Solid 2019/20 performance
• We continue to do all we can to support our employees, customers and communities through this unprecedented COVID-19 pandemic, with the vast majority of operations continuing as usual
• Pennon is well positioned with strong funding and liquidity of £1.6 billion, prior to receipt of net cash proceeds from Viridor sale, to weather ongoing uncertainty
• Solid financial and operational performance across the Group, in line with management expectations, delivering for all our stakeholders, well positioned for K7 (2020-25)
• South West Water finished K6 (2015-20) with sector leading cumulative RORE1 of 11.8%
• Viridor has performed well, successfully delivering key priorities and growth investment
• Delivering on dividend commitment for 2019/20, announcing a sustainable 2020-25 dividend policy for the Continuing Group of CPIH2 +2% per annum
Proposed final dividend for the year ended 31 March 2020: 30.11p per share Ex div 23 JUl 20.
https://www.pennon-group.co.uk/system/f ... esults.pdf
The Board has evaluated the Group's dividend for 2019/20 in light of the COVID-19 pandemic and has concluded that it is appropriate for Pennon to continue to deliver on its dividend commitment. The Group has significant cash and liquidity of £1.6 billion (prior to receipt of net cash proceeds from the sale of Viridor), has not received any Government support measures and continues to progress our WaterShare+ scheme which will see c.£20 million of benefit shared with customers through a customer rebate or a stake in the business through Pennon shares. In addition, the majority of Pennon's shareholders are UK based pension funds, charities, employees, customers and other retail holders who rely on this income.
For 2019/20, the Board has recommended a final dividend of 30.11p, subject to shareholder approval at the Annual General Meeting on 31 July 2020. Together with the interim dividend of 13.66p, this will result in a total dividend of 43.77p, an increase of +6.6% from last year. This is in line with our dividend policy for 2010-2020 of Retail Price Index (RPI) +4% growth per annum, which has been achieved whilst investing more than £3.6 billion in our businesses over the past 10 years. Pennon offers shareholders the opportunity to invest their dividend in a Dividend Reinvestment Plan (DRIP).
The crystallisation of the Viridor sale is equivalent to 22.66p per share of the recommended 2019/20 dividend. This implies a Continuing Group dividend (after excluding Viridor) of 21.11p per share.
The Board intends to use the c.£3.7 billion of net cash proceeds to reduce Pennon's company borrowings and pension deficit, retain some funds for future opportunities, and make a return to shareholders. Details of additional returns to shareholders from the sale of the Viridor business will be announced in due course.
Pennon's dividend policy for 2020-25 for the re-based Continuing Group will be growth of CPIH + 2% per annum, from an implied Continuing Group dividend for 2019/20 of 21.11p per share. The shift from the existing policy of linking the growth in dividend from RPI to CPIH reflects the change in the regulatory model for South West Water, matching allowed revenues.
The re-based dividend reflects the sector leading position of the Continuing Group, with expectations for outperformance on financing and Totex supporting the sustainable dividend growth policy and dividend cover.
RNS here; https://www.investegate.co.uk/pennon-gr ... 00079127O/