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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 | |
---|---|---|---|---|---|---|---|---|---|---|
-5.50 | -0.77% | 711.00 | 706.00 | 707.50 | 713.00 | 694.00 | 694.00 | 767,923 | 16:35:19 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Sewerage Systems | 797.2M | 100k | 0.0004 | 17,675.00 | 1.85B |
TIDMPNN
RNS Number : 9837R
Pennon Group PLC
03 July 2020
PENNON GROUP PLC
PUBLICATION OF ANNUAL REPORT AND ACCOUNTS 2020
In compliance with Listing Rule 9.6.1 Pennon Group Plc (the "Company") announces that the following document has been submitted to the Financial Conduct Authority electronically via the National Storage Mechanism and will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
-- Annual Report and Accounts 2020
The Annual Report and Accounts 2020 may also be viewed on the Company's website at www.pennon-group.co.uk
The Company will hold its 2020 Annual General Meeting ("AGM") at Peninsula House, Rydon Lane, Exeter, United Kingdom, EX2 7HR at 1pm on Friday 31 July 2020. Due to the ongoing COVID-19 pandemic and the restrictions placed on physical public gatherings, it is expected that the meeting will be held as a closed meeting. Further information will be provided in the Notice of AGM, which will be issued to shareholders shortly.
The following information in the Appendix to this announcement is as set out in the Company's Annual Report and Accounts 2020. It should be read in conjunction with the Company's Full Year Results announcement released on 4 June 2020 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.
Simon Pugsley
Group General Counsel & Company Secretary
3 July 2020
APPIX
Principal risks and uncertainties
The Group's business model exposes the business to a variety of external and internal risks influenced by the potential impact of macro political, economic and environmental factors.
While the ability of the Group to influence these macro level risks is limited, they continue to be regularly monitored and the potential implications are considered as part of the ongoing risk assessment process. The Group performs a range of scenario planning and analysis exercises to understand the risk exposure of one, or a number, of these events occurring.
The Group's principal risks have been reviewed and updated to reflect the transfer of risks associated with waste activities as a result of the proposed sale of Viridor, which has received shareholder and European Commission approval. This has resulted in the removal or reassessment of a number of the Group's principal risks when compared with previous annual reports, reflecting the focus of the Group on its water and wastewater businesses.
Britain's exit from the European Union
Prior to Britain's exit from the EU, detailed contingency plans had been established and tested to mitigate against potential issues that may have occurred in the event of a no-deal scenario. Negotiations on a future trading agreement between Britain and the EU is ongoing and continues to be closely monitored.
The impact of any agreement on the Group's operations and processes will be fully evaluated as further detail is confirmed. In the event that no agreement is reached, and trade arrangements revert to World Trade Organization (WTO) rules, existing contingency plans will ensure that the Group is well prepared to mitigate against any short-term impact that is likely to arise from this scenario.
Impact of COVID-19
The Board recognise the significant impact that COVID-19 has had globally and within the UK. In response to the current situation the UK Government has designated key worker status to our frontline operational water and waste activities. In order to continue delivering the expected levels of service to our stakeholders we have reviewed our processes and ways of working and drawn on our resilience and continuity plans, while continuing to prioritise the health, safety and wellbeing of our employees and customers which remains paramount during this period. We also continue to work closely with our key stakeholders and peers including local resilience forums, Water UK, Ofwat and Defra ensuring a joined up and collaborative response. Both the Pennon Executive and Pennon Board continue to receive regular updates on the Group's response.
To date, our business has remained broadly resilient to the immediate risks that have been presented by COVID-19. It is likely, however, that there will be ongoing restrictions in place during 2020/21, which could provide continued challenges to the delivery of our key operational activities. Medium-term response planning has been undertaken to establish strategies to mitigate these risks where possible, which has considered a range of potential scenarios and been informed by actions taken by other countries impacted by the pandemic. These plans will continue to be reviewed and updated as further Government and Public Health guidance is provided.
The principal risks detailed below have been assessed applying the Group's impact and likelihood methodology, separately identifying both the underlying risk assessment prior to the onset of the COVID-19 virus and the assessment of risk reflecting the potential impact of COVID-19. The commentary for individual principal risks also provides further detail on additional mitigation steps that have been taken in response to this event.
The Directors confirm that during 2019/20 they have carried out a robust assessment of current and emerging risks facing the Group. The assessment of the Group's principal risks has considered the impact on its business model, future performance, solvency and liquidity. These principal risks have been considered in preparing the viability statement on page 68.
Strategic impact - long-term priorities affected -------------------------------------------------------------------------- 1 2 3 Leadership Cost base Sustainable in UK efficiency growth infrastructure ------------------ -------------- -------------------------------------- Risk level Green Amber Red Low Medium High Increasing Stable Decreasing
Law, regulation and finance
Net risk Principal Net risk (including risk Strategic impact Mitigation (pre-COVID-19) COVID-19) Risk appetite ====================== ======================= =============== =========== ==================== A: Changes Long-term priorities The General Election in Green Amber We recognise in Government affected: December 2019 has that Government policy 1,2 provided policy evolves. Changes in greater certainty over The Group Government Government seeks to policy may policy, with the minimise fundamentally current potential impact our UK Government risk and ability to supportive maximise deliver the of the existing opportunities Group's strategic regulatory through priorities model. We continue to regular impacting shareholder engage engagement, value. with MPs, all political communication stakeholders, customers and robust and wider stakeholders, scenario both directly and via planning. Water UK, demonstrating the value received from our operational performance and continued investment in the network infrastructure. The UK Government has also committed to the GBP50 Government contribution made to household customers of South West Water being retained for 2020/21. The speed at which action announced by the Government in response to COVID-19,
including changes to restrictions and ongoing support to the economy, presents challenges in ensuring the impact to the business is minimised. ================= ====================== ======================= =============== =========== ==================== B: Regulatory Long-term priorities Greater certainty over Green Amber We accept reform affected: reform that regulatory 1,2 of the regulatory reform occurs Reform of the framework and seek regulatory has been provided to leverage framework may through opportunities result in changes the announcement of where possible to the Group's South and minimise priorities West Water's Final the negative and the service Determination impact of we provide for the 2020-25 regulatory to our customers. regulatory reform by It may have period. Both South West targeting a significant Water and Pennon Water changes impact on our Services which are performance maintain ongoing NPV neutral which can impact dialogue over the shareholder directly with longer term value. regulators to protect and through sector-wide customer forums and engage fully affordability with consultations and and shareholder proposed value. reforms of the regulatory frameworks. A number of temporary regulatory changes have been introduced in response to COVID-19; in particular in respect of the water retail market, including wholesaler support. The speed at which these changes are being introduced has impacted on the ability to fully consult with regulators and increases the possibility that these changes are detrimental to the Group's activities. ================= ====================== ======================= =============== =========== ==================== C: Compliance Long-term priorities The Group operates Green Amber The Group with laws affected: within has the and regulations 1,2 robust and mature highest The Group is regulatory standards required to frameworks ensuring of compliance comply with compliance and has a range of with Ofwat, Environment no appetite regulated and Agency and other for legal non-regulated relevant or regulatory laws and regulations requirements. These breaches. across our frameworks businesses. are subject to regular Non-compliance review with one or by South West Water, a number of Pennon these may result Water Services and the in financial Pennon penalties, Executive. a negative Compliance with the impact on our regulatory ability to framework has become operate effectively more and reputational complex as a result of damage. a number of temporary changes introduced by our regulators in response to COVID-19. All regulatory changes are subject to detailed review and, where necessary, internal processes, systems and controls are revised to ensure compliance. The Group also maintains a comprehensive internal framework to ensure compliance with corporate laws and regulations. This is reinforced through key policies such as the Group's Code of Conduct, supply chain code of conduct and anti-slavery policy. Additionally, the Group's Speak Up whistleblowing process allows any concerns to be raised confidentially and dealt with through appropriate investigations. ================= ====================== ======================= =============== =========== ==================== D: Maintaining Long-term priorities The Group has mature Green Green The Group sufficient affected: treasury, operates finance 1,3 funding and cash flow a prudent and funding, Failure to arrangements approach within our maintain funding in place and the impact to our financing
debt covenants, requirements of political, economic strategy to meet could lead and in order ongoing to additional regulatory risks on the to ensure commitments finance costs Group's financing our funding and put our commitments requirements growth agenda and cash flow is are fully at risk. Breach regularly met. of covenants reviewed by Pennon could result Executive in the requirement and the Board. to repay certain The Group has GBP1.6 debt. billion of cash and committed facilities providing liquidity and ensuring South West Water is prefunded into the next regulatory period. During 2019/20 GBP840 million of new or renewed funding was entered into, including GBP245 million of funding through the Sustainable Funding Framework for South West Water. The strength of our position provides the Group with added resilience in the event of volatility which may arise as a result of COVID-19. ================= ====================== ======================= =============== =========== ==================== E: Non-compliance Long-term priorities The effective Red Red The Group or occurrence affected: management has no appetite of an avoidable 1,2,3 of health & safety for health health & A breach of risks & safety-related safety incident health & safety continues to be a incidents law could lead priority and has to financial for the Board and the highest penalties, Pennon standards significant Executive. of compliance legal costs During the year there within the and damage has Group, contractors, to the Group's been two fatalities partners reputation. that and other have occurred in the third parties. delivery of our activities. Both incidents are deeply tragic and full and thorough root cause analysis has been undertaken to identify additional actions required to prevent such incidents from occurring again alongside additional training and system upgrades. During the year the Group progressed the full roll-out of HomeSafe across the Group, which has contributed to a lost time injury frequency rate of 0.9, a further improvement on prior year and the Group remains on track to achieve its LTIFR target of 0.5 by 2025. In response to COVID-19 additional safety measures have been introduced to ensure that key activities across the Group can continue to be performed safely, in line with Government and public health guidance. This includes remote working, social distancing and the provision of additional hygiene and appropriate personal protective equipment (PPE). The easing of Government restrictions continues to be carefully reviewed to ensure the Group's activities can continue to be delivered safely and Government and public health guidance will continue to be stringently followed. ================= ====================== ======================= =============== =========== ==================== F: Tax compliance Long-term priorities The Group continues to Green Green The Group and contribution affected: achieve ensures 2 the Fair Tax Mark; an full compliance Non-compliance independent with HMRC may result certification scheme, requirements in financial which and will penalties, recognises not enter legal costs organisations into artificial and reputational that demonstrate they tax arrangements damage. Furthermore, are or take the perception paying the right amount an aggressive
that Pennon's of corporation tax in stance in overall tax the the interpretation contribution right place, at the of tax legislation. is inadequate right could have time. a detrimental The Group have an impact on the experienced reputation and professionally of the Group. qualified in-house tax team supported, where necessary, by external specialists. Senior accounting officers are required to review and declare annually the effectiveness of tax-related internal controls within their respective area of responsibility. Discussions continued with HMRC regarding the agreement of uncertain tax items in order to enable the finalisation of tax returns. ================= ====================== ======================= =============== =========== ==================== G: Failure Long-term priorities The Group has an Amber Amber The Group to pay all affected: experienced will ensure pension 2 in-house Pensions team that all obligations The Group could who obligations as they be called upon also engage are met fall due to increase professional in full and increased funding to advisers to manage the but seeks costs to reduce the pension to manage the Group deficit, impacting scheme's investment this without should the our cost base. strategy, unnecessary deferred ensuring the scheme can increased pension pay its obligations as costs to scheme deficit they the Group. increase fall due. The triennial 2019 valuation of the Group's principal pension scheme has recently been completed, with a recovery plan to return to full funding on a technical provisions basis by March 2022. In addition, the Group has sought to support the scheme through the acceleration of contributions of GBP17 million during the year. The Group is currently consulting on potential changes to its pension scheme arrangements including closure to future accrual of the main scheme which, if implemented, will be effective from July 2020. ================= ====================== ======================= =============== =========== ====================
Market and economic conditions
Net risk Principal Strategic Net risk (including risk impact Mitigation (pre-COVID-19) COVID-19) Risk appetite ==================== ============================= =============== =========== ================= H: Non-recovery Long-term South West Water has mature Green Red While seeking of customer priorities and embedded debt collection to minimise debt affected: strategies which has non-recoverable 1,2, continued debt, we Potential to deliver improved recognise impact on collection customer revenue as rates and decreased debt affordability a result of exposure during the year. challenges reduced customer The collection of debt within and the debt collection, Pennon Water Services has inability particularly also improved during the to disconnect with regards year. household to vulnerable The potential impact of customers customers COVID-19 could place results and affordability. affordability in a residual pressure on both our domestic risk of and business retail customers uncollectable negatively impacting on debt remaining. collection rates and debt exposure. Measures introduced by regulators within the retail water market, including the deferral of payments to wholesalers, may also impact on immediate debt levels. We have worked proactively with our customers, identifying and contacting those most in need and supporting them in the most appropriate way. This has included automatically extending social tariffs and payment plans for our domestic customers. Additional short-term flexibility, requested by our regulators, has already been incorporated within our collection processes for both our domestic and
retail water businesses. ================ ==================== ============================= =============== =========== ================= I: Macroeconomic Long-term The Group has a dedicated Amber Amber The Group risks impacting priorities procurement function seeks to inflation, affected: supported take well-judged commodity 3 by established processes and informed and power Changes such to ensure the quality of decisions prices as currency provision and price for while ensuring exchange movements, goods and services procured. plans are tariffs and There remains the potential in place volatility for increased costs arising to mitigate within the from COVID-19 due to demand the potential energy markets and exchange rate volatility impact of could increase for the limited goods macroeconomic the Group's purchased risks. cost base. from outside the UK, in particular chemicals, which increases risk in this area. Energy usage is minimised and where possible on-site renewable generation schemes are implemented to reduce the requirement to purchase electricity from the grid. Despite the current volatility experienced within the spot market, partly as a result of COVID-19, medium-term electricity markets are relatively stable and South West Water had hedged the majority of wholesale power costs for the first two years of the new regulatory period. ================ ==================== ============================= =============== =========== =================
Operating performance
Net risk Principal Net risk (including risk Strategic impact Mitigation (pre-COVID-19) COVID-19) Risk appetite ====================== ====================== =============== =========== ================== J: Poor Long-term priorities The increased Amber Amber The Group operating affected: frequency seeks to performance 1 and impact of extreme reduce both due to extreme Failure of weather the impact weather our assets exposes our assets to and likelihood or climate to cope with risk, through change extreme weather while there continues long-term conditions to planning may lead to be a reduced appetite and forecasting an inability for to ensure to meet our reduced performance that sufficient customers' arising measures needs, environmental from such incidents are in place damage, additional from to mitigate costs and reputational the regulator and our the impact damage. stakeholders. of extreme The Group seeks to weather mitigate and climate this risk proactively change on through our operations. a planned capital investment programme as well as established emergency resources and contingency planning. As part of the risk management process the Group also performs horizon scanning on the longer-term impacts of climate change on its operations. Further improvement in South West Water's resilience is a key focus within the next regulatory period. A Director of Resilience has been appointed during the year to lead this workstream. ==================== ====================== ====================== =============== =========== ================== K: Poor Long-term priorities Despite the retail Green Amber The Group service affected: water continually and/or increased 1,3 market continuing to seeks to competition Poor customer remain increase leading service has highly competitive, customer to loss a direct impact Pennon satisfaction of customers on the ability Water Services has a and maximise of Pennon Water knowledgeable customer Services to key account team to retention retain and support while taking grow market customers. The well informed share. business risk to has strategically develop targeted further high-consumption markets customers and offerings. to maintain market share. As a result of restrictions imposed in response to COVID-19 a proportion of Pennon
Water Services' customers have temporarily ceased operating. If these businesses are unable or choose not to resuming trading following the easing of restrictions this could result in overall attrition to the customer base. Regular contact and communication is being maintained with customers to support them during this period. ==================== ====================== ====================== =============== =========== ================== L: Business Long-term priorities South West Water has Amber Amber The Group Interruption affected: mature operates or significant 1,3 processes in place for a low tolerance operational Operational the for significant failures/ failure in management of their operational incidents our water business assets failure could mean which is done through and seeks that we are a to mitigate unable to supply programme of these risks clean water sophisticated where possible. to our customers planned and preventive or provide maintenance safe wastewater and effective processes. management This has a of stores. direct impact In the event of a on the successful significant delivery of incident South West the PR19 business Water plan. maintains detailed contingency plans and incident management procedures which are regularly reviewed. Existing processes have been extensively reassessed in light of the potential impact of COVID-19 and appropriate measures and actions have been introduced, working with the wider water sector and our key strategic partners, to ensure the continued delivery of our highest priority activities. This has included new working processes, adjusted shift patterns and enhanced operational cover to provide added resilience. These actions have been effective to date in ensuring the resilience of our operations, however, the potential ongoing impact of COVID-19 on our business will continue to remain a risk. ==================== ====================== ====================== =============== =========== ================== M: Difficulty Long-term priorities The Group's HR Amber Amber While turnover in the recruitment, affected: Strategy of employees retention 1,2,3 continues to be does occur and development Failure to embedded we ensure of appropriate have a workforce across the the appropriate skills required of skilled organisation skills and to deliver and motivated in order to continue experience the Group's individuals to is in place strategy will detrimentally attract, retain and with succession impact all develop plans providing of our strategic our employees. adequate priorities. Succession resilience. We need the plans remain in place right people for in the right senior and other key places to innovate, positions share best while the Group practice, deliver recruited synergies and an additional 191 new move the Group apprentices forward. during the year. There are also various engagement forums across the Group which provide opportunities for employees to regularly discuss business priorities and challenges with business leaders. The impact of these initiatives is measured through the results of the most recent Great Places to Work Best Workplace Survey which showed an improved Trust Index score of 63% and maintained last year's engagement score
of 68%. We also achieved our highest ever participation rate at 83%, demonstrating employees value this mechanism for feedback. During COVID-19 we have refocused our resources where appropriate to essential parts of our business and not furloughed any employees. To date there has been no immediate impact of COVID-19 on the ability to attract and retain necessary skills within the Group. It is recognised that there may be longer-term challenges and action is underway to minimise the impact of these. ==================== ====================== ====================== =============== =========== ================== N: Non-delivery Long-term priorities The regulatory Amber Red The Group of regulatory affected: framework is committed outcomes 1,2,3 has been in place to achieving and performance South West since all of our commitments Water's Regulatory 1 April 2015 and South performance Outcomes and West commitments performance Water has delivered over the commitments cumulative length of cover key strategic net ODI rewards of each regulatory focus areas. GBP13.3 period. Non-delivery million during Where performance against these 2015-20. in an individual could result The ODI regime in the year falls in financial 2020-25 below expectation penalties being regulatory period is we implement applied as more action plans well as reputational stretching with the and targeted damage to the overall interventions Group. reward/penalty range to ensure more performance penal. returns While South West Water to committed has levels. used the fast-track status awarded by Ofwat to commence early roll-out of key projects and initiatives, the impact of COVID-19 could present additional medium-term challenges that impact on the ability to deliver the required step change and outperform the agreed performance commitments. Alternative strategies and ways of working are being developed which seek to ensure the continued delivery of performance commitments into the future. ==================== ====================== ====================== =============== =========== ==================
Business systems and capital investment
Net risk Net risk Principal (pre (including risk Strategic impact Mitigation COVID-19) COVID-19) Risk appetite ===================== ============================ =========== ============ ================== O: Failure Long-term priorities All capital projects are Green Green The Group's or increased affected: subject to a robust investment cost of 1,3 business activities capital Inability to case process which includes are taken projects/exposure successfully challenge and risk on an informed to contract deliver on modelling basis with failures our capital of key assumptions. risks weighed programme may Projects against result in increased are delivered using skilled appropriate costs and delays project management resource returns. and detrimentally complemented by senior impacts our oversight ability to and leadership. provide top The scheduling of a number class customer of projects for the 2020-25 service and regulatory period have been achieve our advanced and agreements growth agenda. are in place with strategic partners who will support the delivery of the capital programme. The impact of COVID-19 has seen further strain placed on the financial health of key contractors and supply chain partners. There is regular engagement and communication with our supply chain and early intervention is taken where necessary. Medium-term restrictions,
which could include continued social distancing or restricted travel, could also impact on the costs and timescales in delivering these projects. ================== ===================== ============================ =========== ============ ================== P: Failure Long-term priorities The Group operates a mature Amber Amber We seek of information affected: and embedded governance to minimise technology 1 framework over the IT the risk systems, Failure of environment of informational management our information and South West Water holds technology and protection technology the ISO 27001 failure including systems, due accreditation. and cyber cyber risks to inadequate There has been a security internal processes significant threats or external increase in the number of to the lowest cyber threats employees working remotely level without could result as result of COVID-19, detrimentally in the business which impacting being unable has placed additional on business to operate strain operations. effectively on the capacity of our and the corruption systems. or loss of Additional bandwidth and data. This licences have been procured would have and IT systems have a detrimental remained impact on our resilient during this customers and period. result in financial Disaster recovery plans penalties and are in place for corporate reputational and operational technology, damage for which have been updated the Group. to reflect the impact of COVID-19. During this period there has also been an increase in the volume and sophistication of cyber threats. These risks are mitigated by a strong preventive and detective information security framework aligned to guidance issued by the National Cyber Security Centre (NCSC). South West Water also continues to progress actions to meet the requirements of the Network and Information Systems (NIS) directive with activities aligned to the priorities identified by the Drinking Water Inspectorate. ================== ===================== ============================ =========== ============ ==================
Statement of Directors' responsibilities
(This statement is extracted from the governance section of the Annual Report 2020 and page numbers referred to are those in the Annual Report 2020.)
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 (EU).
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 EU 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 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 76 and 77, confirms that, to the best of his or her knowledge:
(i) The financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, 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 69 and 121) and the Directors' report, 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, 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 position and 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 2020.)
During the year Group companies entered into the following transactions with joint ventures who are not members of the Group. The year end balances as at 31 March 2020 with joint ventures are included within assets held for sale (see note 46 for further details).
2020 2019 GBPm GBPm ============================================ ===== ===== Sales of goods and services -------------------------------------------- ----- ----- INEOS Runcorn (TPS) Limited 18.2 16.6 ============================================ ===== ===== Purchase of goods and services -------------------------------------------- ----- ----- Lakeside Energy from Waste Limited 12.8 12.4 -------------------------------------------- ----- ----- INEOS Runcorn (TPS) Limited 8.3 7.1 -------------------------------------------- ----- ----- Dividends received -------------------------------------------- ----- ----- Lakeside Energy from Waste Holdings Limited 6.0 5.5 ============================================ ===== =====
Year-end balances
2020 2019 GBPm GBPm ===================================================== ===== ===== Receivables due from related parties ----------------------------------------------------- ----- ----- Lakeside Energy from Waste Limited (loan balance) 7.1 7.7 ----------------------------------------------------- ----- ----- INEOS Runcorn (TPS) Limited (loan balance) 59.5 65.0 ===================================================== ===== ===== 66.6 72.7 ===================================================== ===== ===== Lakeside Energy from Waste Limited (trading balance) 1.0 1.0 ----------------------------------------------------- ----- ----- INEOS Runcorn (TPS) Limited (trading balance) 1.2 1.8 ===================================================== ===== ===== 2.2 2.8 ===================================================== ===== ===== Payables due to related parties ----------------------------------------------------- ----- ----- Lakeside Energy from Waste Limited (trading balance) 1.1 0.9 ----------------------------------------------------- ----- ----- INEOS Runcorn (TPS) Limited (trading balance) 1.7 3.2 ===================================================== ===== ===== 2.8 4.1 ===================================================== ===== =====
The GBP66.6 million (2019 GBP72.7 million) receivable relates to loans to related parties due for repayment in instalments between 2018 and 2033. Interest is charged at an average of 13.0% (2019 13.0%).
Company
The following transactions with subsidiary undertakings occurred in the year:
2020 2019 GBPm GBPm ================================================== ===== ===== Sales of goods and services (management fees) 17.9 19.7 ================================================== ===== ===== Purchase of goods and services (support services) 0.6 2.0 ================================================== ===== ===== Interest receivable 43.4 43.3 ================================================== ===== ===== Interest payable 0.1 0.1 ================================================== ===== ===== Dividends received 335.6 196.7 ================================================== ===== =====
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
2020 2019 GBPm GBPm ============================================= ======= ======= Receivables due from subsidiary undertakings --------------------------------------------- ------- ------- Loans 1,225.6 1,044.6 ============================================= ======= ======= Trading balances 16.0 19.9 ============================================= ======= =======
Interest on GBP591.8 million of the loans has been charged at fixed rates during the year with an average effective rate of 4% (2019 GBP499.8 million charged at 5%), and on GBP591.8 million at an average effective rate of three-month LIBOR plus 2.6% (2019 GBP499.8 million charged at 12-month LIBOR + 2.2%). Interest on GBP16.0 million (2019 GBP18.1 million) has been charged at a fixed rate of 6.0%. These loans are due for repayment in instalments over the period 2021 to 2045.
Interest on GBP13.0 million (2019 GBP13.5 million) of the loans has been charged at a fixed rate of 5.0%. Interest on GBP13.0 million (2019 GBP13.5 million) of the loans has been charged at 12-month LIBOR + 3.0%. These loans are due for repayment in instalments over a five-year period following receipt of a request to repay.
No material expected credit loss provision has been recognised in respect of loans to subsidiaries (2019 GBPnil).
2020 2019 GBPm GBPm ======================================== ===== ===== Payables due to subsidiary undertakings ---------------------------------------- ----- ----- Loans 284.4 283.9 ======================================== ===== ===== Trading balances 9.1 14.3 ======================================== ===== =====
The loans from subsidiary undertakings are unsecured and interest-free without any terms for repayment.
3 July 2020
www.pennon-group.co.uk
End transmission
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