REG - Pennon Group PLC - Pennon Group Half Year Results 2016/17 <Origin Href="QuoteRef">PNN.L</Origin> - Part 2
25/11/2016 07:06
- Part 2: For the preceding part double click ID:nRSY1299Qa
Loughlin
Group Chief Executive Officer
25 November 2016
Financial Timetable
(YEAR ENDED 31 MARCH 2017 AND UPCOMING EVENTS)
2 February 2017 Ordinary shares quoted ex-dividend
3 February 2017 Record date for interim dividend
9 February 2017 Trading Statement
13 March 2017 Scrip election date for interim dividend
4 April 2017 Interim cash dividend paid and Scrip shares issued
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
September 2017 Trading Statement
29 November 2017 Half 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.
PRINCIPAL RISKS AND UNCERTAINTIES
In accordance with DTR4.2.3 and 4.2.7 of the Disclosure & Transparency Rules the principal risks for the remaining six
months of the financial year which could have a material adverse affect on the Group have been reconsidered, including the
potential uncertainties arising from the UK leaving the EU. The Board considers that the principal risks remain in line
with those outlined in our 2016 Annual Report, summarised as follows:
Law, Regulation and Finance
· Compliance with law, regulation or decisions by Government and regulators, including water industry market 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
Market and Economic Conditions
· Non-recovery of customer debt
· Macro-economic risks arising from global and UK economic downturn impacting commodity and power prices
· Increase in defined benefit pension scheme deficit
Operating Performance
· Poor operating performance due to extreme weather or climate change
· Poor customer service and/or increased competition leading to loss of customer base
· Business interruption or significant operational failures/ incidents
· Difficulty in recruitment, retention and development of appropriate skills required to deliver the Group's strategy
Business Systems and Capital Investment
· Failure or increased cost of capital projects and/or exposure to contract failures
· Failure of information technology systems, management and protection including cyber
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 were described in greater detail in the Pennon Group Annual Report published at the
beginning of June 2016. 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 half year ended 30 September 2016
Unaudited
Before Non-underlying
non-underlying items half year Total
items half year ended half year Half year
ended 30 September ended ended
30 September 2016 30 September 30 September
2016 (note 5) 2016 2015
Note £m £m £m £m
Revenue 4 685.5 - 685.5 689.1
Operating costs
Manpower costs (89.9) (1.1) (91.0) (89.7)
Raw materials and consumables used (56.1) - (56.1) (55.8)
Other operating expenses (294.1) (9.6) (303.7) (311.9)
Earnings before interest, tax, depreciation
and amortisation 4 245.4 (10.7) 234.7 231.7
Depreciation and amortisation (91.5) - (91.5) (96.4)
Operating profit 4 153.9 (10.7) 143.2 135.3
Finance income 6 19.7 24.4 44.1 22.0
Finance costs 6 (48.3) (39.4) (87.7) (51.5)
Net finance costs 6 (28.6) (15.0) (43.6) (29.5)
Share of post-tax profit from joint ventures 2.8 - 2.8 1.0
Profit before tax 4 128.1 (25.7) 102.4 106.8
Taxation 7 (30.7) 17.4 (13.3) (21.9)
Profit for the period 97.4 (8.3) 89.1 84.9
Attributable to:
Ordinary shareholders of the parent 81.2 (8.3) 72.9 68.7
Perpetual capital security holders 16.2 - 16.2 16.2
Earnings per ordinary share (pence per share) 8
- Basic 17.7 16.8
- Diluted 17.6 16.7
- Before non-underlying items, deferred tax
and adjusted proportionately to reflect the
half year impact of annual hybrid periodic
return 23.6 23.2
The notes on pages 36 to 50 form part of this condensed half year financial information.
PENNON GROUP PLC
Consolidated statement of comprehensive income for the half year ended 30 September 2016
Unaudited
Before Non-underlying
non-underlying items half year Total
items half year ended half year Half year
ended 30 September ended ended
30 September 2016 30 September 30 September
2016 (note 5) 2016 2015
£m £m £m £m
Profit for the period 97.4 (8.3) 89.1 84.9
Other comprehensive loss:
Items that will not be reclassified to profit or loss
Remeasurement of defined benefit obligations (73.1) - (73.1) (8.6)
Income tax on items that will not be reclassified 14.8 (3.6) 11.2 1.8
Total items that will not be reclassified to
profit or loss (58.3) (3.6) (61.9) (6.8)
Items that may be reclassified subsequently
to profit or loss
Share of other comprehensive income from
joint ventures (2.8) - (2.8) (1.0)
Cash flow hedges (2.7) - (2.7) 7.4
Income tax on items that may be reclassified 0.5 (0.5) - (1.5)
Total items that may be reclassified
subsequently to profit or loss (5.0) (0.5) (5.5) 4.9
Other comprehensive loss for
the period net of tax (63.3) (4.1) (67.4) (1.9)
Total comprehensive income for the period 34.1 (12.4) 21.7 83.0
Total comprehensive income attributable to:
Ordinary shareholders of the parent 17.9 (12.4) 5.5 66.8
Perpetual capital security holders 16.2 - 16.2 16.2
The notes on pages 36 to 50 form part of this condensed half year financial information.
PENNON GROUP PLC
Consolidated balance sheet at 30 September 2016
Unaudited
30 September 31 March
2016 2016
Note £m £m
ASSETS
Non-current assets
Goodwill 385.0 385.0
Other intangible assets 65.1 63.8
Property, plant and equipment 17 3,970.6 3,897.3
Other non-current assets 279.7 267.8
Derivative financial instruments 90.3 62.7
Investments in joint ventures 0.1 0.1
4,790.8 4,676.7
Current assets
Inventories 23.4 20.6
Trade and other receivables 333.9 323.5
Derivative financial instruments 13.4 9.5
Cash and cash deposits 14 657.5 632.2
1,028.2 985.8
LIABILITIES
Current liabilities
Borrowings 14 (92.2) (65.0)
Financial liabilities at fair value through profit (1.3) (2.2)
Derivative financial instruments (30.8) (17.4)
Trade and other payables (327.5) (264.6)
Current tax liabilities (54.5) (37.1)
Provisions (58.7) (50.4)
(565.0) (436.7)
Net current assets 463.2 549.1
Non-current liabilities
Borrowings 14 (3,131.4) (3,051.6)
Other non-current liabilities (113.4) (113.2)
Financial liabilities at fair value through profit (51.9) (51.0)
Derivative financial instruments (66.9) (38.5)
Retirement benefit obligations (115.6) (40.9)
Deferred tax liabilities (252.7) (272.0)
Provisions (157.2) (171.0)
(3,889.1) (3,738.2)
Net assets 1,364.9 1,487.6
Shareholders' equity
Share capital 10 168.4 167.8
Share premium account 11 216.9 213.3
Capital redemption reserve 144.2 144.2
Retained earnings and other reserves 540.6 667.5
Total shareholders' equity 1,070.1 1,192.8
Perpetual capital securities 12 294.8 294.8
Total equity 1,364.9 1,487.6
The notes on pages 36 to 50 form part of this condensed half year financial information.
PENNON GROUP PLC
Consolidated statement of changes in equity
Unaudited
Share Retained Perpetual
Share premium Capital earnings capital
capital account redemption and other securities Total
(note 10) (note 11) reserve reserves (note 12) 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 period - - - 68.7 16.2 84.9
Other comprehensive loss for the period - - - (1.9) - (1.9)
Total comprehensive income for the period - - - 66.8 16.2 83.0
Transactions with equity shareholders
Dividends paid or approved - - - (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
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
Adjustment in respect of share-based
Payments - - - 2.4 - 2.4
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 1.4 - - - 1.6
Equity issuance related costs - (2.3) - - - (2.3)
5.4 94.2 - (119.4) (16.2) (36.0)
At 30 September 2015 167.8 212.8 144.2 581.5 294.8 1,401.1
Unaudited
Share Retained Perpetual
Share premium Capital earnings capital
capital account redemption and other securities Total
(note 10) (note 11) reserve reserves (note 12) equity
£m £m £m £m £m £m
At 1 April 2016 167.8 213.3 144.2 667.5 294.8 1,487.6
Profit for the period - - - 72.9 16.2 89.1
Other comprehensive loss for the period - - - (67.4) - (67.4)
Total comprehensive income for the period - - - 5.5 16.2 21.7
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
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
Adjustment in respect of share-based
Payments - - - 1.8 - 1.8
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
Sharesave Scheme 0.2 2.6 - - - 2.8
Proceeds from shares issued under the
Executive Share Option Scheme - 0.1 - - - 0.1
0.6 3.6 - (132.4) (16.2) (144.4)
At 30 September 2016 168.4 216.9 144.2 540.6 294.8 1,364.9
The notes on pages 36 to 50 form part of this condensed half year financial information.
PENNON GROUP PLC
Consolidated statement of cash flows for the half year ended 30 September 2016
Unaudited
Half yearended30 September2016 Half year ended30 September2015
Note £m £m
Cash flows from operating activities
Cash generated from operations 13 243.3 206.4
Interest paid (35.1) (41.4)
Tax paid - (9.5)
Net cash generated from operating activities 208.2 155.5
Cash flows from investing activities
Interest received 1.8 4.5
Loan repayments received from joint ventures 4.0 19.5
Acquisitions, net of cash acquired - (90.0)
Purchase of property, plant and equipment (158.2) (141.4)
Proceeds from sale of property, plant
and equipment 3.2 2.7
Net cash used in investing activities (149.2) (204.7)
Cash flows from financing activities
Proceeds from issuance of ordinary shares 4.2 99.6
Proceeds from treasury shares re-issued 10 - 2.5
Release/(deposit) of restricted funds 7.5 (14.9)
Purchase of ordinary shares by the Pennon
Employee Share Trust (2.6) (1.1)
Proceeds from new borrowing 130.0 130.0
Repayment of borrowings (23.0) (95.1)
Finance lease sale and leaseback 0.2 0.9
Finance lease principal repayments (10.9) (15.0)
Dividends paid (131.6) (37.7)
Net cash (used)/received from financing
Activities (26.2) 69.2
Net increase in cash and cash equivalents 32.8 20.0
Cash and cash equivalents at beginning of period 14 405.7 574.8
Cash and cash equivalents at end of period 14 438.5 594.8
The notes on pages 36 to 50 form part of this condensed half year financial information.
PENNON GROUP PLC
Notes to the condensed half year financial information
1.
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