Update on Viridor's Greater Manchester Contract
24 August 2017
PENNON GROUP PLC
Update on Viridor's Greater Manchester Contract
As previously reported, the Greater Manchester Waste Disposal Authority (GMWDA) took the decision in April 2017 to seek an exit from their 25-year Recycling & Waste Management Private Finance Initiative (PFI) Contract with Viridor Laing (Greater Manchester) Limited.
Viridor and its partners have been working with GMWDA to agree the principles of an exit. These principles have now been agreed and a heads of terms between GMWDA and Viridor Laing (Greater Manchester) Limited has been signed.
Residual waste will continue to be treated at the Runcorn I Energy Recovery Facility which Viridor will continue to operate for the remainder of the original 25-year contract with no significant operational changes.
GMWDA has indicated that the recycling and reprocessing operations will be subject to a re-procurement process, commencing later in 2017. In the meantime, expectations are that Viridor will continue to provide these services for a period of not less than 18 months. Viridor will also be eligible to bid for the new contract.
It is envisaged (subject to a number of conditions and approvals) that a final agreement will be signed by the end of September 2017, dealing with the termination of the PFI Contract. Ownership of Viridor Laing (Greater Manchester) Limited will at that time pass to GMWDA.
For the joint venture entities, Viridor Laing (Greater Manchester) Holdings Limited and INEOS Runcorn (TPS) Holdings Limited, Pennon anticipates at this stage a net one-off non-material impact to the income statement in 2017/18. This takes into account a reduction in the book value investment in joint ventures and an expected one-off gain on joint venture profit after tax. A fuller update will be provided in due course when all agreements are finalised.
For further information, please contact:
Pennon: Susan Davy - Chief Financial Officer
Paul Boote - Group Financial Controller
01392 443 267
Finsbury: James Murgatroyd
Faeth Birch
0207 251 3801
Notes to Editors:
Viridor Laing (Greater Manchester) Limited is wholly owned by Viridor Laing (Greater Manchester) Holdings Limited which in turn is jointly owned by Viridor and John Laing.
INEOS Runcorn (TPS) Limited is wholly owned by INEOS Runcorn (TPS) Holdings Limited which in turn is a joint venture between Viridor, John Laing and Inovyn Chlorvinyls Limited.
The book value of Viridor's economic investment in the Greater Manchester project as at 31 March 2017 was £78.0 million, of which Viridor Laing (Greater Manchester) Holdings Limited represents £40.2 million and INEOS Runcorn (TPS) Holdings Limited represents £37.8 million.
Cautionary statement in respect of forward-looking statements
Certain statements in this announcement are forward-looking statements relating to the Group's operations, performance and financial position based on current expectations of, and assumptions and forecasts made by, management. They are subject to a number of risks, uncertainties and other factors that could cause actual results, performance or achievements of the Group to differ materially from any outcomes or results expressed or implied by such forward-looking statements. The Group's principal risks were described in the 2017 Pennon Group Annual Report which can be viewed online at www.pennon-group.co.uk/AR2017 Such forward looking statements should therefore be construed in light of such risks, uncertainties and other factors and undue reliance should not be placed on them. They are made only as of the date of this announcement and no representation, assurance, guarantee or warranty is given in relation to them including as to their accuracy, completeness, or the basis on which they are made. No obligation is accepted to publicly revise or update these forward-looking statements or adjust them as a result of new information or for future events or developments, except to the extent legally required. Nothing in this Statement should be construed as a profit forecast.
This information is provided by RNS
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