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Water utility Pennon has warned that it expects non-household revenue to reduce in 2020-21 as a result of the financial impact of COVID-19, with a risk from credit losses, and confirmed its £4.2bn sale of Viridor to KKK is on track for completion in early summer.
In an assessment of the financial impact of COVID-19 for 2020-21, Pennon warned that it expected non-household revenue to reduce, offset by increased household demand and said there was a risk from expected credit losses for businesses, retailers and households.
The company said it would deliver on its dividend commitment for 2019-20, with dividend per share up 6.6% to 43.77p.
In its full-year results to end of March 2020 for the continuing group without Viridor compared to 2018-19, pre-tax profit was down £8.7m to £183m, reflecting lower EBITDA, increased depreciation on asset growth and higher absolute interest.
Revenue rose marginally, from £632.6m to £636.7m as growing retail revenues from Pennon Water Services from outside of South West Water's operational region offset lower wholesale revenues from South West Water due to weather-driven reduced demand.
In its full-year results for the continuing group and Viridor, group revenue fell 6% to £1,389.9m, reflecting the exit from Viridor's Greater Manchester contract and lower demand at South West Water due to weather driven lower volume consumption by customers.
Underlying pre-tax profit increased 2.6% to £287.6m, while pre-tax profit for the year rose 15.8% to £301.5m, due to efficient financing providing a non-underlying gain.
The company said that prior to receipt of net cash proceeds from its sale of Viridor, it has strong funding and liquidity of £1.6bn.
Pennon reported that the sale of Viridor to KKK for £4.2bn is on track for early summer completion and that the net cash proceeds of £3.7bn will be used to reduce company borrowings, reduce the pension deficit, retain headroom for future value creating opportunities, and make a return to shareholders.
Chief executive Chris Coughlin said: 'Viridor has become a leader in engineering excellence, new technology and tackling environmental challenges, and the transaction recognises the strategic value that has been created over many years, accelerating the realisation of that value for shareholders.
'Following the sale, Pennon will be a leading UK-focused water infrastructure group, delivering for customers and providing services in the most efficient and sustainable way possible.'