REG - Pennon Group PLC - Pennon Group Full Year Results 2016/17 <Origin Href="QuoteRef">PNN.L</Origin> - Part 3
24/05/2017 07:07
- Part 3: For the preceding part double click ID:nRSX0435Gb
given on page 48. During 2016/17
Pennon Group's business was operated
through two main subsidiaries.
South West Water Limited includes
the merged water companies of South
West Water and Bournemouth Water,
providing water and wastewater
services in Devon, Cornwall and
parts of Dorset and Somerset and
water only services in parts of
Dorset, Hampshire and Wiltshire.
Viridor Limited's business is
recycling, energy recovery and waste
management.
The financial information for the
years ended 31 March 2017 and 31
March 2016 does not constitute
statutory accounts within the
meaning of section 434 of the
Companies Act 2006. The Annual
Report and Accounts for the year
ended 31 March 2017, including the
financial statements from which this
financial information is derived,
will be delivered to the Registrar
of Companies following the Company's
Annual General Meeting on 6 July
2017. The auditor's report on the
2017 financial statements was
unqualified and did not contain a
statement under section 498 of the
Companies Act 2006. The full
financial statements for the year
ended 31 March 2016 were approved by
the Board of Directors on 24 May
2016 and have been delivered to the
Registrar of Companies. The
independent auditor's report on
those financial statements was
unqualified and did not contain a
statement under section 498 of the
Companies Act 2006. This final
results announcement and the results
for the year ended 31 March 2017
were approved by the Board of
Directors on 23 May 2017.
2. Basis of preparation
The financial information in this
announcement has been prepared on
the historical cost accounting basis
(except for fair value items as set
out in the 2016 Annual Report and
Accounts) and in accordance with
International Financial Reporting
Standards (IFRS) and interpretations
of the IFRS Interpretations
Committee as adopted by the European
Union, and with those parts of the
Companies Act 2006 applicable to
companies reporting under IFRS. The
accounting policies adopted are
consistent with those followed in
the preparation of the Group's 2017
Annual Report and Accounts which
have not changed significantly from
those adopted in the Group's 2016
Annual Report and Accounts (which
are available on the Company website
www.pennon-group.co.uk), except as
described in note 3.
3. Accounting policies
It is anticipated that adoption of
the following standard could impact
the Group's future results as set
out below:· IFRS 16 'Leases' no
longer distinguish between an on the
balance sheet finance lease and an
off the balance sheet operating
lease. Instead, for virtually all
lease contracts the lessee
recognises a lease liability
reflecting future lease payments and
a 'right-of-use' asset. The standard
is effective for annual periods
beginning on or after 1 January 2019
and is subject to EU endorsement.
The Directors anticipate that the
adoption of IFRS 16 on 1 April 2019
will affect primarily the accounting
for the Group's operating leases. As
at the reporting date, the group has
non-cancellable operating lease
commitments of £143m. The Group is
assessing these commitments which
will result in the recognition of an
asset and a liability for future
payments and how this will affect
the Group's profit and
classification of cash flows.
Existing borrowing covenants are not
impacted by changes in accounting
standards. Other new standards or
interpretations in issue, but not
yet effective, including IFRS 15
'Revenue from contracts with
customers' and IFRS 9 'Financial
instruments' are not expected to
have a material impact on the
Group's net assets or results.
PENNON GROUP PLC
Notes (continued)
4. Segmental information
Operating segments are reported in a manner consistent with internal reporting provided to the Chief Operating Decision-Maker, which has been identified as the Pennon Group plc Board.
The water business comprises the regulated water and wastewater services undertaken by South West Water. The waste management business is the recycling, energy recovery and waste management services provided by Viridor.
2017 2016
£m £m
Revenue
Water 561.0 547.0
Waste management 793.5 806.2
Other 12.8 12.0
Less intra-segment trading * (14.2) (12.9)
1,353.1 1,352.3
Segment result
Operating profit before depreciation,
amortisation and non-underlying items (EBITDA)
Water 349.1 335.2
Waste management 138.3 116.5
Other (1.4) (3.3)
486.0 448.4
Operating profit before non-underlying items
Water 235.4 224.5
Waste management 71.1 40.9
Other (1.9) (3.6)
304.6 261.8
Profit before tax and non-underlying items
Water 173.9 165.7
Waste management 60.4 30.7
Other 15.7 14.9
250.0 211.3
Profit before tax
Water 187.4 160.5
Waste management 50.2 25.7
Other (27.1) 20.1
210.5 206.3
* Intra-segment trading between and to
different segments is under normal
market based commercial terms and
conditions. Intra-segment revenue of
the other segment is at cost.
Geographic analysis of revenue based on location of customers
2017 2016
£m £m
UK 1,287.6 1,296.1
Rest of European Union 10.3 10.5
China 45.1 38.8
Rest of World 10.1 6.9
1,353.1 1,352.3
The UK is the Group's country of domicile and generates the majority of its revenue from external customers in the UK. The Group's non-current assets are all located in the UK.
PENNON GROUP PLC
Notes (continued)
5. Non-underlying items
Non-underlying items are those that in the Directors' view are required to be separately disclosed by virtue of their size, nature or incidence to enable a full understanding of the Group's financial performance in the year and business trends over time.
2017 2016
£m £m
Operating costs
Restructuring costs (a) (10.7) (10.2)
Total operating costs (10.7) (10.2)
Remeasurement of fair value movement in derivatives (b) 16.0 5.2
Unwind of synthetic derivative (c) (44.8) -
Deferred tax change in rate (d) 21.3 33.1
Tax credit arising on non-underlying items 7.1 1.0
Net non-underlying (charge) / credit (11.1) 29.1
(a) During the year a one-off charge of
£10.7m was made relating to
restructuring costs associated with
the Group-wide Shared Services
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