Pennon on track to meet expectations after revenue declines
By Sean Farrell
Date: Friday 25 Sep 2020
(Sharecast News) - Pennon said it was on course to report first-half results in line with its own expectations after the Covid-19 crisis caused revenue to fall.
The FTSE 100 water company said the impact of Covid-19 was broadly in line with its early estimate for a £10m reduction in net revenue for the current financial year. Pennon said its results for the six months to the end of September were resilient.
Group revenue dropped in the first half as an increase in household use was more than offset by lower income from businesses and other organisations. Payment collections have stayed robust but Pennon said it was keeping a close watch on changes and patterns in response to new Covid-19 restrictions and changes in government support for people and businesses.
"Pennon is on track to deliver resilient financial results in line with management expectations," the company said. "The impact of Covid-19 to date is broadly in line with our initial assumptions for a net revenue impact in 2020/21 of £10m. We will continue to monitor the ongoing financial impact of Covid-19 closely."
Pennon completed the sale of its Viridor waste management business to private equity group Kohlberg Kravis Roberts for an enterprise value of £4.2bn in July. It is using some of the £3.7bn net proceeds to pay off £900m of debt wth about two-thirds of that figure repaid so far. It has also paid £36m into its pension schemes.
"With shorter term deposit rates remaining low, the swift repayment of debt has significantly reduced the Group's cost of carry," Pennon said.
The company, under new management led by Chief Executive Susan Davy, said it was considering what to do with the rest of the money from Viridor. Any investment would be weighed against the option of returning cash to shareholders, it said.
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