Final Results
Pennon Group PLC
26 May 2005
PENNON GROUP PLC 26 May 2005
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2005
Pennon Group announces its unaudited results for the year ended 31 March 2005.
A presentation for City audiences will be held today, 26 May 2005, at 09:00 at
the Great Eastern Hotel, Liverpool Street, London, EC2.
FINANCIAL HIGHLIGHTS
• Operating profit before goodwill up 9.1% to £151.5m. *
• South West Water up 2.4% to £121.7m
• Viridor Waste up 31.3% to £29.8m
• Profit before tax up 10.9% to £87.4m. *
• Earnings per share (before deferred tax) up 9.4% from 57.7p to 63.1p. *
• Dividend
• Recommended final dividend per share up 5.0% to 29.2p.
• Full year dividend up 4.9% to 43.0p.
* Before net exceptional items in 2004/05 of £0.1m (income of
£5.0m less costs of £4.9m; 2003/04 - cost £6.5m).
OPERATIONAL HIGHLIGHTS
• South West Water
• Successful delivery of 2000-2005 regulatory contract.
• Strong growth in RAV 2000-2005 outstripped growth in net debt.
• Delivery under way of 2005-2010 regulatory contract.
• Viridor Waste
• Continued strong growth in profits from landfill
and power generation.
• Recent acquisitions successfully integrated and
performing ahead of expectations.
• West Sussex PFI successful first year.
Ken Harvey, Chairman, said, 'Once again I am delighted to report excellent
results for Pennon. They demonstrate further profitable growth in
the Group and affirm our strategy of focusing on our two key businesses,
South West Water and Viridor Waste. During the year South West Water continued
to improve its efficiency levels, whilst delivering substantial benefits to the
environment and improvements to quality and customer service. Viridor Waste
continues to deliver very strong performance based on both organic growth and
successful acquisitions.'
For further information on 26 May 2005, please contact :
David Dupont Group Director of Finance - Pennon )
Jo Finely Investor Relations Manager - Pennon ) 0207 251 3801
Edward Orlebar Finsbury Group )
GROUP OVERVIEW
• Group turnover up 17.6% to £554.2m.
• Group operating profit before goodwill up by 9.1% to £151.5m. *
• Group profit before tax up 10.9% to £87.4m. *
• Earnings per share before deferred tax up 9.4% to 63.1p.* Basic earnings
per share are 54.6p, up 9.6%.
• Group capital expenditure £188.4m (2003/04 - £170.0m).
• Thames Waste Management Limited acquired in April 2004 for £30.8m
(£28.6m net of cash).
• The Group's first PFI integrated waste management contract, for
West Sussex County Council, started in April 2004.
• Group net debt £1,118.8m, an increase of £44.7m since 31 March 2004.
Gearing, being net borrowing to shareholders' funds, was 119% (2004 - 119%).
Interest cover maintained at 2.4 times.
• The Board has recommended a final dividend of 29.2p, up 5.0%, subject to
shareholder approval. Together with the interim dividend of 13.8p, this will
result in a total dividend for the year of 43.0p, an increase of 4.9% on the
total dividend for 2003/04. As confirmed at the time of the Group's interim
results last December, the Board intends to continue to grow the Group
dividend in real terms, at least up to 2009/10, and to offer shareholders a
scrip dividend alternative.
* Before net exceptional items in 2004/05 of £0.1m, comprising the £5.0m
proceeds now receivable from a business disposal in 1998(2003/04 - nil)
less abortive acquisition costs of £1.5m (2003/04 - £6.5m) and £3.4m
restructuring costs in South West Water(2003/04 - nil).
SOUTH WEST WATER
South West Water turnover rose by £18.0m to £309.8m. Approved tariff increases
amounted to £21.2m. Customers switching from unmeasured to metered charging
caused a reduction of £6.3m in turnover. Other factors contributed a net total
of £3.1m, including 7,300 new customer connections and increased commercial sales
offset by an estimated £2.4m reduction in measured demand, as the summer of 2004
did not match the high temperatures of the previous year.
South West Water's operating profit rose 2.4% to £121.7m before the exceptional
restructuring charge of £3.4m. Operating costs, including depreciation,
increased by £15.2m to £188.1m. Additional costs from new capital schemes of
£5.7m, inflation of £4.4m and other cost increases of £9.2m (mainly pensions,
direct cost of sales and bad debts), were offset by £4.1m of efficiency
savings. Some six years ago, South West Water established a restructuring and
continuous improvement programme to reduce significantly overhead and operating
costs. Its successful delivery ensured that South West Water outperformed the
demanding operational and capital efficiency targets imposed by Ofwat for the
K3 regulatory period (2000-2005). South West Water has announced plans for
further restructuring to contribute towards the additional efficiencies required
over the K4 regulatory period (2005-2010), which includes a £13m p.a. reduction
in base operating costs by 2010. An exceptional charge of £3.4m has been made
in respect of the associated restructuring costs.
During the K3 regulatory period the company grew its Regulatory Asset Value
(RAV) ahead of net debt. RAV is predicted to grow by 33% over K4 period to
£2.6bn by March 2010 - the highest forecast percentage increase of any quoted
UK water company.
Capital expenditure increased by 1.9% to £141.9m. £66.1m was invested in water
supply improvements including water mains renovation, water treatment works
enhancement and leakage control. Ofwat's latest report on leakage notes that
South West Water continues to be one of the leading companies in managing water
leakage and is delivering results in line with Ofwat's leakage target. Almost
570km of water mains were laid, replaced or refurbished during the year, a 55%
increase on 2003/04. Drinking water quality and river water quality are at an
all time high and the region features the highest proportion of high quality
rivers in England.
Waste water investment expenditure totalled £75.8m. Commissioning of the Ilsham
Valley pumping station in Torbay commenced in April 2004 and its operation
signalled the completion of the final major project in the company's 15 year
original 'Clean Sweep' coastal sewage treatment programme. 'Clean Sweep' has
transformed the coastal environment around the South West. 98% of bathing
waters conform with EU mandatory standards and 81% of the region's bathing
waters now meet the tougher EU guideline standards. This compares with only 47%
of the region's bathing waters achieving the guideline standard five years ago.
A further measure of the company's success has been its progress within the
2003/04 Ofwat 'Overall Performance Assessment' which has seen South West Water
achieve one of the largest performance improvements of any of the water
companies during the year as capital expenditure, previously constrained whilst
the coastal clean-up was delivered, has now been able to address other areas. A
further significant performance improvement has been achieved in 2004/05.
VIRIDOR WASTE
Viridor Waste has continued to trade strongly, building on the growth achieved
over the past several years. Turnover rose by 35.6% (£65.2m)to £248.3m in
2004/05. Acquisitions accounted for £40.2m of the increase and underlying
business £25.0m. Landfill tax within turnover increased by £8.2m.
Viridor Waste's operating profit before goodwill amortisation rose by 31.3% to
£29.8m (£26.3m after goodwill amortisation), compared to £22.7m (£20.2m after
goodwill amortisation) in 2003/04. The increase was driven by good performance
from landfill, power generation and collection, and the positive impact of the
West Sussex integrated waste contract and the Thames Waste Management (Thames
Waste) acquisition. Since 2000/01 operating profit before goodwill has grown at
a compound rate of 22.8% p.a. of which around 12% has been organic, with the
rest being achieved through acquisitions. Earnings before interest, tax,
depreciation and amortisation (EBITDA) grew from £43.2m to £56.0m.Capital
expenditure for the year was £45.8m (2003/04 - £30.5m).
In April 2004 Viridor Waste acquired Thames Waste for £30.8m, including cash
balances of £2.2m. The company comprised one operational landfill of four
million cubic metres of consented void space strategically located within the
M25 motorway near Sutton, Surrey; five megawatts (MW) of landfill gas power
generation capacity; and four liquid treatment facilities together with an
associated tanker fleet. The acquisition also included a contract to handle the
disposal of Thames Water's sewage sludge. Since the acquisition of Thames
Waste, Viridor Waste has won a similar contract with Southern Water. The Thames
Waste acquisition has now been fully integrated and was earnings enhancing
after integration costs and goodwill amortisation, one year ahead of forecast.
The previous year's acquisition, Churngold Holdings Limited, has been fully
integrated and was earnings enhancing after goodwill amortisation, also one
year ahead of forecast.
Total landfill disposal volumes increased by 10% to 4.0m tonnes, mainly due to
the Thames Waste acquisition. Gate fees rose by 10%. In December 2004 Devon
County Council resolved to grant Viridor Waste planning permission for a further
3.0m cubic metres of landfill void at Heathfield near Kingsteignton, Devon,
providing an estimated further ten years' disposal capacity at the site. The
permission also allows for the development of a new Materials Reclamation
Facility (MRF) for up to 90,000 tonnes per annum of dry recyclables from the
household waste stream, a MRF to process up to 75,000 tonnes per annum of non-
hazardous commercial and industrial wastes ('skip waste'), including a small
vehicle waste reception and transfer facility, and an enclosed in-vessel
composting plant. Viridor Waste's consented landfill (including Thames Waste)
has decreased from around 83m cubic metres to 80m cubic metres reflecting
planning gains less usage during the year. The company is currently filling its
landfill void at a rate of circa 5.0m cubic metres per annum.
Viridor Waste's total power generation capacity has increased by a further 16%
in the year, most of which has been introduced under Renewable Obligation
Certificates (ROCs) and underpins the strong profit growth achieved. This brings
Viridor Waste's total capacity (excluding a small amount handled by third party
contractors) to 52MW compared to 28MW in March 2002 before the
introduction of the ROCs scheme. A further 3MW is under development.
56% of Viridor Waste's output benefits from ROCs.
As part of the Government's developing waste strategy, local authority
integrated contracts will assume greater importance for the waste industry. The
company started operating its first waste management PFI contract on 1 April
2004. Under the 25 year £450m contract Viridor Waste has taken over the running
of West Sussex's 11 civic amenity sites and recycling centres and the
development of new facilities, including a new materials reclamation facility.
The contract fits well with Viridor's existing activities in this area.
Viridor Waste is also developing a range of new technologies with Government
financial assistance (DEFRA/London Recycling Fund). It has opened in-vessel
composting plants at Beddington (Surrey) and Heathfield (Devon) and two further
plants are under construction at Lackford (Suffolk) and at Broadpath (Devon).
Viridor Waste has also gained planning permission and financial assistance from
the London Recycling Fund for a mechanical/biological treatment plant (MBT) at
its Beddington landfill. Technologies such as these are likely to become
increasingly important as councils strive to meet their European Landfill
Directive targets requiring the diversion of an increasing proportion of
municipal waste from landfill.
EXCEPTIONAL ITEMS
There are 3 exceptional items:
•Costs of £1.5m (2003/04 £6.5m) relating to the abortive acquisition of the
UK landfill and landfill gas operations of Shanks Group Plc where discussions
were terminated on 25 May 2004.
•Restructuring costs in South West Water of £3.4m (2003/04 - nil)
•Profit of £5.0m (2003/04 nil) relating to the balance of proceeds due from
the 1998 disposal of the Group's interest in Societa Italo Britannica
dell'Acqua Srl (SIBA).
PENSIONS
The Group pension schemes showed an indicative net deficit at 31 March 2005 of
c £56m, a similar level to that reported under FRS 17 at 31 March 2004. A sound
investment performance has been offset by an increase in liabilities, reflecting
the recent actuarial valuation.
The Company operates a defined benefit pension scheme for existing staff of, and
new entrants to, Pennon and South West Water and for certain employees in
Viridor Waste. Pennon has a defined contribution scheme for new entrants to
Viridor Waste and employees from certain acquired waste companies.
The triennial actuarial valuation of the Group defined benefit schemes at
1 April 2004 has identified a scheme deficit which resulted in additional annual
charges of c £5.5m under the SSAP 24 accounting policy.
TAXATION
The mainstream corporation tax charge for the year was £7.9m (£7.5m in 2003/04).
The deferred tax charge for the year to 31 March 2005 was £10.8m, up from £3.3m
in 2003/04.
FINANCING INITIATIVES
The total interest charge increased from £57.2m to £60.7m. The average interest
rate on net debt remained at 5.5%, despite the 0.9% increase in average base
rates over the prior year, reflecting the success of the Group's hedging policy.
The Group funding strategy utilises a mix of fixed and floating rate borrowings.
To reduce the risk of adverse interest rate movements, South West Water has
continued its swap arrangements to fix the interest rate on some 75% of its debt
for the period up to March 2006 and on around 50% of its debt out to March 2010.
INTERNATIONAL FINANCIAL REPORTING STANDARDS
Preparation for the adoption of IFRS in 2005/06 is under way. The principal
differences between current UK and International Accounting Standards likely to
impact on the Group are expected to be in relation to deferred tax, goodwill,
fixed asset accounting and pensions. The overall net impact will be to reduce
net assets and increase potentially the volatility of earnings. Underlying cash
flow is not affected.
STRATEGY AND PROSPECTS
The Board's priority continues to be the creation of shareholder value through
its strategic focus on water, sewerage and waste management. The preliminary
results announced above are testament to the Board's strategy of focusing on
these key business areas and underpin its resolve to continue its existing
progressive policy of growing the Group dividend in real terms, at least up to
2009/10.
The Board has confidence that South West Water will successfully deliver the
new K4 regulatory contract and significantly grow its Regulatory Asset Value up
to 2010. Viridor Waste's successful strategy of creating long-term sustainable
profit growth, organically and through acquisitions, is expected to continue
through capitalising on its landfill asset base, exploiting its landfill gas
power generation potential and pursuing profitable opportunities in line with
the Government's developing waste strategy.
Ken Harvey
Chairman
26 May 2005
PENNON GROUP PLC
GROUP PROFIT AND LOSS ACCOUNT
for the year ended 31 March 2005
Before
exceptional Before
items Exceptional Total exceptional Exceptional
(unaudited) items (unaudited) item item Total
2005 2005 2005 2004 2004 2004
Turnover Note £m £m £m £m £m £m
Continuing operations 514.0 - 514.0 471.3 - 471.3
Acquisitions 40.2 - 40.2 - - -
---------------------------------------------------------------------------
Total turnover 554.2 - 554.2 471.3 - 471.3
Operating costs 3 (406.2) (4.9) (411.1) (335.0) (6.5) (341.5)
----------------------------------------------------------------------------
Group operating profit
Continuing operations 144.5 (4.9) 139.6 136.3 (6.5) 129.8
Acquisitions 3.5 - 3.5 - - -
---------------------------------------------------------------------------
Total Group operating
profit 148.0 (4.9) 143.1 136.3 (6.5) 129.8
Share of operating
profit/(loss) in joint
venture 0.1 - 0.1 (0.3) - (0.3)
---------------------------------------------------------------------------
Total operating profit 148.1 (4.9) 143.2 136.0 (6.5) 129.5
Business disposal 3 - 5.0 5.0 - - -
Net interest payable (60.7) - (60.7) (57.2) - (57.2)
---------------------------------------------------------------------------
Profit on ordinary
activities before
taxation 87.4 0.1 87.5 78.8 (6.5) 72.3
-------------------- -----------------------------------
Tax on profit on 4
ordinary activities (18.7) (10.8)
------- -------
Profit on ordinary
activities after
taxation 68.8 61.5
Dividends 5 (55.1) (51.1)
------- -------
Retained surplus
transferred to
reserves 13.7 10.4
======= =======
Earnings per share 6
Before exceptional items
and deferred tax
Adjusted basic 63.1p 57.7p
Adjusted diluted 62.6p 57.3p
After exceptional items
and deferred tax
Basic 54.6p 49.8p
Diluted 54.2p 49.5p
Dividend per share 5 43.0p 41.0p
All operating activities are continuing operations.
There were no recognised gains or losses, other than the profit for the year, in
2005 and 2004.
PENNON GROUP PLC
SUMMARISED GROUP BALANCE SHEET
for the year ended 31 March 2005
2005 2004*
(unaudited)
Note £m £m
----------------------------------
Fixed assets
Intangible assets 63.2 47.6
Tangible assets 2,248.1 2,141.1
Investments 2.6 2.6
----------------------------------
2,313.9 2,191.3
Current assets
Stocks 4.7 4.5
Debtors 100.9 97.3
Investments and cash 302.8 267.7
----------------------------------
408.4 369.5
Creditors:amounts falling due within one year (270.9) (293.6)
----------------------------------
Net current assets 137.5 75.9
----------------------------------
Total assets less current liabilities 2,451.4 2,267.2
Creditors:amounts falling due after more than one year (1,366.8) (1,234.9)
Provisions for liabilities and charges (108.7) (94.0)
Deferred income (37.8) (38.7)
---------------------------------
Net assets 938.1 899.6
=================================
Capital and reserves
Called-up share capital 142.0 137.9
Share premium account 153.7 154.2
Profit and loss account 642.4 607.5
---------------------------------
Shareholders'funds 7 938.1 899.6
=================================
PENNON GROUP PLC
GROUP CASH FLOW STATEMENT
for the year ended 31 March 2005
2005 2004*
(unaudited)
Note £m £m
----------------------------------
Net cash inflow from operating activities 8 255.3 215.1
Returns on investments and servicing of finance (59.1) (41.3)
Taxation (0.4) (0.1)
Capital expenditure and financial investment (174.7) (178.6)
Acquisitions (28.6) (20.0)
Equity dividends paid (28.3) (47.0)
Net cash outflow before use of liquid resources
and financing (35.8) (71.9)
Management of liquid resources (8.1) (62.1)
Financing 72.5 155.7
----------------------------------
Increase in cash in year 28.6 21.7
==================================
* Restated (note 2).
PENNON GROUP PLC
SEGMENTAL ANALYSIS BY CLASS OF BUSINESS
for the year ended 31 March 2005
2005 2004
(unaudited)
£m £m
----------------------------------
Turnover
Continuing operations
Water and sewerage 309.8 291.8
Waste management 248.3 183.1
Other 6.9 7.3
Less intra-group trading (10.8) (10.9)
--------------------------------
Group total 554.2 471.3
================================
Group operating profit
Continuing operations before exceptional items
and goodwill amortisation
Water and sewerage 121.7 118.9
Waste management 29.8 22.7
Other - (2.8)
-------------------------------
Total continuing operations before exceptional items
and goodwill amortisation 151.5 138.8
-------------------------------
Group operating profit
Continuing operations after exceptional items
and goodwill amortisation
Water and sewerage * 118.3 118.9
Waste management 26.3 20.2
Other * (1.5) (9.3)
-------------------------------
Group total 143.1 129.8
===============================
Profit on ordinary activities before taxation
Continuing operations after net exceptional items
and goodwill amortisation
Water and sewerage * 67.1 70.1
Waste management 18.0 14.7
Other + 2.4 (12.5)
-------------------------------
Group totals 87.5 72.3
===============================
* includes the exceptional items (note 3).
+ includes the exceptional items (note 3) and interest arising on parent company
financing of acquisitions.
Continuing operations include acquisitions.
PENNON GROUP PLC
NOTES
1 The financial information for the years ended 31 March 2005 and 31 March
2004 does not constitute full financial statements within the meaning of section
240 of the Companies Act 1985. The full financial statements for the year ended 31
March 2004 have been delivered to the Registrar of Companies. The independent
auditors' report on those financial statements was unqualified and did not
contain a statement under section 237 (2) or (3) of the Companies Act 1985.
2 The Group's accounting policy on the treatment of shares acquired under
the Employee Share Ownership Plan has been amended following adoption of
Urgent Issues Task Force Abstract 17 (revised 2003) 'Employee Share Schemes'
(UITF17 revised 2003) and Urgent Issues Task Force Abstract 38 'Accounting
for ESOP Trusts' (UITF38).
The policy adopted by the Group for the treatment of shares acquired
under the Employee Share Ownership Plan recognises in the profit and loss
account the cost of an award on a straight line basis over the period to
which the performance criteria relate and is based on an assessment of
the expectations of the extent that those performance criteria will be met.
To meet the award, shares are held in a discretionary trust. Until such
time as the shares vest unconditionally with the employees, the
consideration paid for the shares is deducted in arriving at shareholders'
funds. Previously, the shares acquired by the trust were recognised on the
balance sheet at cost of acquisition less impairment, being the charge to
profits over the period to which the employees' performance related. Any
gain or loss on transactions in own shares will be reported through the
statement of movements in shareholders' funds.
As a result of these changes in accounting policy the comparative figures
have been restated as follows :
Group balance sheet :
As at 31 March 2004
Fixed asset Profit and loss
investments reserve
£m £m
Previously reported 3.6 608.5
Application of UITF17 (revised 2003) 3.7 3.7
Application of UITF38 (4.7) (4.7)
--------------------------------------
Restated now reported 2.6 607.5
======================================
The restatement of the profit and loss reserve at 31 March 2004 includes
a prior period adjustment of £1.3m at 31 March 2003. There has been no
change to the amount recognised as the cost of the awards in the profit
and loss account for the year.
Group cash flow statement :
Year ended 31 March 2004
Capital
expenditure and
financial
investment Financing
£m £m
Previously reported (179.2) 156.3
Application of UITF38 0.6 (0.6)
--------------------------------
Restated now reported (178.6) 155.7
================================
3 The exceptional items are :
2005 2004
£m £m
Abortive acquisition costs (1.5) (6.5)
Water and sewerage business
restructuring costs (3.4) -
Business disposal proceeds 5.0 -
-------------------------------
Net exceptional income/(costs) 0.1 (6.5)
===============================
The exceptional cost of £1.5m (2004 £6.5m) relates to the abortive acquisition
of the UK landfill and landfill gas operations of Shanks Group Plc where
discussions were terminated on 25 May 2004.
The business disposal profit of £5.0m (2004 nil) relates to the balance
of proceeds due from the 1998 arrangement to dispose of the
Group's interest in Societa Italo Britannica dell'Acqua Srl (SIBA).
4 Tax on profit on ordinary activities for the year comprises :
2005 2004
(unaudited)
£m £m
United Kingdom corporation tax at 30% 7.9 7.5
Deferred taxation 10.8 3.3
-------------------------------
18.7 10.8
===============================
5 Dividends
2005 2004
(unaudited)
£m £m
Interim dividend of 13.8p
(2004 13.2p) per share 17.7 16.4
Proposed final dividend 29.2p
(2004 27.8p) per share 37.4 34.7
-------------------------------
55.1 51.1
===============================
If approved at the Annual General Meeting on 28 July 2005 the final
dividend of 29.2p per share will be paid on 5 October 2005 to
shareholders on the register at 5 August 2005.
6 Basic and diluted earnings per share
The calculation of earnings per share is based on the profit on
ordinary activities after taxation divided by the weighted average
number of ordinary shares in issue during the year of 126.0 million
(2004 123.5 million).
All share options with an exercise price lower than the average market
price of the Company's shares during the year have been included in the
calculation of diluted earnings per share. The weighted average number
of shares in issue during the year, taking account of the dilutive
effect of share options, was 126.9 million (2004 124.3 million).
Adjusted basic and diluted earnings per share
Adjusted earnings per share have been calculated to exclude the impact
of the exceptional items and deferred tax on the results, as
these items can have a distorting effect on earnings from year to year
and therefore warrant separate consideration. Adjusted
earnings have been calculated as follows :
2005 2004
Profit on Profit on
ordinary Earnings per share ordinary Earnings per share
activities Basic Diluted activities Basic Diluted
(un-
audited)
£m p p £m p p
Profit on ordinary activities
after taxation 68.8 54.6 54.2 61.5 49.8 49.5
Net exceptional items (0.1) (0.1) (0.1) 6.5 5.3 5.2
Deferred tax 10.8 8.6 8.5 3.3 2.6 2.6
Adjusted earnings before
------------------------------------------------------------------------
exceptional items and deferred
tax 79.5 63.1 62.6 71.3 57.7 57.3
========================================================================
The number of ordinary shares in issue at 31 March 2005 was 127.9 million
(2004 124.3 million).
7 Statement of movements in shareholders' funds
2005 2004*
(unaudited)
£m £m
Profit on ordinary activities after taxation 68.8 61.5
Dividends (55.1) (51.1)
-------------- -------------
13.7 10.4
Adjustment for shares issued under the
scrip dividend alternative 22.8 1.3
Shares issued for cash consideration 0.8 2.1
Purchase of own shares - (0.6)
Adjustment for shares issued in respect
of the Annual Incentive Bonus Plan
- Deferred shares 0.5 -
Adjustment in respect of employee
shares schemes 0.9 0.9
Goodwill arising on previously acquired
business (0.2) (3.3)
--------------- ------------
Shareholders' funds (equity interest) :
Addition for year 38.5 10.8
At 1 April previously reported 900.6 890.1
Prior year adjustment (note 2) (1.0) (1.3)
-------------- ------------
At 1 April (restated) 899.6 888.8
-------------- ------------
At 31 March 938.1 899.6
==============================
* Restated (note 2).
8 Reconciliation of Group operating profit to net cash inflow from
operating activities:
2005 2004*
(unaudited)
£m £m
Group operating profit 143.1 129.8
Depreciation charge 95.1 86.1
Amortisation of intangible fixed assets 3.5 2.5
Deferred income released to profits (1.3) (1.2)
Decrease in provisions for liabilities
and charges (2.4) (2.0)
Increase in stocks (0.2) (0.5)
Decrease/(increase) in debtors (amounts
falling due within and over one year) 7.9 (4.2)
Increase in creditors (amounts
falling due within and over one year) 10.1 5.4
Profit on disposal of tangible fixed assets (1.4) (1.7)
Other non-cash changes 0.9 0.9
----------- -----------
Net cash inflow from operating activities 255.3 215.1
=========== ===========
* Restated (note 2).
9 Acquisitions
On 5 April 2004 the entire issued share capital of Thames Waste
Management Limited, (now renamed Viridor (Thames) Limited), was
purchased by Viridor Waste Management Limited for a cash consideration
of £30.8 million, including costs of £0.3 million. Net cash
balances acquired were £2.2 million. The acquisition was accounted for
using the acquisition method and provisional goodwill arising on the
acquisition, amounting to £18.0 million, has been capitalised and will
be amortised evenly over the Directors'estimate of useful economic life,
which is 20 years.
In November 2004 the entire issued share capital of Mac-Glass Recycling
Limited was purchased by Viridor Waste Management Limited through the
issue of loan notes by Pennon Group Plc of £0.9 million. The acquisition
was accounted for using the acquisition method and provisional goodwill
arising on the acquisition, amounting to £0.9 million, has been
capitalised and will be amortised evenly over the Directors' estimate
of useful economic life, which is 20 years.
10 Analysis of net debt
At Cash Acquisitions Non-cash At
1 April flow (excluding movements 31 March
2004 cash items) 2005
unaudited)
£m £m £m £m £m
Cash at bank and in hand 14.0 (9.6) - - 4.4
Current asset investments:
Overnight deposits 13.5 36.3 - - 49.8
Bank overdrafts (7.0) 1.9 - - (5.1)
-------------------------------------------------------------
20.5 28.6 - - 49.1
-------------------------------------------------------------
Debt due within one year
(other than bank overdrafts) (79.7) 75.2 (1.1) (14.8) (20.4)
Debt due after more than
one year (491.5) (95.0) - 14.8 (571.7)
Finance lease obligations (763.6) (51.9) (0.3) (8.6) (824.4)
------------------------------------------------------------
(1,334.8) (71.7) (1.4) (8.6) (1,416.5)
------------------------------------------------------------
Current asset investments:
Other than overnight
deposits 240.2 8.1 - 0.3 248.6
------------------------------------------------------------
(1,074.1) (35.0) (1.4) (8.3) (1,118.8)
============================================================
Non-cash movements include transfers between categories of debt for
changing maturities, increased accrued finance charges within
finance lease obligations and increased accrued interest on unlisted
investments.
11 The Annual Report for 2004/05 will be issued to shareholders on
27 June 2005.
Pennon Group Plc
Registered Office :
Peninsula House
Rydon Lane
EXETER
Devon EX2 7HR
Registered in England No 2366640
www.pennon-group.co.uk
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 17th May 2024
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