Delivering sustainable profit and dividend growth

Pennon Group Chairman Ken Harvey said:

"The Group has delivered a resilient set of results for 2014/15. South West Water's EBITDA was higher than last year despite the tariff freeze, thanks to a strong focus on cost efficiency, and as expected Viridor's EBITDA exceeded last year. Viridor has made excellent progress in its Energy business bringing five new Energy Recovery Facilities on stream in the year. Pennon is well positioned to continue to deliver profitable growth and consistent, sustainable cash returns to shareholders. The Board was pleased to announce in March the continuation of the current dividend policy, targeting 4% year-on-year growth above RPI inflation to 2020."

2014/15 2013/14 Change
Group Revenue £1,357.2m £1,321.2m +2.7%
Group EBITDA(1) £411.0m £407.3m +0.9%
South West Water EBITDA(1) £331.3m £330.9m +0.1%
Viridor EBITDA(1) £80.4m £76.3m +5.4%
Viridor Underlying EBITDA(2) £135.3m £125.9m +7.5%
Group Profit Before Tax and exceptional items £210.7m £207.3m +1.6%
Group Profit Before Tax £197.0m £158.7m +24.1%
Exceptional items post-tax (£11.0m) (£39.7m) +72.3%
Capital Investment(3) £407.3m £434.1m (6.2%)
Earnings per share(4) 39.8p 42.6p (6.6%)
Dividend per share 31.80p 30.31p +4.9%

(1) EBITDA: Earnings before interest, tax, depreciation, amortisation and exceptional items
(2) EBITDA plus share of joint venture EBITDA and IFRIC 12 interest receivable
(3) Including construction spend on service concession arrangements
(4) Before net exceptional charges and deferred tax. Basic earnings per share (statutory basis) 32.3p

Financial Highlights:

  • Revenue up by +2.7% to £1,357.2m
  • EBITDA(1) up by +0.9% to £411.0m
    • South West Water up +0.1% to £331.3m, despite 2014/15 tariff freeze thanks to continued cost efficiency
    • Viridor EBITDA up +5.4% to £80.4m, with Energy Recovery Facilities (ERFs) contributing significantly
  • Profit before tax(2) up +1.6% to £210.7m
    • South West Water up +3.3% to £167.9m
    • Viridor up +0.4% to £27.7m
  • Net exceptional post-tax charge of £11.0m
    • impairment of a small number of landfill sites, and underperforming contracts, partly offset by a reduction in environmental provisions and reduced retirement benefit obligations following pension scheme benefit changes
  • Net debt stable at £2,197.1m, implying Net Gearing of 61.9%(3)
    • reflects Pennon Group's efficient financing
    • convertible bonds of £125m fully converted; 20.9m Pennon shares issued
    • financing of £100.3m cash consideration for Bournemouth Water via successful equity placing after year end
  • Strong liquidity and financing position
    • cash and committed facilities of £1,741m, of which £771m in cash balances
  • Earnings per share(4) down (6.6%) to 39.8p
    • reflecting underlying impact of tariff freeze, which will be recovered on an NPV neutral basis over 2015 - 2020
  • Full year dividend up +4.9% to 31.80p
    • policy of 4% year-on-year dividend growth over RPI inflation to continue to 2020

(1) EBITDA: Earnings before interest, tax, depreciation, amortisation and exceptional items
(2) Before net exceptional charges. Group statutory profit before tax £197.0m
(3) Net borrowings/(equity + net borrowings)
(4) Before net exceptional charges and deferred tax. Basic earnings per share (statutory basis) 32.3p

Presentation of Results:

A presentation for City audiences will be held today, Wednesday, 20 May 2015, at 11am at Vintners' Hall, 68 Upper Thames Street, London, EC4V 3BG.

A live webcast of the presentation can also be accessed using the following link:
pennon-group.co.uk/investor-information/financial-reports-and-presentations.

For further information, please contact:

Susan Davy
Group Director of Finance - Pennon
Sarah Heald
Head of Investor Relations - Pennon
01392 443 401

James Murgatroyd
Finsbury
0207 251 3801

About Pennon:

Pennon Group Plc is an environmental utility infrastructure company, which owns South West Water Limited and Viridor Limited. The Group has assets of over £5 billion and a workforce of over 4,500 people.

South West Water provides water and sewerage services to a population of approximately 1.7 million in Devon and Cornwall and parts of Dorset and Somerset.

Viridor is one of the leading UK renewable energy, recycling and waste management companies providing services to local authorities and businesses across the UK. Its strategy is focused on transforming waste, using input materials to produce vital renewable energy, high quality recyclates and raw materials.

On 15 April 2015, Pennon Group acquired Bournemouth Water from Sembcorp Holdings Limited. Bournemouth Water provides water services to a population of approximately 440,000 people in the Bournemouth and Christchurch region.

Further information on Pennon can also be found on the Group's website, www.pennon-group.co.uk

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