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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Pennon Group Plc | LSE:PNN | London | Ordinary Share | GB00BNNTLN49 | ORD 61 1/20P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -4.50 | -0.68% | 660.00 | 660.00 | 661.50 | 661.00 | 654.50 | 654.50 | 39,226 | 11:05:20 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Sewerage Systems | 797.2M | 100k | 0.0004 | 16,512.50 | 1.73B |
From Apr 2019 to Apr 2024
TIDMPNN
RNS Number : 9855G
Pennon Group PLC
02 June 2017
PENNON GROUP PLC
PUBLICATION OF ANNUAL REPORT AND ACCOUNTS 2017
AND NOTICE OF ANNUAL GENERAL MEETING
In compliance with Listing Rule 9.6.1 Pennon Group Plc (the "Company") announces that the following documents have been submitted to the Financial Conduct Authority electronically via the National Storage Mechanism and will shortly be available for inspection at www.morningstar.co.uk/uk/NSM
Annual Report and Accounts 2017
Notice of Annual General Meeting
Form of Proxy
The Annual Report and Accounts 2017 and Notice of Annual General Meeting may also be viewed on the Company's website at www.pennon-group.co.uk
The Company will hold its 2017 Annual General Meeting at Sandy Park Conference Centre, Sandy Park Way, Exeter, Devon, EX2 7NN on Thursday 6 July 2017 at 11.00am.
The following information in the Appendix to this announcement is as set out in the Company's Annual Report and Accounts 2017. It should be read in conjunction with the Company's Full Year Results announcement released on 24 May 2017 which included a set of consolidated financial statements, a fair review of the development and performance of the business and the position of the Company and its main trading subsidiary companies. Together these documents constitute the information required by Disclosure and Transparency Rule 6.3.5.
Helen Barrett-Hague
Group General Counsel & Company Secretary
2 June 2017
APPIX
PRINCIPAL RISKS AND UNCERTAINTIES
Hot Features
Premium
Strategic impact - long-term
priorities affected
-----------------------------------------------------------------------------------
1 2 3
Leadership Leadership Driving sustainable
in UK in growth
water cost
and waste base
efficiency
------------------------- -------------- ----------------------------------------
Risk level
Green Amber Red
Low Medium High Increasing Stable Decreasing
----------------------- -------------- ------- ----------- ------- -----------
The low, medium Current assessment
and high risk of direction of
level is our estimate travel of risk
of the net risk level.
to the Group after
mitigation. It
is important to
note that risk
is difficult to
estimate with
accuracy and therefore
may be more or
less than indicated.
Law, regulation and finance
Principal Strategic impact Mitigation Net Direction Risk appetite
risks risk
------------------ ------------------------ ----------------------- ------ ---------- -------------------
Compliance Long-term priorities Robust regulatory Green High standards
with law, affected: framework ensures of compliance
regulation 1 2 compliance are sought
or decisions Non-compliance with Ofwat, with no
by Government could lead Environment appetite
and regulators, to financial Agency and for legal
including penalties and other requirements. and regulatory
water industry other additional Full engagement breaches.
reform costs which in consultations As regulatory
could undermine on reform of reform
our efforts policy and is progressing,
to maximise legislation, we aim
cost base efficiency. helps influence to minimise
Damage to reputation change through the impact
could affect effective stakeholder by targeting
shareholder relationships. changes
value. Clear and accessible which are
Regulatory guidance for NPV neutral
reform could employees is over the
lead to inefficiencies in place and longer
and have a training programmes term, to
consequential have been rolled protect
affect on customer out and are shareholder
affordability. ongoing. value and
The June 2017 Good progress customer
General Election has been made affordability.
could lead in preparing
to a changed for regulatory
regulatory reform and
environment. we entered
the non-household
retail market
on1 April 2017.
We are fully
engaged in
the programme
for the next
regulatory
price review.
External reviews
support the
assurance provided
by the water
business to
its regulators.
------------------ ------------------------ ----------------------- ------ ---------- -------------------
Maintaining Long-term priorities Clear treasury Green Ensure
sufficient affected: and funding funding
finance 1 3 policies and requirements
and funding Failure to an effective are fully
to meet maintain funding Group Treasury met by
ongoing requirements team. maintaining
commitments could lead Funding in prudent
to additional place at effective headroom.
finance costs average interest
and put our rates below
growth agenda many in its
at risk. sector, with
prefunding
and headroom,
including revolving
credit facilities,
to meet future
funding requirements.
------------------ ------------------------ ----------------------- ------ ---------- -------------------
Non-compliance Long-term priorities Risk is reduced Amber High standards
or occurrence affected: through health of compliance
of avoidable 1 2 3 and safety are sought
health and Breach of health compliance with no
safety incident and safety systems, policies appetite
laws and regulations and procedures, for compliance
could lead which are currently breaches
to financial being reviewed within
penalties, and enhanced, the Group
significant supported by and third
legal costs, a programme party operations.
damage to reputation of capital
and loss of investment.
shareholder
value.
------------------ ------------------------ ----------------------- ------ ---------- -------------------
Uncertainty Long-term priorities Professionally Green Full compliance
arising affected: qualified and with HMRC
from open 2 experienced requirements.
tax computations Censure for in-house tax
where liabilities non-compliance team, supported
remain to with HMRC requirements by external
be agreed could lead specialists.
to financial Significant
penalties, progress made
significant during 2016/17
legal costs, to agree outstanding
damage to reputation tax items with
and loss of HMRC.
shareholder
value.
------------------ ------------------------ ----------------------- ------ ---------- -------------------
Increase Long-term priorities Use of professional Green Expectation
in defined affected: advisers to that pension
benefit 2 manage the benefits
pension The Group could pension scheme's can be
scheme deficit be called upon investment paid in
to increase strategy to full without
funding to ensure the increased
reduce the scheme can costs to
deficit, impacting pay its obligations the Company.
our cost base. as they fall
due.
Risk increased
post-Brexit
vote due to
market uncertainties.
The situation
has since stabilised,
as evidenced
by the outcome
of the recent
triennial evaluation,
which demonstrates
the recovery
plan from 2013
is still on
track.
------------------ ------------------------ ----------------------- ------ ---------- -------------------
Market and economic conditions
Principal Strategic Mitigation Net Direction Risk appetite
risks impact risk
-------------- --------------- ------------------------------------------------------------ ------ ---------- ----------------
Non-recovery Long-term Water business Amber Minimise
of customer priorities debt collection non-recoverable
debt affected: strategies debt. We
1 2 kept under recognise
Potential review with customer
impact new initiatives affordability
on customer regularly implemented: challenges
debt * Targeting previous occupier debt after customer moves and that
collection, given the
particularly inability
with regard * Specific case management and use of court claims and to disconnect
to vulnerable domestic
customers and customers,
affordability. * Use of charging orders. some risk
of
uncollectable
Affordability debt remains.
tariffs (e.g.
Restart, WaterCare,
FreshStart)
help to reduce
bad debt exposure
for customers
struggling
to pay.
Viridor's debt
collection
risk is lower
due to the
high proportion
of public sector
accounts.
-------------- --------------- ------------------------------------------------------------ ------ ---------- ----------------
Macro-economic Long-term Viridor is Amber Taking
risks arising priorities well positioned well-judged
from the affected: across the risks and
global and 3 waste hierarchy, having
UK economic The economic with long-term response
downturn climate and contracts supporting plans in
commodity falling the ERF segment. place to
and power commodity The recycling mitigate
prices and energy self help measures external
prices have focus on performance, macro-economic
a direct in mitigating risk factors
impact the impact down to
on the of global economic an acceptable
revenues conditions level.
generated by on commodity
our recycling prices.
business. Energy risk
management
at a Group
level acts
as a natural
hedge between
South West
Water and Viridor,
offsetting
any drop in
power prices.
Existing investments
that qualified
for Renewable
Obligation
Certificates
are protected
by the 'grandfathering'
principle.
-------------- --------------- ------------------------------------------------------------ ------ ---------- ----------------
Operating performance
Principal Strategic impact Mitigation Net Direction Risk appetite
risks risk
---------------- ------------------------- ------------------------ ------ ---------- -----------------
Poor operating Long-term priorities Contingency Green Reduce
performance affected: plans, emergency both the
due to extreme 1 resources and likelihood
weather Failure of investment and impact
or climate our assets through a planned through
change to cope with capital programme long-term
extreme weather mitigates the planning
conditions risks of extreme and ensuring
may lead to weather incidents. sufficient
an inability We prepare measures
to meet our a Water Resources are in
customers' Management place to
needs, environmental Plan every mitigate
damage, additional five years risk.
costs and loss and drought
of reputation. plans every
three years,
which are both
reviewed annually
for a range
of climate
change and
demand scenarios,
with schemes
promoted to
maintain water
resources (e.g.
pumped storage
for reservoirs),
conservation
and customer
water efficiency
measures.
While no water
restrictions
are envisaged,
the risk is
rising due
to the recent
prolonged period
of dry weather.
Viridor has
in place a
regional adverse
weather management
strategy, aimed
at reducing
disruption
to site operations
and transport
logistics.
---------------- ------------------------- ------------------------ ------ ---------- -----------------
Poor customer Long-term priorities Targeted improvements Amber Good customer
service/ affected: made to improve service
increased 1 3 customer service is at the
competition Poor customer including South heart of
leading service has West Water's everything
to loss a direct impact relative industry we do.
of customer on South West standing during Continually
base Water's delivery the K6 period. seek to
of the PR14 Viridor's strategy increase
business plan to diversify customer
and Viridor's into energy satisfaction.
ability to recovery has Minimise
retain and offset the the impact
grow market decline in of market
share. landfill and reform
The opening current challenges by defending
up of the non-household in recycling. the existing
retail market Viridor is customer
to competition exploring alternative base whilst
means that uses for its developing
we must ensure landfill assets. further
we understand markets.
and meet the
needs of our
business customers
if we are to
deliver growth
in this area.
---------------- ------------------------- ------------------------ ------ ---------- -----------------
Business Long-term priorities Detailed contingency Amber Effective
interruption affected: plans and incident business
or significant 1 management continuity
operational Operational procedures. and contingency
failures/ failure in Equipment failure plans in
incidents our Water business is managed place to
could mean through sophisticated mitigate
that we are planned preventative the risk
not able to maintenance and accelerate
supply clean regimes. Any the recovery
water to our disruption from an
customers or is alleviated incident,
provide safe by good liaison with residual
wastewater and communication. risk covered
services. This by insurance.
has a direct
impact on successful
delivery of
the PR14 business
plan.
Business interruption
caused by defects,
outages or
fire could
impact the
availability
and optimisation
of our ERFs
and recycling
facilities.
---------------- ------------------------- ------------------------ ------ ---------- -----------------
Difficulty Long-term priorities Succession Amber Appropriate
in recruitment, affected: plans are in skills
retention 1 2 3 place. The and experience
and development Ensuring we recent Group in place,
of appropriate have a workforce restructure, with good
skills, of skilled Viridor transformation succession
which are and motivated and integration plans to
required individuals of Bournemouth mitigate
to deliver is key to delivery Water have impact
the Group's of all our strengthened on strategic
strategy strategic priorities. the executive plan.
We need the team, but in
right people turn has the
in place to potential to
share best impact morale
practice, deliver across the
synergies and Group.
move the Group With reliance
forward in on EU nationals,
the new 'shared uncertainties
services' structure. across the
We need a team Group following
with the necessary the Brexit
commercial vote mean the
acumen to help current assessment
our businesses of the direction
grow and prosper. of travel of
the risk is
increasing.
---------------- ------------------------- ------------------------ ------ ---------- -----------------
Business systems and capital investment
Principal Strategic impact Mitigation Net Direction Risk appetite
risks risk
---------------- ------------------------ ---------------------- ------ ---------- ------------------
Failure Long-term priorities Skilled project Amber Pennon's
or increased affected: management investment
cost of 1 3 resource and activities
capital The success oversight boards are based
projects/ of our capital provide rigour on taking
exposure programme and to the delivery well-judged
to contract long-term contracts of major projects. risks for
failures is key to our Due diligence appropriate
ability to on suppliers, returns.
provide top technologies
class customer and acquisitions.
service, the Back-to-back
delivery of agreements
our growth and supplier
agenda and guarantees
our aspirations provide protection.
to grow market Regular reporting
share in our of performance
waste recycling on major contracts
and recovery and post project
business. appraisals.
The Greater
Manchester
Waste Disposal
Authority has
publicly stated
it is seeking
an exit from
the Greater
Manchester
Waste PFI.
Pennon/Viridor
is working
closely with
its JV partners
to secure a
mutually acceptable
outcome.
---------------- ------------------------ ---------------------- ------ ---------- ------------------
Failure Long-term priorities Major systems Amber Robust
of information affected: implementation systems
technology 1 is supported in place
systems, Failure of by a formal to support
management our systems programme governance business
and protection, due to inadequate framework, activity,
including cyber security supplemented with strong
cyber risks could lead by specialist cyber protection
to significant consultants. to minimise
business interruption. Viridor systems a growing
Corruption are in the risk.
or loss of process of
data could migrating to
result in detriment a Group shared
to our customers, service platform.
financial penalties Cyber risks
and reputational are mitigated
damage. by a strong
information
security framework,
cyber security
awareness campaigns,
plus internal
and external
testing and
formal ISO
accreditation.
Ensure all
possible measures
are in place,
aligned to
guidance issued
by the National
Cyber Security
Centre (NCSC),
commensurate
with the fast
changing cyber
risk landscape.
---------------- ------------------------ ---------------------- ------ ---------- ------------------
DIRECTORS' RESPONSIBILITIES STATEMENTS
(This statement is extracted from the governance section of the Annual Report 2017 and page numbers referred to are those in the Annual Report 2017.)
The Directors are responsible for preparing the annual report, the Directors' remuneration report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the Group and Company financial statements
in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.
Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for the year.
In preparing these financial statements the Directors are required to:
-- select suitable accounting policies and then apply them consistently -- make judgements and accounting estimates which are reasonable and prudent
-- state whether applicable IFRSs as adopted by the European Union have been followed, subject to any material departures disclosed and explained in the financial statements.
The Directors confirm that they have complied with the above requirements in preparing the financial statements.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions, and disclose with reasonable accuracy at any time the financial position of the Group and the Company; and enable them to ensure that the financial statements and the Directors' remuneration report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the International Accounting Standards (IAS) Regulation. They are also responsible for safeguarding the assets of the Group and the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Each of the Directors, whose names and functions are listed on pages 56 and 57, confirms that, to the best of his or her knowledge:
i) The financial statements, which have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Group and of the Company.
ii) The strategic report (pages 1 to 51) and the Directors' report (pages 100 to 103) include a fair review of the development and performance of the business during the year and the position of the Company and the Group at the year end, together with a description of the principal risks and uncertainties they face.
iii) Following receipt of advice from the Audit Committee, that the annual report, taken as a whole, is fair, balanced and understandable, and provides the information necessary for the shareholders to assess the Group's performance, business model and strategy.
The Directors are responsible for the maintenance and integrity of the Company's website www.pennon-group.co.uk.
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
RELATED PARTY TRANSACTIONS
(The following is Note 44 to the Financial Statements set out in the Annual Report 2017.)
During the year Group companies entered into the following transactions with joint ventures and associate related parties who are not members of the Group:
2017 2016
GBPm GBPm
============================================ ===== =====
Sales of goods and services
-------------------------------------------- ----- -----
Viridor Laing (Greater Manchester) Limited 80.1 87.3
-------------------------------------------- ----- -----
INEOS Runcorn (TPS) Limited 15.8 18.5
============================================ ===== =====
Purchase of goods and services
-------------------------------------------- ----- -----
Viridor Laing (Greater Manchester) Limited - 0.3
-------------------------------------------- ----- -----
Lakeside Energy from Waste Limited 10.4 12.1
-------------------------------------------- ----- -----
INEOS Runcorn (TPS) Limited 6.6 4.3
-------------------------------------------- ----- -----
Dividends received
-------------------------------------------- ----- -----
Lakeside Energy from Waste Holdings Limited 4.5 6.0
============================================ ===== =====
Year-end balances
2017 2016
GBPm GBPm
============================================== ===== =====
Receivables due from related parties
---------------------------------------------- ----- -----
Viridor Laing (Greater Manchester) Limited
(loan balance) 40.2 36.8
---------------------------------------------- ----- -----
Lakeside Energy from Waste Limited (loan
balance) 8.6 8.9
---------------------------------------------- ----- -----
INEOS Runcorn (TPS) Limited (loan balance) 37.8 35.5
============================================== ===== =====
86.6 81.2
============================================== ===== =====
Viridor Laing (Greater Manchester) Limited
(trading balance) 15.3 11.3
---------------------------------------------- ----- -----
Lakeside Energy from Waste Limited (trading
balance) 1.0 1.0
---------------------------------------------- ----- -----
INEOS Runcorn (TPS) Limited (trading balance) 1.3 2.7
============================================== ===== =====
17.6 15.0
============================================== ===== =====
Payables due to related parties
---------------------------------------------- ----- -----
Lakeside Energy for Waste Limited (trading
balance) 2.7 2.3
---------------------------------------------- ----- -----
INEOS Runcorn (TPS) Limited (trading balance) 1.5 1.6
============================================== ===== =====
4.2 3.9
============================================== ===== =====
The GBP86.6 million (2016 GBP81.2 million) receivable relates to loans to related parties included within receivables and due for repayment in instalments between 2017 and 2033. Interest is charged at an average of 13.0% (2016 13.0%).
Company
The following transactions with subsidiary undertakings occurred in the year:
2017 2016
GBPm GBPm
======================================== ===== =====
Sales of goods and services (management
fees) 11.2 10.5
======================================== ===== =====
Purchase of goods and services (support
services) 0.5 0.4
======================================== ===== =====
Interest receivable 39.6 38.6
======================================== ===== =====
Interest payable 0.1 0.1
======================================== ===== =====
Dividends received 247.0 140.7
======================================== ===== =====
Sales of goods and services to subsidiary undertakings are at cost. Purchases of goods and services from subsidiary undertakings are under normal commercial terms and conditions which would also be available to unrelated third parties.
Year-end balances
2017 2016
GBPm GBPm
============================================= ======= =====
Receivables due from subsidiary undertakings
--------------------------------------------- ------- -----
Loans 1,124.3 965.6
============================================= ======= =====
Trading balances 13.4 8.6
============================================= ======= =====
Interest on GBP70.0 million of the loans has been charged at a fixed rate of 4.5%, on GBP428.0 million at a fixed rate of 5.0% and on GBP28.0 million at a fixed rate of 6.0% (2016 GBP70.0 million at 4.5%, GBP373.6 million nil at 5.0%, GBP28.0 million at 6.0% and GBP0.5 million at 1.4%). Interest on GBP497.8 million of the loans is charged at 12 month LIBOR +1.0% (2016 GBP443.5 million) and on GBP0.5 million at base rate +1.0%. These loans are due for repayment in instalments over the period 2016 to 2043.
Interest on GBP100.0 million of the loans has been charged at 1 month LIBOR + 1.0% (2016 GBP50.0 million). This loan is expected to be repaid in 2017/18. During the year there were no provisions (2016 nil) in respect of loans to subsidiaries not expected to be repaid.
2017 2016
GBPm GBPm
======================================== ===== =====
Payables due to subsidiary undertakings
---------------------------------------- ----- -----
Loans 322.0 287.2
======================================== ===== =====
Trading balances 9.5 14.6
======================================== ===== =====
The loans from subsidiary undertakings are unsecured and interest-free without any terms for repayment.
2 June 2017
www.pennon-group.co.uk
End transmission
This information is provided by RNS
The company news service from the London Stock Exchange
END
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June 02, 2017 04:28 ET (08:28 GMT)
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