Result of Meeting

RNS Number : 3804D

Pennon Group PLC

28 June 2021

 

Pennon Group plc

28 June 2021

Pennon Group plc

Pennon obtains shareholder approval for a Special Dividend, Share Consolidation, proposed additional share buy-back authority, changes to Articles of Association and related resolutions

O n 3 June 2021 Pennon Group plc (Pennon or the Company), announced its intention to return c.£1.5 billion to shareholders by way of a special dividend representing £3.55 per Existing Ordinary Share (the Special Dividend) and to consolidate its ordinary share capital on the basis of 2 New Ordinary Shares with a nominal value of 61.05 pence each for every 3 Existing Ordinary Shares (the Share Consolidation).

In addition, to further return capital to shareholders, Pennon announced its intention to initiate an on-market share buy-back programme in order to purchase New Ordinary Shares from its shareholders, for an aggregate purchase price of up to £0.4 billion (a Share Buy-back). The Share Buy-back is expected to start after payment of the Special Dividend and to conclude before 30 September 2022. The Board considers this approach an appropriate means of returning capital to shareholders, whilst providing Pennon with ongoing financial flexibility. In the event that compelling growth opportunities arise in the UK water sector, the Board may decide not to initiate or to halt any Share Buy-back and use the remaining proceeds to pursue those opportunities in order to drive further shareholder value.

Pennon is pleased to announce that the resolutions proposed at a general meeting of the Company held at 9.00 a.m. on 28 June 2021 (the Meeting) seeking approval of the Special Dividend, Share Consolidation, proposed additional Share Buy-Back authority, changes to Articles of Association and certain additional related resolutions (the Resolutions) were duly passed by the Company's shareholders. Full details of the votes are set out below.

The shareholder record time and date for entitlement to the Special Dividend and the Share Consolidation will be 6.00 p.m. on 2 July 2021. Completion of the Special Dividend and Share Consolidation is expected to take place by 16 July 2021.

A further announcement will be made upon completion of each of the Special Dividend, Share Consolidation and, if applicable, any initiation of a Share Buy-back.

For further information, please contact:

Pennon Group Plc		[phone]
Paul Boote	Group Finance Director
Jennifer Cooke	Group Investor Relations Manager
Media Enquiries - Finsbury Glover Hering		[phone]
James Murgatroyd
Harry Worthington

Further Information

The Resolutions were all passed on a poll, with votes cast in accordance with proxy voting instructions submitted to the Company by the relevant deadline, together with those cast at the meeting itself, totalling as follows:

RESOLUTION	VOTES FOR	% FOR	VOTES AGAINST	% AGAINST	VOTES TOTAL	% of ISC VOTED	VOTES WITHHELD
1. To approve the Special Dividend	307,199,750	97.75	7,079,945	2.25	314,279,695	74.45%	17,743
2. To approve the Share Consolidation	307,100,599	97.72	7,166,635	2.28	314,267,234	74.45%	30,204
3. To approve the authority to allot shares	303,558,571	96.59	10,708,476	3.41	314,267,047	74.45%	30,391
4. To approve the disapplication of pre-emption rights	312,781,792	99.64	1,124,830	0.36	313,906,622	74.36%	390,816
5. To approve the authority to disapply pre-emption rights in connection with an acquisition or specified capital investment	307,435,300	97.94	6,475,923	2.06	313,911,223	74.36%	386,215
6. To approve the authority to purchase the Company's own shares	304,560,227	97.20	8,785,549	2.80	313,345,776	74.23%	951,662
7. To approve the adoption of New Articles	314,032,761	99.93	216,978	0.07	314,249,739	74.44%	47,699

Resolutions 1 to 3 were passed as ordinary resolutions, each requiring more than 50% of the total voting rights of eligible shareholders who voted in respect of such ordinary resolution to be votes for such ordinary resolution.

Resolutions 4 to 7 were passed as special resolutions, each requiring not less than 75% of the total voting rights of eligible shareholders who voted in respect of such special resolution to be votes for such special resolution.

The total number of ordinary shares of 40.7 pence each in issue at the Meeting date, excluding shares held in treasury, was 422,118,304.

The total votes cast in favour of the Resolutions includes those giving the Chair discretion. A "vote withheld" is not a vote in law and is not counted in the calculation of the proportion of the votes "for" and "against" a resolution.

The full text of the Resolutions is set out in the Notice of General Meeting in the Circular.

A copy of the Resolutions will be submitted and made available for inspection from the National Storage Mechanism at https://data.fca.org.uk/#/nsm/nationalstoragemechanism .

A copy of this Announcement has been posted on the Company's website at www.pennon-group.co.uk/investor-information/shareholder-services .

Background

Re-shaping the Pennon Group - focused on UK water and creating ongoing value for Shareholders, customers and employees

2020/21 has been a transformative year for the Group. On 8 July 2020, we completed the sale of Viridor to KKR for net proceeds of £3.7 billion. The sale recognised the strategic value developed by Pennon over many years, realising significant value for Shareholders, and creating the opportunity to refocus the Group exclusively on UK water.

The Group has undertaken a highly disciplined strategic review of potential growth options to look to deploy the net proceeds (the Strategic Review). The Strategic Review considered a range of factors including earnings accretion, value creation from the impact of shareholder returns (both income and growth) and the impact on customers and other shareholders. All opportunities have been benchmarked against a return of capital to shareholders.

The acquisition of Bristol Water Holdings UK Limited and its subsidiaries, including Bristol Water plc (Bristol Water), (together, the Bristol Water Group), announced on 3 June 2021, for an equity value of £425 million, marks an important step in the Group's Strategic Review.  The Board consider the Bristol Water Group to be highly complementary to the Group, presenting an attractive opportunity expand South West Water's wholesale capabilities, whilst deploying best practice from both businesses to deliver value for customers, shareholders, and broader stakeholders.  

Ensuring that the balance sheets of both the Group and South West Water are in a sustainable position for the future, we have taken steps to right-size our debt portfolio at the Pennon company level, repaying c.£1.1 billion, with c.£0.1 billion cash retained from the Disposal proceeds in Pennon and gross debt at the Pennon company level of c.£0.2 billion.

In addition, the Group plans to invest a further £0.1 billion into South West Water in support of the Green Recovery, which will aim to deliver solutions to address climate change, improve public health and create jobs, over and above existing commitments. The Group also plans to increase our contribution to Pennon's principal pension scheme, over and above normal contributions, to £53 million (which includes an amount of £36 million already contributed in H1 2020/21). The balance of £17 million is payable within six months of payment of the Special Dividend.

After these adjustments, taking into account the acquisition of Bristol Water Holdings UK Limited and rounding of the amounts outlined above, the residual net cash proceeds Pennon has retained from the Disposal amount to c.£1.9 billion (the Net Proceeds). The Board determined that a proportion of the Net Proceeds should be returned to shareholders by way of a proposed special dividend of c.£1.5 billion in aggregate, representing £3.55 per Existing Ordinary Share (the Special Dividend). The Board proposed to pay the Special Dividend to shareholders on the register of members of the Company as at 6.00 p.m. on 2 July 2021.

As is common when an amount representing a significant proportion of the market capitalisation of a company is returned to shareholders, the Board recommended that the Special Dividend was combined with an associated share consolidation on the basis of 2 New Ordinary Shares with nominal value of 61.05 pence each for every 3 Existing Ordinary Shares (the Share Consolidation) . The effect of the Share Consolidation is that the Existing Ordinary Shares will be replaced by the New Ordinary Shares so as to reduce the number of shares in issue and reflect the amount of cash to be returned to Shareholders. The result of the Share Consolidation is to reduce the number of Ordinary Shares in issue by approximately the same percentage of market capitalisation returned via the Special Dividend (for these purposes, the market capitalisation used is that as at market close on 2 June 2021).

The Company currently operates a Dividend Reinvestment Plan (DRIP) under which eligible shareholders may use their dividends to buy additional shares in the Company. The DRIP cut-off time and date is 6.00 p.m. on 2 July 2021 (the DRIP Cut-Off Time). Accordingly, those eligible shareholders who do not as of the DRIP Cut-Off Time participate in the DRIP may not apply to participate in the DRIP in respect of the Special Dividend. The Special Dividend payable to shareholders who are participants in the DRIP as of the DRIP Cut-Off Time will, unless such participation is revoked, be reinvested in additional New Ordinary Shares.

Following today's shareholder approval of the Special Dividend and the Share Consolidation and subject to admission in respect of the New Ordinary Shares, the Special Dividend is expected to be paid to shareholders on 16 July 2021.

As all Existing Ordinary Shares will be consolidated, the number of Ordinary Shares held by each shareholder will reduce, but the proportion of the total issued ordinary share capital of the Company held by each shareholder immediately before and following the Share Consolidation will, save for fractional entitlements and participation in the DRIP, remain unchanged.  Apart from having a different nominal value, each New Ordinary Share will rank pari passu for dividends and will carry the same rights as set out in the Company's articles of association that currently attach to the Existing Ordinary Shares.

Capitalised terms not otherwise defined in this Announcement have the same meaning given to them in the shareholder circular published by the Company on 3 June 2021 (the Circular).

Cautionary statement

This Announcement is not intended to and does not constitute, or form part of, any offer to sell or an invitation to purchase or subscribe for any securities or a solicitation of any vote or approval in any jurisdiction. The information contained in this Announcement is not for release, publication or distribution to persons in any jurisdiction where to do so might constitute a violation of local securities laws or regulations.

Important information relating to the joint financial advisors and corporate brokers

Barclays Bank PLC, acting through its Investment Bank (Barclays), which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting exclusively for Pennon as joint financial advisor and corporate broker, and for no one else, in connection with the Special Dividend and Share Consolidation and will not be responsible to anyone other than Pennon for providing the protection offered to clients of Barclays or for providing advice in relation to the Special Dividend and Share Consolidation, the contents of this Announcement or any transaction, arrangement or other matter referred to in this Announcement.

Morgan Stanley & Co. International plc (Morgan Stanley), which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting exclusively for Pennon as joint financial advisor and corporate broker, and for no one else, in connection with the Special Dividend and Share Consolidation and will not be responsible to anyone other than Pennon for providing the protection offered to clients of Morgan Stanley or for providing advice in relation to the Special Dividend and Share Consolidation, the contents of this Announcement or any transaction, arrangement or other matter referred to in this Announcement.

 

END

 

 

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