REG - Pennon Group PLC - Pennon Group Half Year Results 2016/17 <Origin Href="QuoteRef">PNN.L</Origin> - Part 5
25/11/2016 07:06
- Part 5: For the preceding part double click ID:nRSY1299Qd
Half year ended 30 September2016 Year ended 31 March 2016
£m £m
GBP 300m 6.75% perpetual subordinated
capital securities 294.8 294.8
On 8 March 2013 the Company issued £300m perpetual capital securities. They have no fixed redemption date but the Company may, at its sole discretion, redeem all, but not part, of these securities at their principal amount on 8 March 2018 or any subsequent periodic return payment date after this.
The Company has the option to defer periodic returns on any relevant payment date, as long as a dividend on the Ordinary Shares has not been paid or declared in the previous 12 months. Deferred periodic returns shall be satisfied only on redemption or payment of dividend on Ordinary Shares, all of which only occur at the sole discretion of the Company.
As the Company paid a dividend on 1 April 2016 the periodic return of £20.3m scheduled 8 March 2017 is payable and consequently has been recognised as a liability at 30 September 2016.
PENNON GROUP PLC
Notes to the condensed half year financial information (continued)
13. Cash flow from operating activities
Reconciliation of profit to net cash inflow from operating activities:
Unaudited
Half yearended30 September2016 Half year ended30 September2015
£m £m
Cash generated from operations
Profit for the period 89.1 84.9
Adjustments for:
Share-based payments 1.8 2.4
Profit on disposal of property, plant
and equipment (2.0) (4.1)
Depreciation charge 90.1 94.6
Amortisation of intangible assets 1.4 1.8
Non-underlying restructuring costs 10.7 -
Non-underlying movement in derivatives 15.0 -
Share of post-tax profit from joint ventures (2.8) (1.0)
Finance income (19.7) (22.0)
Finance costs 48.3 51.5
Taxation charge 13.3 21.9
Changes in working capital :
Increase in inventories (2.8) (5.0)
(Increase)/ decrease in trade and other
receivables (2.3) 2.3
Increase in service concession
arrangements receivable (13.2) (13.4)
Increase in trade and other payables 27.3 0.5
Increase in retirement benefit obligations 1.0 0.9
Decrease in provisions (11.9) (8.9)
Cash generated from operations 243.3 206.4
Unaudited
Half year ended 30 September Half year ended30 September
2016 2015
Total interest paid £m £m
Interest paid in operating activities 35.1 41.4
Interest paid in investing activities 6.1 4.0
Total interest paid 41.2 45.4
PENNON GROUP PLC
Notes to the condensed half year financial information (continued)
14. Net borrowings
Unaudited
Half year ended 30 September Year ended 31 March
2016 2016
£m £m
Cash and cash deposits 657.5 632.2
Borrowings - current
Bank and other loans (24.9) -
Other current borrowings (41.1) (39.0)
Finance lease obligations (26.2) (26.0)
Total current borrowings (92.2) (65.0)
Borrowings - non-current
Bank and other loans (1,484.9) (1,502.5)
Other non-current borrowings (339.4) (234.5)
Finance lease obligations (1,307.1) (1,314.6)
Total non-current borrowings (3,131.4) (3,051.6)
Total net borrowings (2,566.1) (2,484.4)
For the purposes of the cash flow statement cash and cash equivalents comprise:
Unaudited
Half year ended 30 September Year ended 31 March
2016 2016
£m £m
Cash and cash deposits as above 657.5 632.2
Less : deposits with a maturity of three months
or more (restricted funds) (219.0) (226.5)
438.5 405.7
Restricted funds are available for access, subject to being replaced by an equivalent valued security.
PENNON GROUP PLC
Notes to the condensed half year financial information (continued)
15. Fair value disclosure for financial instruments
Fair value of financial instruments carried at amortised
cost
Financial assets and liabilities which are not carried
at an amount which approximates to their fair value are:
Unaudited
Half year ended Year ended
30 September 2016 31 March 2016
Book value Fair value Book value Fair value
£m £m £m £m
Non-current borrowings :
Bank and other loans (1,484.9) (1,694.5) (1,502.5) (1,566.2)
Other non-current
borrowings (339.4) (300.5) (234.5) (209.3)
Finance lease obligations (1,307.1) (1,188.0) (1,314.6) (1,163.0)
Total non-current
borrowings (3,131.4) (3,183.0) (3,051.6) (2,938.5)
Other non-current assets 279.7 348.4 267.8 334.9
Compared to 31 March 2016 balances the difference
between the book value and fair value of the Group's non
-current borrowings and assets relates to a decrease in
the underlying interest rates used to calculate the fair
value.
Valuation hierarchy of financial instruments carried at
fair value
The Group uses the following hierarchy for determining
the fair value of financial instruments by valuation
technique:
· quoted prices (unadjusted) in active markets for
identical assets or liabilities (level 1)
· inputs other than quoted prices included within
level 1 that are observable for the asset or liability,
either directly (that is, as prices) or indirectly (that
is, derived from prices) (level 2)
· inputs for the asset or liability that are not
based on observable market data (that is, unobservable
inputs) (level 3).
The fair value of financial instruments not traded in an
active market (level 2, for example over-the-counter
derivatives) is determined by using valuation
techniques. A variety of methods and assumptions are
used based on market conditions existing at each balance
sheet date. Quoted market prices or dealer quotes for
similar instruments are used for long-term debt. Other
techniques, such as estimated discounted cash flows, are
used to determine fair value for the remaining financial
instruments. The fair value of interest rate swaps is
calculated as the present value of the estimated future
cash flows.
PENNON GROUP PLC
Notes to the condensed half year financial information (continued)
15. Fair value disclosure for financial instruments (continued)
Valuation hierarchy of financial instruments carried at fair value (continued)
The Group's financial instruments are valued principally using level 2 measures:
Unaudited
Half year ended30 September Year ended31 March
2016 2016
£m £m
Level 2 inputs
Assets
Derivatives used for cash flow hedging 18.0 3.4
Derivatives used for fair value hedging - 1.8
Derivatives not in a hedge accounting relationship 85.7 67.0
Total assets 103.7 72.2
Liabilities
Derivatives used for cash flow hedging 53.6 46.9
Derivatives used for fair value hedging - -
Derivatives not in a hedge accounting relationship 4.6 4.8
Total liabilities 58.2 51.7
Financial instruments valued using level 3 measures are valued by the counterparty using cash flows discounted at prevailing mid-market rates. The fair value of such financial instruments is not significantly sensitive to unobservable inputs.
Level 3 inputs
Liabilities
Derivatives deemed held for trading 39.5 4.2
The fair value of level 3 inputs is determined using the Black-Scholes valuation model with reference to prevailing mid-market rates and a propriety Nomura index.
The table below shows the summary of changes in the fair value of the Group's level 3 financial instruments:
Unaudited
Half year ended30 September Year ended31 March
2016 2016
£m £m
Opening liability (4.2) (3.6)
(Losses) and gains recognised in net
finance costs (35.3) 8.4
Settlement of recognised gains - (9.0)
Closing liability (39.5) (4.2)
PENNON GROUP PLC
Notes to be condensed half year financial information (continued)
16. Retirement benefit obligations Defined benefit schemes The principal actuarial assumptions were: the rate used to discount schemes' liabilities and expected return on scheme assets of 2.35% (March 2016 3.30%) and the inflation assumption of 3.0% (March 2016 2.9%).
Unaudited
Half year ended Year ended
30 September 2016 31 March 2016
Present value of obligation Fair value of plan assets Total Present value of obligation Fair value of plan assets Total
£m £m £m £m £m £m
At 1 April (833.6) 792.7 (40.9) (752.3) 692.7 (59.6)
Arising on acquisition - - - (86.6) 88.5 1.9
Amounts recognised in the
income statement (20.8) 13.0 (7.8) (39.9) 25.5 (14.4)
Remeasurements through
other comprehensive
income (168.5) 95.4 (73.1) 17.1 (19.7) (2.6)
Contributions 13.7 (7.5) 6.2 28.1 5.7 33.8
- More to follow, for following part double click ID:nRSY1299QfRecent 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