REG - Pennon Group PLC - Pennon Group Half Year Results 2016/17 <Origin Href="QuoteRef">PNN.L</Origin> - Part 3
25/11/2016 07:05
- Part 3: For the preceding part double click ID:nRSY1299Qb
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 given on page 50. Pennon
Group's business is operated through two
main subsidiaries. South West Water
Limited includes the merged water
companies of South West Water and
Bournemouth Water, holding the water and
wastewater services appointments for
Devon, Cornwall and parts of Dorset and
Somerset and the water appointments for
parts of Dorset, Hampshire and Wiltshire.
Viridor Limited's business is waste,
recycling and recovery.
This condensed half year financial
information was approved by the Board of
Directors on 24 November 2016.
The financial information for the period
ended 30 September 2016 does not
constitute statutory accounts within the
meaning of section 435 of the Companies
Act 2006. The statutory accounts for 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 these
financial statements was unqualified, and
did not contain a statement under section
498 of the Companies Act 2006.
2. Basis of preparation
This condensed half year financial
information has been prepared in
accordance with the Disclosure and
Transparency Rules of the Financial
Services Authority and with IAS 34
"Interim financial reporting" as adopted
by the European Union (EU). This condensed
half year financial information should be
read in conjunction with the Pennon Group
Plc Annual Report and Accounts for the
year ended 31 March 2016, which were
prepared in accordance with International
Financial Reporting Standards (IFRSs) as
adopted by the EU.
Having made enquiries, the Directors
consider that the Company and its
subsidiary undertakings have adequate
resources to continue in business for the
foreseeable future, and that it is
therefore appropriate to adopt the going
concern basis in preparing the condensed
half year financial information.
This condensed half year financial
information has been reviewed but not
audited by the independent auditor
pursuant to the Auditing Practices Board
guidance on the "Review of Interim
Financial Information".
The preparation of the half year financial
information requires management to make
judgements, estimates and assumptions that
affect the application of accounting
policies and the reported amounts of
assets and liabilities, income and
expense. Actual results may differ from
these estimates. The significant
judgements made by management in applying
the Group's accounting policies and the
key sources of estimation uncertainty are
consistent with those that applied to the
consolidated financial statements for the
year ended 31 March 2016, with the
exception of changes in estimates that are
required in determining the half year
provision of income taxes.
3. Accounting policies
The accounting policies adopted in this
condensed half year financial information
are consistent with those applied and set
out in the Pennon Group Plc Annual Report
and Accounts for the year ended 31 March
2016 and are in accordance with all IFRSs
and interpretations of the IFRS
Interpretations Committee expected to be
applicable for the year ended 31 March
2017 in issue which have been adopted by
the EU.
New standards or interpretations which
were mandatory for the first time in the
year beginning 1 April 2016 did not have a
material impact on the net assets or
results of the Group.
The tax charge for September 2016 and
September 2015 has been derived by
applying the anticipated effective annual
rate to the first half year profit before
tax.
PENNON GROUP PLC
Notes to the condensed half year financial information (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 and the regulated water services undertaken by Bournemouth Water. The waste management business is the waste recycling and recovery services provided by Viridor Limited.
Unaudited
Half year Half year
ended ended
30 September 30 September
2016 2015
£m £m
Revenue
Water 287.9 279.3
Waste management 397.9 410.1
Other 6.1 6.1
Less intra-segment trading (6.4) (6.4)
685.5 689.1
Segment result
Operating profit before depreciation, amortisation
and non-underlying items (EBITDA)
Water 183.0 173.6
Waste management 63.3 61.0
Other (0.9) (2.9)
245.4 231.7
Operating profit before non-underlying items
Water 127.2 117.7
Waste management 27.7 20.5
Other (1.0) (2.9)
153.9 135.3
Profit before tax and non-underlying items
Water 97.0 87.0
Waste management 23.1 12.9
Other 8.0 6.9
128.1 106.8
Profit before tax
Water 96.5 87.0
Waste management 12.9 12.9
Other (7.0) 6.9
102.4 106.8
Intra-segment transactions between and to other segments are under normal commercial terms and conditions. Intra-segment revenue or interest receivable of one segment is a cost or interest payable of another.
Factors such as seasonal weather patterns can affect sales volumes, income and costs in both the water and waste management segments.
PENNON GROUP PLC
Notes to the condensed half year financial information (continued)
4. Segmental information (continued)
Geographic analysis of revenue based on location of customers
Unaudited
Half year ended 30 September2016 Half year ended30 September2015
£m £m
UK 663.5 664.2
Rest of European Union 3.9 4.5
China 14.6 12.2
Rest of World 3.5 8.2
685.5 689.1
The Group's country of domicile is the United Kingdom and is the country in which it generates the majority of its revenue. The Group's non-current assets are located in the United Kingdom.
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.
Unaudited
Half year ended 30 September2016 Half year ended30 September2015
£m £m
Operating costs
Shared services restructuring cost (a) (10.7) -
Total net operating costs (10.7) -
Remeasurement of fair value movement in derivatives (b) (15.0) -
Deferred tax change in rate (c) 20.1 -
Tax charge arising on non-underlying items (2.7) -
Net non-underlying charge (8.3) -
(a) During the period a one-off charge of £10.7m was made relating to restructuring costs associated with the Group-wide Shared Services Review. The £10.7m charge consists of a £9.5m non-cash charge to other operating expenses relating to a rationalisation of systems leading to an asset de-recognition, and a £1.1m charge to manpower costs and a £0.1m charge to other operating costs in relation to
restructuring provisions.
(b) In the period a credit of £24.4m was recognised relating to non-cash derivative fair value movements associated with derivatives that are not designated as being party to an accounting hedge relationship. In addition, a charge of £39.4m was made to recognise the movement in the fair value of another derivative arrangement relating to a change in legislation, which impacts the derivative's
future cash flows.
(c) Following the enactment during the period the rate of corporation tax reduced from 18% to 17% from April 2020, resulting in a one-off credit of £20.1m being recognised in the income statement. In addition a charge of £4.1m has been recognised in the statement of comprehensive income.
PENNON GROUP PLC
Notes to the condensed half year financial information (continued)
6. Net finance costs
Unaudited
Half year ended Half year ended
30 September 2016 30 September 2015
Finance Finance Finance Finance
cost income Total cost income Total
£m £m £m £m £m £m
Cost of servicing debt
Bank borrowings and overdrafts (24.2) - (24.2) (25.4) - (25.4)
Interest element of finance lease
rentals (16.2) - (16.2) (17.4) - (17.4)
Other finance costs (2.2) - (2.2) (2.0) - (2.0)
Interest receivable - 1.8 1.8 - 3.8 3.8
Interest receivable on shareholder
loans to joint ventures - 5.0 5.0 - 5.7 5.7
(42.6) 6.8 (35.8) (44.8) 9.5 (35.3)
Notional interest
Interest receivable on service
concession arrangements - 8.8 8.8 - 8.3 8.3
Retirement benefit obligations (0.6) - (0.6) (1.2) - (1.2)
Unwinding of discounts on
provisions (5.1) - (5.1) (5.5) - (5.5)
(5.7) 8.8 3.1 (6.7) 8.3 1.6
Net gains on derivative financial
instruments arising from the combination of non-derivative instruments - 4.1 4.1 - 4.2 4.2
Net finance costs before
non-underlying items (48.3) 19.7 (28.6) (51.5) 22.0 (29.5)
Non-underlying items (note 5)
- More to follow, for following part double click ID:nRSY1299QdRecent news on Pennon
See all newsREG - Pennon Group PLC - Total Voting Rights
AnnouncementREG - Pennon Group PLC - Director/PDMR Shareholding
AnnouncementREG - Pennon Group PLC - Confirmation of Chief Executive Officer Start Date
AnnouncementREG - Pennon Group PLC - Holding(s) in Company
AnnouncementREG - Pennon Group PLC - Total Voting Rights
Announcement