constitute "forward-looking statements" within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995. Forward-looking statements are
identified in this Report by words such as "anticipate", "aim", "believe",
"continue", "could", "due", "estimate", "expect", "forecast", "goal",
"intend", "may", "outlook", "plan", "probably", "project", "remain", "seek",
"should", "target", "will", "would" and related and similar expressions, as
well as statements in the future tense. All statements other than of
historical fact may be forward-looking statements and represent the Group's
belief regarding future events, many of which, by their nature, are inherently
uncertain and outside the Group's control. Various known and unknown risks,
uncertainties and other factors could lead to substantial differences between
the actual future results, financial situation development or performance of
the Group and the estimates and historical results given herein. Important
risks, uncertainties and other factors that could cause actual results,
performance or achievements of Pennon Group to differ materially from any
outcomes or results expressed or implied by such forward-looking statements
include, among other things, compliance with law, regulation or decisions by
Government and regulators, including water industry reform; maintaining
sufficient finance and funding to meet ongoing commitments; non-compliance or
occurrence of avoidable Health and Safety incidents; uncertainty arising from
open tax computations where liabilities remain to be agreed; non-recovery of
customer debt; poor operating performance due to extreme weather and climate
change; macro-economic risks arising from the Global and UK economic downturn
impacting commodity and power prices; poor customer service/increased
competition leading to loss of customer base; business interruption or
significant operational failures/incidents; talent management and succession
planning in place to meet business requirements; failure or increased cost of
capital projects/exposure to contract failures and information technology
systems, management and protection including cyber risks. These risks will be
described in greater detail in the Pennon Group Annual Report published at the
beginning of June 2017. Such forward looking statements should therefore be
construed in light of such risks, uncertainties and other factors and undue
reliance should not be placed on them. Nothing in this report should be
construed as a profit forecast.
Any forward-looking statements are made only as of the date of this document
and no representation, assurance, guarantee or warranty is given in relation
to them including as to their accuracy, completeness, or the basis on which
they are made. The Group accepts no obligation to revise or update publicly
these forward-looking statements or adjust them as a result of new information
or for future events or developments, except to the extent legally required.
UNSOLICITED COMMUNICATIONS WITH SHAREHOLDERS
A number of companies, including Pennon Group plc, continue to be aware that
their shareholders have received unsolicited telephone calls or correspondence
concerning investment matters which imply a connection to the company
concerned. If shareholders have any concerns about any contact they have
received then please refer to the Financial Conduct Authority's website
www.fca.org.uk/scamsmart. Details of any share dealing facilities that the
Company endorses will be included in Company mailings.
PENNON GROUP PLC
Consolidated income statement for the year ended 31 March 2017
Before non-underlying items2017 Non-underlying items (note 5)2017 Total2017 Before non-underlying items2016 Non-underlying items (note 5)2016 Total2016
Notes £m £m £m £m £m £m
Revenue 4 1,353.1 - 1,353.1 1,352.3 - 1,352.3
Operating costs
Employment costs (179.7) (1.1) (180.8) (180.0) (8.6) (188.6)
Raw materials and consumables used (115.8) - (115.8) (114.7) - (114.7)
Other operating expenses (571.6) (9.6) (581.2) (609.2) (1.6) (610.8)
Earnings before interest, tax,
depreciation and amortisation 4 486.0 (10.7) 475.3 448.4 (10.2) 438.2
Depreciation and amortisation (181.4) - (181.4) (186.6) - (186.6)
Operating profit 4 304.6 (10.7) 293.9 261.8 (10.2) 251.6
Finance income 6 36.3 16.0 52.3 42.1 5.2 47.3
Finance costs 6 (95.1) (44.8) (139.9) (96.2) - (96.2)
Net finance costs 6 (58.8) (28.8) (87.6) (54.1) 5.2 (48.9)
Share of post-tax profit from
joint ventures 4.2 - 4.2 3.6 - 3.6
Profit before tax 4 250.0 (39.5) 210.5 211.3 (5.0) 206.3
Taxation 7 (58.4) 28.4 (30.0) (72.1) 34.1 (38.0)
Profit for the year 191.6 (11.1) 180.5 139.2 29.1 168.3
Attributable to:
Ordinary shareholders of the
parent 175.4 (11.1) 164.3 123.0 29.1 152.1
Perpetual capital security
holders 16.2 - 16.2 16.2 - 16.2
Earnings per ordinary share(pence per share) 8
- Basic 39.8 37.0
- Diluted 39.6 36.9
PENNON GROUP PLC
Consolidated statement of comprehensive income for the year ended 31 March 2017
Before non-underlying items2017 Non-underlying items (note 5)2017 Total2017 Before non-underlying items2016 Non-underlying items (note 5)2016 Total2016
£m £m £m £m £m £m
Profit for the year 191.6 (11.1) 180.5 139.2 29.1 168.3
Other comprehensive
(loss) / income
Items that will not be reclassified
to profit or loss
Remeasurement of defined
benefit obligations (23.6) - (23.6) (2.6) - (2.6)
Income tax on items that will not
be reclassified 4.7 (1.4) 3.3 0.6 (3.0) (2.4)
Total items that will not be
reclassified to profit or loss (18.9) (1.4) (20.3) (2.0) (3.0) (5.0)
Items that may be reclassified
subsequently to profit or loss
Share of other comprehensive
income from joint ventures 0.3 - 0.3 2.4 - 2.4
Cash flow hedges 4.9 - 4.9 5.0 - 5.0
Income tax on items that may be
reclassified (1.0) (0.3) (1.3) (1.0) (0.8) (1.8)
Total items that may be
reclassified subsequently to
profit or loss 4.2 (0.3) 3.9 6.4 (0.8) 5.6
Other comprehensive
(loss) / income for the year net of tax (14.7) (1.7) (16.4) 4.4 (3.8) 0.6
Total comprehensive income
for the year 176.9 (12.8) 164.1 143.6 25.3 168.9
Total comprehensive income
attributable to:
Ordinary shareholders of the
parent 160.7 (12.8) 147.9 127.4 25.3 152.7
Perpetual capital security
holders 16.2 - 16.2 16.2 - 16.2
PENNON GROUP PLC
Consolidated balance sheet at 31 March 2017
2017 2016
Notes £m £m
ASSETS
Non-current assets
Goodwill 385.0 385.0
Other intangible assets 67.1 63.8
Property, plant and equipment 4,103.2 3,897.3
Other non-current assets 308.0 267.8
Derivative financial instruments 73.6 62.7
Investments in joint ventures 0.1 0.1
4,937.0 4,676.7
Current assets
Inventories 21.3 20.6
Trade and other receivables 340.8 323.5
Derivative financial instruments 14.1 9.5
Cash and cash deposits 13 598.1 632.2
974.3 985.8
LIABILITIES
Current liabilities
Borrowings 13 (146.5) (65.0)
Financial liabilities at fair value through profit (2.4) (2.2)
Derivative financial instruments (17.3) (17.4)
Trade and other payables (286.5) (264.6)
Current tax liabilities (26.8) (37.1)
Provisions (40.4) (50.4)
(519.9) (436.7)
Net current assets 454.4 549.1
Non-current liabilities
Borrowings 13 (3,116.5) (3,051.6)
Other non-current liabilities (180.7) (113.2)
Financial liabilities at fair value through profit (48.4) (51.0)
Derivative financial instruments (25.2) (38.5)
Retirement benefit obligations (68.0) (40.9)
Deferred tax liabilities (269.6) (272.0)
Provisions (173.8) (171.0)
(3,882.2) (3,738.2)
Net assets 1,509.2 1,487.6
Shareholders' Equity
Share capital 10 168.4 167.8
Share premium account 217.4 213.3
Capital redemption reserve 144.2 144.2
Retained earnings and other reserves 684.4 667.5
Total shareholders' equity 1,214.4 1,192.8
Perpetual capital securities 11 294.8 294.8
Total equity 1,509.2 1,487.6
PENNON GROUP PLC
Consolidated statement of changes in equity for the year ended 31 March 2017
Share capital(note 10) Share premium account Capital redemption reserve Retained earnings and other reserves Perpetual capital securities(note 11) Total Equity
£m £m £m £m £m £m
At 1 April 2015 162.4 118.6 144.2 634.1 294.8 1,354.1
Profit for the year - - - 152.1 16.2 168.3
Other comprehensive income for the year - - - 0.6 - 0.6
Total comprehensive income for the year - - - 152.7 16.2 168.9
Transactions with equity shareholders:
Dividends paid - - - (129.5) - (129.5)
Adjustment for shares issued under the
Scrip Dividend Alternative 0.3 (0.3) - 6.3 - 6.3
Equity issuance 4.9 95.4 - - - 100.3
Equity issuance related costs - (2.3) - - - (2.3)
Adjustment in respect of share-based
payments (net of tax) - - - 2.5 - 2.5
Distributions due to perpetual capital security
holders - - - - (20.3) (20.3)
Current tax relief on distributions to perpetual
capital security holders - - - - 4.1 4.1
Own shares acquired by the Pennon
Employee Share Trust in respect of share
options granted - - - (1.1) - (1.1)
Proceeds from treasury shares re-issued - - - 2.5 - 2.5
Proceeds from shares issued under the
Sharesave Scheme 0.2 1.9 - - - 2.1
5.4 94.7 - (119.3) (16.2) (35.4)
At 31 March 2016 167.8 213.3 144.2 667.5 294.8 1,487.6
Profit for the year - - - 164.3 16.2 180.5
Other comprehensive loss for the year - - - (16.4) - (16.4)
Total comprehensive income for the year - - - 147.9 16.2 164.1
Transactions with equity shareholders:
Dividends paid - - - (138.5) - (138.5)
Adjustment for shares issued under the
Scrip Dividend Alternative 0.3 (0.3) - 6.9 - 6.9
Adjustment in respect of share-based
payments (net of tax) - - - 3.2 - 3.2
Distributions due to perpetual capital security
holders - - - - (20.3) (20.3)
Current tax relief on distributions to perpetual
capital security holders - - - - 4.1 4.1
Own shares acquired by the Pennon
Employee Share Trust in respect of share
options granted 0.1 1.2 - (2.6) - (1.3)
Proceeds from shares issued under the
Executive Share Option Scheme - 0.2 - - - 0.2
Proceeds from shares issued under the
Sharesave Scheme 0.2 3.0 - - - 3.2
0.6 4.1 - (131.0) (16.2) (142.5)
At 31 March 2017 168.4 217.4 144.2 684.4 294.8 1,509.2
PENNON GROUP PLC
Consolidated statement of cash flows for the year ended 31 March 2017
2017 2016
Notes £m £m
Cash flows from operating activities
Cash generated from operations 12 431.5 371.3
Interest paid (76.4) (79.1)
Tax paid (36.4) (45.0)
Net cash generated from operating activities 318.7 247.2
Cash flows from investing activities
Interest received 14.5 14.9
Loan repayments received from joint ventures 0.3 27.5
Dividends received from joint ventures 4.5 6.0
Acquisitions, net of cash acquired - (91.0)
Purchase of property, plant and equipment (354.1) (283.7)
Proceeds from sale of property, plant and equipment 4.1 6.8
Net cash used in investing activities (330.7) (319.5)
Cash flows from financing activities
Proceeds from treasury shares re-issued 10 - 2.5
Proceeds from issuance of ordinary shares 4.7 100.1
Return/ (deposit) of restricted funds 2.7 (30.3)
Purchase of ordinary shares by the Pennon
Employee Share Trust (2.6) (1.1)
Proceeds from new borrowing 130.0 80.0
Repayment of borrowings (39.0) (96.5)
Finance lease sale and leaseback 60.7 30.4
Finance lease principal repayments (24.0) (38.4)
Dividends paid (131.6) (123.2)
Perpetual capital securities periodic return (20.3) (20.3)
Net cash used in financing activities (19.4) (96.8)
Net decrease in cash and cash
equivalents (31.4) (169.1)
Cash and cash equivalents at beginning of year 13 405.7 574.8
Cash and cash equivalents at end of year 13 374.3 405.7
PENNON GROUP PLC
Notes
1. General information
Pennon Group plc is a company
registered in the United Kingdom
under the Companies Act 2006. The
address of the registered office is
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