Pennon Group Plc · LSE:PNN
Pennon — H1 2000/01 Earnings Presentation
32 slides from Pennon's earnings presentation, November 2000
Slide 1: Pennon Group Plc Interim Results
Pennon Group Plc Interim Results For the half year ended 30 September 2000
Slide 2: Financial Highlights
Pennon Group Plc Financial Highlights Turnover down 4% to £223.3m Operating profit down 20% to £66.6m Profit before tax down 32% to £41.4m Earnings per share down 26% to 30.0p Interim dividend per share down 25% to 11.6p Impact of one-off price reduction for South West Water - £16.6m
Slide 3: Operational Highlights
Pennon Group Plc Operational Highlights South West Water – Targeting out-performance of K3 regulatory contract – Further improvement in efficiency levels – Compliance levels at an all time high – Out-performance relative to leakage targets – Substantial improvement in service levels Viridor – In
Slide 4: Strategic Review
Pennon Group Plc Strategic Review Focus on creating value South West Water – alternative structures for owning and operating assets being explored – issues still to be resolved – regulatory matters – announcements as and when decisions taken Viridor – disposal of construction business – option
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Slide 6: Summary Financial Performance
Pennon Group Plc Summary Financial Performance For the half year ended 30 September 2000 1999 Change 1999/00 £m £m % £m Turnover 223.3 233.6 (4) 467.0 Operating profit 66.6 83.3 (20) 167.1 Profit before tax 41.4 61.0 (32) 121.6
Slide 7: Cashflow
Pennon Group Plc Cashflow For the half year ended 30 September 2000 1999 1999/00 £m £m £m Cash inflow from operations 105.3 105.2 216.3 Net interest paid (19.4) (9.6) (10.1) Dividends and tax paid (22.0) (7.0) (64.6) Capital expenditure (81.0) (57.5) (140.6) Acquisitions and disposals 0.5 0.3 0.5 Sh
Slide 8: Net Debt
Pennon Group Plc Net Debt As at As at 30 September 31 March 2000 1999 2000 £m £m £m Loans and finance leases: – over one year 705.1 661.2 664.0 – one year and under 43.3 43.8 42.1 748.4 705.0 706.1 Less current asset investments and cash: (65.4) (79.2) (39.3) 683.0 625.8 666.8
Slide 9: Borrowing and Re-Financing Strategy
Pennon Group Plc Borrowing and Re-Financing Strategy £m Net funding and re-financing requirement for K3 500-550 To be met by: – finance leasing facilities 170 – European Investment Bank 100 – renewal of bank bilateral facilities 120 – still to be determined 110-160 500-550
Slide 10: Net Interest Payable
Pennon Group Plc Net Interest Payable For the half year ended 30 September 2000 1999 1999/00 £m £m £m Interest payable 27.1 25.0 50.3 Interest receivable (2.1) (2.5) (4.8) Defeased lease gain - (0.4) (0.4) Net interest payable 25.0 22.1 45.1 Average rate of interest 7.4% 6.9% 6.8%
Slide 11: Depreciation
Pennon Group Plc Depreciation For the half year ended 30 September 2000 1999 1999/00 £m £m £m South West Water – infrastructure assets 6.5 3.8 7.5 – other assets 18.8 17.5 35.6 25.3 21.3 43.1 Viridor and other Group companies 8.3 8.2 15.9 33.6 29.5 59.0
Slide 12: Taxation
Pennon Group Plc Taxation For the half year ended 30 September 2000 1999 1999/00 £m £m £m UK tax charge – corporation tax - 10.7 14.8 – advance corporation tax: previous year utilisation - (5.4) (10.5) Overseas tax charge 0.6 0.4 0.7 0.6 5.7 5.0
Slide 13: Key Financial Ratios
Pennon Group Plc Key Financial Ratios For the half year ended 30 September 2000 1999 1999/00 Dividend cover 2.6 times 2.6 times 1.8 times Net interest cover 2.7 times 3.8 times 3.7 times Net gearing 70% 68% 71%
Slide 14: Dividend Policy
Pennon Group Plc Dividend Policy As forecast last year, interim dividend cut by 24.7% Similar level of reduction likely for final dividend Progressive dividend policy thereafter
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Slide 16: South West Water Ltd Financial Performance
South West Water Ltd Financial Performance For the half year ended 30 September 2000 1999 Change 1999/00 £m £m % £m Turnover 126.6 140.4 (10) 280.2 Operating profit 56.6 73.3 (23) 146.8
Slide 17: South West Water Turnover
South West Water Ltd Turnover Reduction of £13.8m (9.8%) in half year Reflects impact of £m – Po cut (16.6) – RPI increase 1.9 – Customer base and volume changes (1.3) – Infrastructure connection charges 1.5 – Other 0.7 (13.8) Number of meter switchers - 18,000 Number of new water connection
Slide 18: South West Water Operating Costs
South West Water Ltd Operating Costs For the half year ended 30 September 2000 1999 Increase £m £m % Total operating costs 70.0 67.1 4 Less depreciation charges (25.3) (21.3) 19 Operating costs before depreciation charges 44.7 45.8 (2) Increase/(decrease) in total operating costs due to: £m – inflat
Slide 19: Efficiency Savings for the Half Year
South West Water Ltd Efficiency Savings for the Half Year ended 30 September 2000 Operating cost savings: £m - Manpower related 1.1 - Procurement benefits 0.3 - Power cost usage and price reductions 0.4 - Other savings 1.9 3.7
Slide 20: Operational Performance Summary
South West Water Ltd Operational Performance Summary Continuing improvement in efficiency levels Compliance levels at all time high Leakage targets – currently ahead of target – one of only two WASC’s to have reached their confirmed economic target Substantial improvement in performance and
Slide 21: Progress on K3 Determination
South West Water Ltd Progress on K3 Determination Implementation of detailed plans targeted to out-perform both capex and opex Increasing confidence of achieving targeted out-performance
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Slide 23: Viridor Ltd Summary Financial Performance
Viridor Ltd Summary Financial Performance For the half year ended 30 September 2000 1999 1999/00 £m £m £m Turnover 108.6 101.6 206.9 Operating profit 10.0 9.8 19.8
Slide 24: Viridor Waste Ltd Financial Performance
Viridor Waste Ltd Financial Performance For the half year ended 30 September 2000 1999 1999/00 £m £m £m Turnover 54.1 50.1 100.6 Operating profit 7.0 7.8 15.2 Operating margins – before landfill tax 19% 22% 21% – after landfill tax 13% 16% 15%
Slide 25: Viridor Waste Operational and Business Highlights
Viridor Waste Ltd Operational and Business Highlights Turnover up by £4.0m, of which landfill tax accounts for £2.3m Total landfill volumes increased 3% to 1.6m tonnes in six months ended 30 September 2000 Overall price per tonne maintained Decrease in operating profit relates primarily to –
Slide 26: Viridor Instrumentation Financial Performance
Viridor Instrumentation Ltd Financial Performance For the half year ended 30 September 2000 1999 1999/00 £m £m £m Turnover 26.9 24.1 49.6 Operating profit – before charging goodwill 3.5 2.3 4.1 – after charging goodwill 2.9 1.6 2.9 Operating margins* 13% 10% 8% *before goodwill amortisation
Slide 27: Viridor Instrumentation Operational and Business Highlights
Viridor Instrumentation Ltd Operational and Business Highlights Strong growth in underlying profitability First half year benefited from two large contracts Underlying profitability improved as a result of: – rationalisation of ELE, including business relocations – restructured and strengthene
Slide 28: Viridor Contracting Financial Performance
Viridor Contracting Ltd Financial Performance For the half year ended 30 September 2000 1999 1999/00 £m £m £m Turnover 27.0 27.1 56.0 Operating profit 0.1 0.5 1.6 Operating margins - 2% 3%
Slide 29: Viridor Contracting Operational and Business Highlights
Viridor Contracting Ltd Operational and Business Highlights Utilities and Mechanical and Electrical Divisions improved profitability, whilst Civils and Copa Divisions reduced Proposed disposal of business progressing - Copa Division disposal now concluded
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Slide 31: Summary
Pennon Group Plc Summary • Results reflect impact of Po cuts • Strong performance by South West Water • Increasing confidence of out-performance by South West Water in K3 • Difficult trading conditions for Viridor Waste, but well-positioned for future growth • Substantial improvement by Viridor Inst
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