REG - Pennon Group PLC - Pennon Group Half Year Results 2016/17 <Origin Href="QuoteRef">PNN.L</Origin> - Part 7

PennonAnnouncement

25/11/2016 07:06

- Part 7: For the preceding part double click  ID:nRSY1299Qf 

to review the condensed consolidated set of financial statements in the half-yearly financial report for the six months ended 30 September 2016 which comprises the Consolidated income statement, the Consolidated statement of comprehensive income, the Consolidated balance sheet, the Consolidated statement of changes in equity, the Consolidated statement of cash flows and related notes. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
                                                    This report is made solely to the company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
                                                    Directors' Responsibilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
                                                    The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
                                                    As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
                                                    Our Responsibility                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
                                                    Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
                                                    Scope of Review                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
                                                    We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
                                                    express an audit opinion.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
                                                    Conclusion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
                                                    Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated set of financial statements in the half-yearly financial report for the six months ended 30 September 2016 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
                                                    Ernst & Young LLPReading24 November 2016                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
 
 
 1  Return on Regulated Equity (RORE) 
 
 2  Energy Recovery Facility (ERF) 
 
 3  Before non-underlying items 
 
 4  Statutory EBITDA plus share of Joint Venture EBITDA and IFRIC 12 interest receivable 
 
 5  Before deferred tax and adjusted proportionately to reflect the half year impact of the annual hybrid periodic return.
Basic earnings per share (statutory basis) 17.7p 
 
 6  The RPI rate used is 2.0% as of September 2016 
 
 7 £3.8m net cumulative reward reflecting £5.7m net reward which will be recognised at the end of the regulatory period and
£1.9m net penalty which can be reflected during the 
 
regulatory period 
 
 8  Excluding Avonmouth 
 
 9  Safety, Health, Environment and Quality 
 
 10 Subject to competition clearance 
 
 11  Before non-underlying items 
 
 12  Statutory EBITDA plus share of Joint Venture EBITDA and IFRIC 12 interest receivable 
 
 13  Including construction spend on service concession arrangements 
 
 14  Before deferred tax and adjusted proportionately to reflect the half year impact of the annual hybrid periodic return.
Basic earnings per share (statutory basis) 17.7p 
 
 15  The RPI rate used is 2.0% as of September 2016 
 
 16  Including landfill tax and construction spend on service concession arrangements 
 
 17  Before non-underlying items 
 
 18  RORE reflects the Ofwat regulatory guidance of Base RORE plus Outperformance.  It is calculated using actual results
before non-underlying items (deflated into 2012/13 
 
prices) and compared against the Final Determination allowances sourced from Ofwat published models and based on notional
gearing and annual average RCV. 
 
 19  The RPI rate used is 2.0% as of September 2016 
 
 20  Two arrangements are accounted for in non-underlying derivative movements 
 
 21 Proprietary Nomura Index 
 
 22  Based on RCV at March 2017 assuming RPI of 2.5% 
 
 23  Including construction spend on service concession arrangements and £6.1 million of capitalised interest 
 
 24  Safety, health, environment and quality 
 
 25  RORE reflects the Ofwat regulatory guidance of Base RORE plus Outperformance. It is calculated using actual results
before non-underlying items (deflated into 2012/13 
 
prices) and compared against the Final Determination allowances sourced from Ofwat published models and based on notional
gearing and annual average RCV. Reflects cumulative performance for the 18 months to 30 September 2016. £24m Totex savings
delivered in H1 2016/17. 
 
 26  Includes integration synergies already delivered. Phasing of actual expenditure compared to the planned programme has
been reflected. Outperformance includes a reduction 
 
in the RCV run-off for the RCV element of Totex outperformance calculated based on the Final Determination PAYG. Tax
impacts reflect actual effective tax rates. 
 
 27  Interest outperformance is based on the outturn effective interest rate using the expected K6 RPI of 2.8%, aligned
with the long term RPI assumptions, notional debt gearing of 
 
62.5%, and a notional tax impact of 20%. 
 
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