Interim Results
Pennon Group PLC
09 December 2004
PENNON GROUP PLC 9 December 2004
INTERIM RESULTS FOR THE HALF YEAR ENDED 30 SEPTEMBER 2004
Pennon Group announces its unaudited results for the half year ended 30
September 2004.
A presentation for City audiences will be held today, Thursday 9 December 2004,
at 09:00 at The City Presentation Centre, 4 Chiswell Street, London, EC1.
FINANCIAL HIGHLIGHTS
• Operating profit up 11.0% to £78.4m.*
• South West Water up 6.9% to £65.3m.
• Viridor Waste up 30.6% to £14.5m before goodwill.
• Profit before tax up 11.0% to £47.4m.*
• Earnings per share (before deferred tax) up 9.9% to 34.3p.*
• Interim dividend per share up 4.5% to 13.8p.
• Final Determination received by South West Water.
*Before exceptional item in 2004/05 of £2.0m for costs incurred
relating to abortive acquisition.
OPERATIONAL HIGHLIGHTS
• South West Water:
• Remains on track to outperform the current regulatory contract.
• Ofwat confirmed 2003/04 OPA improvement of 45 points and
enhanced efficiency banding.
• Viridor Waste:
• Continued strong growth in profits from landfill and power generation.
• Thames Waste acquisition and West Sussex PFI performing in
line with expectations.
Final Determination
---------------------
The Final Determination by Ofwat on prices to be paid by South West Water's
customers for the next five years represents a very tough challenge for the
company, but one the company is determined to meet. Against this background and
having regard to the level of customer charges in the South West, the Board has
decided not to ask the Director General of Water Services to refer the Price
Determination to the Competition Commission.
Ken Harvey, Chairman said: 'These excellent results demonstrate further
profitable growth in the Group, affirming our strategy of focusing on our two
key businesses, South West Water and Viridor Waste. The Board confirms its
intention to continue its existing progressive policy of growing the Group
dividend in real terms, at least up to 2009/10'.
For further information today, 9 December 2004, please contact :
David Dupont Group Director of Finance 020 7251 3801
Jo Finely Investor Relations Manager
Edward Orlebar Finsbury Group
GROUP OVERVIEW
• Turnover rose by 20.2% to £282.2m.
• Operating profit rose by 11.0% to £78.4m.*
• Profit before tax was up 11.0% to £47.4m.*
• Earnings per share before the exceptional item and deferred tax
increased by 9.9% to 34.3p. Earnings per share after the exceptional
item and deferred tax fell by 5.2% to 29.1p.
• Capital expenditure was £86.1m (2003 - £85.6m).
• Thames Waste Management Limited was acquired during the half year for
£30.7m (£28.5m net of cash).
• Net debt was £1,089.0m, an increase of £14.9m since 31 March 2004.
Gearing, being net borrowings to shareholders' funds, was 118% (2003 -
114%). Interest cover was 2.5 times for the 30 September 2004 half year
(2003 - 2.5 times).
• The interim dividend of 13.8p per share represents an increase of 4.5%
over the equivalent figure for September 2003. It will be paid on 7
April 2005 to shareholders on the register on 28 January 2005. A scrip
dividend alternative will be available.
*Before exceptional item in 2004/05 of £2.0m for costs incurred
relating to abortive acquisition.
SOUTH WEST WATER
South West Water turnover rose by £11.6m to £157.6m. Approved tariff increases,
including the 4.4% K factor, amounted to £10.5m. Customers switching from
unmeasured to metered charging caused a reduction of £3.3m in turnover. Other
factors, including 3,600 new customer connections and increased commercial
sales, offset by a small decrease in measured demand, contributed £4.4m.
South West Water's operating profit rose 6.9% to £65.3m. Operating costs,
including depreciation, increased by £7.4m to £92.3m. Additional costs from new
capital schemes of £2.8m, inflation of £1.6m and £4.6m of other cost increases,
mainly pensions and direct cost of sales, were offset by £1.6m of efficiency
savings. South West Water remains ahead of Ofwat's efficiency targets and is on
track to deliver further efficiency savings to outperform the regulatory
contract to 2005.
Capital expenditure reduced as expected by £1.8m to £68.0m. £33.6m 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 is one of the leading companies in managing water leakage
and continues to deliver results in line with Ofwat's leakage target. Water
resources remain secure. Almost 300km of water mains were laid, replaced or
refurbished during the half year, a 44% increase on the first half of 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. South
West Water in 2003/04 has achieved one of the largest Overall Performance
Assessment score improvements, as reported by Ofwat.
Waste water investment expenditure totalled £34.4m for the half year.
Commissioning of the Ilsham Valley pumping station in Torbay commenced in early
April and its operation signalled the completion of the final major project in
the company's 15 year original 'Clean Sweep' coastal sewage treatment programme.
The 'Clean Sweep' has transformed the coastal environment around the South West
and this year 81% of the South West's beaches reached the top quality guideline
standard in the 2004 annual assessment, one of the best performances of any
region in the UK. This compares with 47% of the region's bathing waters
achieving the tougher standard five years ago.
The strong growth in South West Water's Regulatory Asset Value (RAV), as
previously highlighted, continues to outstrip the increase in the company's net
debt to 2005.
Last week, the Director General of Water Services (Ofwat) issued his Final
Determination in respect of the K4 period (2005 - 2010). The key elements for
South West Water are:
(a) 'K' price increases of 12.5%, 9.8%, 9.8%, 1.7%, 1.4% for 2005-2010; an
average of 6.9% over the five years.
(b) A capital programme of £762m at 2002/03 prices (similar to AMP3).
(c) Average annual operating expenditure efficiency improvements of 2.5%
(water) and 2.0% (sewerage).
(d) Capital maintenance efficiency improvements of 6.0% (water) and 11%
(sewerage), including frontier shift.
(e) Capital enhancement efficiency improvement of 7.0% (water) and 18%
(sewerage), including frontier shift.
(f) Projected Regulatory Asset Value increase to £2,560m by March 2010
(out-turn prices).
The Final Determination represents a very tough challenge for South West Water,
but one the company is determined to meet. Substantial efficiencies have already
been delivered by the company since privatisation and focus continues on
delivering additional efficiencies to meet the demands placed upon it. South
West Water has announced plans for further restructuring to contribute towards
the additional efficiencies required over the period, and manpower levels will
be reduced by a further 100. The company expects to provide for exceptional
restructuring costs of c. £5.0m in the second half of 2004/05.
VIRIDOR WASTE
Viridor Waste ('Viridor') has continued to trade strongly in the six months
ended 30 September 2004, building further on the growth achieved over the past
three years. Turnover was up 39.7% to £126.7m, including a £17.0m contribution
from the Thames Waste Management acquisition, £5.3m from landfill tax, a full
six month contribution from Churngold Holdings (acquired June 2003) and the
impact of the West Sussex PFI.
Viridor operating profit before goodwill for the half year rose by 30.6% to
£14.5m (£12.7m after goodwill), compared to £11.1m in 2003/04 (£10.0m after
goodwill). Underlying operating profit rose 11.0% excluding this year's and the
full year effect of last year's acquisitions and additional pensions charges.
Operating margins, before goodwill and excluding landfill tax, were down from
16.8% to 15.0% reflecting the change in business mix including Thames Waste
Management's liquids and sludge contracts. Earnings before interest, tax,
depreciation and amortisation (EBITDA) rose 32.6% from £21.5m to £28.5m. Capital
expenditure for the half year was £18.0m (2003 - £15.7m).
Total landfill disposal volumes increased by 20% to 2.3m tonnes (including
Thames Waste Management). Excluding acquisitions, volumes increased by 12% to
2.1m tonnes. Volumes were particularly high preceding the ending of hazardous
waste disposal to non-hazardous landfills in July. Underlying gate fees rose by
5%, continuing to outstrip cost increases. Viridor currently has 80 million
cubic metres of landfill capacity.
Viridor's power generation output increased by 25% to 160,000 MWH (a 9% increase
excluding acquisitions) which was sold at an average price of £50 per MWH. 53%
of this output is eligible for ROCs; the remainder benefits from the
Government's Non Fossil Fuel Obligations. Capacity increased by a further 2MW to
47MW with a further 3MW under construction.
In April Viridor acquired Thames Waste Management Limited, a landfill power
generation and liquid waste treatment business, for a cash consideration of
£30.7m (£28.5m net of cash in the company). Since acquisition, the company has
secured a long term waste and recycling contract with Southern Water. Under the
five-year £20m contract, Viridor will provide sludge collection, transport and
recycling and disposal services to Southern Water. The acquisition is projected
to be earnings enhancing before goodwill this year and is trading in line with
expectations.
As part of the Government's developing waste strategy, council integrated
contracts will assume greater importance for the waste industry. Viridor
commenced its 25-year £450m integrated waste contract with West Sussex County
Council on April 1, its first PFI contract. This involves the management and
operation of 12 household waste recycling sites, five transfer stations and a
materials reclamation facility across the county. Existing sites will be
improved and upgraded and a number of new sites will be developed. £25m capital
expenditure will be required in the early years of the contract, including a
replacement materials reclamation facility. Viridor also began a three-year
'provision of waste disposal and associated services' contract worth £10m with
the Borough of Poole Council on 1 September 2004.
Viridor continues to explore new technologies in partnership with its customers.
A £2.3m in-vessel composting facility was opened at Beddington landfill near
Croydon in September. This innovative waste recycling facility is now fully
operational and has a capacity to process up to 30,000 tonnes of green (organic)
domestic waste per annum. Built with substantial grant funding from the London
Recycling Fund, the facility is designed initially to serve the London Boroughs
of Sutton, Croydon and Merton. This will assist them in meeting their recycling
and landfill diversion targets over the coming years, making a significant
contribution towards sustainable waste management in London. Two further £1.5m
in-vessel composting plants are under construction, with financial assistance
from DEFRA, in Devon and Suffolk in partnership with the respective county
councils.
PENSIONS
The Group's defined benefit pension schemes showed an indicative net deficit at
30 September 2004 at a similar level to the reported FRS 17 net deficit of
£54.0m at 31 March 2004. This deficit represents c. 5% of the Group's total
market capitalisation.
The triennial actuarial valuation of the Group's defined benefit pension schemes
at 1 April 2004 is in progress and when completed is expected to result in
additional annual costs of c. £6m; in line with this an additional charge of £3m
under SSAP24 accounting is reflected in the half year.
INTERNATIONAL FINANCIAL REPORTING STANDARDS
Preparation for the adoption of IFRS in 2005/06 is underway. 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. It is expected that the overall net impact
will be to reduce net assets and increase the volatility of earnings. Underlying
cash flow is not affected.
TAXATION
The mainstream corporation tax charge for the half year to September 2004 was
£4.6m (2003 - £4.2m).
The deferred tax charge for the half year to 30 September 2004 was £4.5m. (2003
- £0.7m).
FINANCING
Net interest payable increased from £27.8m to £31.0m. The average interest rate
on net debt has increased from 5.5% to 5.7%.
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 Final
Determination represents a major challenge for both South West Water and the
Group which we are determined to meet. Viridor Waste's successful strategy of
creating long-term sustainable profit growth 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
9 December 2004
PENNON GROUP PLC
GROUP PROFIT AND LOSS ACCOUNT
for the half year ended 30 September 2004
------------------------------ --------------- --------------------------------
Half year ended Half year ended Year ended
30 September 30 September 31 March
2004 2003* 2004 *
(unaudited) (unaudited)
------------------------------ --------------- --------------------------------
before before
exceptn'l Exceptn'l exceptn'l Exceptn'l
item item Total item item Total
Turnover Note £m £m £m £m £m £m £m
Continuing 263.0 - 263.0 234.8 455.1 - 455.1
operations
Acquisitions 19.2 - 19.2 - 16.2 - 16.2
------ ------ ------ -------- ------ ------ ------
Total turnover 282.2 - 282.2 234.8 471.3 - 471.3
Operating costs 4 (203.8) (2.0) (205.8) (164.2) (335.0) (6.5) (341.5)
------ ------ ------ -------- ------ ------ ------
Group operating
profit
Continuing
operations 76.9 (2.0) 74.9 70.6 135.7 (6.5) 129.2
Acquisitions 1.5 - 1.5 - 0.6 - 0.6
------ ------ ------ -------- ------ ------ ------
Total Group
operating
profit 78.4 (2.0) 76.4 70.6 136.3 (6.5) 129.8
Share of operating loss
in joint venture - - - (0.1) (0.3) - (0.3)
------ ------ ------ -------- ------ ------ ------
Total operating
profit 78.4 (2.0) 76.4 70.5 136.0 (6.5) 129.5
Net interest
payable (31.0) - (31.0) (27.8) (57.2) - (57.2)
------ ------ ------ -------- ------ ------ ------
Profit on
ordinary activities
before taxation 47.4 (2.0) 45.4 42.7 78.8 (6.5) 72.3
Tax on profit on
ordinary activities 5 (9.1) - ( 9.1) (4.9) (10.8) - (10.8)
------ ------ ------ -------- ------ ------ ------
Profit on ordinary
activities after
taxation 38.3 (2.0) 36.3 37.8 68.0 (6.5) 61.5
Dividends 6 (17.7) - (17.7) (16.4) (51.1) - (51.1)
------ ------ ------ -------- ------ ------ ------
Retained surplus
transferred to reserves 20.6 (2.0) 18.6 21.4 16.9 (6.5) 10.4
------ ------ ------ -------- ------ ------ ------
Earnings per share
Before exceptional
item and deferred tax 7
Adjusted basic 34.3p 31.2p 57.7p
Adjusted diluted 34.1p 31.1p 57.3p
After exceptional
item and deferred tax
Basic 29.1p 30.7p 49.8p
Diluted 28.9p 30.5p 49.5p
Dividend per share 6 13.8p 13.2p 41.0p
There were no recognised gains or losses other than the profit for the six
months to 30 September 2004 and for the year to 31 March 2004.
* Restated (note 3).
PENNON GROUP PLC
SUMMARISED GROUP BALANCE SHEET
at 30 September 2004
30 September 30 September 31 March
2004 2003* 2004*
(unaudited) (unaudited)
Note £m £m £m
Fixed assets
Intangible assets 62.5 45.7 47.6
Tangible assets 2,190.6 2,105.6 2,141.1
Investments 2.6 0.6 2.6
---------- ---------- ----------
2,255.7 2,151.9 2,191.3
Current assets
Stocks 4.9 3.8 4.5
Debtors 107.4 104.8 97.3
Investments and cash 296.3 225.1 267.7
---------- ---------- ----------
408.6 333.7 369.5
Current liabilities
Creditors: amounts falling due
within one year (324.6) (258.9) (293.6)
---------- ---------- ----------
Net current assets 84.0 74.8 75.9
---------- ---------- ----------
Total assets less
current liabilities 2,339.7 2,226.7 2,267.2
Creditors: amounts falling due
after more than one year (1,278.2) (1,187.7) (1,234.9)
Provisions for
liabilities and charges (101.1) (90.3) (94.0)
Deferred income (34.6) (39.1) (38.7)
---------- ---------- ----------
Net assets 925.8 909.6 899.6
---------- ---------- ----------
Capital and reserves
Called-up share capital 139.5 137.6 137.9
Share premium account 156.1 154.2 154.2
Profit and loss account 630.2 617.8 607.5
---------- ---------- ----------
Shareholders' funds 8 925.8 909.6 899.6
---------- ---------- ----------
* restated (note 3).
PENNON GROUP PLC
GROUP CASH FLOW STATEMENT
for the half year ended 30 September 2004
Half year ended Half year ended Year ended
30 September 30 September 31 March
2004 2003* 2004*
(unaudited) (unaudited)
Note £m £m £m
Net cash inflow from
operating activities 9 135.0 103.8 215.1
Returns on investments
and servicing of finance (22.5) (9.6) (41.3)
Taxation - - (0.1)
Capital expenditure and
financial investment (81.0) (94.9) (178.6)
Acquisitions (28.5) (20.0) (20.0)
Equity dividends paid (10.6) (15.6) (47.0)
Net cash outflow before
use of liquid resources
and financing (7.6) (36.3) (71.9)
Management of liquid resources 0.7 5.1 (62.1)
Financing 31.9 72.2 155.7
----------- ---------- ----------
Increase in cash in
period 25.0 41.0 21.7
----------- ---------- ----------
* restated (note 3).
PENNON GROUP PLC
SEGMENTAL ANALYSIS BY CLASS OF BUSINESS
for the half year ended 30 September 2004
Half year ended Half year ended Year ended
30 September 30 September 31 March
2004 2003 2004
(unaudited) (unaudited)
£m £m £m
Turnover
Continuing operations
Water and sewerage 157.6 146.0 291.8
Waste management 126.7 90.7 183.1
Other 3.4 3.8 7.3
Less intra-group trading (5.5) (5.7) (10.9)
------------ ----------- ----------
Group total 282.2 234.8 471.3
------------ ----------- ----------
Group operating profit
Continuing operations before
exceptional item and goodwill
amortisation
Water and sewerage 65.3 61.1 118.9
Waste management 14.5 11.1 22.7
Other 0.4 (0.5) (2.8)
------------ ----------- ----------
Total continuing operations
before exceptional item
and goodwill amortisation 80.2 71.7 138.8
------------ ----------- ----------
Group operating profit
Continuing operations after
exceptional item and goodwill
amortisation
Water and sewerage 65.3 61.1 118.9
Waste management 12.7 10.0 20.2
Other (1.6) (0.5) (9.3)
------------ ----------- ----------
Group total 76.4 70.6 129.8
------------ ----------- ----------
Profit on ordinary activities
before taxation
Continuing operations after
exceptional item and goodwill
amortisation
Water and sewerage 39.6 37.2 70.1
Waste management 8.6 7.5 14.7
Other* (2.8) (2.0) (12.5)
------------ ----------- ----------
Group total 45.4 42.7 72.3
------------ ----------- ----------
* includes exceptional item and interest arising on parent company financing of
acquisitions.
Continuing operations include acquisitions.
PENNON GROUP PLC
NOTES
1. The results for the half year ended 30 September 2004 are unaudited as were
those for the half year ended 30 September 2003. The same accounting policies
have been applied as those set out in the Pennon Group Plc Annual Report and
Accounts for the year ended 31 March 2004 except for the policy on the treatment
of shares acquired under the Employee Share Ownership Plan (see note 3).
2. The financial information for the year ended 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 that year 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.
3. 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
Fixed asset investments Profit and loss reserve
September March September March
2003 2004 2003 2004
£m £m £m £m
Previously reported 2.1 3.6 619.3 608.5
Application of UITF17
(revised 2003) 3.2 3.7 3.2 3.7
Application of UITF38 (4.7) (4.7) (4.7) (4.7)
------- ------- ------- -------
Restated now reported 0.6 2.6 617.8 607.5
------- ------- ------- -------
The restatement for September 2003 comprises a prior period adjustment of £1.3m
at 31 March 2003. There has been no change to the charge for the half year.
Group cash flow statement
Capital expenditure and Financing
financial investment
September March September March
2003 2004 2003 2004
£m £m £m £m
Previously reported (95.5) (179.2) 72.8 156.3
Application of
UITF38 0.6 0.6 (0.6) (0.6)
------- ------- ------- -------
Restated now (94.9) (178.6) 72.2 155.7
reported ------- ------- ------- -------
4. The exceptional item is £2.0m (March 2004 £6.5m) costs incurred 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.
5. Tax on profit on ordinary activities comprises :
September September March
2004 2003 2004
(unaudited) (unaudited)
£m £m £m
United Kingdom corporation tax 4.6 4.2 7.5
Deferred tax 4.5 0.7 3.3
------- ------- -------
9.1 4.9 10.8
------- ------- -------
The tax charge for September 2004 and September 2003 has been derived by
applying the anticipated effective annual tax rate to the first half year profit
before tax.
6. Dividends
September September March
2004 2003 2004
(unaudited) (unaudited)
£m £m £m
Interim dividend of 13.8p
(September 2003 13.2p) per share 17.7 16.4 16.4
Final dividend of 27.8p per share - - 34.7
------- ------- -------
17.7 16.4 51.1
------- ------- -------
The interim dividend of 13.8p per share will be paid on 7 April 2005 to
shareholders on the register on 28 January 2005.
7. Earnings per Ordinary share
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 half year of 124.7 million (2003 123.3 million).
All share options with an exercise price lower than the average market price of
the Company's shares during the half year have been included in the calculation
of diluted earnings per share. The weighted average number of shares in issue
during the half year, taking account of the dilutive effect of share options,
was 125.6 million (2003 123.9 million).
Adjusted basic and diluted earnings per share
Adjusted earnings per share have been calculated to exclude the impact of the
exceptional item and deferred tax on the results, as such items can have a
distorting effect on earnings from year to year and therefore warrant separate
consideration. Adjusted earnings have been calculated as follows :
30 September 30 September 31 March
2004 2003* 2004*
( unaudited) (unaudited)
£m £m £m
Profit on ordinary activities after
taxation 36.3 37.8 61.5
Exceptional item 2.0 - 6.5
Deferred tax (note 5) 4.5 0.7 3.3
------- ------- -------
Adjusted earnings before
exceptional item and deferred tax 42.8 38.5 71.3
------- ------- -------
* restated (note 3).
8. Statement of movements in shareholders' funds
September September March
2004 2003 2004
(unaudited) (unaudited)
£m £m £m
Profit on ordinary activities
after taxation 36.3 37.8 61.5
Dividends (17.7) (16.4) (51.1)
------- ------- -------
18.6 21.4 10.4
Adjustment for shares issued under
the scrip dividend alternative 5.8 - 1.3
Shares issued for cash 0.7 1.8 2.1
consideration
Purchase of own shares - (0.6) (0.6)
Adjustment for shares issued in
respect of the Annual Incentive
Bonus Plan
- Deferred shares 0.5 - -
Adjustment in respect of
employee share schemes 0.6 0.4 0.9
Goodwill arising on previously
acquired business - (2.2) (3.3)
------- ------- -------
Shareholders' funds (equity
interest) :
Addition for period 26.2 20.8 10.8
At start of period
As previously reported 900.6 890.1 890.1
Prior year adjustment (note 3) (1.0) (1.3) (1.3)
------- ------- -------
At start of period (restated) 899.6 888.8 888.8
------- ------- -------
At end of period 925.8 909.6 899.6
------- ------- -------
9. Reconciliation of Group operating profit to net cash inflow from operating
activities:
Half year ended Half year ended Year ended
30 September 30 September 31 March
2004 2003* 2004*
(unaudited) (unaudited)
£m £m £m
Group operating profit 76.4 70.6 129.8
Depreciation charge 47.6 42.1 86.1
Amortisation of intangible fixed assets 1.8 1.1 2.5
Provision for impairment of
fixed asset investments 0.6 0.4 0.9
Deferred income released to
profits (0.6) (0.6) (1.2)
Decrease in provisions for
liabilities and charges (0.9) (1.4) (2.0)
(Increase)/decrease in stocks (0.4) 0.2 (0.5)
Increase in debtors (amounts
falling due within and over one year) (3.8) (11.0) (4.2)
Increase in creditors (amounts
falling due within and over one year) 14.6 2.3 5.4
(Profit)/loss on disposal of
tangible fixed assets (0.3) 0.1 (1.7)
---------- ---------- ----------
Net cash inflow from operating
activities 135.0 103.8 215.1
---------- ---------- ----------
* restated (note 3).
10. Acquisitions
On 6 April 2004 the entire issued share capital of Thames Waste Management
Limited, (now renamed Viridor Waste (Thames) Limited), was purchased by Viridor
Waste Management Limited for a cash consideration of £30.7 million, including
costs of £0.2 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 £16.7 million, has been
capitalised and will be amortised evenly over the Directors' estimate of useful
economic life, which is 20 years.
11. Analysis of net debt :
At Cash flow Non-cash At 30
1 April movements September
2004 2004
(unaudited)
£m £m £m £m
Cash at bank
and in hand 14.0 (1.2) - 12.8
Current asset
investments:
Overnight deposits 13.5 29.2 - 42.7
Bank overdrafts (7.0) (3.0) - (10.0)
-------- -------- -------- --------
20.5 25.0 - 45.5
-------- -------- -------- --------
Debt due within one
year
(other than bank
overdrafts) (79.7) 16.6 (7.6) (70.7)
Debt due after more
than one year (491.5) (25.0) 7.6 (508.9)
Finance lease
obligations (763.6) (22.8) (9.3) (795.7)
-------- -------- -------- --------
(1,334.8) (31.2) (9.3) (1,375.3)
-------- -------- -------- --------
Current asset investments:
Other than
overnight deposits 240.2 (0.7) 1.3 240.8
-------- -------- -------- --------
(1,074.1) (6.9) (8.0) (1,089.0)
-------- -------- -------- --------
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 cash deposits to secure
rental obligations.
12. The interim report will be posted to shareholders on 14 January 2005 and
will also be available from the Company's registered office.
Pennon Group Plc
Registered Office: Peninsula House,
Rydon Lane, Exeter, 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
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