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"value": "Notes to the Financial Statements Notes to the Financial Statements 117766 AAnnnnuuaall RReeppoorrtt aanndd AAccccoouunnttss 22002233 || PPeennnnoonn GGrroouupp ppllcc 1. General information Pennon Group plc is a company registered in the United Kingdom under the Companies Act 2006. The address of the registered office is given on page 227. Pennon Group\u2019s business is operated through two principal subsidiaries. South West Water Limited, providing water and wastewater services in Devon, Cornwall and parts of Dorset and Somerset and water only services in parts of Dorset, Hampshire, Wiltshire and Bristol. Following the statutory licence transfer from Bristol Water plc to South West Water Limited on 1 February 2023 the regulated water business of Bristol Water plc transferred to South West Water Limited. Pennon Group is the majority shareholder of Pennon Water Services Limited, a company providing water and wastewater retail services to non- household customer accounts across Great Britain. Bristol Water Holdings UK Limited owns a 30% share in Water 2 Business Limited, a joint venture with Wessex Water, operating in the same sector as Pennon Water Services Limited. 2. Principal accounting policies The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to the years presented. (a) Basis of preparation These financial statements have been prepared on the historical cost accounting basis (except for fair value items, principally acquisitions, transfers of assets from customers and certain financial instruments as described in accounting policy notes (b), (u) and (n) respectively) and in accordance with UK-adopted international accounting standards and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006. The Company has taken advantage of section 408 of the Companies Act 2006 not to present the parent company profit and loss account. These financial statements are presented in pounds sterling and all values rounded to the nearest one-hundred thousand pounds, except when otherwise indicated. A summary of the principal accounting policies is set out below, together with an explanation where changes have been made to previous policies on the adoption of new accounting standards and interpretations in the year. The going concern basis has been adopted in preparing these financial statements. At 31 March 2023 the Group has access to undrawn committed funds and cash and cash deposits totalling \u00a3420 million, including cash and other short-term deposits of \u00a3165 million and \u00a3255 million of undrawn facilities. Cash and other short-term deposits include \u00a322 million of restricted funds deposited with lessors which are available for access, subject to being replaced by an equivalent valued security. In making their assessment, the Directors reviewed the principal risks and considered which risks might threaten the Group\u2019s going concern status, to do this the Group\u2019s business plan has been stress-tested. Whilst the Group\u2019s risk management processes seek to mitigate the impact of principal risks as set out on pages 52 to 62, individual sensitivities against these risks have been identified. These sensitivities, which are ascribed a value with reference to risk weighting, factoring in the likelihood of occurrence and financial impact, were applied to the baseline financial forecast which uses the Group\u2019s annual budget for FY 2023/24 and longer-term strategic business plan for the remainder of the going concern period to 30 June 2024. The forecast includes our new syndicated \u00a3300 million private placement. During the year we also agreed updated covenant terms on the majority of our facilities and the Directors are confident that the covenant update process for the remaining small number of lenders will be concluded satisfactorily in the very near term. For facilities where changes to covenant terms are not finalised at the date of approval of the financial statements, we have modelled the impact on the Group\u2019s solvency, using existing terms, under a stress-tested scenario, and concluded this does not compromise the going concern of the Group over the assessment period. The risks and sensitivities include consideration of; legislative impacts such as change in government policy and non-compliance with laws and regulations, macro-economic impacts such as inflation and interest rate increases, and operational impacts such as ensuring adequate water resources and failure of operational assets. A combined stress testing scenario has been performed to assess the overall impact of these individual scenarios impacting the Group collectively. The combined weighted impact of the risks occurring is c.\u00a3120m, this value is considered equivalent to an extreme one-off event that could occur within a year, the probability of such an event happening is deemed unlikely. Through this testing, it has been determined that none of the individual principal risks would in isolation, or in aggregate, compromise the going concern of the Group over the going concern period, the assessment has been considered by reviewing the impact on the solvency position as well as debt and interest covenants. In the combined scenario to ensure that the Group was able to continue as a going concern, additional mitigations could be deployed to reduce gearing and increase covenant headroom. Examples of mitigations could include; reduction in discretionary operational expenditure, deferral of capital expenditure and / or cancellation of non-essential capital expenditure, reduction in the amount of dividend payable, and raising additional funding. In addition, we have modelled a reverse engineered scenario that could possibly compromise the Group\u2019s solvency over the going concern assessment period. This scenario builds on the factors above and additionally assumes all the Group\u2019s principal risks are incurred within the going concern period, with no probability weightings attached. The Board considered the likelihood of this scenario on the Group\u2019s solvency over the going concern period, as remote, given this would require all of the principal risks to be incurred at maximum impact within the same time frame, without implementing controllable mitigations, as noted above, or raising additional funding. Having considered the Group\u2019s funding position and financial projections, which take into account a range of possible impacts, as described in this report, the Directors have a reasonable expectation that that the Group will meet the requirements of its covenants and has adequate resources to continue in operational existence for the period to at least the end of the going concern assessment period of 30 June 2024, and that there are no material uncertainties to disclose. For this reason, they continue to adopt the going concern basis in preparing the financial statements. In preparing the financial statements management has considered the impact of climate change, taking into account the relevant disclosures in the Strategic Report, including those made in accordance with the recommendations of the Taskforce on Climate-related Financial Disclosure. The expected environmental impact of climate change on the water business has been modelled noting that the physical risks are increasing. It is likely that the Group will need to invest to protect certain assets such as sewage works and pumping stations against sea level inundation and these considerations form part of the planning process for new capital expenditure. Longer term investment, outlined in the strategic plans, will be needed to manage future risks. To achieve this, combined regulatory and government support within their policy frameworks will be essential. Whilst it is estimated additional spend will be required to manage future risks, the current available information and assessment did not identify any risks that would require the useful economic lives of assets to be reduced in the year or identify the need for impairment that would impact the carrying values of such assets or have any other impact on the financial statements. The impact assessments will be continuously updated to reflect the latest available information on the impact of climate change. New standards or interpretations which were mandatory for the first time in the year beginning 1 April 2022 did not have a material impact on the net assets or results of the Group and the parent company. New standards or interpretations due to be adopted from 1 April 2023 are not expected to have a material impact on the Group\u2019s and the parent company\u2019s net assets or results. Existing borrowing covenants are not impacted by changes in accounting standards. 2. Principal accounting policies continued (b) Basis of consolidation The Group financial statements include the results of Pennon Group plc and its subsidiaries and joint ventures. The results of subsidiaries and joint ventures are included from the date of acquisition or incorporation and excluded from the date of disposal. The results of subsidiaries are consolidated where the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The results of joint ventures are accounted for on an equity basis. Intra-group trading, loan balances and transactions are eliminated on consolidation. The acquisition method of accounting is used to account for the purchase of subsidiaries. The excess of the value transferred to the seller in return for control of the acquired business, together with the fair value of any previously held equity interest in that business over the Group\u2019s share of the fair value of the identifiable net assets, is recorded as goodwill. (c) Revenue recognition Group revenue is recognised following delivery of performance obligations and an assessment of when control over the product or service is transferred to the customer. Revenue is only recognised when collection of consideration is highly probable. Revenue is recognised either when the performance obligation in the contract has been performed (point in time recognition) or \u2018over time\u2019 as the performance obligations to the customer are satisfied. For each obligation satisfied over time, the Group applies a revenue recognition method that accurately reflects performance in transferring control of the services to the customer. Where a contract with a customer includes more than one performance obligation, revenue is allocated to each obligation in proportion to a fair value assessment of the total contract sales value split across the services provided. At the inception of a contract the total transaction price is estimated, being the fair value to which the Group expects to be entitled under the contract, including any variable consideration. Variable consideration is based on the most likely outcome of the performance obligations. Revenue excludes value added tax, trade discounts and revenue arising from transactions between Group companies. Water (domestic and non-household retail) For most of the services provided to domestic customers, contract terms are implied through statute and regulation in the absence of formal, written contracts. South West Water and Bristol Water have a duty under legislation to provide domestic customers with services regardless of payment and is not permitted to disconnect domestic customers for non-payment of bills. Charges are set via the periodic review price-setting process, regulated by Ofwat. In respect of ongoing, continuous services to customers, such as the provision of drinking water and wastewater services, revenue is recognised over time. Customers with an unmeasured supply are billed at the start of the year for the full amount of the annual charge but typically take advantage of a choice of payment arrangements to pay by regular instalments. The performance obligation has been assessed as standing ready to provide water and sewerage services when required by our customers, and accordingly revenue is recognised under IFRS 15 as the stand-ready obligation is fulfilled over time. Customers with a metered supply are sent up to four bills per year, based either on actual meter readings or estimated usage. For these customers, revenue includes an estimation of the amount of unbilled usage at the period end. Payment options for domestic customers include an annual meter payment plan where customers agree to pay a fixed amount per month which is adjusted to reflect actual consumption at the end of the year. Revenue is recognised as water is supplied, based on estimate usage for unbilled elements. A range of regulated services is offered to property developers and owners who require connection to the water and sewerage networks or need the networks to be extended or altered. Typically, these customers pay an estimate of the charges in advance as a deposit, which is treated as a contract liability and are billed or refunded the difference between the estimate and actual costs on completion of the work. The principle components of these contributions are as follows: i) Where the performance obligation relates solely to a connection to the network, revenue is recognised at the point of connection when the customer is deemed to obtain control. ii) Where assets are constructed or provided by the Group or assets transferred to the Group, it is considered that there is an explicit or implied performance obligation to provide an ongoing water and/or wastewater service, with the result that revenue is recognised over a time no longer than the economic life of assets provided by or transferred to the Group. Pennon Water Services provides specialist retail water and wastewater services to business customers. It raises bills and recognises revenue in accordance with its contracts with customers and in line with the limits established for the non-household periodic price-setting process where applicable. Contract assets and liabilities A trade receivable is recognised when the Group has an unconditional right to receive consideration in exchange for performance obligations already fulfilled. A contract asset is recognised when the Group has fulfilled some of its performance obligations but has not yet obtained an unconditional right to receive consideration. The amounts for contract assets, when applicable, are disclosed within note 19 (Other non-current assets) and note 22 (Trade and other receivables) as appropriate. A contract liability is recognised when consideration is received in advance of the Group performing its performance obligations to customers, including, when appropriate, transfers of assets from customers (per paragraph (u) below). The value of contract liabilities is disclosed within note 26 (Trade and other payables) and note 29 (Other non- current liabilities) as appropriate. (d) Segmental reporting Each of the Group\u2019s business segments provides services which are subject to risks and returns which are different from those of the other business segments. The Group\u2019s internal organisation and management structure and its system of internal financial reporting are based primarily on business segments. The Group is organised into two operating segments. The water segment comprises the regulated water and wastewater services undertaken by South West Water. The non-household retail business reflects the services provided by Pennon Water Services. Other segments, including Pennon Group plc, are not reportable segments as they are not reported to Chief Decision makers. Segmental revenue and results include transactions between businesses. Inter-segmental transactions are eliminated on consolidation. (e) Goodwill Goodwill arising on consolidation from the acquisition of subsidiary undertakings represents the excess of the purchase consideration over the fair value of net assets acquired, less any subsequent impairment charges. Goodwill is recognised as an asset and reviewed for impairment at least annually. Any impairment is recognised immediately in the income statement and is not subsequently reversed. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units (CGUs) or group of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal reporting purposes. Goodwill is allocated and monitored at the reportable operating segment level. Further details are contained in accounting policy (i). When a subsidiary undertaking is sold, the profit or loss on disposal is determined after including the attributable amount of goodwill. Notes to the Financial Statements continued 117788 AAnnnnuuaall RReeppoorrtt aanndd AAccccoouunnttss 22002233 || PPeennnnoonn GGrroouupp ppllcc 2. Principal accounting policies continued (f) Other intangible assets Other intangible assets include assets acquired in business combination and are capitalised at fair value at the date of acquisition. Following initial recognition, finite life intangible assets are amortised on a straight- line basis over their estimated useful lives, with the expense charged to the income statement through operating costs. (g) Property, plant and equipment i) Infrastructure assets (being water mains and sewers, impounding and pumped raw water storage reservoirs, dams, pipelines and sea outfalls) Infrastructure assets were included at fair value on transition to IFRS, and subsequent additions are recorded at cost less accumulated depreciation and impairment charges. Expenditure to increase capacity or enhance infrastructure assets is capitalised where it can be reliably measured, and it is probable that incremental future economic benefits will flow to the Group. The cost of day to day servicing of infrastructure components is recognised in the income statement as it arises. Infrastructure assets are depreciated evenly over their useful economic lives, and are principally: Dams and impounding reservoirs 100 to 200 years Water mains 60 to 180 years Sewers 75 to 150 years Assets in the course of construction are not depreciated until commissioned. ii) Other assets (being property, overground plant and equipment) Other assets are included at cost less accumulated depreciation. Freehold land is not depreciated. Other assets are depreciated evenly to their residual value over their estimated economic lives, and are principally: Land and buildings \u2013 freehold buildings 10 to 80 years Land and buildings \u2013 leasehold buildings Over the estimated economic lives or the lease period, whichever is the shorter Operational properties 15 to 100 years Fixed plant 10 to 30 years Vehicles, mobile plant and computers 4 to 20 years Assets in the course of construction are not depreciated until commissioned. The cost of assets includes directly attributable labour and overhead costs which are incremental to the Group. Borrowing costs directly attributable to the construction of a qualifying asset (an asset necessarily taking a substantial period of time to be prepared for its intended use) are capitalised as part of the asset. Assets transferred from customers are recognised at fair value as set out in accounting policy (u). The assets\u2019 residual values and useful lives are reviewed annually. Gains and losses on disposal are determined by comparing sale proceeds with carrying amounts. These are included in the income statement. (h) Leased assets All are accounted for by recognising a right-of-use asset and a lease liability except for: \u2022 Low value assets; and \u2022 Leases with a duration of 12 months or less. Contracts are initially measured at the present value of contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless this is not readily determinable, in which case the Group\u2019s incremental borrowing rate on commencement of the lease is used. After initial measurement, lease payments are allocated between the liability and finance cost. The finance cost is charged to profit and loss over the lease period to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The interest element of cash payments in respect of these leases is included within interest payments in determining net cash generated from operating activities. The capital element of the cash payment is included within cash flows from financing activities. Right-of-use assets are amortised on a straight- line basis over the remaining term of the lease or the remaining economic life of the asset if shorter. When the Group revisits its estimate of lease term (because, for example, it reassesses an extension option), it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which is discounted at the same discount rate that applied on lease commencement. In these circumstances an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining (revised) lease term. Assets are included as property, plant and equipment as right-of-use assets at the present value of the minimum lease payments and are depreciated over their estimated economic lives or the finance lease period, whichever is the shorter. The corresponding liability is recorded as borrowings. The interest element of the rental costs is charged against profits using the actuarial method over the period of the lease. The Group regularly uses sale and leaseback transactions to finance its capital programme. A sale and leaseback transaction is where the Group sells an asset and immediately reacquires the use of the asset by entering into a lease with the buyer. Each transaction is assessed as to whether it meets the criteria within IFRS 15 \u2018Revenue from contracts with customers\u2019 for a sale to have occurred. If the sale criteria are met a lease liability is recognised, the associated property, plant and equipment asset is derecognised, and a right-of-use asset is recognised at the proportion of the carrying value relating to the right retained. Any gain or loss arising relates to the rights transferred to the buyer. If the criteria for a sale under IFRS 15 have not been met the asset is not derecognised and no sale is recorded. (i) Impairment of non-financial assets Assets with an indefinite useful life are not subject to amortisation and are tested annually for impairment, or whenever events or changes in circumstance indicate that the carrying amount may not be recoverable. Assets subject to amortisation or depreciation are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which an asset\u2019s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset\u2019s fair value, less costs to sell, and value- in-use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Value-in-use represents the present value of projected future cash flows expected to be derived from a CGU, discounted using a pre- tax discount rate which reflects an assessment of the market cost of capital of the CGU. Impairments are charged to the income statement in the year in which they arise. Non-financial assets other than goodwill that have been impaired are reviewed for possible reversal of the impairment at each reporting date. Where a previously impaired asset or CGU\u2019s recoverable amount is in excess of its carrying amount, previous impairments are reversed to the carrying value that would have expected to be recognised had the original impairment not occurred. 2. Principal accounting policies continued
(j) Parent company: Investment in subsidiary undertakings
Investments in subsidiary undertakings are initially recorded at cost,
being the fair value of the consideration paid. Subsequently investments
are reviewed for impairment on an individual basis annually or if events
or changes in circumstances indicate that the carrying value may not be
fully recoverable.
(k) Investment in associated companies
Associated companies are entities over which the Group exercises joint
control. Investments in associated companies are accounted for using
the equity method of accounting. Any excess of the cost of acquisition
over the Group\u2019s share of the fair values of the identifiable net assets of
the associated company at the date of acquisition is recognised as
goodwill and is included in the carrying value of the investment in the
associated company.
The carrying value of the Group\u2019s investment is adjusted for the Group\u2019s
share of post-acquisition profits or losses recognised in the income
statement and statement of comprehensive income. Losses of an
associated company in excess of the Group\u2019s interest are not recognised
unless the Group has a legal or constructive obligation to fund those
losses.
(l) Inventories
Inventories are stated at the lower of cost and net realisable value. The
cost of finished goods and work in progress includes raw materials and
the cost of bringing stocks to their present location and condition. It
excludes borrowing costs. Net realisable value is the estimated selling
price less cost to sell. The costs of items of inventory are determined
using weighted average costs.
(m) Cash and cash deposits
Cash and cash deposits comprise cash in hand and short-term deposits
held at banks. Bank overdrafts are offset against cash balances where
there is a legally enforceable right to offset and there is an intention to
settle the balances on a net basis. Otherwise, overdrafts are included
within current borrowings.
(n) Financial instruments
Financial instruments are recognised and measured in accordance with
IFRS 9. The Group classifies its financial instruments in the following
categories:
i) Debt instruments at amortised cost
All loans and borrowings are initially recognised at fair value, net of
transaction costs incurred. Following initial recognition, interest-bearing
loans and borrowings are subsequently stated at amortised cost using
the effective interest method. Gains and losses are recognised in the
income statement when instruments are derecognised or impaired.
Premia, discounts and other costs and fees are recognised in the income
statement through amortisation.
Borrowings are classified as current liabilities unless the Group has an
unconditional right to defer settlement of the liability for at least 12
months after the balance sheet date.
ii) Trade receivables
Trade receivables do not carry any interest receivable and are
recognised initially at fair value and subsequently at amortised cost
using the effective interest method, less provision for expected credit
losses (ECLs). In accordance with IFRS 9, each Group entity performs an
impairment analysis at each reporting date to measure the ECLs. Each
entity does not track changes in credit risk but instead recognises a loss
allowance based on lifetime ECLs at each reporting date. Each
subsidiary has established a provision matrix that is based on its
historical credit loss experience, adjusted for forward-looking factors
specific to the receivables and the economic environment.
iii) Trade payables
Trade payables are not interest-bearing and are recognised initially at
fair value and subsequently measured at amortised cost using the
effective interest method.
iv) Derivative financial instruments and hedging activities
The Group uses derivative financial instruments, principally interest rate
swaps, cross-currency interest rate swaps and inflation swaps to hedge
risks associated with interest rate and exchange rate fluctuations.
Derivative instruments are initially recognised at fair value on the date
the derivative contract is entered into and subsequently remeasured at
fair value for the reported balance sheet.
The Group designates certain hedging derivatives as either:
\u2022 A hedge of a highly probable forecast transaction or change in the
cash flows of a recognised asset or liability (a cash flow hedge); or
\u2022 A hedge of the exposure to change in the fair value of a recognised
asset or liability (a fair value hedge).
The gain or loss on remeasurement is recognised in the income
statement except for cash flow hedges which meet the conditions for
hedge accounting, when the portion of the gain or loss on the hedging
instrument which is determined to be an effective hedge is recognised
directly in equity, and the ineffective portion in the income statement.
The gains or losses deferred in equity in this way are subsequently
recognised in the income statement in the same period in which the
hedged underlying transaction or firm commitment is recognised in the
income statement.
In order to qualify for hedge accounting, the Group is required to
document in advance the relationship between the item being hedged
and the hedging instrument. The Group is also required to document
and demonstrate an assessment of the relationship between the hedged
item and the hedging instrument which shows that the hedge will be
highly effective on an ongoing basis. This effectiveness testing is
reperformed at the end of each reporting period to ensure that the
hedge remains highly effective.
The full fair value of a hedging derivative is apportioned on a straight-
line basis between non-current and current assets and liabilities based
on the remaining maturity of the hedging derivative.
Derivative financial instruments deemed held for trading, which are
not subject to hedge accounting, are classified as a current asset or
liability with any change in fair value recognised immediately in the
income statement.
The Group uses cross-currency swaps for some of its foreign currency
denominated private placement borrowings. The swaps either have the
effect of (i) converting variable rate foreign currency borrowings into
fixed rate sterling borrowings, (ii) converting fixed rate foreign currency
borrowings into fixed rate sterling borrowings, or (iii) converting fixed
rate foreign currency borrowings into floating rate sterling borrowings.
v) Financial instruments at fair value through profit
Financial instruments at fair value through profit reflect the fair value
movement of the hedged risk on a hedged item through a fair value
hedging relationship. The fair values of these financial instruments are
initially recognised on the date the hedging relationship is entered into
and thereafter remeasured at each subsequent balance sheet date. The
gain or loss on remeasurement for the period is recognised in the
income statement.
vi) Receivables due from subsidiary undertakings
Amounts owed by subsidiaries are classified and recorded at amortised
cost and reduced by allowances for ECLs. Estimated future credit losses
are first recorded on initial recognition of a receivable and are based on
estimated probability of default. Individual balances are written off when
management deems them not to be collectible.
Notes to the Financial Statements continued
118800 AAnnnnuuaall RReeppoorrtt aanndd AAccccoouunnttss 22002233 || PPeennnnoonn GGrroouupp ppllcc
2. Principal accounting policies continued
(o) Taxation including deferred tax
The tax charge for the year comprises current and deferred tax. Tax is
recognised in the income statement, except to the extent that it relates
to items recognised in the statement of comprehensive income or
directly in equity. In this case the tax is also recognised in the statement
of comprehensive income or directly in equity as appropriate.
Current tax is calculated on the basis of tax laws enacted or
substantively enacted at the balance sheet date. Management
periodically evaluates tax items subject to interpretation and establishes
provisions on individual tax items, where in the judgement of
management, the position is uncertain. The Group includes a number of
companies, including the parent company, which are part of a tax group
for certain aspects of the tax legislation. One of these aspects relates to
group relief whereby current tax liabilities can be offset by current tax
losses arising in other companies within the same tax group. Payments
for group relief are included within the current tax disclosures.
Deferred tax is provided in full on temporary differences between the
carrying amount of assets and liabilities in the financial statements and
the tax base, except where they arise from initial recognition of an asset
or liability in a transaction, other than a business combination, that at the
time of the transaction affects neither accounting nor taxable profit or
loss. Deferred tax assets are recognised only to the extent that it is
probable that future taxable profits will be available against which the
assets can be realised. Deferred tax is determined using the tax rates
enacted or substantively enacted at the balance sheet date, and
expected to apply when the deferred tax liability is settled or the
deferred tax asset is realised.
(p) Provisions
Provisions are made where there is a present legal or constructive
obligation as a result of a past event and it is probable that there will be
an outflow of economic benefits to settle this obligation and a reliable
estimate of this amount can be made. Where the effect of the time value
of money is material the current amount of a provision is the present
value of the expenditures expected to be required to settle obligations.
The unwinding of the discount to present value is included as notional
interest within finance costs.
(q) Share capital and treasury shares
Ordinary shares are classified as equity.
Where the Company purchases the Company\u2019s equity share capital
(treasury shares) the consideration paid, including any directly
attributable costs, is deducted from equity until the shares are cancelled
or reissued. Where such shares are subsequently reissued, any
consideration received, net of any directly attributable transaction costs,
is included in equity.
The Group balance sheet includes the shares held by the Pennon Group
plc Employee Benefit Trust, relating to employee share-based payments,
which have not vested at the balance sheet date. These are shown as a
deduction from shareholders\u2019 equity until such time as they vest.
Share buy-back scheme and tender offer
Shares purchased for cancellation are deducted from retained earnings
at the total consideration paid or payable, including any related
expenses. Where the Group has an irrevocable commitment to purchase
shares for cancellation at the balance sheet date, a liability is recognised
in other creditors based on the share price at the balance sheet date
and retained earnings reduced by the amount of the liability.
Shares purchased and held by the Group (treasury shares) are deducted
from the treasury reserve at the total consideration paid or payable. On
cancellation of treasury shares, the cost is transferred from the treasury
reserve to retained earnings.
When treasury shares are issued at below cost, an amount representing
the difference between the cost of those shares and issue proceeds is
transferred to retained earnings. No gain or loss is recognised in the
consolidated income statement on the purchase, sale, issue or
cancellation of the Group\u2019s own equity instruments.
(r) Dividend distributions
Dividend distributions are recognised as a liability in the financial
statements in the period in which the dividends are approved by
the Company\u2019s shareholders. Interim dividends are recognised when
paid, final dividends when approved by shareholders at the Annual
General Meeting.
(s) Employee benefits
i) Retirement benefit obligations
The Group operates defined benefit and defined contribution
pension schemes.
Defined benefit pension schemes
The liability recognised in the balance sheet in respect of defined benefit
pension plans is the present value of the defined benefit obligation at
the end of the year less the fair value of plan assets. If the value of a
plan\u2019s assets exceeds the present value of its obligations, the resulting
surplus is only recognised if the Group has an unconditional right to
that surplus.
The defined benefit obligation is calculated by independent actuaries
who advise on the selection of Directors\u2019 best estimates of assumptions,
using the projected unit credit method. The present value of the defined
benefit obligation is determined by discounting the estimated future
cash outflows using interest rates of high-quality corporate bonds, and
that have terms to maturity approximating to the terms of the related
pension obligation. The increase in liabilities of the Group\u2019s defined
benefit pension schemes, expected to arise from employee service in the
year, is charged against operating profit.
Changes in benefits granted by the employer are recognised
immediately as a past service cost in the income statement.
Actuarial gains and losses arising from experience adjustments and
changes in actuarial assumptions are charged or credited to equity in
the statement of comprehensive income in the period in which they
arise.
Defined contribution scheme
Costs of the defined contribution pension scheme are charged to the
income statement in the year in which they arise. The Group has no
further payment obligations once the contributions have been paid.
ii) Share-based payment
The Group operates a number of equity-settled, share-based payment
plans for employees. The fair value of the employee services required in
exchange for the grant is recognised as an expense over the vesting
period of the grant.
Fair values are calculated using an appropriate pricing model. Non-
market-based vesting conditions are adjusted for assumptions as to the
number of shares which are expected to vest.
(t) Fair values
The fair value of interest rate, inflation and cross currency swaps is
based on the market price to transfer the asset or liability at the balance
sheet date in an ordinary transaction between market participants. The
fair values of short-term deposits, loans and overdrafts with a maturity of
less than one year are assumed to approximate to their book values. In
the case of non-current bank loans and other loans, the fair value of
financial liabilities for disclosure purposes is estimated by discounting
the future contractual cash flows at the current market interest rate
available to the Group for similar financial instruments.
2. Principal accounting policies continued
(u) Transfers of assets from customers
Where an item of property, plant and equipment that must be used to
connect customers to the network is received from a customer, or where
cash is received from a customer for the acquisition or construction of
such an item, that asset is recorded and measured on initial recognition
at its fair value. The credit created by the recognition of the asset is
recognised as a contract liability on the balance sheet. The contract
liability reduces, and revenue is recognised in the income statement, as
performance obligations are satisfied. The period over which the credit is
recognised depends upon the nature of the service provided, as
determined by the agreement with the customer. Where the service
provided is solely a connection to the network, the credit is recognised
at the point of connection. If the agreement does not specify a period,
revenue is recognised over a period no longer than the economic life of
the transferred asset used to provide the ongoing service.
The fair value of assets on transfer from customers is determined using
a cost valuation approach allowing for depreciation.
(v) Foreign exchange
Transactions denominated in foreign currencies are translated at the
exchange rate at the date of the transaction. Monetary assets and
liabilities denominated in a foreign currency are translated at the closing
balance sheet rate. The resulting gain or loss is recognised in the
income statement.
(w) Non-underlying items
Non-underlying items are those that in the Directors\u2019 view should be
separately disclosed by virtue of their size, nature or incidence to enable
a full understanding of the Group\u2019s financial performance.
(x) Grants and contributions
Grants and contributions receivable in respect of property, plant and
equipment which provide the customer with ongoing access to the
water and sewerage networks, are treated as contract liabilities and
released to revenue over the economic life of those elements of
property, plant and equipment. Grants and contributions receivable in
respect of expenses charged against profits in the year have been
included in the income statement.
Government grants are recognised where there is reasonable certainty
that the grant will be received and all attached conditions will be
complied with. When the grant relates to an expense item, it is
recognised on a systematic basis over the periods that the related costs,
for which it is intended to compensate, are expensed. The income from
such grants is presented in the financial statements as a deduction from
the expense to which it relates.
3. Financial risk management
(a) Financial risk factors
The Group\u2019s activities expose it to a variety of financial risks: liquidity
risk; market risk (interest rate and foreign currency risk); credit risk and
inflation risk.
The Group\u2019s treasury function seeks to ensure that sufficient funding is
available to meet foreseeable needs and to maintain reasonable
headroom for contingencies and manages inflation and interest rate risk.
The principal financial risks faced by the Group relate to liquidity,
interest rate and credit counterparty risk.
These risks and treasury operations are managed by the Group Chief
Financial Officer in accordance with policies established by the Board.
Major transactions are individually approved by the Board. Treasury
activities are reported to the Board and are subject to review by internal
audit.
Financial instruments are used to raise finance, manage risk, optimise
the use of surplus funds and manage overall interest rate performance.
The Group does not engage in speculative activity.
i) Liquidity risk
The Group actively maintains a mixture of long-term and short-term
committed facilities which are designed to ensure the Group has
sufficient available funds for operations and planned expansions
equivalent to at least one year\u2019s forecast requirements at all times.
Details of undrawn committed facilities and short-term facilities are
provided in note 28.
Refinancing risk is managed under a Group policy that requires that no
more than 20% of Group net borrowings should mature in any financial
year.
The Group and water business have entered into covenants with
lenders. While terms vary, these typically provide for limits on gearing
(primarily based on the water business\u2019s regulatory capital value and
unregulated EBITDA) and interest cover. Existing covenants are not
impacted by subsequent changes to accounting standards.
Notes to the Financial Statements continued
118822 AAnnnnuuaall RReeppoorrtt aanndd AAccccoouunnttss 22002233 || PPeennnnoonn GGrroouupp ppllcc
3. Financial risk management continued
(a) Financial risk factors continued
Contractual undiscounted cash flows, including interest payments, at the balance sheet date were:
Due within
1 year
\u00a3m
Due between
1 and 2 years
\u00a3m
Due between
2 and 5 years
\u00a3m
Due over
5 years
\u00a3m
Total
\u00a3m
Group
31 March 2023
Non-derivative financial liabilities
Borrowings excluding lease liabilities 92.7 64.4 364.3 1,544.7 2,066.1
Interest payments on borrowings 86.7 83.0 208.3 768.7 1,146.7
Lease liabilities including interest 70.9 88.5 282.1 1,243.7 1,685.2
Trade and other payables 174.0 \u2013 \u2013 \u2013 174.0
Derivative contracts
Derivative contracts \u2013 net payments/(receipts) (0.8) (4.6) (0.6) 0.3 (5.7)
31 March 2022
Non-derivative financial liabilities
Borrowings excluding lease liabilities 70.0 101.4 221.0 1,596.9 1,989.3
Interest payments on borrowings 56.8 57.1 89.4 492.4 695.7
Lease liabilities including interest 189.4 46.4 227.7 1,157.7 1,621.2
Trade and other payables 134.4 \u2013 \u2013 \u2013 134.4
Derivative contracts
Derivative contracts \u2013 net payments/(receipts) (3.6) (6.5) (7.9) (2.2) (20.2)
Company
31 March 2023
Non-derivative financial liabilities
Borrowings (including intercompany borrowings) 279.1 8.8 146.9 \u2013 434.8
Interest payments on borrowings 9.6 9.3 6.7 6.0 31.6
Trade and other payables 3.6 \u2013 \u2013 \u2013 3.6
31 March 2022
Non-derivative financial liabilities
Borrowings (including intercompany borrowings) 312.8 \u2013 75.1 79.4 467.3
Interest payments on borrowings 6.5 6.6 13.8 2.5 29.4
Trade and other payables 5.7 \u2013 \u2013 \u2013 5.7
ii) Market risk
The treasury policy states at least 60% of the Group\u2019s debt should be fixed, this is managed through fixed rate debt and the use of derivatives to
ensure these levels are met. Of the Group\u2019s net borrowings a proportion is RPI index-linked. The interest rate for index-linked debt is based mainly
upon an RPI measure; due to current Ofwat methodology the Group has considered other index linked indices which are also used in determining the
amount of revenue from customers of South West Water. The Group uses a combination of fixed rate, index-linked borrowings and fixed rate interest
swaps as cash flow hedges of future variable interest payments to achieve this policy. The notional principal amounts of the interest rate swaps are
used to determine settlement under those swaps and are not therefore an exposure for the Group. These instruments are analysed in note 23.
The Group has no significant interest-bearing assets upon which the net return fluctuates from market risk. Deposit interest receivable is expected
to fluctuate in line with interest payable on floating rate borrowings. Consequently, the Group\u2019s income and cash generated from operations (note 37)
are independent of changes in market interest rates.
For 2023 if interest rates on variable net borrowings had been on average 1% higher/lower with all other variables held constant, post-tax profit for the
year and equity would have increased/decreased by \u00a36.4 million (2022 post tax profit for the year and equity would have increased/decreased by \u00a34.3
million), for the equity sensitivity fair value, with derivative impacts excluded. This provides an indication of the changes which could be expected and
can be multiplied to support sensitivity analysis, the expected volatility is within the range of 0%-2%.
For 2023 if the indices on index-linked borrowings had been on average 1% higher/lower with all other variables held constant, post-tax profit for the
year and equity would have decreased/increased by \u00a33.8 million (2022 post tax profit for the year and equity would have increased/decreased by \u00a36.5
million). This provides an indication of the changes which could be expected and can be multiplied to support sensitivity analysis, the expected
volatility is within the range of 3%-7%.
Foreign currency risk occurs at transactional and translation level from borrowings and transactions in foreign currencies. These risks are managed
through forward contracts, which provide certainty over foreign currency risk.
iii) Credit risk
Credit counterparty risk arises from cash and cash deposits, derivative financial instruments and exposure to customers, including outstanding
receivables. Further information on the credit risk relating to trade and other receivables is given in note 22.
Counterparty risk arises from the investment of surplus funds and from the use of derivative financial instruments. The Board has agreed a policy for
managing such risk which is controlled through credit limits, counterparty approvals, and rigorous monitoring procedures.
The Group has no other significant concentration of credit risk. The Group\u2019s surplus funds are managed by the Group\u2019s treasury function and are
usually placed in short-term fixed interest deposits or the overnight money markets. Deposit counterparties must meet Board approved minimum
criteria based on their short-term credit ratings and therefore be of good credit quality.
3. Financial risk management continued
(a) Financial risk factors continued
iv) Inflation risk
Market inflation has caused inflationary pressures across the Group, the Group has index linked facilities which are predominantly Retail Price Index
(RPI) linked.
Inflation risk arises if the indexes increase meaning the Group will either be paying or accreting the inflation, this could put pressure on the gearing or
interest cover ratios.
Inflation risk is mitigated through the index linked nature of our revenues and RCV calculations.
(b) Capital risk management
The Group\u2019s objectives when managing capital are to safeguard the Group\u2019s ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal capital structure to minimise the cost of capital.
The Group\u2019s policy is to have a minimum of 12 months pre-funding of projected capital expenditure. At 31 March 2023 the Group had cash and
facilities, including restricted funds, of \u00a3420 million (2022 \u00a3816 million), meeting this objective.
In order to maintain or adjust the capital structure, the Group seeks to maintain a balance of returns to shareholders through dividends and an
appropriate capital structure of debt and equity for each business segment and the Group.
The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net borrowings divided by total capital. Net borrowings are
analysed in note 38 and calculated as total borrowings less cash and cash deposits. Total capital is calculated as total shareholders\u2019 equity plus net
borrowings. The Group currently manages a net borrowings position of \u00a32,965.4 million (2022 \u00a32,682.9 million).
The gearing ratios at the balance sheet date were:
2023
\u00a3m
2022
\u00a3m
Net borrowings (note 38) 2,965.4 2,682.9
Total equity 1,125.2 1,276.6
Total capital 4,090.6 3,959.5
Gearing ratio 72.6% 67.8%
The water segment is also monitored on the basis of the ratio of its net borrowings to regulatory capital value. Ofwat\u2019s notional gearing target for the
K7 (2020-25) regulatory period is set at 60%.
South West Water*
2023
\u00a3m
2022
\u00a3m
Shadow Regulatory Capital Value 4,715.9 4,236.0
Net borrowings 2,865.3 2,639.1
Net borrowings/Regulatory Capital Value 60.8% 62.3%
*Net borrowing reflects South West Water Limited\u2019s group of companies, with 2022 reanalysed to exclude the impact of intra-group loans, to provide
comparative performance.
The Group has entered into covenants with lenders and, while terms vary, these typically provide for limits on gearing and interest cover. The Group
has been in compliance with its covenants during the year.
(c) Determination of fair values
The Group uses the following hierarchy for determining the fair value of financial instruments by valuation technique:
\u2022 Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)
\u2022 Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly
(that is, derived from prices) (level 2)
\u2022 Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).
The Group\u2019s financial instruments are valued principally using level 2 measures as analysed in note 23.
The fair value of financial instruments not traded in an active market (for example over-the-counter derivatives) is determined by using valuation
techniques. A variety of methods and assumptions are used based on market conditions existing at each balance sheet date. Quoted market prices
or dealer quotes for similar instruments are used for long-term debt. Other techniques, such as estimated discounted cash flows, are used to
determine fair value for the remaining financial instruments. The fair value of interest rate swaps is calculated as the present value of the estimated
future cash flows.
The carrying values, less expected credit losses, of trade receivables and payables are assumed to approximate to their fair values.
Notes to the Financial Statements continued 118844 AAnnnnuuaall RReeppoorrtt aanndd AAccccoouunnttss 22002233 || PPeennnnoonn GGrroouupp ppllcc 4. Critical accounting judgements and estimates The Group\u2019s principal accounting policies are set out in note 2. Management is required to exercise significant judgement and make use of estimates and assumptions in the application of these policies. Estimates are based on factors including historical experience and expectations of future events that management believe to be reasonable. However, given the judgemental nature of such estimates, actual results could be different from the assumptions used. Estimates Provision for doubtful debts The Group has a material level of exposure to collection of trade receivables. Provisions in respect of these balances are calculated with reference to historical credit loss experience, adjusted for forward- looking factors which by their nature are subject to uncertainty. Analysis of actual recovery compared with provisioning levels have not, to date, resulted in material variances. Under its regular review procedures at the balance sheet date, the Group applies a simplified approach in calculating ECLs for trade receivables and contract assets. Therefore, the Group does not track changes in credit risk but instead recognises a loss allowance based on lifetime ECLs at each reporting date. Each subsidiary has established a provision matrix that is informed by its historical credit loss experience, adjusted for forward-looking factors specific to the receivables and the economic environment. The Group's policy is to write-off trade receivables where the expectation of recovery is considered highly unlikely. The actual level of debt collected may differ from the estimated levels of recovery. As at 31 March 2023 the Group\u2019s current trade receivables were \u00a3280.3 million (2022 \u00a3296.2 million), against which \u00a3106.5 million (2022 \u00a3100.4 million) had been provided for ECLs (note 22). Whilst the provisions are considered to be appropriate, changes in estimation basis or in economic conditions could lead to a change in the level of provisions recorded and consequently the charge or credit to the Income Statement. Retirement benefit obligations The Group operates defined benefit pension schemes for which actuarial valuations are carried out as determined by the trustees at intervals of not more than three years. The most recent triennial valuation of the main scheme was as at 31 March 2022, the outcome of which is summarised in note 30. The pension cost and liabilities under IAS 19 are assessed in accordance with Directors\u2019 best estimates using the advice of an independent qualified actuary and assumptions in the latest actuarial valuation. The assumptions are based on member data supplied to the actuary and market observations for interest rates and inflation, supplemented by discussions between the actuary and management. The mortality assumption uses a scheme-specific calculation based on CMI 2019 actuarial tables with an allowance for future longevity improvement. The principal assumptions used to measure schemes\u2019 liabilities, sensitivities to changes in those assumptions and future funding obligations are set out in note 30. Judgements Non-underlying items In establishing which items are disclosed separately as non-underlying, to enable a full understanding of the Group\u2019s financial performance, the Directors exercise their judgement in assessing the size, nature or incidence of specific items. See note 6 for further details. Goodwill allocation Goodwill arising on the acquisition of Bristol Water is allocated to the group of cash-generating units that are expected to benefit from the synergies of the combination, the \u2018Water CGU\u2019. The Water CGU comprises the regions of South West Water, Bournemouth Water and Bristol Water. The Water CGU operates under one management structure with functional integration across the operating segment generating the synergies of the combination. The recoverable amount is the higher of fair value, less costs to sell, and value-in-use. Value-in-use represents the present value of projected future cash flows expected to be derived from a CGU, discounted using a pre-tax discount rate which reflects an assessment of the market cost of capital of the CGU. Impairments are charged to the income statement in the year in which they arise. Other estimates Management assessed and resolved that the level of estimation for revenue recognition of accrued revenue relating to water and wastewater should not be considered critical as the estimates are largely calculated on a systematic basis and have not, to date, resulted in a material adjustment within the following 12-month period. However, management consider the total level of estimation of accrued revenue relating to water and wastewater to be material and highlight this as a material other estimate. The acquisition of Bristol Water in June 2021 has been accounted for using the acquisition method under IFRS 3. The identifiable assets, liabilities and contingent liabilities are recognised at their fair value at date of acquisition. The fair value of the net assets identified were determined with assistance from independent experts using professional valuation techniques appropriate to the individual category of asset or liability. Calculating the fair values of net assets, notably the fair values of property, plant and equipment given the nature of the infrastructure assets acquired, involves estimation and consequently the fair value exercise is recorded as an other accounting estimate. The depreciation charge is sensitive to the value of property, plant and equipment, a higher or lower fair value calculation would lead to a change in the depreciation charge in the period following acquisition. The operations of Bristol Water are now part of South West Water with all activities operating in the same industry, therefore identical or similar transactions within South West Water do not require new significant judgements or estimates to be made by the Group. In early June 2022 the final review of tax balances was completed, with the identification of capital assets non-qualifying for tax purposes, this has led to an increase in the deferred tax liability with an offsetting increase in the total value of goodwill recognised on acquisition of \u00a35.5 million (see note 43), consequently the balance sheet has been restated retroactively to the acquisition date. The property, plant and equipment of the Group relates primarily to infrastructure assets (being water mains and sewers, impounding and pumped raw water storage reservoirs, dams, pipelines and sea outfalls) as well as other assets which include fixed plant and operational properties. The useful economic lives of these types of asset vary from 10 to 200 years. Asset lives are reviewed annually and amended where changes are made to assumptions relating to the expected life of the asset from judgement around usage and performance experience, technological advancement and other relevant factors. Overall assessments on the impact of climate change on long life assets have been completed and will be continuously updated for the latest available information. The most recent assessment of the impact on climate change, which includes the potential to mitigate adverse impacts, has not identified any specific impact on the useful economic lives of long life assets. Environmental factors and climate change form part of the planning process for new capital expenditure. The depreciation charge is sensitive to amendments of the useful economic lives of these assets, a significant change in the estimated life of these assets could have a material impact on depreciation, this is therefore noted as a material other estimate. 5. Segmental information Operating segments are reported in a manner consistent with internal reporting provided to the Chief Operating Decision-Maker (CODM), which has been identified as the Pennon Group plc Board. The earnings measures below are used by the Board in making decisions. The Group is organised into two operating segments. The water segment comprises the regulated water and wastewater services undertaken by South West Water. The non-household retail business reflects the services provided by Pennon Water Services. Segment assets include goodwill and other intangible assets, property, plant and equipment, inventories, trade and other receivables and cash and cash deposits. Segment liabilities comprise operating liabilities and borrowings and exclude taxation. The other segment liabilities include the Company\u2019s financing arrangements and Group taxation liabilities. Capital expenditure comprises additions to property, plant and equipment. 2023 \u00a3m 2022 \u00a3m Revenue Water 701.3 687.8 Non-household retail 218.0 195.3 Other 8.6 8.5 Less intra-segment trading 1 (102.9) (99.3) Total underlying revenue 825.0 792.3 Water non-underlying revenue (note 6) (27.8) \u2013 797.2 792.3 Operating profit/(loss) before depreciation, amortisation and non-underlying items (Underlying EBITDA) Water 308.4 385.0 Non-household retail 4.3 3.4 Other (4.9) (4.5) 307.8 383.9 Operating profit/(loss) before non-underlying items Water 159.4 244.0 Non-household retail 3.6 2.6 Other (9.9) (9.4) 153.1 237.2 Profit/(loss) before tax and non-underlying items Water 14.1 146.0 Non-household retail 1.8 1.0 Other 0.9 (3.5) 16.8 143.5 (Loss)/profit before tax Water (29.6) 144.0 Non-household retail 1.8 1.0 Other 19.3 (17.3) (8.5) 127.7 1. Intra-segment transactions between and to different segments are under normal market-based commercial terms and conditions. Intra-segment revenue of the other segment is at cost. Water \u00a3m Non- household retail \u00a3m Other \u00a3m Eliminations \u00a3m Group \u00a3m Balance sheet 31 March 2023 Assets (excluding carrying value in associated companies) 4,925.3 59.3 594.6 (403.3) 5,175.9 Carrying value in associated companies \u2013 \u2013 9.6 \u2013 9.6 Total assets 4,925.3 59.3 604.2 (403.3) 5,185.5 Liabilities (3,925.2) (55.4) (483.0) 403.3 (4,060.3) Net assets 1,000.1 3.9 121.2 \u2013 1,125.2 31 March 2022 Assets (excluding carrying value in associated companies) 4,872.8 57.1 776.3 (384.1) 5,322.1 Carrying value in associated companies 9.6 \u2013 \u2013 \u2013 9.6 Total assets 4,882.4 57.1 776.3 (384.1) 5,331.7 Liabilities (3,810.4) (54.8) (576.0) 384.1 (4,057.1) Net assets 1,072.0 2.3 200.3 \u2013 1,274.6 5. Segmental information continue d
Segment liabilities of the water segment comprise of operating liabilities and borrowings. The other segment includes Company only assets and
liabilities as well as Group taxation liabilities and should be considered in conjunction with the eliminations column.
Notes
Water
\u00a3m
Non-household
retail
\u00a3m
Other and
eliminations
\u00a3m
Group
\u00a3m
Other information
31 March 2023
Intangible asset additions 16 4.5 0.1 \u2013 4.6
Amortisation of other intangible assets 7 3.4 0.2 \u2013 3.6
Capital expenditure (Property, plant and equipment) 17 353.6 \u2013 0.1 353.7
Depreciation 7 145.6 0.5 5.0 151.1
Finance income 8 6.2 0.1 21.3 27.6
Finance costs 8 151.5 1.9 (7.6) 145.8
31 March 2022
Intangible asset additions 16 3.4 0.2 \u2013 3.6
Amortisation of other intangible assets 7 3.2 0.2 \u2013 3.4
Capital expenditure (Property, plant and equipment) 17 237.3 \u2013 \u2013 237.3
Depreciation 7 137.8 0.7 4.8 143.3
Finance income 8 3.9 \u2013 (1.3) 2.6
Finance costs 8 101.8 1.6 (7.1) 96.3
Finance income and costs above reflect the segment in which the amounts arise and exclude intercompany transactions.
All revenue is generated in the United Kingdom. The grouping of revenue streams by how they are affected by economic factors, as required by IFRS
15, is as follows:
Year ended 31 March 2023
Water
\u00a3m
Non-household
retail
\u00a3m
Other
\u00a3m
Total
\u00a3m
Segment revenue \u2013 underlying 701.3 218.0 8.6 927.9
Segment revenue \u2013 non-underlying (note 6) (27.8) \u2013 \u2013 (27.8)
Inter-segment revenue (94.7) \u2013 (8.2) (102.9)
Revenue from external customers 578.8 218.0 0.4 797.2
Significant service lines
Water 578.8 \u2013 \u2013 578.8
Non-household retail \u2013 218.0 \u2013 218.0
Other \u2013 \u2013 0.4 0.4
578.8 218.0 0.4 797.2
Year ended 31 March 2022
Water
\u00a3m
Non-household
retail
\u00a3m
Other
\u00a3m
Total
\u00a3m
Segment revenue \u2013 underlying 687.8 195.3 8.5 891.6
Inter-segment revenue (90.9) (0.2) (8.2) (99.3)
Revenue from external customers 596.9 195.1 0.3 792.3
Significant service lines
Water 596.9 \u2013 \u2013 596.9
Non-household retail \u2013 195.1 \u2013 195.1
Other \u2013 \u2013 0.3 0.3
596.9 195.1 0.3 792.3
The Group\u2019s country of domicile is the United Kingdom and this is the country in which it generates the majority of its revenue. The Group\u2019s non-
current assets are all located in the United Kingdom.
6. Non-underlying items
Non-underlying items are those that in the Directors\u2019 view should be separately disclosed by virtue of their size, nature or incidence to enable a full
understanding of the Group\u2019s financial performance in the year and business trends over time. The presentation of results is consistent with internal
performance monitoring.
Revenue
Notes
2023
\u00a3m
2022
\u00a3m
WaterShare+
1
(20.2) \u2013
Drought incentive
2
(7.6) \u2013
Operating costs
Drought costs
2
(9.4) \u2013
WaterShare+
1
(2.2) \u2013
Integration and CMA merger review costs
3
(4.3) (6.9)
Bristol Water acquisition costs
3
\u2013 (8.9)
Earnings before interest, tax, depreciation and amortisation (43.7) (15.8)
Bond redemption
4
18.4 \u2013
Net tax credit arising on non-underlying items above
5
9 4.7 1.3
Deferred tax change in rate
6
9 0.6 (99.5)
Net non-underlying charge (20.0) (114.0)
1. In September 2020, the Group offered its WaterShare+ scheme to its customers whereby customers could choose to accept a credit on their bill or take shares in Pennon Group
plc. The scheme has operated again in the year ended 31 March 2023. The value of the rebate equated to \u00a313 per customer and the total value of \u00a320.2 million was recognised in
full as a non-underlying reduction to revenue in the year ended 31 March 2023. \u00a319.9 million of the WaterShare+ credits were taken as credits on customers\u2019 bills, with the balance
of \u00a30.3 million being taken as shares in Pennon Group Plc. This item was non-underlying in nature given its individual size and its non-recurring nature. Additional costs of \u00a32.2
million were incurred in relation to the offering.
2. 2022 was one of the driest and hottest years on record. Elevated demand on the South West Water region from increased tourism and the hot, dry weather led to an approximate
15% increase in distribution input in the year against the expected level from 2017 included in the drought plan. The combination of these individually extreme factors led to
extremely low water storage levels in the Colliford Water Resource Zone, with the main supply of Colliford reservoir falling to around 14% capacity in October. A drought was
declared by the Environment Agency in Devon and Cornwall in August 2022. In order to react to the drought and water shortage, South West Water invoked a series of emergency
measures and one-off expenditure to ensure the region could be supplied with water over the summer and continuing into 2023. Due to the exceptional combination of these
events and the significance of the emergency actions, certain costs have been classified as non-underlying given their size, nature and non-recurring incidence. The costs directly
addressing these exceptional circumstances include charges for drought permits, water tankering and other water saving measures. In November 2022, South West Water asked
households in Cornwall to reduce water usage as part of the \u2018Stop The Drop\u2019 campaign to increase reservoir levels. Household customers were offered a \u00a330 bill credit if Colliford
reservoir reached 30% storage capacity by 31 December 2022 from a low of around 14%. In December 2022 the company announced the water level in Colliford reservoir reached
30% and as a result all household customers in Cornwall received a \u00a330 credit on their bill. This one-off incentive was provided as part of the response to the drought conditions in
the Cornwall area in order to further prompt customers to reduce water usage. The total value of the bill credits amounted to \u00a37.6 million.
3. The Group incurred expenses of \u00a34.3 million in the year ended 31 March 2023. These related to the integration and statutory transfer of Bristol Water into South West Water. These
costs are classified as non-underlying due to their non-recurring nature. In the year ended 31 March 2022, the Group incurred expenses of \u00a38.9 million in relation to the acquisition
of Bristol Water and \u00a36.9 million on the resulting merger review by the Competition and Markets Authority and other integration costs.
4. On 17 October 2022 Bristol Water plc gave notice of redemption of the \u00a340 million bonds due to be repaid in March 2041. The bonds were redeemed as part of the statutory
transfer of the business of Bristol Water to South West Water. The Group carrying value of the bonds at redemption was \u00a391.3 million. The bonds were redeemed on 17 November
2022 for \u00a372.3 million, and the difference arising on early settlement was credited to finance costs in the year. Associated legal costs of c.\u00a31 million have been incurred in relation to
the bond redemption. The redemption of the bonds is non-recurring and of a material value, hence the credit has been treated as non-underlying.
5. The tax credit arising on non-underlying items reflects a \u00a32.8 million current tax credit in respect of losses which will be carried back against prior year taxable profits. A deferred
tax credit of \u00a31.9 million relates to tax losses carried forwards and the deferred tax unwind of the fair value adjustment in relation to the Bristol Water bond terminated in the year.
The prior year credit of \u00a31.3 million related to a current tax credit on Group strategic review costs.
6. Following the Chancellor's Budget on 4 March 2021 and subsequent substantial enactment of the Finance Act on 24 May 2021, the UK's main rate of corporation tax increased to
25% from 1 April 2023. All deferred tax assets and liabilities were therefore reviewed and where they will crystallise after 1 April 2023 recalculated to crystallise at 25%, hence giving a
non-underlying deferred tax charge in the year ended 31 March 2022 of \u00a399.5 million. This charge is considered non-underlying due to it arising from a material legislative change
and its treatment is consistent with that applied in relation to previous changes in corporation tax rates. A \u00a30.6 million deferred tax credit in respect of rate change arises on losses
carried forwards which will be relieved at 25%.
Notes to the Financial Statements continued
118888 AAnnnnuuaall RReeppoorrtt aanndd AAccccoouunnttss 22002233 || PPeennnnoonn GGrroouupp ppllcc
7. Operating costs
Notes
2023
\u00a3m
2022
\u00a3m
Employment costs before non-underlying items 13 102.2 90.4
Raw materials and consumables 33.6 22.9
Other operating expenses before non-underlying items include:
Profit on disposal of property, plant and equipment (0.4) (1.0)
Short-term/low value asset lease expense 5.3 1.7
Government grant receivable (18.6) \u2013
Trade receivables impairment 22 7.8 5.6
Depreciation of property, plant and equipment:
\u2022 Owned assets 17 118.3 105.5
\u2022 Under leases 17 32.8 37.8
Amortisation of other intangible assets 16 3.6 3.4
During the year the group received financial support from the UK Government\u2019s Energy Relief Bill Scheme totalling \u00a318.6 million (2022 nil). Operating
costs include a charge of \u00a315.9 million (2022 \u00a315.8 million) relating to non-underlying items, as detailed in note 6.
Fees payable to the Company\u2019s auditor in the year were:
2023
\u00a3000
2022
\u00a3000
Fees payable to the Company\u2019s auditor and its associates for the audit of parent company and consolidated financial statements 384 360
Fees payable to the Company\u2019s auditor and its associates for other services:
The audit of Company\u2019s subsidiaries 932 474
Audit-related assurance services 120 108
Other non-audit services 43 28
Total fees 1,479 970
Fees payable to the Company\u2019s auditor in respect of Pennon Group pension schemes:
Audit 55 55
Expenses reimbursed to the auditor in relation to the audit of the Group were \u00a379,000 (2022 \u00a350,000).
A description of the work of the Audit Committee is set out in its report on pages 120 to 125 which includes an explanation of how the auditor\u2019s
objectivity and independence are safeguarded when non-audit services are provided by the auditor\u2019s firm.
8. Net finance costs
2023 2022
Notes
Finance
cost
\u00a3m
Finance
income
\u00a3m
Total
\u00a3m
Finance
cost
\u00a3m
Finance
income
\u00a3m
Total
\u00a3m
Cost of servicing debt
Bank borrowings and overdrafts (111.3) \u2013 (111.3) (73.9) \u2013 (73.9)
Interest element of lease payments (30.8) \u2013 (30.8) (20.3) \u2013 (20.3)
Other finance costs (3.7) \u2013 (3.7) (2.1) \u2013 (2.1)
Interest received \u2013 4.9 4.9 \u2013 2.0 2.0
Net gains on derivative financial instruments \u2013 2.3 2.3 \u2013 \u2013 \u2013
(145.8) 7.2 (138.6) (96.3) 2.0 (94.3)
Notional interest
Retirement benefit obligations 30 \u2013 2.0 2.0 \u2013 0.6 0.6
Net finance costs (underlying) (145.8) 9.2 (136.6) (96.3) 2.6 (93.7)
Finance income (non-underlying) 6 \u2013 18.4 18.4 \u2013 \u2013 \u2013
Net finance costs (including non-underlying) (145.8) 27.6 (118.2) (96.3) 2.6 (93.7)
In addition to the above, finance costs of \u00a35.0 million (2022 \u00a31.3 million) have been capitalised on qualifying assets included in property, plant and
equipment, at an average borrowing rate of 5.7% (2022 4.1%).
Other finance costs include \u00a31.1 million (2022 \u00a30.9 million) of dividends payable on listed preference shares issued by Bristol Water, which are classified
as debt (see note 28).
9. Taxation
Before non-
underlying items
2023
\u00a3m
Non-
underlying
items
(note 6)
2023
\u00a3m
Total
2023
\u00a3m
Before non-
underlying items
2022
\u00a3m
Non-
underlying
items
(note 6)
2022
\u00a3m
Total
2022
\u00a3m
Analysis of charge in year
Current tax (credit)/charge (2.7) (2.8) (5.5) 5.0 (1.3) 3.7
Deferred tax \u2013 other (0.6) (1.9) (2.5) 8.9 \u2013 8.9
Deferred tax arising on change of rate of corporation tax (0.3) (0.6) (0.9) \u2013 99.5 99.5
Total deferred tax charge/(credit) (0.9) (2.5) (3.4) 8.9 99.5 108.4
Tax (credit)/charge for year (3.6) (5.3) (8.9) 13.9 98.2 112.1
UK corporation tax is calculated at 19% (2022 19%) of the estimated assessable profit for the year.
UK corporation tax for the Group is stated after a credit relating to prior year current tax of \u00a32.7 million (2022 \u00a31.7 million credit) and a prior year
deferred tax charge of \u00a31.0 million (2022 \u00a310.2 million credit). These items arise following the recording of the routine return to provision adjustments
following the submission of the tax computations for the year ended 31 March 2022 to HMRC ahead of the 31 March 2023 filing deadline.
The tax for the year differs from the theoretical amount which would arise using the standard rate of corporation tax in the UK of 19% (2022 19%) as
follows:
2023
\u00a3m
2022
\u00a3m
Reconciliation of total tax charge
(Loss)/profit before tax (8.5) 127.7
(Loss)/profit multiplied by the standard rate of UK corporation tax of 19% (2022 19%) (1.6) 24.3
Effects of:
(Income)/expenses not deductible for tax purposes (0.4) 1.8
Joint venture profits not taxable (0.1) \u2013
Adjustments to tax charge in respect of prior years (1.7) (11.9)
Change in UK tax rates (1.0) 99.5
Depreciation charged on non-qualifying assets 0.7 0.7
Other (4.8) (2.3)
Tax (credit)/charge for year (8.9) 112.1
2023
\u00a3m
2022
\u00a3m
Reconciliation of current tax charge
(Loss)/profit before tax (8.5) 127.7
(Loss)/profit multiplied by the standard rate of UK corporation tax of 19% (2021 19%) (1.6) 24.3
Effects of:
Relief for capital allowances in place of depreciation (37.6) (36.3)
Disallowance of depreciation charged in the accounts 24.4 22.4
Other timing differences (11.1) (7.2)
(Income)/expenses not deductible for tax purposes (0.4) 1.8
Joint venture profits not taxable (0.1) \u2013
Accounting policy alignment adjustment on acquisition of Bristol Water 5.0 \u2013
Adjustments to tax charge in respect of prior years (2.7) (1.7)
Depreciation charged on non-qualifying assets 0.7 0.6
Tax losses carried forward 18.6 \u2013
Relief for capitalised interest and foreign exchange gains/losses (0.7) (0.2)
Current tax (credit)/charge for year (5.5) 3.7
The Group's current tax credit is higher than the UK headline rate of 19%, primarily due to capital allowances. Capital allowances provide tax relief when
a business incurs expenditure on qualifying capital items such as plant and machinery used by the business. As an infrastructure business, these
allowances help the Group to plan major investment and consequentially to maintain lower customer bills, as corporation tax relief is given against the
investments made.
The Group benefits from the 130% super-deductions and 50% enhanced allowances in respect of qualifying spend relating to contracts entered into
after 3 March 2021.The Group incurs significant capital expenditure each year as it maintains and enhances it assets for the benefit of its customers,
communities and the environment. These enhanced allowances have increased capital allowance claims for the year and contributed significantly to
the current tax credit for the year. There is also a consequently higher deferred tax liability and charge due to the additional capital allowance
deductions together with the increase in the rate of corporation tax to 25% from April 2023.
9. Taxation continued
Other differences relate to the timing of relief for items including pensions, fair value items and financial derivatives. The increase in the year relates
mainly to the unwind of the fair value adjustment on the Bristol Water bond which was terminated in the year and additional pension contributions
relief as a result of spreading in accordance with tax legislation.
Profits from joint ventures are included in the consolidated accounts on an after tax basis, as such these profits are not taxable in the Group accounts.
The accounting policy alignment relates to Bristol Water plc aligning their accounting policy in relation to deferred income to that of South West Water
on acquisition. Despite the accounting adjustments reflecting the restated 2022 figures, for tax purposes the adjustment will be subject to corporation
tax during the year ended 31 March 2023, hence the adjustment in the year.
Adjustments to the tax charge in respect of prior year arise from the return to provision adjustments booked having completed and submitted the
corporation tax returns for the year ended 31 March 2022 in March 2023. This is a routine item with any adjustments reflected in the following years
tax charge.
Depreciation charge on non-qualifying assets generates a permanent adjustment which increases the tax charge. Non-qualifying assets are those
which do not qualify for writing down tax allowances, including certain fixed assets typically in relation to older buildings and premises where tax relief
is not available.
Tax losses generated in the year and carried forward generate a deferred tax rather than current tax credit, hence the adjustment to current tax. When
utilised, the adjustment will be reflected through a movement from deferred to current tax.
Immediate tax relief is available in respect of capitalised interest and foreign exchange gains/losses.
In addition to the amounts recognised in the income statement, the following tax charges / (credits) (which include the effect of the change in tax
rate) were recognised:
2023
\u00a3m
2022
\u00a3m
Amounts recognised directly in other comprehensive income
Deferred tax credit on defined benefit pension schemes (9.8) (2.4)
Deferred tax charge on cash flow hedges 7.3 6.5
Amounts recognised directly in equity
Deferred tax charge on share-based payments 0.5 \u2013
Factors affecting future tax charges
The UK main rate of corporation tax will increase to 25% from 1 April 2023. This change was substantively enacted on 24 May 2021, as such deferred
tax liabilities and assets were recalculated and recorded at the rate they are expected to unwind. This increased the tax charge in the income
statement during the year ended 31 March 2022 by \u00a399.5m, with a credit of \u00a38.7m taken through the SOCI/Equity in respect of retirement obligations,
derivatives and share based payments.
The Chancellor announced in the March 2023 Budget that super deductions will be replaced by full expensing for the next three years in respect of
plant and machinery assets. The 50% first year allowance in relation to special rate assets will also continue until 31 March 2026. The Group therefore
anticipates generating current tax losses for the next few years.
10. Profit of the parent company
2023
\u00a3m
2022
\u00a3m
Profit attributable to ordinary shareholders\u2019 equity dealt within the accounts of the parent company 8.4 74.5
As permitted by Section 408 of the Companies Act 2006, no income statement or statement of comprehensive income is presented for the Company.
11. Earnings per share
Basic earnings per share are calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary
shares outstanding during the year, excluding those held in the employee share trust (note 36), which are treated as cancelled.
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to include all dilutive potential ordinary shares. The
Group has two types of dilutive potential ordinary shares \u2013 those share options granted to employees where the exercise price is less than the average
market price of the Company\u2019s ordinary shares during the year; and the contingently issuable shares under the Group\u2019s Performance and Co-investment
Plan, the long-term incentive plan and the deferred shares element of the Annual Incentive Bonus Plan, based on performance criteria for the vesting of
the awards.
The weighted average number of shares and earnings used in the calculations were:
2023 2022
Number of shares (millions)
For basic earnings per share 261.9 312.1
Effect of dilutive potential ordinary shares from share options 0.9 1.7
For diluted earnings per share 262.8 313.8
11. Earnings per share continued
Basic and diluted earnings per ordinary share
Earnings per ordinary share before non-underlying items and deferred tax are presented as the Directors believe that this measure provides a more
useful year on year comparison of business trends and performance. Deferred tax is excluded as the Directors believe it reflects a distortive effect of
changes in corporation tax rates and the level of long-term capital investment. Earnings per share have been calculated as follows:
2023 2022
(Loss)/profit
after tax
\u00a3m
Earnings per share Profit
after tax
\u00a3m
Earnings per share
Basic p Diluted p Basic p Diluted p
Statutory earnings attributable to ordinary shareholders of the
parent 0.1 \u2013 \u2013 15.4 4.9 4.9
Deferred tax (credit)/charge before non-underlying items (0.9) (0.3) (0.3) 8.9 2.9 2.8
Non-underlying items (net of tax) 20.0 7.6 7.6 114.0 36.5 36.4
Adjusted earnings 19.2 7.3 7.3 138.3 44.3 44.1
12. Dividends
2023
\u00a3m
2022
\u00a3m
Amounts recognised as distributions to ordinary equity holders in the year
Interim dividend paid for the year ended 31 March 2022 11.70p (2021 6.77p) per share 31.6 28.6
Final dividend paid for the year ended 31 March 2022 26.83p (2021 14.97p) per share 70.0 63.2
Special dividend paid for the year ended 31 March 2022 nil (2021 355.0p) per share \u2013 1,498.5
101.6 1,590.3
Proposed dividends
Proposed interim dividend for the year ended 31 March 2023: 12.96p (2022 11.70p) per share 33.9 32.4
Proposed final dividend for the year ended 31 March 2023: 29.77p (2022 26.83p) per share 77.8 69.6
111.7 102.0
The proposed interim and final dividends have not been included as liabilities in these financial statements.
The proposed interim dividend for 2023 was paid on 5 April 2023 and the proposed final dividend is subject to approval by shareholders at the AGM.
13. Employment costs
Notes
2023
\u00a3m
2022
\u00a3m
Wages and salaries 110.0 96.3
Social security costs 12.1 9.7
Pension costs 30 11.0 11.1
Share-based payments 33 2.4 2.2
Total employment costs 135.5 119.3
Charged:
\u2022 Employment costs (excluding non-underlying items) \u2013 consolidated income statement 102.2 90.4
\u2022 Employment costs (non-underlying items) \u2013 consolidated income statement \u2013 1.7
\u2022 Capital schemes \u2013 property, plant and equipment 32.7 27.2
\u2022 Research and development 0.6 \u2013
Total employment costs 135.5 119.3
Details of Directors\u2019 emoluments are set out in note 14. There are no personnel, other than Directors, who as key management exercise authority and
responsibility for planning, directing and controlling the activities of the Group. Members of other executive committees assist the Directors in their
duties but do not hold authority to control the activities of the Group.
2023 2022
Employees (average full-time equivalent number)
The average monthly number of employees (including Executive Directors) was:
Water 2,639 2,394
Non-household retail 158 177
Other 67 65
Total 2,864 2,636
Notes to the Financial Statements continued
119922 AAnnnnuuaall RReeppoorrtt aanndd AAccccoouunnttss 22002233 || PPeennnnoonn GGrroouupp ppllcc
14. Directors\u2019 emoluments
2023
\u00a3000
2022
\u00a3000
Executive Directors:
\u2022 Salary 784 775
\u2022 Performance-related bonus paid or payable 51 149
\u2022 Share-based payments 786 707
\u2022 Other emoluments, including payments in lieu of pension provision 111 116
Non-Executive Directors 583 523
2,315 2,270
The cost of share-based payments represents the amount charged to the income statement, as described in note 33. The aggregate gains on vesting
of Directors\u2019 share-based awards amounted to a total of \u00a3142,000 (2022 \u00a3180,000).
Total emoluments include nil (2022 nil) payable to Directors for services as directors of subsidiary undertakings.
At 31 March 2023 no Directors (2022 none) are accruing retirement benefits under defined benefit pension schemes in respect of which the Group
contributed. In the previous year ending 31 March 2022, the defined benefit pension scheme closed to future accrual, on 30 June 2021, and during the
prior period up to the date of closure to future accrual the company contributed \u00a312,000 in respect of one Director.
At 31 March 2023 two Directors (2022 two) are members of the Group\u2019s defined contribution pension scheme in respect of which the Group
contributed \u00a34,000 (2022 \u00a33,000).
At 31 March 2023 two Directors received payments in lieu of pension provision (2022 two).
More detailed information concerning Directors\u2019 emoluments (including pensions and the highest paid Director) and share interests is shown in the
Directors\u2019 remuneration report on pages 136 to 157.
15. Goodwill
\u00a3m
Cost:
At 1 April 2021 42.3
Acquisition of Bristol Water Group (note 43) 121.6
At 31 March 2022 163.9
At 31 March 2023 163.9
Carrying amount:
At 1 April 2021 42.3
At 31 March 2022 (restated) 163.9
At 31 March 2023 163.9
Goodwill acquired in a business combination is allocated at acquisition to the CGU expected to benefit from that business combination. During the
year ended 31 March 2022, the Group acquired the Bristol Water Group, adding \u00a3121.6 million to goodwill (see note 43).
All goodwill represents the water business, therefore this is the lowest level at which goodwill is monitored and tested.
An adjustment to the preliminary accounting for the Bristol Water acquisition has been made within the measurement period ending 2 June 2022, this
adjustment is presented retrospectively and the 31 March 2022 balance sheet figures have been adjusted accordingly (see note 4).
Impairment testing of goodwill
The Group tests goodwill for impairment annually, or more frequently if there are any indications that impairment may have arisen.
The recoverable amount of the water business segment is assessed using level 2 fair value hierarchy techniques, with reference to the market value of
the water business, using a market-based observable premium, based on historical water industry merger and acquisition activity, to regulated capital
value as defined by ofwat.
The results of tests performed during the year demonstrate significant headroom in the water CGU, and it is judged that no reasonable change in the
key assumptions would cause the carrying amount of the CGUs to exceed the recoverable amount.
16. Other intangible assets
Patents
\u00a3m
Other
\u00a3m
Total
\u00a3m
Cost:
At 1 April 2021 0.2 4.0 4.2
Additions \u2013 3.6 3.6
Acquisition of Bristol Water Group \u2013 12.8 12.8
Disposals (0.2) (0.8) (1.0)
At 31 March 2022 \u2013 19.6 19.6
Additions \u2013 4.6 4.6
Disposals \u2013 (1.9) (1.9)
At 31 March 2023 \u2013 22.3 22.3
Accumulated amortisation:
At 1 April 2021 0.2 2.8 3.0
Charge for year \u2013 3.4 3.4
Disposals (0.2) (0.5) (0.7)
At 31 March 2022 \u2013 5.7 5.7
Charge for year \u2013 3.6 3.6
Disposals \u2013 (1.9) (1.9)
At 31 March 2023 \u2013 7.4 7.4
Carrying amount:
At 1 April 2021 \u2013 1.2 1.2
At 31 March 2022 \u2013 13.9 13.9
At 31 March 2023 \u2013 14.9 14.9
Other, including computer software, is amortised over the useful life of the assets which at acquisition was ten years. The average remaining life is one
year (2022 two years).
The carrying values of other intangible assets are reviewed annually or when events or changes in circumstance indicate that the carrying amounts
may not be fully recoverable.
Notes to the Financial Statements continued
119944 AAnnnnuuaall RReeppoorrtt aanndd AAccccoouunnttss 22002233 || PPeennnnoonn GGrroouupp ppllcc
17. Property, plant and equipment
Land and
buildings
\u00a3m
Infrastructure
assets
\u00a3m
Operational
properties
\u00a3m
Fixed and mobile
plant, vehicles
and computers
\u00a3m
Construction
in progress
\u00a3m
Total
\u00a3m
Group
Cost:
At 31 March 2021 126.4 2,042.4 777.6 2,078.9 117.8 5,143.1
Additions 1.3 40.5 7.5 67.3 120.7 237.3
Acquisition of Bristol Water Group 56.4 644.0 161.3 60.2 22.9 944.8
Assets adopted at fair value \u2013 11.0 \u2013 \u2013 \u2013 11.0
Grants and contributions \u2013 \u2013 \u2013 \u2013 (3.2) (3.2)
Disposals (0.2) (1.2) (1.3) (2.4) \u2013 (5.1)
Transfers/reclassifications 2.8 17.7 7.2 46.3 (74.0) \u2013
At 31 March 2022 186.7 2,754.4 952.3 2,250.3 184.2 6,327.9
Additions 0.7 52.3 11.4 85.3 204.0 353.7
Assets adopted at fair value \u2013 14.3 \u2013 \u2013 \u2013 14.3
Disposals (0.3) (1.5) (0.6) (2.4) \u2013 (4.8)
Transfers/reclassifications 1.7 43.8 8.5 43.8 (97.8) \u2013
At 31 March 2023 188.8 2,863.3 971.6 2,377.0 290.4 6,691.1
Accumulated depreciation:
At 31 March 2021 18.9 335.6 294.0 1,273.6 \u2013 1,922.1
Charge for year 4.2 33.7 19.2 89.5 \u2013 146.6
Disposals \u2013 (1.2) (1.3) (2.3) \u2013 (4.8)
At 31 March 2022 23.1 368.1 311.9 1,360.8 \u2013 2,063.9
Charge for year 4.5 36.3 20.6 93.4 \u2013 154.8
Disposals (0.3) (1.5) (0.4) (2.3) \u2013 (4.5)
At 31 March 2023 27.3 402.9 332.1 1,451.9 \u2013 2,214.2
Net book value:
At 31 March 2021 107.5 1,706.8 483.6 805.3 117.8 3,221.0
At 31 March 2022 163.6 2,386.3 640.4 889.5 184.2 4,264.0
At 31 March 2023 161.5 2,460.4 639.5 925.1 290.4 4,476.9
Of the total depreciation charge of \u00a3154.8 million (2022 \u00a3146.6 million), \u00a31.5 million (2022 \u00a31.3 million) has been charged to capital projects, \u00a32.2 million
(2022 \u00a32.0 million) has been offset by deferred income and \u00a3151.1 million (2022 \u00a3143.3 million) has been charged against profits. Asset lives and
residual values are reviewed annually. During the year borrowing costs of \u00a35.0 million (2022 \u00a31.3 million) have been capitalised on qualifying assets, at
an average borrowing rate of 5.7% (2022 4.1%).
Groups of assets forming cash generating units are reviewed for indicators of impairment. No indicators of impairment were identified during the year.
Asset lives are reviewed annually. No significant changes were required in 2022/23.
17. Property, plant and equipment continued
The Group leases many assets as a lessee, across several categories of asset. Right-of-use assets held under leases included in property, plant and
equipment above were:
Land and
buildings
\u00a3m
Infrastructure
assets
\u00a3m
Operational
properties
\u00a3m
Fixed and mobile
plant, vehicles
and computers
\u00a3m
Construction
in progress
\u00a3m
Total
\u00a3m
Group
Cost:
At 1 April 2021 35.3 413.7 482.2 524.7 \u2013 1,455.9
Additions \u2013 \u2013 7.7 7.9 \u2013 15.6
Acquisition of Bristol Water Group 0.5 0.1 \u2013 1.7 \u2013 2.3
Disposals \u2013 (14.1) (114.3) (152.6) \u2013 (281.0)
At 31 March 2022 35.8 399.7 375.6 381.7 \u2013 1,192.8
Additions 0.1 19.3 0.5 20.9 \u2013 40.8
Disposals (0.5) (35.1) (41.0) (13.6) \u2013 (90.2)
At 31 March 2023 35.4 383.9 335.1 389.0 \u2013 1,143.4
Accumulated depreciation:
At 31 March 2021 2.8 78.0 142.8 304.3 \u2013 527.9
Charge / (credit) for year 1.3 5.1 8.0 23.4 \u2013 37.8
Disposals \u2013 (3.5) (48.1) (143.2) \u2013 (194.8)
At 31 March 2022 4.1 79.6 102.7 184.5 \u2013 370.9
Charge for year 1.2 4.9 6.0 20.7 \u2013 32.8
Disposals (0.2) (14.7) (18.1) (13.4) \u2013 (46.4)
At 31 March 2023 5.1 69.8 90.6 191.8 \u2013 357.3
Net book amount:
At 31 March 2021 32.5 335.7 339.4 220.4 \u2013 928.0
At 31 March 2022 31.7 320.1 272.9 197.2 \u2013 821.9
At 31 March 2023 30.3 314.1 244.5 197.2 \u2013 786.1
When the group enters into sale and leaseback arrangements, the accounting for the arrangement depends on whether the transaction meets the
criteria within IFRS 15 for a sale to have occurred. If the sale criteria are met, the associated property, plant and equipment asset is derecognised, and a
right-of-use asset is recognised at the proportion of the carrying value relating to the right retained. If the criteria for a sale under IFRS 15 have not
been met the asset is not derecognised, but is reclassified to right-of-use assets (within property, plant and equipment). Right of use assets includes
assets held under sale and leaseback arrangements with a carrying value of \u00a3785.2 million (2022 \u00a3793.7 million).
Fixed and mobile plant,
vehicles and computers
\u00a3m
Company
Cost:
At 31 March 2021 0.3
At 31 March 2022 0.3
At 31 March 2023 0.3
Accumulated depreciation:
At 31 March 2021 0.2
At 31 March 2022 0.2
At 31 March 2023 0.2
Net book value:
At 31 March 2021 0.1
At 31 March 2022 0.1
At 31 March 2023 0.1
Asset lives and residual values are reviewed annually.
Notes to the Financial Statements continued
119966 AAnnnnuuaall RReeppoorrtt aanndd AAccccoouunnttss 22002233 || PPeennnnoonn GGrroouupp ppllcc
18. Financial instruments by category
The accounting policies for financial instruments that have been applied to line items are:
Fair value Amortised cost
Notes
Derivatives used
for fair value
hedging
\u00a3m
Derivatives used
for cash flow
hedging
\u00a3m
Debt
instruments at
amortised cost
\u00a3m
Trade
receivables and
trade payables
\u00a3m
Total
\u00a3m
Group
31 March 2023
Financial assets
Amounts owed by joint ventures 19 \u2013 \u2013 9.3 \u2013 9.3
Trade receivables 22 \u2013 \u2013 \u2013 173.8 173.8
Derivative financial instruments 23 0.4 53.5 \u2013 \u2013 53.9
Cash and cash deposits 25 \u2013 \u2013 165.4 \u2013 165.4
Total 0.4 53.5 174.7 173.8 402.4
F
i
n
a
n
c
i
a
l
l
i
a
b
i
l
i
t
i
e
s
Borrowings 28 \u2013 \u2013 (3,130.8) \u2013 (3,130.8)
Derivative financial instruments 23 \u2013 (4.8) \u2013 \u2013 (4.8)
Trade payables 26 \u2013 \u2013 \u2013 (150.7) (150.7)
Total \u2013 (4.8) (3,130.8) (150.7) (3,286.3)
31 March 2022
Financial assets
Amounts owed by joint ventures 19 \u2013 \u2013 9.6 \u2013 9.6
Trade receivables 22 \u2013 \u2013 \u2013 180.9 180.9
Derivative financial instruments 23 1.2 19.2 \u2013 \u2013 20.4
Cash and cash deposits 25 \u2013 \u2013 519.0 \u2013 519.0
Total 1.2 19.2 528.6 180.9 729.9
Financial liabilities
Borrowings 28 \u2013 \u2013 (3,201.9) \u2013 (3,201.9)
Amounts owed by joint ventures 26 \u2013 \u2013 \u2013 (1.8) (1.8)
Trade payables 26 \u2013 \u2013 \u2013 (107.5) (107.5)
Total \u2013 \u2013 (3,201.9) (109.3) (3,311.2)
Company
31 March 2023
F
i
n
a
n
c
i
a
l
a
s
s
e
t
s
Amounts owed by subsidiaries 19,22 \u2013 \u2013 101.8 \u2013 101.8
Other receivables 22 \u2013 \u2013 3.4 \u2013 3.4
Derivative financial instruments 23 0.4 0.7 \u2013 \u2013 1.1
Cash and cash deposits 25 \u2013 \u2013 104.1 \u2013 104.1
Total 0.4 0.7 209.3 \u2013 210.4
Financial liabilities
Borrowings 28 \u2013 \u2013 (434.8) \u2013 (434.8)
Trade payables 26 \u2013 \u2013 \u2013 (2.0) (2.0)
Total \u2013 \u2013 (434.8) (2.0) (436.8)
31 March 2022
Financial assets
Amounts owed by subsidiaries 19, 22 \u2013 \u2013 79.7 \u2013 79.7
Other receivables 22 \u2013 \u2013 0.7 \u2013 0.7
Derivative financial instruments 23 1.2 0.4 \u2013 \u2013 1.6
Cash and cash deposits 25 \u2013 \u2013 306.7 \u2013 306.7
Total 1.2 0.4 387.1 \u2013 388.7
Financial liabilities
Borrowings 28 \u2013 \u2013 (467.3) \u2013 (467.3)
Trade payables 26 \u2013 \u2013 \u2013 (0.7) (0.7)
Total \u2013 \u2013 (467.3) (0.7) (468.0)
19. Other non-current assets
Non-current receivables
Group Company
2023
\u00a3m
2022
\u00a3m
2023
\u00a3m
2022
\u00a3m
Amounts owed by subsidiary undertakings \u2013 \u2013 26.1 31.5
Amounts owed by related parties (note 42) 9.3 9.6 \u2013 \u2013
Interest receivable 13.9 \u2013 \u2013 \u2013
23.2 9.6 26.1 31.5
Non-current receivables were due:
Group Company
2023
\u00a3m
2022
\u00a3m
2023
\u00a3m
2022
\u00a3m
Between 1 and 2 years 13.9 9.6 5.2 5.2
Over 2 years and less than 5 years 9.3 \u2013 15.7 15.6
Over 5 years \u2013 \u2013 5.2 10.7
23.2 9.6 26.1 31.5
The fair values of non-current receivables were:
Group Company
2023
\u00a3m
2022
\u00a3m
2023
\u00a3m
2022
\u00a3m
Amounts owed by subsidiary undertakings \u2013 \u2013 26.1 31.5
Amounts owed by joint ventures 9.3 9.6 \u2013 \u2013
Interest receivable 13.0 \u2013 \u2013 \u2013
22.3 9.6 26.1 31.5
20. Investments
Subsidiary undertakings
\u00a3m
Company
At 31 March 2021 846.4
Investment in subsidiary undertakings:
Bristol Water acquisition 419.6
South West Water share acquisition 45.0
Impairment of investment in subsidiary (0.2)
At 31 March 2022 1,310.8
Investment in subsidiary undertakings:
Bristol Water disposal (407.5)
South West Water share acquisition 413.3
At 31 March 2023 1,316.6
The recoverable amount of investments is determined based on value-in-use calculations, which are set out in note 15.
During the year, as part of the statutory licence transfer of Bristol Water to South West Water, the Company transferred its shareholding in Bristol
Water plc to South West Water Limited for \u00a3413 million. The consideration was satisfied through the Company subscribing for an additional \u00a31 of share
capital of South West Water Limited at a premium of \u00a3413 million.
In the year ended 31 March 2022, the Company subscribed to 45 million \u00a31 ordinary shares in South West Water Limited at a cost \u00a345 million.
Investment in associates and joint ventures
Name of entity Principal activity
Place of
business/country of
incorporation
% of ownership Measurement method
Water 2 Business Limited (\u201cW2B\u201d) National retailer in the non-household market
and provides retail water services to non-
household customers
England 30% Equity
Bristol Wessex Billing Services Limited (\u201cBWBSL\u201d) Meter reading, billing, debt recovery and
customer contact management services
England 50% Equity
Searchlight Collection Limited Debt collection services England 50% Equity
The carrying value of the Group\u2019s share of these investments in associates and joint ventures at 31 March 2022 and at 31 March 2023 is \u00a30.3 million.
The Group\u2019s share of the profits and other comprehensive income of these investments in associates and joint ventures for the year ended 31 March
2023 is \u00a30.3 million (year ended 31 March 2022 nil).
Notes to the Financial Statements continued
119988 AAnnnnuuaall RReeppoorrtt aanndd AAccccoouunnttss 22002233 || PPeennnnoonn GGrroouupp ppllcc
20. Investments continued
The Group\u2019s joint ventures and associates are all private companies and there are no quoted market prices available for the shares.
Summarised
financial information for the joint ventures and investments in associates is set out below:
Summarised balance sheets
2023
\u00a3m
2022
\u00a3m
W2B BWBSL Searchlight W2B BWBSL Searchlight
Current
Cash and cash equivalents 1.5 1.3 \u2013 \u2013 1.1 \u2013
Other current assets 60.1 2.2 0.1 53.6 2.0 0.1
Total current assets 61.6 3.5 0.1 53.6 3.1 0.1
Non-current assets 5.5 \u2013 \u2013 6.5 \u2013 \u2013
Financial liabilities (excluding trade payables) \u2013 \u2013 \u2013 (1.1) \u2013 \u2013
Current liabilities (including trade payables) (35.0) (3.5) \u2013 (28.0) (3.1) \u2013
Total current liabilities (35.0) (3.5) \u2013 (29.1) (3.1) \u2013
Non-current liabilities (31.1) \u2013 \u2013 (32.2) \u2013 \u2013
Net assets 1.0 \u2013 0.1 (1.2) \u2013 0.1
Summarised statement of comprehensive income
2023
\u00a3m
2022
\u00a3m
W2B BWBSL Searchlight W2B BWBSL Searchlight
Revenue 232.9 17.5 0.3 193.5 15.8 0.3
Cost of sales and other operating expenses (228.7) (17.5) (0.3) (190.9) (15.8) (0.3)
Interest (1.3) \u2013 \u2013 (0.7) \u2013 \u2013
Pre-tax profit 2.9 \u2013 \u2013 1.9 \u2013 \u2013
Taxation charge (0.7) \u2013 \u2013 (0.6) \u2013 \u2013
Total comprehensive income 2.2 \u2013 \u2013 1.3 \u2013 \u2013
The information above reflects the amounts presented in the financial statements of the associates (and not the Group\u2019s share of these amounts)
adjusted for differences in accounting policies between the Group and associates.
W2B\u2019s year-end date is 30 June.
BWBSL\u2019s and Searchlight\u2019s year
ends are 31 March. The Group's carrying amount of the investments held is \u00a30.3m (2022 nil) which comprises 30% of the Group's share of equity of
W2B. For BWBSL and Searchlight, the net equity is \u00a3nil (2022 \u00a3nil). The Group\u2019s share of profit from associated companies is \u00a30.3m (2022 \u00a3nil) which
comprises 30% of the Group\u2019s share of W2B, restricted by brought forward losses.
21. Inventories
Group Company
2023
\u00a3m
2022
\u00a3m
2023
\u00a3m
2022
\u00a3m
Raw materials and consumables 10.0 7.7 \u2013 \u2013
22. Trade and other receivables \u2013 current
Group Company
2023
\u00a3m
2022
\u00a3m
2023
\u00a3m
2022
\u00a3m
Trade receivables 280.3 296.2 \u2013 \u2013
Less: allowance for expected credit losses in respect of trade receivables (106.5) (100.4) \u2013 \u2013
Net trade receivables 173.8 195.8 \u2013 \u2013
Amounts owed by parent undertaking \u2013 \u2013 \u2013 \u2013
Amounts owed by subsidiary undertakings \u2013 \u2013 75.7 48.2
Amounts owed by associated companies 0.1 \u2013 \u2013 \u2013
Other receivables 20.8 41.1 3.4 0.7
Accrued income 34.1 26.4 \u2013 0.1
Prepayments 9.2 7.6 1.3 0.8
238.0 270.9 80.4 49.8
Trade receivables include accrued income relating to customers with water budget payment plans. Trade receivables have decreased year on year,
largely due to the one-off bill reductions in the final quarter of the year in relation to Watershare+ and the drought incentive (see note 6) along with
tariff reductions in the South West Water region.
Accrued income includes \u00a325.7 million (2022 \u00a322.0 million) in respect of metered accrual revenue in the retail water business. Metered accrual revenue
relates to performance obligations that have been fully extinguished in providing services to customers prior to the reporting date. Payment in respect
of these services is a matter of time following issuance of invoices.
The Directors consider that the carrying amounts of trade and other receivables approximate to their fair value.
22. Trade and other receivables \u2013 current continued There is no concentration of credit risk in trade receivables. The Group has a large number of customers who are dispersed and there is no significant loss on trade receivables expected that has not been provided for. The Group applies the simplified approach in calculating the expected credit losses for trade receivables allowing a provision matrix to be used which is based on the expected life of trade receivables, default rates for different customer categories within the collection process and forward-looking information. As at 31 March, an analysis of the ageing of trade receivables is as follows: 2023 \u00a3m 2022 \u00a3m Group Not due 57.5 68.9 Past due 1 \u2013 30 days 14.7 17.4 Past due 31 \u2013 120 days 17.1 20.2 More than 120 days 191.0 189.7 280.3 296.2 The aged trade receivables above are taken directly from aged sales ledger records. The Group\u2019s operating businesses specifically review separate categories of debt to identify an appropriate allowance for expected credit losses as outlined in note 2 (n) ii). South West Water Limited has a duty under legislation to continue to provide domestic customers with services regardless of payment. Given the different nature of customer demographics within South West Water\u2019s operating area and the non-household retail business of Pennon Water Services, different provision matrices are adopted by each business. The provision matrix adopted for household customers in the most significant operating region of Devon and Cornwall is outlined in the table below, showing the range of provision rates dependent on phase of collection. The table also includes the gross debt and provision rates for other customer areas: Trade receivables 2023 \u00a3m AAlllloowwaannccee ffoorr eexxppeecctteedd ccrreeddiitt lloosssseess 22002233 \u00a3\u00a3mm Devon and Cornwall (household customers) \u2022 Current occupier < 12 months: 1% - 30% 35.3 00..22 \u2022 Current occupier 12 \u2013 24 months: 10% \u2013 60% 14.6 22..88 \u2022 Current occupier 24 \u2013 36 months: 15% \u2013 80% 10.8 33..44 \u2022 Current occupier > 36 months: 20% \u2013 100% 90.4 4499..55 \u2022 Previous occupier: 55% \u2013 100% 51.9 3311..33 Bristol 31.0 55..44 Pennon Water Services 38.3 1133..55 Other 8.0 00..44 280.3 110066..55 No material expected credit loss provision has been recognised in respect of amounts owed by subsidiary undertakings. The movement in the allowance for expected credit losses in respect of trade receivables was: 2023 \u00a3m 2022 \u00a3m At 1 April 100.4 102.3 Provision for expected credit losses 7.8 5.5 Receivables written off during the year as uncollectable (1.7) (7.4) At 31 March 106.5 100.4 23. Derivative financial instruments Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Derivatives used for cash flow hedging Non-current assets 32.9 14.1 0.2 0.3 Current assets 20.6 5.1 0.5 0.1 Current liabilities (2.4) \u2013 \u2013 \u2013 Non-current liabilities (2.4) \u2013 \u2013 \u2013 Derivatives used for fair value hedging Non-current assets 0.3 0.7 0.3 0.7 Current assets 0.1 0.5 0.1 0.5 The Group\u2019s financial risks and risk management policies are set out in note 3. The fair value of derivatives is split between current and non-current assets or liabilities based on the maturity of the cash flows. The ineffective portion recognised in the income statement arising from hedging relationships was \u00a3nil (2022 \u00a3nil). Notes to the Financial Statements continued 220000 AAnnnnuuaall RReeppoorrtt aanndd AAccccoouunnttss 22002233 || PPeennnnoonn GGrroouupp ppllcc 23. Derivative financial instruments contin ued During the year a \u00a35.0 million charge (2022 \u00a35.8 million charge) was recognised in profit and loss relating to cash flow hedges previously recognised through other comprehensive income and recorded in the hedging reserve. A \u00a329.1 million credit (2022 \u00a340.6 million credit) was recognised in other comprehensive income for cash flow hedges that may be classified subsequently to profit and loss. Interest rate swaps, primarily cash flow hedges, and fixed rate borrowings are used to manage the mix of fixed and floating rates to ensure at least 60% of Group net borrowings are at fixed rate. At 31 March 2023 the Group had interest rate swaps to swap from floating to fixed rate and hedged financial liabilities with a notional value of \u00a3853 million and a weighted average maturity of 3.4 years (2022 \u00a3718 million, with 3.5 years). The weighted average interest rate of the swaps for their nominal amount was 1.54% (2022 1.14%). The Group has established a hedge ratio of 1:1 for the hedging relationships as the underlying risks of the swaps are identical to the hedged risk components. To test the hedge effectiveness, the Group uses the hypothetical derivative method and compares the changes in the fair value of the hedging instrument against the changes in fair value of the hedged item attributable to the hedged risk. The hedge ineffectiveness can arise from: \u2022 Different interest rate curve applied to discount the hedged item and hedging instrument \u2022 Differences in timing of cash flows of the hedged item and hedging instrument \u2022 The counterparties\u2019 credit risk differently impacting the fair value movements of the hedging instrument and hedged item The impact of the hedging instrument on the statement of financial position is as follows: GGrroouupp Notional amount \u00a3m Carrying amount \u00a3m Line item in the statement of financial position Change in fair value used for measuring ineffectiveness in the period \u00a3m AAss aatt 3311 MMaarrcchh 22002233 Interest rate swaps 853.4 52.4 Derivative financial instruments 33.6 RPI swaps 300.0 (4.4) Derivative financial instruments (4.4) Cross currency swaps 24.0 1.1 Derivative financial instruments (0.5) As at 31 March 2022 Interest rate swaps 717.9 18.8 Derivative financial instruments 40.6 Cross currency swaps 24.0 1.6 Derivative financial instruments 1.5 CCoommppaannyy Notional amount \u00a3m Carrying amount \u00a3m Line item in the statement of financial position Change in fair value used for measuring ineffectiveness in the period \u00a3m AAss aatt 3311 MMaarrcchh 22002233 Cross currency swaps 24.0 1.1 Derivative financial instruments (0.5) As at 31 March 2022 Cross currency swaps 24.0 1.6 Derivative financial instruments 1.5 The periods for which the cash flow hedges are expected to affect future profit or loss are as follows: Due within 1 year \u00a3m Due between 1 and 2 years \u00a3m Due between 2 and 5 years \u00a3m Due over 5 years \u00a3m Total \u00a3m Group 31 March 2023 Assets 20.8 19.0 8.8 5.3 53.9 Liabilities (2.4) (2.0) (0.2) (0.2) (4.8) 31 March 2022 Assets 5.1 5.0 7.0 2.1 19.2 Company 31 March 2023 Assets 0.5 0.2 \u2013 \u2013 0.7 Liabilities \u2013 \u2013 \u2013 \u2013 \u2013 31 March 2022 Assets 0.1 0.2 0.1 \u2013 0.4 Valuation hierarchy The Group uses the following hierarchy for determining the fair value of financial instruments by valuation technique: \u2022 Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1) \u2022 Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2) \u2022 Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3). 23. Derivative financial instruments contin ued
The fair value of financial instruments not traded in an active market (level 2, for example over-the-counter derivatives) is determined by using
valuation techniques. A variety of methods and assumptions are used based on market conditions existing at each balance sheet date. Quoted market
prices or dealer quotes for similar instruments are used for long-term debt. Other techniques, such as estimated discounted cash flows, are used to
determine fair value for the remaining financial instruments. The fair value of interest rate swaps is calculated as the present value of the estimated
future cash flows.
The Group\u2019s financial derivatives are valued using level 2 measures:
Group Company
2023
\u00a3m
2022
\u00a3m
2023
\u00a3m
2022
\u00a3m
Assets
Derivatives used for cash flow hedging 53.5 19.2 0.7 0.4
Derivatives used for fair value hedging 0.4 1.2 0.4 1.2
Total assets 53.9 20.4 1.1 1.6
Liabilities
Derivatives used for cash flow hedging (4.8) \u2013 \u2013 \u2013
Total liabilities (4.8) \u2013 \u2013 \u2013
24. Financial instruments at fair value through profit
Group Company
2023
\u00a3m
2022
\u00a3m
2023
\u00a3m
2022
\u00a3m
Current liabilities 2.6 2.5 0.1 0.1
Non-current liabilities 34.0 36.1 \u2013 \u2013
Non-current assets 1.3 \u2013 1.3 \u2013
Financial instruments at fair value through profit reflect the fair value movement of the hedged risk on the hedged item which had been designated in
a fair value hedging relationship.
The hedged item was the \u00a3150 million bond issued by South West Water Finance Plc in 2010 which matures in July 2040 (see note 28). The hedging
relationship was de-designated in previous periods at which point the fair value amount recognised at that point ceased to be revalued. The fixed
financial liability at the point of de-designation is released to the income statement over the remaining life of the debt.
25. Cash and cash deposits
Group Company
2023
\u00a3m
2022
\u00a3m
2023
\u00a3m
2022
\u00a3m
Cash at bank and in hand 69.7 57.3 34.0 6.7
Short-term bank deposits 25.0 50.0 25.0 50.0
Other deposits 70.7 411.7 45.1 250.0
Total cash and cash deposits 165.4 519.0 104.1 306.7
Group short-term deposits have an average maturity of one working day (2022 one working day).
Group other deposits have an average maturity of 45 days (2022 78 days).
Group other deposits include restricted funds of \u00a321.7 million (2022 \u00a3161.7 million) to settle long-term lease liabilities (note 28) and \u00a3nil (2022 \u00a36.1
million) held in an instant access account under the terms of other loan agreements. Restricted funds are available for access, subject to being
replaced by an equivalent valued security.
For the purposes of the cash flow statement cash and cash equivalents comprise:
Group
Company
2023
\u00a3m
2022
\u00a3m
2023
\u00a3m
2022
\u00a3m
Cash and cash deposits as above 165.4 519.0 104.1 306.7
Less: deposits with a maturity of three months or more (restricted funds) (21.7) (167.8) \u2013 \u2013
143.7 351.2 104.1 306.7
26. Trade and other payables \u2013 current
Group
Company
2023
\u00a3m
2022
\u00a3m
2023
\u00a3m
2022
\u00a3m
Trade payables 150.7 107.5 2.0 0.7
Contract liabilities 3.7 3.3 \u2013 \u2013
Other tax and social security 3.4 4.3 0.4 0.8
Accruals 44.3 29.5 2.3 2.1
Other payables 23.3 25.1 1.6 2.0
Amounts owed to joint venture \u2013 1.8 \u2013 \u2013
225.4 171.5 6.3 5.6
The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
Notes to the Financial Statements continued
220022 AAnnnnuuaall RReeppoorrtt aanndd AAccccoouunnttss 22002233 || PPeennnnoonn GGrroouupp ppllcc
26. Trade and other payables \u2013 current continued
The movement in the contract liabilities was:
Contract liabilities
Group
2023
\u00a3m
2022
\u00a3m
At 1 April 140.5 130.3
Revenue recognised in the year (6.4) (2.0)
Consideration received in advance of completion of performance obligations 24.9 12.2
At 31 March 159.0 140.5
The analysis of contract liabilities between current and non-current is:
Group
2023
\u00a3m
2022
\u00a3m
Current 3.7 3.3
Non-current (note 29) 155.3 137.2
159.0 140.5
Performance obligations related to the current contract liabilities balance above are expected to be satisfied, and revenue will be recognised, within the
financial year ended 31 March 2024.
27. Current tax assets/(liabilities)
Group Company
2023
\u00a3m
2022
\u00a3m
2023
\u00a3m
2022
\u00a3m
Current year debtor / (creditor) 3.1 2.8 (0.2) (0.2)
Prior year tax items 5.3 (1.3) (3.2) (3.2)
8.4 1.5 (3.4) (3.4)
28. Borrowings
Group
Company
2023
\u00a3m
2022
\u00a3m
2023
\u00a3m
2022
\u00a3m
Current
Bank and other loans 92.7 40.0 \u2013 \u2013
Private placements \u2013 30.0 \u2013 30.0
Amounts owed to subsidiary undertakings \u2013 \u2013 279.1 282.8
92.7 70.0 279.1 312.8
Leases 32.0 170.2 \u2013 \u2013
Total current borrowings 124.7 240.2 279.1 312.8
Non-current
Bank and other loans 697.0 641.9 49.8 49.9
Private placements 305.3 279.3 105.9 104.6
Fixed rate bonds 214.6 213.2 \u2013 \u2013
RPI index-linked bonds 744.0 773.0 \u2013 \u2013
Listed preference shares 12.5 12.5 \u2013 \u2013
1,973.4 1,919.9 155.7 154.5
Leases 1,032.7 1,041.8 \u2013 \u2013
Total non-current borrowings 3,006.1 2,961.7 155.7 154.5
Total borrowings 3,130.8 3,201.9 434.8 467.3
South West Water Finance Plc issued a \u00a3150 million fixed rate bond in July 2010 maturing in 2040 with a cash coupon of 5.875%.
South West Water Finance Plc issued a \u00a3200 million RPI index-linked bond in July 2008 maturing in 2057 with a cash coupon of 1.99%. Bournemouth
Water Limited issued a \u00a365 million RPI index-linked bond in April 2005 maturing in 2033 with a cash coupon of 3.084%. This instrument was
transferred to South West Water Limited in April 2017. Prior to acquisition by Pennon, Bristol Water Plc issued RPI index-linked bonds totalling \u00a391
million maturing in 2032 with a cash coupon of 3.635%.
In November 2022 Bristol Water plc redeemed \u00a340m of bonds due to be repaid in March 2041 at a value of \u00a372.3 million. The Group carrying value of the
bonds at redemption was \u00a391.7 million and costs were incurred of \u00a31.0m, resulting in a net gain on settlement of \u00a318.4 million.
Fair value adjustments of \u00a3124 million (2022 \u00a3169 million) in relation to the acquisition of Bournemouth Water Limited and Bristol Water Plc have been
allocated to the instruments to which they relate.
28. Borrowings continued The listed preference shares were issued by Bristol Water Plc at \u00a31 in 1992. They are held by external shareholders and are listed on the London Stock Exchange. Shareholders are entitled to receive dividends at 8.75% per annum on the par value of the shares on a cumulative basis; these dividends are payable half yearly on 1 April and 1 October. On winding up, the preference shareholders rank ahead of Bristol Water ordinary shareholders and are entitled to receive \u00a31 per share and any dividends accrued but unpaid in respect of their shares. In the event that dividends on the preference shares are in arrears for six months or more, holders of the preference shares become entitled to vote at general meetings of members. The authorised preference share capital consists of 14,000,000 8.75% irredeemable cumulative preference shares of \u00a31 each. The preference shares are classified as liabilities in the consolidated balance sheet of the Group and the related dividends are classified as finance costs. The fair values of borrowings, are valued using level 2 measures, unless otherwise stated below, (as set out in note 23) were: 2023 2022 Book value \u00a3m Fair value \u00a3m Book value \u00a3m Fair value \u00a3m Group Bank and other loans 92.7 92.7 40.0 40.0 Private placement \u2013 \u2013 30.0 30.0 92.7 92.7 70.0 70.0 Leases 32.0 \u2013 170.2 \u2013 Total current borrowings 124.7 92.7 240.2 70.0 Group Bank and other loans 697.0 684.1 641.9 650.5 Private placements 305.3 288.2 279.3 272.0 Fixed rate bonds (level 1) 135.8 137.8 135.3 181.5 Fixed rate bonds 78.8 66.8 77.9 75.2 RPI index-linked bond 744.0 614.5 773.0 885.9 Listed preference shares 12.5 21.5 12.5 24.9 1,973.4 1,812.9 1,919.9 2,090.0 Leases 1,032.7 \u2013 1,041.8 \u2013 Total non-current borrowings 3,006.1 1,812.9 2,961.7 2,090.0 Total borrowings 3,130.8 1,905.6 3,201.9 2,160.0 Company Private placements \u2013 \u2013 30.0 30.0 Amounts owed to subsidiary undertakings 279.1 279.1 282.8 282.8 Total current borrowings 279.1 279.1 312.8 312.8 Bank and other loans 49.8 50.4 49.9 51.8 Private placements 105.9 105.7 104.6 105.1 Total non-current borrowings 155.7 156.1 154.5 156.9 Total borrowings 434.8 435.2 467.3 469.7 Under IFRS 16 the disclosure of the fair value of leases is not required. Where market values are not available, fair values of borrowings have been calculated by discounting expected future cash flows at prevailing interest rates. During the year, as part of its ongoing programme to renew and raise new financing, the Group entered into \u00a3200 million of new terms loans and leasing facility arrangements, with an average maturity of 9 years, a \u00a325 million private placement and \u00a3195 million of new and renewed revolving credit facilities. The maturity of non-current borrowings, excluding leases, was: Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Between 1 and 2 years 64.4 101.4 8.7 \u2013 Over 2 years and less than 5 years 364.2 221.0 147.0 75.1 Over 5 years 1,544.8 1,597.5 \u2013 79.4 1,973.4 1,919.9 155.7 154.5 The weighted average maturity of non-current borrowings, excluding leases, was 13.2 years (2022 14.2 years). Undrawn committed borrowing facilities at the balance sheet date were: Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Floating rate: Expiring within 1 year 119.8 50.0 80.0 25.0 Expiring after 1 year 135.0 247.0 25.0 80.0 254.8 297.0 105.0 105.0 Notes to the Financial Statements continued 220044 AAnnnnuuaall RReeppoorrtt aanndd AAccccoouunnttss 22002233 || PPeennnnoonn GGrroouupp ppllcc 28. Borrowings continued Information on leases The Group has leases for various assets as shown in note 17. The maturity of lease liabilities was: Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Within 1 year 32.0 170.1 \u2013 \u2013 Over 1 year and less than 5 years 181.7 180.6 \u2013 \u2013 Over 5 years 851.0 861.2 \u2013 \u2013 1,064.7 1,211.9 \u2013 \u2013 Analysed as: Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Current 32.0 170.1 \u2013 \u2013 Non-current 1,032.7 1,041.8 \u2013 \u2013 1,064.7 1,211.9 \u2013 \u2013 For the purposes of calculating debt or borrowings under the Group\u2019s financing agreements, all of which were negotiated under IFRS prior to the implementation of IFRS 16, borrowings that were previously categorised as operating leases under IAS 17 are excluded from the definition of debt. As at 31 March 2023 the carrying value of leases previously categorised as IAS 17 operating leases was \u00a337.3 million (2022 \u00a336.9 million). The Group does not face a significant liquidity risk with regard to its lease liabilities. Lease liabilities are monitored within the Group\u2019s treasury function. The discount rate used to calculate the lease liabilities above involves estimation. Where the Group cannot readily determine the rate implicit in the lease the Group uses an estimated incremental borrowing rate (IBR). At 31 March 2023 the range of IBRs used was between 2.6% and 3.9% (2022 between 2.6% and 3.9%) and the weighted average IBR across all leases was 3.3% (2021 3.8%). If the weighted average rate used increased or decreased by 10bps, this would result in a c.1.1% increase or reduction in the present value of lease liabilities recognised at 31 March 2023 (2022 c.1.1%). The period for repayment of certain leases includes an agreement to deposit with the lessor group amounts equal to the difference between the original and revised payments due. The accumulated deposits, \u00a321.6 million at 31 March 2023 (2022 \u00a3161.7 million), are currently being held to settle the lease liability\u202fsubject to rights to release by negotiation with the lessor. The deposits are subject to a registered charge given as security to the lessor for the balance outstanding. Cash outflows in respect of leasing relate to principal repayments of \u00a3120.3 million (2022 \u00a3231.4 million) and interest repayments of \u00a3100.5 million (2022 \u00a317.2 million), in addition to inflows from lease financing arrangements of \u00a340.2 million (2022 \u00a315.0 million). Other information required to be disclosed under IFRS 16 is included in note 17. 29. Other non-current liabilities Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Amounts owed to subsidiary undertakings \u2013 \u2013 8.5 8.6 Contract liabilities 155.3 137.2 \u2013 \u2013 155.3 137.2 8.5 8.6 Non-current contract liabilities relate to consideration received in advance of the Group performing its performance obligations to customers where performance obligations will not be completed within 12 months of the balance sheet date. The overall movement in total contract liabilities is disclosed in note 26. Contract liabilities reflect the fair value of assets transferred from customers in the water segment. The majority of the contract liabilities included above are expected to unwind after five years. 30. Retirement benefit obligations During the year the Group operated a number of defined benefit pension schemes and also defined contribution schemes. The principal plan within the Group is the Pennon Group Pension Scheme (PGPS), which is a funded defined benefit, final salary pension scheme in the UK. Following the acquisition of Bristol Water, the Group also assumed defined benefit obligations through Bristol Water\u2019s membership of Water Companies Pension Scheme (\u2018WCPS\u2019). The Group\u2019s pension schemes are established under trust law and comply with all relevant UK legislation. The assets of the Group\u2019s pension schemes are held in separate trustee administered funds. The trustees of the funds are required to act in the best interest of the funds\u2019 beneficiaries. The appointment of schemes\u2019 trustees is determined by the schemes\u2019 trust documentation. The Group has a policy for the PGPS that one-half of all trustees, other than the Chair, are nominated by members of the schemes, including pensioners. Bristol Water\u2019s membership of WCPS is through a separate section of that scheme. The assets of the section are held separately from those of the Group and are invested by discretionary fund managers appointed by the trustees of the scheme. The employees in the section ceased to earn additional defined benefit pensions on 31 March 2016. There were no employer contributions to the scheme from that date and from 30 June 2016, with the agreement of the trustees, deficit contributions also ceased. All eligible employees were offered membership of a stakeholder pension scheme. In 2018 the trustees of the Bristol Water section of the WCPS purchased a bulk annuity policy to insure the benefits for members of the section. Following this the method for valuing the liabilities of the pension scheme has remained the same. However, the scheme assets, in the form of the insurance policy, now materially match the value of the liabilities. The process to buy up and wind up the scheme is continuing, including discussions regarding the release of the surplus on completion of this process. PGPS is closed to future accrual. 30. Retirement benefit obligations continued
Defined contribution schemes
Pension costs for defined contribution schemes were \u00a39.4 million (2022 \u00a37.6 million).
Defined benefit schemes
Assumptions
The principal actuarial assumptions at 31 March were:
2023
%
2022
%
Rate of increase in pensionable pay 2.7 3.0
Rate of increase for current and future pensions 2.8 3.1
Rate used to discount schemes\u2019 liabilities and expected return on schemes\u2019 assets 4.7 2.8
Inflation 3.3 3.6
Mortality
Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statistics and experience. The
mortality assumption uses a scheme-specific calculation based on CMI 2019 actuarial tables with an allowance for future longevity improvement.
The average life expectancy in years of a member having retired at age 62 on the balance sheet date is projected as:
2023 2022
Male 24.2 24.9
Female 26.7 27.2
The average life expectancy in years of a future pensioner retiring at age 62, 20 years after the balance sheet date, is projected as:
2023 2022
Male 25.6 26.0
Female 28.2 28.3
The sensitivities regarding the principal assumptions used to measure the schemes\u2019 liabilities are:
Change in
assumption
Impact on
schemes\u2019 liabilities
Rate of increase in current and future pensions +/\u2013 0.5% +/\u2013 4.3%
Rate used to discount schemes\u2019 liabilities +/\u2013 0.5% \u2013/+ 6.5%
Inflation +/\u2013 0.5% +/\u2013 5.0%
Life expectancy +/\u2013 1 year +/\u2013 3.7%
The sensitivity analysis shows the effect of changes in the principal assumptions used for the measurement of the pension liability. The method used
to calculate the sensitivities is approximate and has been determined taking into account the duration of the liabilities and the overall profile of each
scheme\u2019s membership. This is the same approach as has been adopted in previous years.
The amounts recognised in the balance sheet were:
Group Company
2023
\u00a3m
2022
\u00a3m
2023
\u00a3m
2022
\u00a3m
Present value of financial obligations (719.5) (985.9) (139.5) (190.7)
Fair value of plan assets 753.2 1,056.5 144.2 203.1
Surplus/(deficit) of funded plans 33.7 70.6 4.7 12.4
Less: restriction of surplus (4.4) (4.3) \u2013 \u2013
Net asset/(liability) recognised in the balance sheet 29.3 66.3 4.7 12.4
Notes to the Financial Statements continued
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30. Retirement benefit obligations continued
The movement in the net defined benefit obligation over the accounting period is as follows:
2023 2022
Present value
of obligation
\u00a3m
Fair value
of plan assets
\u00a3m
Total
\u00a3m
Present value
of obligation
\u00a3m
Fair value
of plan assets
\u00a3m
Total
\u00a3m
At 1 April (985.9) 1,052.2 66.3 (901.7) 910.5 8.8
Acquisition Bristol Water Group \u2013 \u2013 \u2013 (175.4) 183.2 7.8
Current service cost (1.0) (0.6) (1.6) (2.9) (0.6) (3.5)
Past service cost, curtailments and gains/losses on settlements \u2013 \u2013 \u2013 (0.1) \u2013 (0.1)
Interest (expense)/income (26.5) 28.5 2.0 (20.8) 21.4 0.6
(27.5) 27.9 0.4 (23.8) 20.8 (3.0)
Remeasurements:
Loss on plan assets excluding amounts included in interest expense \u2013 (288.7) (288.7) \u2013 (33.1) (33.1)
Gain/(loss) from change in demographic assumptions 9.7 \u2013 9.7 (0.7) \u2013 (0.7)
Gain from change in financial assumptions 266.0 \u2013 266.0 80.4 \u2013 80.4
Experience (losses)/gains (25.9) (0.1) (26.0) (22.2) 0.5 (21.7)
249.8 (288.8) (39.0) 57.5 (32.6) 24.9
Contributions:
Employers \u2013 1.6 1.6 \u2013 27.8 27.8
Payments from plans: \u2013 \u2013 \u2013
Benefit payments 44.1 (44.1) \u2013 57.5 (57.5) \u2013
44.1 (42.5) 1.6 57.5 (29.7) 27.8
At 31 March (719.5) 748.8 29.3 (985.9) 1,052.2 66.3
Recognition of surplus on principal pension scheme
In accordance with IAS 19 \u2018Employee Benefits\u2019 the value of the net pension scheme surplus that can be recognised in the statement of financial
position is restricted to the present value of economic benefits available in the form of refunds from the scheme or reductions in future contributions.
In respect of the Group\u2019s principal pension scheme, PGPS, the surplus has been recognised as the Group believes that ultimately it has an
unconditional right to a refund of any surplus assuming the full settlement of the plan\u2019s liabilities in a single event, such as a scheme wind up.
Bristol Water
The Group believes that it has an unconditional right to a refund of surplus and that the gross pension surplus can be recognised. This benefit is only
available as a refund as no additional defined pension benefits are being earned. Under UK tax legislation a tax deduction of 35% is applied to a refund
from a UK pension scheme, before it is passed to the employer. This tax deduction has been applied to restrict the value of the surplus recognised for
this scheme.
The movement in the Company\u2019s net defined benefit obligation over the accounting period is as follows:
2023 2022
Present value
of obligation
\u00a3m
Fair value
of plan assets
\u00a3m
Total
\u00a3m
Present value
of obligation
\u00a3m
Fair value
of plan assets
\u00a3m
Total
\u00a3m
At 1 April (190.7) 203.1 12.4 (205.7) 200.2 (5.5)
Current service cost (0.4) \u2013 (0.4) (0.4) \u2013 (0.4)
Past service cost and gains and losses on settlements \u2013 \u2013 \u2013 \u2013 \u2013 \u2013
Interest (expense)/income (5.2) 5.6 0.4 (4.2) 4.2 \u2013
(5.6) 5.6 \u2013 (4.6) 4.2 (0.4)
Remeasurements:
Loss on plan assets excluding amounts included in interest expense \u2013 (56.4) (56.4) \u2013 (13.7) (13.7)
Loss from change in demographic assumptions 2.0 \u2013 2.0 \u2013 \u2013 \u2013
Gain/(loss) from change in financial assumptions 52.6 \u2013 52.6 12.3 \u2013 12.3
Experience losses (6.2) \u2013 (6.2) (4.6) \u2013 (4.6)
48.4 (56.4) (8.0) 7.7 (13.7) (6.0)
Contributions:
Employers \u2013 0.3 0.3 \u2013 24.3 24.3
Payments from plans:
Benefit payments 8.4 (8.4) \u2013 11.9 (11.9) \u2013
8.4 (8.1) 0.3 11.9 12.4 24.3
At 31 March (139.5) 144.2 4.7 (190.7) 203.1 12.4
30. Retirement benefit obligations continued The schemes\u2019 assets relating to the Group were: 2023 2022 Quoted prices in active market \u00a3m Prices not quoted in active market \u00a3m Fund % Quoted prices in active market \u00a3m Prices not quoted in active market \u00a3m Fund % Equities 124.3 \u2013 17 219.0 \u2013 21 Government bonds 14.4 \u2013 2 96.1 \u2013 9 Other bonds 175.8 72.1 33 270.1 79.3 33 Diversified growth 43.9 \u2013 6 67.8 \u2013 6 Property/Infrastructure 19.0 22.4 5 69.6 11.4 8 Insurance linked security 41.2 107.0 20 78.2 147.8 22 LDI investments 109.2 \u2013 14 \u2013 \u2013 \u2013 Other (including cash funds) 6.3 13.2 3 3.9 9.0 1 534.1 214.7 100 804.7 247.5 100 The Company\u2019s share of the schemes\u2019 assets at the balance sheet date was: 2023 2022 Quoted prices in active market \u00a3m Prices not quoted in active market \u00a3m Fund % Quoted prices in active market \u00a3m Prices not quoted in active market \u00a3m Fund % Equities 28.5 \u2013 20 49.7 \u2013 24 Government bonds 3.3 \u2013 2 21.8 \u2013 11 Other bonds 40.3 16.5 39 61.3 18.0 39 Diversified growth 10.1 \u2013 7 15.4 \u2013 8 Property/Infrastructure 4.4 5.2 7 15.8 2.6 9 Insurance linked security 9.5 \u2013 7 17.7 \u2013 9 LDI investments 25.1 \u2013 17 \u2013 \u2013 \u2013 Other 1.4 \u2013 1 0.8 \u2013 \u2013 122.6 21.7 100 182.5 20.6 100 Through its defined benefit pension plan, the Group is exposed to a number of risks, the most significant of which are detailed below: Asset volatility The liabilities are calculated using a discount rate set with reference to corporate bond yields; if assets underperform this yield, this will create a deficit. The schemes hold a proportion of growth assets (equities and diversified growth funds) which are expected to outperform corporate bonds in the long term, but can give rise to volatility and risk in the short term. As the funding of the schemes improves, an increasing proportion of the schemes\u2019 assets are invested in less volatile asset classes such as cash and bonds which more closely reflect market movements in the schemes\u2019 liabilities. The allocation to growth assets is monitored such that it is suitable with the schemes\u2019 long- term objectives. Changes in bond yields A decrease in corporate bond yields will increase the schemes\u2019 liabilities, although this will be partially offset by an increase in the value of the schemes\u2019 bond holdings. Inflation risk The majority of the schemes\u2019 benefit obligations are linked to inflation, and higher inflation will lead to higher liabilities (although, in most cases, caps on the level of inflationary increases are in place to protect against extreme inflation). The scheme uses LDIs (\u2018Liability Driven Investment Funds\u2019) within the asset portfolios to hedge against the value of liabilities changing as a result of movements in long-term interest rates and inflation expectations. The structure allows the scheme to both hedge against the risks and retain capital investment in assets that are expected to generate higher returns. Whilst LDIs are an integral part of the hedging strategy, risk management and monitoring strategies are in place to ensure that the collateral requirements to maintain these structures are closely managed. Life expectancy The majority of the schemes\u2019 obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the liabilities. In conjunction with its investment advisers, the trustees have structured the schemes\u2019 investments with the objective of balancing investment returns and levels of risk. The asset allocation for the main scheme has three principal elements: \u2022 Holding of cash funds and bonds which are expected to be less volatile than most other asset classes and reflects market movements in the schemes\u2019 liabilities \u2022 A proportion of equities with fund managers having freedom in making investment decisions to maximise returns, and \u2022 Investment of a proportion of the schemes\u2019 assets in alternative asset classes which give the potential for diversification (currently property, insurance linked securities and diversified growth). The liabilities of the defined benefit schemes are measured by using the projected unit credit method which is an accrued benefits valuation method in which the scheme liabilities make allowance for projected increases in pensionable pay.Notes to the Financial Statements continued
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30. Retirement benefit obligations continued
As funding of our principal pension scheme has improved the investment portfolio has been de-risked through increasing the scheme\u2019s real gilts hedging
position through LDIs (Liability Driven Investments), which are commonly used by UK pension schemes. As has been widely reported, the unprecedented
increases in gilt yields in late September 2022 resulted in rapid reductions in collateral in LDI arrangements which schemes are required to increase or the
hedging structure is unwound. As permitted by the scheme rules and legislation, Pennon approved a temporary loan facility on 28 September 2022 to
provide short-term liquidity to the scheme whilst investments were re-balanced. \u00a325 million was provided on this date and this was fully repaid within 6
days. This loan facility remains undrawn and available for use.
The future cash flows arising from the payment of the defined benefits are expected to be settled primarily in the period between 15 and 40 years from
the balance sheet date.
The 2022 triennial actuarial valuation of the principal defined benefit scheme was agreed in 2023 with an actuarial valuation surplus of \u00a38.0 million. No
deficit recovery contributions are required as a result of the 2022 valuation. Additional contributions of \u00a31.6 million were paid into the scheme in
respect of scheme expenses (2022: \u00a323 million including use of proceeds from the Viridor disposal). The Group monitors funding levels on an annual
basis and the Group expects to pay only scheme expenses of around \u00a31.7 million, during the year ended 31 March 2024.
The last formal actuarial valuation of the Bristol Water section of the WCPS was at 31 March 2017.
31. Deferred tax
Deferred tax is provided in full on temporary differences under the liability method using enacted tax rates.
Movements on deferred tax were:
Group Company
2023
\u00a3m
2022
\u00a3m
2023
\u00a3m
2022
\u00a3m
Liabilities/(assets) at 1 April 512.4 259.6 (13.1) (12.5)
Acquisition of Bristol Water Group \u2013 140.3 \u2013 \u2013
(Credited)/charged to the income statement (0.9) 8.9 (2.4) 3.1
Charged/(credited) to equity, including impact of change in tax rate (2.0) 4.1 (1.8) (3.5)
Other non-underlying charges/(credits) in the income statement (2.5) 99.5 (1.3) (0.2)
Liabilities/(assets) at 31 March 507.0 512.4 (18.6) (13.1)
An adjustment to the preliminary accounting for the Bristol Water acquisition has been made within the measurement period ending 2 June 2022, this
adjustment is presented retrospectively and the 31 March 2022 balance sheet figures for deferred tax have been adjusted accordingly (see note 4).
Deferred tax assets have been recognised in respect of all temporary differences giving rise to deferred tax assets because it is probable that these
assets will be recovered.
The majority of the Group\u2019s deferred tax liability is expected to be recovered over more than one year. The majority of the Company\u2019s deferred tax
asset is expected to be recovered over more than one year. All deferred tax assets and liabilities within the same jurisdiction are offset.
The movements in deferred tax assets and liabilities were:
Group
Deferred tax liabilities
Derivatives
\u00a3m
Accelerated
tax depreciation
\u00a3m
Fair value
adjustments
\u00a3m
Short-term
liabilities
including
provisions
\u00a3m
Retirement
benefit
obligations
\u00a3m
Total
\u00a3m
At 1 April 2021 \u2013 276.3 17.0 \u2013 \u2013 293.3
Acquisition of Bristol Water Group \u2013 92.2 74.3 (12.5) \u2013 154.0
Charged/(credited) to the income statement \u2013 2.6 (0.9) \u2013 \u2013 1.7
Non-underlying charge to the income statement \u2013 88.5 5.3 \u2013 \u2013 93.8
Reclassification from deferred tax assets \u2013 \u2013 \u2013 18.6 9.7 28.3
At 31 March 2022 \u2013 459.6 95.7 6.1 9.7 571.1
Charged/(credited) to the income statement \u2013 13.6 (1.2) (4.6) 3.0 10.8
Non-underlying credit to the income statement \u2013 \u2013 \u2013 \u2013 \u2013 \u2013
Charged/(credited) to equity \u2013 \u2013 \u2013 \u2013 (9.8) (9.8)
Reclassification 2.9 \u2013 \u2013 \u2013 \u2013 2.9
At 31 March 2023 2.9 473.2 94.5 1.5 2.9 575.0
31. Deferred tax continued
Deferred tax assets
Derivatives
\u00a3m
Share-based
payments
\u00a3m
Tax losses
\u00a3m
Fair value
adjustment
\u00a3m
Short-term
liabilities
including
provisions
\u00a3m
Retirement
benefit
obligations
\u00a3m
Total
\u00a3m
At 1 April 2021 (12.0) (1.7) (4.8) (8.3) (0.9) (6.0) (33.7)
Charged/(credited) to the income statement 0.5 (0.1) (3.3) 1.9 0.4 7.8 7.2
Acquisition of Bristol Water Group \u2013 \u2013 \u2013 (32.8) 19.1 \u2013 (13.7)
Non-underlying charge/(credit) to the income statement 0.3 (0.2) (2.5) (2.2) \u2013 10.3 5.7
(Credited)/charged to equity, including impact on change in
tax rate
6.5 \u2013 \u2013 \u2013 \u2013 (2.4) 4.1
Reclassified to deferred tax liabilities \u2013 \u2013 \u2013 \u2013 (18.6) (9.7) (28.3)
At 31 March 2022 (4.7) (2.0) (10.6) (41.4) \u2013 \u2013 (58.7)
Charged/(credited) to the income statement 0.3 0.5 (14.7) 2.2 \u2013 \u2013 (11.7)
Non-underlying charge/(credit) to the income statement \u2013 \u2013 (10.6) 8.1 \u2013 \u2013 (2.5)
Reclassification to deferred tax liabilities (2.9) \u2013 \u2013 \u2013 \u2013 \u2013 (2.9)
Charged to equity, including impact on change in tax rate 7.3 0.5 \u2013 \u2013 \u2013 \u2013 7.8
At 31 March 2023 \u2013 (1.0) (35.9) (31.1) \u2013 \u2013 (68.0)
Net liability
At 31 March 2022 512.4
At 31 March 2023 507.0
Company
Deferred tax assets
Retirement
benefit
obligations
\u00a3m
Derivatives
\u00a3m
Share-based
payments
\u00a3m
Tax losses
\u00a3m
Total
\u00a3m
At 1 April 2021 (6.8) \u2013
(0.9) (4.8) (12.5)
Charged/(credited) to the income statement 6.5 \u2013
(0.1) (3.3) 3.1
Non-underlying credit to the income statement 2.5 \u2013
(0.2) (2.5) (0.2)
Credited to equity, including impact on change in tax rate (3.5) \u2013
\u2013
\u2013
(3.5)
At 31 March 2022 (1.3) \u2013
(1.2) (10.6) (13.1)
Charged/(credited) to the income statement 2.0 \u2013 0.3 (4.7) (2.4)
Non-underlying charge/(credit) to the income statement \u2013 \u2013 \u2013 (1.3) (1.3)
Charged/(credited) to equity, including impact on change in tax rate (2.0) \u2013 0.2 \u2013 (1.8)
At 31 March 2023 (1.3) \u2013 (0.7) (16.6) (18.6)
Deferred tax charged/(credited) to equity or other comprehensive income during the year was:
Group Company
2023
\u00a3m
2022
\u00a3m
2023
\u00a3m
2022
\u00a3m
Remeasurement of defined benefit obligations (9.8) 2.4 (2.0) (3.5)
Cash flow hedges 7.3 (6.5) \u2013 \u2013
Share-based payments 0.5 \u2013 0.2 \u2013
(2.0) (4.1) (1.8) (3.5)
Capital allowances are available when a business incurs qualifying expenditure on capital items such as infrastructure assets. Capital allowances
provide tax relief on these items in place of accounting depreciation which is not tax deductible. Over the period of ownership of an asset, cumulative
depreciation and capital allowances will equalise. Capital allowance rates are set by the UK Government and every business receives the same rate of
allowance. Capital allowance rates typically vary from 3% up to 100% in certain instances. In recent years enhanced allowances known as super
deductions at 130% have been available on plant and machinery assets acquired after 3 March 2021 together with 50% first year allowances on special
rate assets. From 1 April 2023, super deductions will be replaced by full expensing for three years whilst the 50% first year allowance will be maintained
for the same period. Given the Group's continuing capital expenditure programme, it is unlikely that the deferred tax liability will crystallise in the near
future.
The different accounting treatment of property, plant and equipment for tax and accounting purposes means that the taxable income of the Group is
not the same as the profit reported in the financial statements. The adjustments for this are reflected in the current tax reconciliation. As explained in
note 9, the Government has introduced capital expenditure super-deduction allowance incentives for the two year period to April 2023 which
increases the rate of capital allowances to up to 130% for expenditure on qualifying plant and machinery. This provides an increase in current tax relief
for the Group with a consequently higher deferred tax liability and charge due to the additional capital allowance deductions and the increase in the
rate of corporation tax to 25% from April 2023.
Notes to the Financial Statements continued
221100 AAnnnnuuaall RReeppoorrtt aanndd AAccccoouunnttss 22002233 || PPeennnnoonn GGrroouupp ppllcc
31. Deferred tax continued
Short term temporary differences arise on items such as retirement benefit obligations, derivatives and share based payments because the
treatment of such items are different for tax and accounting purposes. These differences reverse over future years following that in which they arise,
as is reflected in the deferred tax charge in these financial statements. Specifically, retirement benefit obligations will crystallise over the life of the
pension scheme and/or the period when spreading applies (this can be up to three years for spreading purposes), whilst share based payments will
crystallise over the remaining life of the share schemes which are up to 5 years. Short term liabilities including provisions will typically crystallise in the
following year.
The fair value liability relates to the revaluation of tangible fixed assets on the acquisition of Bournemouth Water and Bristol Water. The fair value asset
relates to the revaluation of debt on the acquisition of Bournemouth Water and Bristol Water. These items will be released over their remaining life
which is up to 142 years.
Where interest charges or other costs are capitalised in the accounts, tax relief is either given as the charges are incurred or when the costs are taken
to the income statement.
Derivatives reflect the fair value movements on treasury derivatives, these can fluctuate considerably each year. The balance will crystallise when
derivative items are either terminated or mature, the life of these items can be up to ten years.
Tax losses relate to trading losses generated in the year and non-trade deficits carried forwards in relation to the UK's corporate interest restriction
rules, these are anticipated to be utilised within the next five years.
32. Provisions
Restructuring
\u00a3m
Total
\u00a3m
Group
At 1 April 2022 1.0 1.0
Utilised (0.6) (0.6)
Charged to the income statement \u2013
\u2013
At 31 March 2023 0.4 0.4
The restructuring provision relates principally to severance costs and will be utilised within one year.
33. Share capital
Allotted, called\u2013up and fully paid
Number of shares
Treasury
shares
Ordinary
shares
\u00a3m
Group and Company
At 1 April 2021 ordinary shares of 40.7p each 8,443 422,120,181 171.8
Share consolidation (2,815) (140,708,916) \u2013
For consideration of \u00a33.8 million, shares issued under the Company\u2019s Sharesave Scheme \u2013
582,427 0.4
Shares cancelled \u2013
(17,146,744) (10.5)
At 31 March 2022 ordinary shares of 61.05p each 5,628 264,846,948 161.7
For consideration of \u00a32.3 million, shares issued under the Company\u2019s Sharesave Scheme \u2013
379,044 0.2
Shares cancelled \u2013
(3,910,503) (2.4)
At 31 March 2023 ordinary shares of 61.05p each 5,628 261,315,489 159.5
Shares held as treasury shares may be sold or reissued for any of the Company\u2019s share schemes or cancelled.
On 16 July 2021, the Group paid a special dividend of \u00a31.5 billion to shareholders in relation to the return of capital to shareholders announced on 3
June 2021. In order to maintain the comparability of the Company\u2019s share price before and after the special dividend, a share consolidation was
approved at the General Meeting held on 28 June 2021. Shareholders received 2 New Ordinary shares of 61.05 pence each for every 3 Existing
Ordinary shares of 40.7 pence each.
During the prior year, the Group announced and began a process to purchase ordinary shares at an aggregate cost of up to \u00a3400 million by
September 2022. During the prior year the Group purchased \u00a3199.6 million of ordinary shares from the market at an average ordinary share price of
1,164 pence. The shares acquired under the tender offer were immediately cancelled, creating a capital redemption reserve of \u00a310.5 million. The
maximum number of shares that can be repurchased in connection with the Programme is 42,183,689 (being the maximum authority granted by
Pennon's shareholders at Pennon's AGM on 22 July 2021).
During the year ended 31 March 2023, the Group purchased a further \u00a339.9 million of ordinary shares from the market at an average ordinary share
price of 1,022 pence. The total aggregate cost of the Buy-back programme, which has terminated, was \u00a3239.5 million. The shares acquired under the
tender offer were immediately cancelled, creating a capital redemption reserve of \u00a32.4 million.
Employee share schemes
The Group operates a number of equity-settled share plans for the benefit of employees. Details of each plan are:
i) Sharesave Scheme
An all-employee savings-related plan is operated that enables employees, including Executive Directors, to invest up to a maximum of \u00a3500 per month
for three or five years. These savings can then be used to buy ordinary shares, at a price set at a 17% or 20% discount to the market value at the start
of the savings period, at the third or fifth year anniversary of the option being granted. Options expire six months following the exercise date and,
except for certain specific circumstances such as redundancy, lapse if the employee leaves the Group before the option exercise period commences.
33. Share capital continued
Outstanding options to subscribe for ordinary shares of 61.05 pence each under the Company\u2019s share option schemes are:
Date granted and
subscription price
fully paid
Period when
options normally
exercisable
Thousands of shares in respect of
which options outstanding at
31 March
2023 2022
28 June 2017 767p 2020 \u2013 2022 \u2013 28
3 July 2018 635p 2021 \u2013 2023 100 112
9 July 2019 620p 2022 \u2013 2024 84 447
19 July 2020 928p 2023 \u2013 2025 193 234
6 July 2021 879p 2024 \u2013 2026 552 680
5 July 2022 828p 2025 \u2013 2027 533 \u2013
1,462 1,501
The number and weighted average exercise price of Sharesave options are:
2023 2022
Number of
ordinary shares
(thousands)
Weighted
average
exercise
price per share
(p)
Number of
ordinary shares
(thousands)
Weighted
average exercise
price per share
(p)
At 1 April 1,501 789 1,494 687
Granted 598 828 723 879
Forfeited (215) 781 (43) 695
Exercised (379) 633 (582) 640
Expired (43) 859 (91) 817
At 31 March 1,462 835 1,501 789
The weighted average price of the Company\u2019s shares at the date of exercise of Sharesave options during the year was 927 pence (2022 1,216 pence).
The options outstanding at 31 March 2023 had a weighted average exercise price of 620 pence (2022 789 pence) and a weighted average remaining
contractual life of 1.91 years (2022 1.96 years). The number of exercisable Sharesave options at 31 March 2023 was 1,000 (2022 2,000) and the
weighted average exercise price of exercisable Sharesave options was 620 pence (2022 635 pence).
The aggregate fair value of Sharesave options granted during the year was \u00a30.7 million (2022 \u00a32.0 million), determined using the Black-Scholes
valuation model. The significant inputs into the valuation model at the date of issue of the options were:
2023 2022
Weighted average share price (pence) 957 1,187
Weighted average exercise price (pence) 828 879
Expected volatility 25% 27%
Expected life 3.3 years 3.4 years
Risk-free rate 1.3% 0.10%
Expected dividend yield 4.0% 3.0%
Expected volatility was determined by calculating the historical volatility of the Group\u2019s share price over the previous three years.
ii) Long-term incentive plan (LTIP)
Executive Directors and senior management receive an annual grant of conditional shares. Share awards vest subject to the achievement of specific
performance conditions measured over a performance period of not less than three years.
The number and price of shares in the LTIP are:
2023 2022
Number of
ordinary shares
(thousands)
Weighted
average exercise
price per share
(p)
Number of
ordinary shares
(thousands)
Weighted
average exercise
price per share
(p)
At 1 April 1,170 902 999 843
Granted 255 1,038 221 1,141
Vested (357) 790 \u2013 \u2013
Lapsed (188) 876 (50) 790
At 31 March 880 990 1,170 902
The awards outstanding at 31 March 2023 had a weighted exercise price of 990 pence (2022 902 pence) and a weighted average remaining
contractual life of 2.6 years (2022 2.3 years).
The aggregate fair value of awards granted during the year was \u00a31.1 million (2022 \u00a31.0 million), determined from market value. No option pricing
methodology is applied since the vesting of the shares depends on non-market performance vesting conditions.
Having reflected on the exceptional economic backdrop and in particular the cost-of-living crises faced by many of our customers, the CEO
recommended that the Remuneration Committee consider lapsing her bonus and 2020 LTIP awards in full, and diverting an equivalent value into the
Group\u2019s Watershare+ scheme. The Watershare+ scheme directly benefits the Group\u2019s customers by either providing money off their bill or via
ownership of Pennon Group plc shares. While recognising the performance delivered, the Remuneration Committee accepted and approved the CEO\u2019s
recommendation regarding her awards.
Notes to the Financial Statements continued
221122 AAnnnnuuaall RReeppoorrtt aanndd AAccccoouunnttss 22002233 || PPeennnnoonn GGrroouupp ppllcc
33. Share capital continued
iii) Annual Incentive Bonus Plan \u2013 deferred shares
Awards under the plan to Executive Directors and senior management involve the release of ordinary shares in the Company to participants. There is
no performance condition since vesting is conditional upon continuous service with the Group for a period of three years from the award. The number
and weighted average price of shares in the Annual Incentive Bonus Plan are:
2023 2022
Number of
ordinary shares
(thousands)
Weighted
average exercise
price per share
(p)
Number of
ordinary shares
(thousands)
Weighted
average exercise
price per share
(p)
At 1 April 206 955 345 847
Granted 54 988 82 1,141
Vested (110) 756 (75) 761
Lapsed (9) 1,001 (2) 941
Cancelled \u2013 \u2013 (144) 903
At 31 March 141 1,065 206 955
The awards outstanding at 31 March 2023 had a weighted average exercise price of 1,065 pence (2022 955 pence) and a weighted average remaining
contractual life of 1.3 years (2022 1.1 years). The Company\u2019s share price at the date of the awards ranged from 988 pence to 1,141 pence (2022 756
pence to 1,141 pence).
The aggregate fair value of awards granted during the year was \u00a30.5 million (2022 \u00a30.9 million), determined from market value. No option pricing
methodology is applied since dividends paid on the shares are receivable by the participants in the scheme.
Further details of the plans and options granted to Directors, included above, are shown in the Directors\u2019 remuneration report.
34. Share premium account
\u00a3m
Group and Company
At 1 April 2021 232.1
Shares issued under the Sharesave Scheme 3.4
At 31 March 2022 235.5
Shares issued under the Sharesave Scheme 2.1
At 31 March 2023 237.6
35. Capital redemption reserve
The capital redemption reserve represents the redemption of B shares and cancellation of deferred shares arising from a capital return to shareholders
undertaken during 2006, together with the redemption of shares during the years ended 31 March 2023 and 31 March 2022.
\u00a3m
Group and Company
At 1 April 2021 144.2
Share capital redeemed 10.5
At 31 March 2022 154.7
Share capital redeemed 2.4
At 31 March 2023 157.1
36. Retained earnings and other reserves
Own
shares
\u00a3m
Hedging
reserve
\u00a3m
Retained
earnings
\u00a3m
Total
\u00a3m
Group
At 31 March 2021 (3.5) (17.0) 2,457.3 2,436.8
Profit for the year \u2013 \u2013 15.4 15.4
Other comprehensive income for the year \u2013 34.1 27.3 61.4
Dividends paid relating to 2021 \u2013 \u2013 (1,590.3) (1,590.3)
Credit to equity in respect of share-based payments (net of tax) \u2013 \u2013 2.2 2.2
Charge in respect of share options vesting 0.8 \u2013 (0.8) \u2013
Own shares acquired by the Pennon Employee Share Trust in respect of share options granted (1.2) \u2013 \u2013 (1.2)
Shares purchased for cancellation (included related expenses) \u2013 \u2013 (201.7) (201.7)
At 31 March 2022 (3.9) 17.1 709.4 722.6
Profit for the year \u2013 \u2013 0.1 0.1
Other comprehensive income/(loss) for the year \u2013 21.8 (29.2) (7.4)
Dividends paid relating to 2022 \u2013 \u2013 (101.6) (101.6)
Credit to equity in respect of share-based payments (net of tax) \u2013 \u2013 1.9 1.9
Charge in respect of share options vesting 5.4 \u2013 (5.4) \u2013
Own shares acquired by the Pennon Employee Share Trust in respect of share options granted (5.0) \u2013 \u2013 (5.0)
Shares purchased for cancellation (included related expenses) \u2013 \u2013 (40.0) (40.0)
At 31 March 2023 (3.5) 38.9 535.2 570.6
The own shares reserve represents the cost of ordinary shares in Pennon Group plc issued to or purchased in the market and held by the Pennon
Group plc Employee Benefit Trust to satisfy awards under the Group\u2019s Annual Incentive Bonus Plan.
The market value of the 152,000 ordinary shares (2022 238,000 ordinary shares) held by the Trust at 31 March 2023 was \u00a31.2 million (2022
\u00a32.6 million).
Hedging
reserve
\u00a3m
Retained
earnings
\u00a3m
Total
\u00a3m
Company
At 1 April 2021 (0.1) 2,410.9 2,410.8
Profit for the year \u2013 74.5 74.5
Other comprehensive income/(loss) for the year 0.1 (2.6) (2.5)
Dividends paid relating to 2021 (including \u00a31.5 billion special dividend) \u2013 (1,590.3) (1,590.3)
Shares purchased for cancellation (including related expenses) \u2013 (201.7) (201.7)
Credit to equity in respect of share-based payments (net of tax) \u2013 0.9 0.9
Charge in respect of share options vesting \u2013 (2.6) (2.6)
At 31 March 2022 \u2013 689.1 689.1
Profit for the year \u2013 8.4 8.4
Other comprehensive loss for the year \u2013 (6.1) (6.1)
Dividends paid relating to 2022 \u2013 (101.6) (101.6)
Shares purchased for cancellation (including related expenses) \u2013 (40.0) (40.0)
Credit to equity in respect of share-based payments (net of tax) \u2013 1.3 1.3
Charge in respect of share options vesting \u2013 (5.4) (5.4)
At 31 March 2023 \u2013 545.7 545.7
In making decisions about the level of dividends to be proposed the Directors take steps to check that retained earnings reflect realised profits and are
therefore distributable within the requirements of the Companies Act 2006.
Notes to the Financial Statements continued
221144 AAnnnnuuaall RReeppoorrtt aanndd AAccccoouunnttss 22002233 || PPeennnnoonn GGrroouupp ppllcc
37. Analysis of cash flows given in the statement of cash flows
Reconciliation of profit for the year to cash generated from operations:
Cash generated from operations
Group Company
2023
\u00a3m
2022
\u00a3m
2023
\u00a3m
2022
\u00a3m
Profit for the year 0.4 15.6 8.4 74.5
Adjustments for:
Share-based payments 2.4 2.2 1.5 1.1
Profit on disposal of property, plant and equipment (0.4) (1.0) \u2013 \u2013
Depreciation charge 151.1 143.3 \u2013 \u2013
Amortisation of intangible assets 3.6 3.4 \u2013 \u2013
Investment impairment charge \u2013 \u2013 \u2013 0.4
non-underlying bond early redemption gain (18.4) \u2013
non-underlying Bristol Water acquisition costs \u2013 8.9 \u2013 8.9
non-underlying CMA merger review and integration costs \u2013 6.9 \u2013 4.8
Share of post-tax profit from associated companies (0.3) \u2013 \u2013 \u2013
Finance income (before non-underlying items) (9.2) (2.6) (11.8) (6.5)
Finance costs (before non-underlying items) 145.8 96.3 13.3 10.8
Dividends receivable \u2013 \u2013 (15.7) (94.5)
Taxation (credit)/charge (8.9) 112.1 (4.3) (2.7)
Changes in working capital:
Increase in inventories (2.3) (0.6) \u2013 \u2013
Decrease/(increase) in trade and other receivables 15.9 (14.3) (31.0) 6.9
Increase/(decrease) in trade and other payables 34.6 (12.2) 0.6 (9.6)
Increase/(decrease) in retirement benefit obligations from contributions \u2013 (24.2) 0.1 (24.0)
(Decrease)/increase in provisions (0.6) 0.4 \u2013 \u2013
Cash generated/(outflow) from operations 313.7 334.2 (38.9) (29.9)
Reconciliation of total interest paid:
Group Company
2023
\u00a3m
2022
\u00a3m
2023
\u00a3m
2022
\u00a3m
Interest paid in operating activities 159.7 74.6 7.7 6.0
Interest paid in investing activities 5.0 1.3 \u2013 \u2013
Total interest paid 164.7 75.9 7.7 6.0
During the year, the Group completed a number of sale and leaseback transactions in respect of its infrastructure assets as part of its ongoing
financing arrangements. Cash proceeds of \u00a340.2 million (2022 \u00a315.0 million) were received and a gain of \u00a3nil (2022 \u00a3nil) was recognised. These assets
are being leased back at market rentals over varying lease terms from 7.5 to 9.5 years.
38. Net borrowings
Group Company
2023
\u00a3m
2022
\u00a3m
2023
\u00a3m
2022
\u00a3m
Cash and cash deposits 165.4 519.0 104.1 306.7
Borrowings \u2013 current
Bank and other current borrowings (92.7) (70.0) \u2013 (30.0)
Lease obligations (32.0) (170.2) \u2013 \u2013
Amounts owed to subsidiary undertakings \u2013 \u2013 (279.1) (282.8)
Total current borrowings (124.7) (240.2) (279.1) (312.8)
Borrowings \u2013 non-current
Bank and other non-current borrowings (1,960.9) (1,907.4) (155.7) (154.5)
Listed preference shares (12.5) (12.5) \u2013 \u2013
Lease obligations (1,032.7) (1,041.8) \u2013 \u2013
Total non-current borrowings (3,006.1) (2,961.7) (155.7) (154.5)
Total net borrowings (2,965.4) (2,682.9) (330.7) (160.6)
38. Net borrowings continued
The movements in net borrowings during the periods presented were as follows:
Group
Net borrowings
at 1 April
2021
\u00a3m
Bristol Water
acquisition
\u00a3m
Cash flows
\u00a3m
Transfer between
non-current
and current
\u00a3m
Other non-cash
movements
\u00a3m
Net borrowings
at 31 March
2022
\u00a3m
Cash and cash deposits 2,919.3 6.1 (2,406.4) \u2013 \u2013 519.0
Bank and other current borrowings (40.1) (9.0) 49.4 (70.4) 0.1 (70.0)
Current lease obligations (48.2) (0.2) 232.8 (365.5) 10.9 (170.2)
Bank and other non-current borrowings (1,375.7) (516.7) (61.0) 70.4 (24.4) (1,907.4)
Listed preference shares \u2013 (12.5) \u2013 \u2013 \u2013 (12.5)
Non-current lease obligations (1,391.0) (1.2) (15.0) 365.5 (0.1) (1,041.8)
Net cash/(borrowings) 64.3 (533.5) (2,200.2) \u2013 (13.5) (2,682.9)
Net borrowings
at 1 April
2022
\u00a3m
Cash flows
\u00a3m
Transfer between
non-current
and current
\u00a3m
Other non-cash
movements
\u00a3m
Net borrowings
at 31 March
2023
\u00a3m
Cash and cash deposits 519.0 (353.6) \u2013 \u2013 165.4
Bank and other current borrowings (70.0) 20.4 (43.3) 0.2 (92.7)
Current lease obligations (170.2) 221.1 (49.1) (33.8) (32.0)
Bank and other non-current borrowings (1,907.4) (57.2) 43.3 (39.6) (1,960.9)
Listed preference shares (12.5) \u2013 \u2013 \u2013 (12.5)
Non-current lease obligations (1,041.8) (40.2) 49.1 0.2 (1,032.7)
Net borrowings (2,682.9) (209.5) \u2013 (73.0) (2,965.4)
Other non-cash movements for the Group in 2023 includes the increase in borrowings from interest which is rolled into the amount repayable.
The movements in net borrowings during the periods presented were as follows:
Company
Net
borrowings
at 1 April
2021
\u00a3m
Cash flows
\u00a3m
Other
non-cash
movements
\u00a3m
Net
borrowings
at 31 March 2022
\u00a3m
Cash and cash deposits 2,495.6 (2,188.9) \u2013 306.7
Bank and other loans due within one year \u2013 \u2013 (30.0) (30.0)
Amounts due to subsidiary undertakings (283.4) 0.5 0.1 (282.8)
Bank and other loans due after one year (184.4) \u2013 29.9 (154.5)
2,027.8 (2,188.4) \u2013 (160.6)
Net
borrowings
at 1 April
2022
\u00a3m
Cash flows
\u00a3m
Other
non-cash
movements
\u00a3m
Net
borrowings
at 31 March
2023
\u00a3m
Cash and cash deposits 306.7 (202.6) \u2013 104.1
Bank and other loans due within one year (30.0) 30.0 \u2013 \u2013
Amounts due to subsidiary undertakings (282.8) 3.7 \u2013 (279.1)
Bank and other loans due after one year (154.5) \u2013 (1.2) (155.7)
(160.6) (168.9) (1.2) (330.7)
Notes to the Financial Statements continued 221166 AAnnnnuuaall RReeppoorrtt aanndd AAccccoouunnttss 22002233 || PPeennnnoonn GGrroouupp ppllcc 39. Subsidiary and joint venture undertakings at 31 March 2023 Principal subsidiary companies Registered office address Country of incorporation, registration and principal operations Water Bristol Water Plc Bridgwater Road, Bristol, BS13 7AT England South West Water Limited* Peninsula House, Rydon Lane, Exeter, EX2 7HR England South West Water Finance Plc Peninsula House, Rydon Lane, Exeter, EX2 7HR England South West Water Customer Services Limited Peninsula House, Rydon Lane, Exeter, EX2 7HR England Non-household retail Pennon Water Services Limited* (1) Peninsula House, Rydon Lane, Exeter, EX2 7HR England Other Peninsula Insurance Limited* (2) Level 5, Mill Court, La Charroterie, St Peter Port, GY1 1EJ Guernsey * Indicates the shares are held directly by Pennon Group plc, the Company. 1. 80% of share capital owned by Pennon Group plc. All shares in issue are ordinary shares. 2. Captive insurance company established with the specific objective of financing risks emanating from within the Group. Other trading companies Registered office address Country of incorporation Bristol Water Holdings UK Limited* Bridgwater Road, Bristol, BS13 7AT England Bristol Water Core Holdings Limited Bridgwater Road, Bristol, BS13 7AT England Bristol Water Holdings Limited Bridgwater Road, Bristol, BS13 7AT England Peninsula Properties (Exeter) Limited Peninsula House, Rydon Lane, Exeter, EX2 7HR England Peninsula Trustees Limited* Peninsula House, Rydon Lane, Exeter, EX2 7HR England Pennon Defined Contribution Pension Trustee Limited* Peninsula House, Rydon Lane, Exeter, EX2 7HR England Pennon Pension Trustees Limited* Peninsula House, Rydon Lane, Exeter, EX2 7HR England Pennon Trustee Limited* Peninsula House, Rydon Lane, Exeter, EX2 7HR England Avon Valley Water Limited Peninsula House, Rydon Lane, Exeter, EX2 7HR England Bournemouth Water Investments Limited Peninsula House, Rydon Lane, Exeter, EX2 7HR England Bournemouth Water Limited Peninsula House, Rydon Lane, Exeter, EX2 7HR England BWH Enterprises Limited Peninsula House, Rydon Lane, Exeter, EX2 7HR England D.M.P (Holdings) Limited* \u00a7 Peninsula House, Rydon Lane, Exeter, EX2 7HR England Exe Continental \u00a7 Peninsula House, Rydon Lane, Exeter, EX2 7HR England Greenhill Environmental Limited* \u00a7 Peninsula House, Rydon Lane, Exeter, EX2 7HR England Haul Waste Limited* \u00a7 Peninsula House, Rydon Lane, Exeter, EX2 7HR England Pennon Share Scheme Trustees Limited* Peninsula House, Rydon Lane, Exeter, EX2 7HR England Pennon South West Limited* \u00a7 Peninsula House, Rydon Lane, Exeter, EX2 7HR England Pennon Waste Management Limited* \u00a7 Peninsula House, Rydon Lane, Exeter, EX2 7HR England Seal Security Systems Limited* \u00a7 Peninsula House, Rydon Lane, Exeter, EX2 7HR England Source for Business Limited Peninsula House, Rydon Lane, Exeter, EX2 7HR England SSWB Limited Peninsula House, Rydon Lane, Exeter, EX2 7HR England SWW Pension Trustees Limited* Peninsula House, Rydon Lane, Exeter, EX2 7HR England Viridor Contracting Limited \u00a7 Peninsula House, Rydon Lane, Exeter, EX2 7HR England The subsidiary undertakings are wholly owned unless stated otherwise and all shares in issue are ordinary shares. All companies above are consolidated in the Group financial statements. Joint Ventures and Associates Registered office address Country of incorporation Stake (%) Bristol Wessex Billing Services Limited 1 Clevedon Walk, Nailsea, Bristol, BS48 1WA England 50 CREWW Executive Board Limited Peninsula House, Rydon Lane, Exeter, EX2 7HR England 50 Searchlight Collections Limited PO BOX 930 Galmington Office, Galmington Trading Estate, Cornishway West, Taunton, Somerset, TA1 9LQ England 50 Water 2 Business Limited 21e Somerset Square, Nailsea, Bristol, United Kingdom, BS48 1RQ England 30 * Indicates the shares are held directly by Pennon Group plc, the Company. *\u00a7 Indicates the subsidiary was dissolved since the balance sheet date.39. Subsidiary and joint venture undertakings at 31 March 2023 continued
Subsidiary audit exemption
Pennon Group plc has issued guarantees over the liabilities of the following companies at 31 March 2021 under section 479C of Companies Act 2006
and these entities are exempt from the requirements of the Act relating to the audit of individual accounts by virtue of section 479A of the Act.
Company Company number
Bristol Water Core Holdings Limited 04637554
Bristol Water Holdings Limited 02630760
Bristol Water Holdings UK Limited 04789566
Peninsula Properties (Exeter) Limited 02307220
Pennon Power Limited 00736732
South West Water Customer Services Limited 07620338
Viridor Waste 2 Limited 02298543
40. Contingencies
Contingent liabilities
Group Company
2023
\u00a3m
2022
\u00a3m
2023
\u00a3m
2022
\u00a3m
Guarantees:
Performance bonds 9.7 9.7 9.7 9.7
9.7 9.7 9.7 9.7
Guarantees in respect of performance bonds relate to changes to the collateral requirements for the non-household retail business with other
wholesalers.
Other contractual and litigation uncertainties
Ofwat and the Environment Agency announced an industry-wide investigation into sewage treatment works on 18 November 2021. On 27 June 2022, as
part of its ongoing investigation, Ofwat announced enforcement action against South West Water Limited, the company is now included alongside the five
companies which received enforcement notices in March 2022. The company continues to work openly with Ofwat to comply with the notice as part of this
ongoing investigation. The potential outcome of these investigations continues to be unknown.
On 23 May 2023 Ofwat announced an investigation into South West Water's 2021/22 operational performance data relating to leakage and per capita
consumption. This operational performance data was reported in South West Water's Annual Performance Report 2021/22. This report is subject to
assurance processes which include independent checks and balances carried out by an external technical auditor. The company will work openly and
constructively with Ofwat to comply with the formal notice issued to South West Water as part of this investigation. The potential outcome of this
investigation is currently unknown.
The Group establishes provisions in connection with contracts and litigation where it has a present legal or constructive obligation as a result of past
events and where it is more likely than not an outflow of resources will be required to settle the obligation and the amount can be reliably estimated.
Where it is uncertain that these conditions are met, a contingent liability is disclosed unless the likelihood of the obligation arising is remote or the
matter is not deemed material.
41. Capital commitments
Group Company
2023
\u00a3m
2022
\u00a3m
2023
\u00a3m
2022
\u00a3m
Contracted but not provided 72.0 59.5 \u2013 \u2013
42. Related party transactions
Group companies entered into the following transactions with joint ventures which were not members of the Group. Bristol Wessex Billing Services
Limited and Water 2 Business Limited are joint venture investments of Bristol Water Holdings Limited.
2023
\u00a3m
2022
\u00a3m
Sales of goods and services
Water 2 Business Limited 17.9 14.5
Purchase of goods and services
Bristol Wessex Billing Services Limited 3.5 2.4
Year-end balances
2023
\u00a3m
2022
\u00a3m
Receivables due from related parties
Water 2 Business Limited (including loan receivable of \u00a39.3 million (2022 \u00a39.6 million) 10.8 11.1
Bristol Wessex Billing Services Limited 1.6 0.9
Payables due to related parties
Water 2 Business Limited \u2013 0.4
Bristol Wessex Billing Services Limited \u2013 1.4
Notes to the Financial Statements continued
221188 AAnnnnuuaall RReeppoorrtt aanndd AAccccoouunnttss 22002233 || PPeennnnoonn GGrroouupp ppllcc
42. Related party transactions continued
The receivables due from related parties are unsecured and will be settled in cash. No guarantees have been given or received. No provisions have
been made, or are considered necessary, for doubtful debts in respect of these amounts due.
The loans to Water 2 Business Limited are due to be repaid on 28 February 2025 and carry interest at SONIA plus 2.00%.
Company
The following transactions with subsidiary undertakings occurred in the year:
2023
\u00a3m
2022
\u00a3m
Sales of goods and services (management fees) 7.9 9.0
Purchase of goods and services (support services) 0.5 0.5
Interest receivable 3.0 1.3
Dividends received 15.7 94.5
Sales of goods and services to subsidiary undertakings are at cost. Purchases of goods and services from subsidiary undertakings are under normal
commercial terms and conditions which would also be available to unrelated third parties.
Year-end balances
2023
\u00a3m
2022
\u00a3m
Receivables due from subsidiary undertakings
Loans 99.2 31.5
Trading balances and other receivables 2.6 48.2
The loan balance comprises two loans. A loan with a balance of \u00a326.1m is due for repayment in instalments over a five-year period following a receipt of
a request to repay. No request to repay has been issued at the current time. Interest on \u00a313.1 million (2022 \u00a313.1 million) of the loans has been charged
at a fixed rate of 5%. Interest on \u00a313.0 million (2022 \u00a313.0 million) of the loans has been charged at 12-month SONIA +3.0%. A loan with a balance of
\u00a373.1m was repaid on 16 May 2023. This loan was issued on 16 November 2022 to Bristol Water plc and novated to South West Water limited on 1
February 2023. Interest was charged on the loan balance at Bank of England base rate +0.75%.
No material expected credit loss provision has been recognised in respect of loans to subsidiaries (2022 nil).
2023
\u00a3m
2022
\u00a3m
Payables due to subsidiary undertakings
Loans 279.1 282.8
Trading balances 8.5 8.6
The loans from subsidiary undertakings are unsecured and interest-free without any terms for repayment.
43. Acquisition of Bristol Water Group
On 2 June 2021, the Company acquired 100% of the issued share capital and voting rights of Bristol Water Holdings UK Limited, the holding company
of the Bristol Water Group. Bristol Water Group comprises Bristol Water plc, a regulated water only company and a 30% share in Water 2 Business
Limited, a joint venture with Wessex Water. The purpose of the acquisition was to grow the Group\u2019s core water business by expanding into a
geographically contiguous region. The acquisition of the Bristol Water Group was reviewed by the Competition and Markets Authority and given full
clearance on 7 March 2022. The Bristol Water Group is consolidated in Pennon\u2019s accounts with effect from the completion of acquisition at midnight
on 2 June 2021.
The net assets recognised in the 31 March 2022 financial statements were based on a provisional assessment of their fair value. The Group had not
completed a full tax review by the date the 2022 financial statements were approved for issue by the Board of Directors. In early June 2022 the final
review of tax balances was completed, this has led to an increase in the deferred tax liability with an offsetting increase in the total value of goodwill
recognised on acquisition of \u00a35.5 million, the amortisation of this deferred tax liability to 31 March 2023 is immaterial. Final fair values on acquisition are
shown in the table below. Corresponding amounts for the financial year ended 31 March 2022 have also been restated.
The goodwill that arose on the acquisition can be attributed to synergies expected to be derived from the combination and the value of the workforce
which cannot be recognised as a separately identifiable intangible asset. Goodwill has been allocated to the water segment. The goodwill arising is not
expected to be tax deductible.
43. Acquisition of Bristol Water Group continued
The details of the business combination are as follows:
\u00a3m
Fair value of consideration transferred
Amount settled in cash 419.6
Recognised amounts of identifiable net assets
Property, plant and equipment 944.8
Intangible assets 12.8
Other non-current assets 9.9
Inventories 1.7
Trade and other receivables 22.3
Cash and cash deposits (including restricted cash of \u00a36.1 million) 18.9
Current tax liability (2.2)
Borrowings (545.1)
Trade and other payables (32.2)
Provisions (0.3)
Retirement benefit obligations 7.8
Deferred tax liabilities (140.4)
Identifiable net assets 298.0
Goodwill on acquisition 121.6
Consideration for equity settled in cash 419.6
Payment to acquire loan to former parent 5.5
Cash and cash equivalents acquired (excluding restricted cash) (12.8)
Net cash outflow on acquisition 412.3
Acquisition costs paid charged to expenses 8.9
Net cash paid relating to the acquisition 421.2
Acquisition related costs of \u00a38.9 million are not included as part of the consideration transferred and were recognised as an expense in the
consolidated income statement within other operating expenses.
The fair value of trade and other receivables acquired as part of the business combination amounted to \u00a322.3 million with a gross contractual amount
of \u00a338.9 million. At the acquisition date the Group\u2019s best estimate of the contractual cash flows expected not to be collected amounted to \u00a316.6 million.
As part of the acquisition of Bristol Water, the Group acquired interests in two joint ventures, Bristol Wessex Billing Services Limited (\u201cBWBSL\u201d) and
Water 2 Business Limited (\u201cwater2business\u201d). These two interests are accounted for using the equity method. Currently the carrying values of these
investments equates to \u00a30.3m (2022 nil), representing the relevant share of the net assets of each of these interests.
The goodwill that arose on the acquisition can be attributed to synergies expected to be derived from the combination and the value of the workforce
which cannot be recognised as an intangible asset. Goodwill has been allocated to the water segment. The goodwill arising is not expected to be tax
deductible.
44. Events after the reporting period
In May 2023 the Group acquired a c.40 Gwh solar photovoltaic site in Dunfermline which is ready to build with consents in place, and is expected to
commence generation in 2024, for total acquisition and build costs of c.\u00a335 million. The site also has the capacity for a two-hour 60 MW battery that
will support the UK Grid\u2019s move to renewables at a cost of c.\u00a325 million.
On 23 April 2023, South West Water was issued with a fine of \u00a32.15 million in relation to pollution offences occurring between 2016 and 2020, following
a case brought by the Environment Agency. The liability for the fine and related costs are recorded on the balance sheet of the Group as at 31 March
2023.
On 23 May 2023 Ofwat announced an investigation into South West Water's 2021/22 operational performance data relating to leakage and per capita
consumption. This operational performance data was reported in South West Water's Annual Performance Report 2021/22. This report is subject to
rigorous assurance processes which include independent checks and balances carried out by an external technical auditor. The company will work
openly and constructively with Ofwat to comply with the formal notice issued to South West Water as part of this investigation. The potential outcome
of this investigation is currently unknown.
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"value": "1. General information Pennon Group plc is a company registered in the United Kingdom under the Companies Act 2006. The address of the registered office is given on page 227. Pennon Group\u2019s business is operated through two principal subsidiaries. South West Water Limited, providing water and wastewater services in Devon, Cornwall and parts of Dorset and Somerset and water only services in parts of Dorset, Hampshire, Wiltshire and Bristol. Following the statutory licence transfer from Bristol Water plc to South West Water Limited on 1 February 2023 the regulated water business of Bristol Water plc transferred to South West Water Limited. Pennon Group is the majority shareholder of Pennon Water Services Limited, a company providing water and wastewater retail services to non- household customer accounts across Great Britain. Bristol Water Holdings UK Limited owns a 30% share in Water 2 Business Limited, a joint venture with Wessex Water, operating in the same sector as Pennon Water Services Limited. ",
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"value": "Pennon Group\u2019s business is operated through two principal subsidiaries. South West Water Limited, providing water and wastewater services in Devon, Cornwall and parts of Dorset and Somerset and water only services in parts of Dorset, Hampshire, Wiltshire and Bristol. Following the statutory licence transfer from Bristol Water plc to South West Water Limited on 1 February 2023 the regulated water business of Bristol Water plc transferred to South West Water Limited. Pennon Group is the majority shareholder of Pennon Water Services Limited, a company providing water and wastewater retail services to non- household customer accounts across Great Britain. Bristol Water Holdings UK Limited owns a 30% share in Water 2 Business Limited, a joint venture with Wessex Water, operating in the same sector as Pennon Water Services Limited. ",
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"value": "2. Principal accounting policies The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to the years presented. (a) Basis of preparation These financial statements have been prepared on the historical cost accounting basis (except for fair value items, principally acquisitions, transfers of assets from customers and certain financial instruments as described in accounting policy notes (b), (u) and (n) respectively) and in accordance with UK-adopted international accounting standards and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006. The Company has taken advantage of section 408 of the Companies Act 2006 not to present the parent company profit and loss account. These financial statements are presented in pounds sterling and all values rounded to the nearest one-hundred thousand pounds, except when otherwise indicated. A summary of the principal accounting policies is set out below, together with an explanation where changes have been made to previous policies on the adoption of new accounting standards and interpretations in the year. The going concern basis has been adopted in preparing these financial statements. At 31 March 2023 the Group has access to undrawn committed funds and cash and cash deposits totalling \u00a3420 million, including cash and other short-term deposits of \u00a3165 million and \u00a3255 million of undrawn facilities. Cash and other short-term deposits include \u00a322 million of restricted funds deposited with lessors which are available for access, subject to being replaced by an equivalent valued security. In making their assessment, the Directors reviewed the principal risks and considered which risks might threaten the Group\u2019s going concern status, to do this the Group\u2019s business plan has been stress-tested. Whilst the Group\u2019s risk management processes seek to mitigate the impact of principal risks as set out on pages 52 to 62, individual sensitivities against these risks have been identified. These sensitivities, which are ascribed a value with reference to risk weighting, factoring in the likelihood of occurrence and financial impact, were applied to the baseline financial forecast which uses the Group\u2019s annual budget for FY 2023/24 and longer-term strategic business plan for the remainder of the going concern period to 30 June 2024. The forecast includes our new syndicated \u00a3300 million private placement. During the year we also agreed updated covenant terms on the majority of our facilities and the Directors are confident that the covenant update process for the remaining small number of lenders will be concluded satisfactorily in the very near term. For facilities where changes to covenant terms are not finalised at the date of approval of the financial statements, we have modelled the impact on the Group\u2019s solvency, using existing terms, under a stress-tested scenario, and concluded this does not compromise the going concern of the Group over the assessment period. The risks and sensitivities include consideration of; legislative impacts such as change in government policy and non-compliance with laws and regulations, macro-economic impacts such as inflation and interest rate increases, and operational impacts such as ensuring adequate water resources and failure of operational assets. A combined stress testing scenario has been performed to assess the overall impact of these individual scenarios impacting the Group collectively. The combined weighted impact of the risks occurring is c.\u00a3120m, this value is considered equivalent to an extreme one-off event that could occur within a year, the probability of such an event happening is deemed unlikely. Through this testing, it has been determined that none of the individual principal risks would in isolation, or in aggregate, compromise the going concern of the Group over the going concern period, the assessment has been considered by reviewing the impact on the solvency position as well as debt and interest covenants. In the combined scenario to ensure that the Group was able to continue as a going concern, additional mitigations could be deployed to reduce gearing and increase covenant headroom. Examples of mitigations could include; reduction in discretionary operational expenditure, deferral of capital expenditure and / or cancellation of non-essential capital expenditure, reduction in the amount of dividend payable, and raising additional funding. In addition, we have modelled a reverse engineered scenario that could possibly compromise the Group\u2019s solvency over the going concern assessment period. This scenario builds on the factors above and additionally assumes all the Group\u2019s principal risks are incurred within the going concern period, with no probability weightings attached. The Board considered the likelihood of this scenario on the Group\u2019s solvency over the going concern period, as remote, given this would require all of the principal risks to be incurred at maximum impact within the same time frame, without implementing controllable mitigations, as noted above, or raising additional funding. Having considered the Group\u2019s funding position and financial projections, which take into account a range of possible impacts, as described in this report, the Directors have a reasonable expectation that that the Group will meet the requirements of its covenants and has adequate resources to continue in operational existence for the period to at least the end of the going concern assessment period of 30 June 2024, and that there are no material uncertainties to disclose. For this reason, they continue to adopt the going concern basis in preparing the financial statements. In preparing the financial statements management has considered the impact of climate change, taking into account the relevant disclosures in the Strategic Report, including those made in accordance with the recommendations of the Taskforce on Climate-related Financial Disclosure. The expected environmental impact of climate change on the water business has been modelled noting that the physical risks are increasing. It is likely that the Group will need to invest to protect certain assets such as sewage works and pumping stations against sea level inundation and these considerations form part of the planning process for new capital expenditure. Longer term investment, outlined in the strategic plans, will be needed to manage future risks. To achieve this, combined regulatory and government support within their policy frameworks will be essential. Whilst it is estimated additional spend will be required to manage future risks, the current available information and assessment did not identify any risks that would require the useful economic lives of assets to be reduced in the year or identify the need for impairment that would impact the carrying values of such assets or have any other impact on the financial statements. The impact assessments will be continuously updated to reflect the latest available information on the impact of climate change. New standards or interpretations which were mandatory for the first time in the year beginning 1 April 2022 did not have a material impact on the net assets or results of the Group and the parent company. New standards or interpretations due to be adopted from 1 April 2023 are not expected to have a material impact on the Group\u2019s and the parent company\u2019s net assets or results. Existing borrowing covenants are not impacted by changes in accounting standards. 2. Principal accounting policies continued (b) Basis of consolidation The Group financial statements include the results of Pennon Group plc and its subsidiaries and joint ventures. The results of subsidiaries and joint ventures are included from the date of acquisition or incorporation and excluded from the date of disposal. The results of subsidiaries are consolidated where the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The results of joint ventures are accounted for on an equity basis. Intra-group trading, loan balances and transactions are eliminated on consolidation. The acquisition method of accounting is used to account for the purchase of subsidiaries. The excess of the value transferred to the seller in return for control of the acquired business, together with the fair value of any previously held equity interest in that business over the Group\u2019s share of the fair value of the identifiable net assets, is recorded as goodwill. (c) Revenue recognition Group revenue is recognised following delivery of performance obligations and an assessment of when control over the product or service is transferred to the customer. Revenue is only recognised when collection of consideration is highly probable. Revenue is recognised either when the performance obligation in the contract has been performed (point in time recognition) or \u2018over time\u2019 as the performance obligations to the customer are satisfied. For each obligation satisfied over time, the Group applies a revenue recognition method that accurately reflects performance in transferring control of the services to the customer. Where a contract with a customer includes more than one performance obligation, revenue is allocated to each obligation in proportion to a fair value assessment of the total contract sales value split across the services provided. At the inception of a contract the total transaction price is estimated, being the fair value to which the Group expects to be entitled under the contract, including any variable consideration. Variable consideration is based on the most likely outcome of the performance obligations. Revenue excludes value added tax, trade discounts and revenue arising from transactions between Group companies. Water (domestic and non-household retail) For most of the services provided to domestic customers, contract terms are implied through statute and regulation in the absence of formal, written contracts. South West Water and Bristol Water have a duty under legislation to provide domestic customers with services regardless of payment and is not permitted to disconnect domestic customers for non-payment of bills. Charges are set via the periodic review price-setting process, regulated by Ofwat. In respect of ongoing, continuous services to customers, such as the provision of drinking water and wastewater services, revenue is recognised over time. Customers with an unmeasured supply are billed at the start of the year for the full amount of the annual charge but typically take advantage of a choice of payment arrangements to pay by regular instalments. The performance obligation has been assessed as standing ready to provide water and sewerage services when required by our customers, and accordingly revenue is recognised under IFRS 15 as the stand-ready obligation is fulfilled over time. Customers with a metered supply are sent up to four bills per year, based either on actual meter readings or estimated usage. For these customers, revenue includes an estimation of the amount of unbilled usage at the period end. Payment options for domestic customers include an annual meter payment plan where customers agree to pay a fixed amount per month which is adjusted to reflect actual consumption at the end of the year. Revenue is recognised as water is supplied, based on estimate usage for unbilled elements. A range of regulated services is offered to property developers and owners who require connection to the water and sewerage networks or need the networks to be extended or altered. Typically, these customers pay an estimate of the charges in advance as a deposit, which is treated as a contract liability and are billed or refunded the difference between the estimate and actual costs on completion of the work. The principle components of these contributions are as follows: i) Where the performance obligation relates solely to a connection to the network, revenue is recognised at the point of connection when the customer is deemed to obtain control. ii) Where assets are constructed or provided by the Group or assets transferred to the Group, it is considered that there is an explicit or implied performance obligation to provide an ongoing water and/or wastewater service, with the result that revenue is recognised over a time no longer than the economic life of assets provided by or transferred to the Group. Pennon Water Services provides specialist retail water and wastewater services to business customers. It raises bills and recognises revenue in accordance with its contracts with customers and in line with the limits established for the non-household periodic price-setting process where applicable. Contract assets and liabilities A trade receivable is recognised when the Group has an unconditional right to receive consideration in exchange for performance obligations already fulfilled. A contract asset is recognised when the Group has fulfilled some of its performance obligations but has not yet obtained an unconditional right to receive consideration. The amounts for contract assets, when applicable, are disclosed within note 19 (Other non-current assets) and note 22 (Trade and other receivables) as appropriate. A contract liability is recognised when consideration is received in advance of the Group performing its performance obligations to customers, including, when appropriate, transfers of assets from customers (per paragraph (u) below). The value of contract liabilities is disclosed within note 26 (Trade and other payables) and note 29 (Other non- current liabilities) as appropriate. (d) Segmental reporting Each of the Group\u2019s business segments provides services which are subject to risks and returns which are different from those of the other business segments. The Group\u2019s internal organisation and management structure and its system of internal financial reporting are based primarily on business segments. The Group is organised into two operating segments. The water segment comprises the regulated water and wastewater services undertaken by South West Water. The non-household retail business reflects the services provided by Pennon Water Services. Other segments, including Pennon Group plc, are not reportable segments as they are not reported to Chief Decision makers. Segmental revenue and results include transactions between businesses. Inter-segmental transactions are eliminated on consolidation. (e) Goodwill Goodwill arising on consolidation from the acquisition of subsidiary undertakings represents the excess of the purchase consideration over the fair value of net assets acquired, less any subsequent impairment charges. Goodwill is recognised as an asset and reviewed for impairment at least annually. Any impairment is recognised immediately in the income statement and is not subsequently reversed. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units (CGUs) or group of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal reporting purposes. Goodwill is allocated and monitored at the reportable operating segment level. Further details are contained in accounting policy (i). When a subsidiary undertaking is sold, the profit or loss on disposal is determined after including the attributable amount of goodwill. 2. Principal accounting policies continued (f) Other intangible assets Other intangible assets include assets acquired in business combination and are capitalised at fair value at the date of acquisition. Following initial recognition, finite life intangible assets are amortised on a straight- line basis over their estimated useful lives, with the expense charged to the income statement through operating costs. (g) Property, plant and equipment i) Infrastructure assets (being water mains and sewers, impounding and pumped raw water storage reservoirs, dams, pipelines and sea outfalls) Infrastructure assets were included at fair value on transition to IFRS, and subsequent additions are recorded at cost less accumulated depreciation and impairment charges. Expenditure to increase capacity or enhance infrastructure assets is capitalised where it can be reliably measured, and it is probable that incremental future economic benefits will flow to the Group. The cost of day to day servicing of infrastructure components is recognised in the income statement as it arises. Infrastructure assets are depreciated evenly over their useful economic lives, and are principally: Dams and impounding reservoirs 100 to 200 years Water mains 60 to 180 years Sewers 75 to 150 years Assets in the course of construction are not depreciated until commissioned. ii) Other assets (being property, overground plant and equipment) Other assets are included at cost less accumulated depreciation. Freehold land is not depreciated. Other assets are depreciated evenly to their residual value over their estimated economic lives, and are principally: Land and buildings \u2013 freehold buildings 10 to 80 years Land and buildings \u2013 leasehold buildings Over the estimated economic lives or the lease period, whichever is the shorter Operational properties 15 to 100 years Fixed plant 10 to 30 years Vehicles, mobile plant and computers 4 to 20 years Assets in the course of construction are not depreciated until commissioned. The cost of assets includes directly attributable labour and overhead costs which are incremental to the Group. Borrowing costs directly attributable to the construction of a qualifying asset (an asset necessarily taking a substantial period of time to be prepared for its intended use) are capitalised as part of the asset. Assets transferred from customers are recognised at fair value as set out in accounting policy (u). The assets\u2019 residual values and useful lives are reviewed annually. Gains and losses on disposal are determined by comparing sale proceeds with carrying amounts. These are included in the income statement. (h) Leased assets All are accounted for by recognising a right-of-use asset and a lease liability except for: \u2022 Low value assets; and \u2022 Leases with a duration of 12 months or less. Contracts are initially measured at the present value of contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless this is not readily determinable, in which case the Group\u2019s incremental borrowing rate on commencement of the lease is used. After initial measurement, lease payments are allocated between the liability and finance cost. The finance cost is charged to profit and loss over the lease period to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The interest element of cash payments in respect of these leases is included within interest payments in determining net cash generated from operating activities. The capital element of the cash payment is included within cash flows from financing activities. Right-of-use assets are amortised on a straight- line basis over the remaining term of the lease or the remaining economic life of the asset if shorter. When the Group revisits its estimate of lease term (because, for example, it reassesses an extension option), it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which is discounted at the same discount rate that applied on lease commencement. In these circumstances an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining (revised) lease term. Assets are included as property, plant and equipment as right-of-use assets at the present value of the minimum lease payments and are depreciated over their estimated economic lives or the finance lease period, whichever is the shorter. The corresponding liability is recorded as borrowings. The interest element of the rental costs is charged against profits using the actuarial method over the period of the lease. The Group regularly uses sale and leaseback transactions to finance its capital programme. A sale and leaseback transaction is where the Group sells an asset and immediately reacquires the use of the asset by entering into a lease with the buyer. Each transaction is assessed as to whether it meets the criteria within IFRS 15 \u2018Revenue from contracts with customers\u2019 for a sale to have occurred. If the sale criteria are met a lease liability is recognised, the associated property, plant and equipment asset is derecognised, and a right-of-use asset is recognised at the proportion of the carrying value relating to the right retained. Any gain or loss arising relates to the rights transferred to the buyer. If the criteria for a sale under IFRS 15 have not been met the asset is not derecognised and no sale is recorded. (i) Impairment of non-financial assets Assets with an indefinite useful life are not subject to amortisation and are tested annually for impairment, or whenever events or changes in circumstance indicate that the carrying amount may not be recoverable. Assets subject to amortisation or depreciation are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which an asset\u2019s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset\u2019s fair value, less costs to sell, and value- in-use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Value-in-use represents the present value of projected future cash flows expected to be derived from a CGU, discounted using a pre- tax discount rate which reflects an assessment of the market cost of capital of the CGU. Impairments are charged to the income statement in the year in which they arise. Non-financial assets other than goodwill that have been impaired are reviewed for possible reversal of the impairment at each reporting date. Where a previously impaired asset or CGU\u2019s recoverable amount is in excess of its carrying amount, previous impairments are reversed to the carrying value that would have expected to be recognised had the original impairment not occurred. 2. Principal accounting policies continued (j) Parent company: Investment in subsidiary undertakings Investments in subsidiary undertakings are initially recorded at cost, being the fair value of the consideration paid. Subsequently investments are reviewed for impairment on an individual basis annually or if events or changes in circumstances indicate that the carrying value may not be fully recoverable. (k) Investment in associated companies Associated companies are entities over which the Group exercises joint control. Investments in associated companies are accounted for using the equity method of accounting. Any excess of the cost of acquisition over the Group\u2019s share of the fair values of the identifiable net assets of the associated company at the date of acquisition is recognised as goodwill and is included in the carrying value of the investment in the associated company. The carrying value of the Group\u2019s investment is adjusted for the Group\u2019s share of post-acquisition profits or losses recognised in the income statement and statement of comprehensive income. Losses of an associated company in excess of the Group\u2019s interest are not recognised unless the Group has a legal or constructive obligation to fund those losses. (l) Inventories Inventories are stated at the lower of cost and net realisable value. The cost of finished goods and work in progress includes raw materials and the cost of bringing stocks to their present location and condition. It excludes borrowing costs. Net realisable value is the estimated selling price less cost to sell. The costs of items of inventory are determined using weighted average costs. (m) Cash and cash deposits Cash and cash deposits comprise cash in hand and short-term deposits held at banks. Bank overdrafts are offset against cash balances where there is a legally enforceable right to offset and there is an intention to settle the balances on a net basis. Otherwise, overdrafts are included within current borrowings. (n) Financial instruments Financial instruments are recognised and measured in accordance with IFRS 9. The Group classifies its financial instruments in the following categories: i) Debt instruments at amortised cost All loans and borrowings are initially recognised at fair value, net of transaction costs incurred. Following initial recognition, interest-bearing loans and borrowings are subsequently stated at amortised cost using the effective interest method. Gains and losses are recognised in the income statement when instruments are derecognised or impaired. Premia, discounts and other costs and fees are recognised in the income statement through amortisation. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. ii) Trade receivables Trade receivables do not carry any interest receivable and are recognised initially at fair value and subsequently at amortised cost using the effective interest method, less provision for expected credit losses (ECLs). In accordance with IFRS 9, each Group entity performs an impairment analysis at each reporting date to measure the ECLs. Each entity does not track changes in credit risk but instead recognises a loss allowance based on lifetime ECLs at each reporting date. Each subsidiary has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the receivables and the economic environment. iii) Trade payables Trade payables are not interest-bearing and are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. iv) Derivative financial instruments and hedging activities The Group uses derivative financial instruments, principally interest rate swaps, cross-currency interest rate swaps and inflation swaps to hedge risks associated with interest rate and exchange rate fluctuations. Derivative instruments are initially recognised at fair value on the date the derivative contract is entered into and subsequently remeasured at fair value for the reported balance sheet. The Group designates certain hedging derivatives as either: \u2022 A hedge of a highly probable forecast transaction or change in the cash flows of a recognised asset or liability (a cash flow hedge); or \u2022 A hedge of the exposure to change in the fair value of a recognised asset or liability (a fair value hedge). The gain or loss on remeasurement is recognised in the income statement except for cash flow hedges which meet the conditions for hedge accounting, when the portion of the gain or loss on the hedging instrument which is determined to be an effective hedge is recognised directly in equity, and the ineffective portion in the income statement. The gains or losses deferred in equity in this way are subsequently recognised in the income statement in the same period in which the hedged underlying transaction or firm commitment is recognised in the income statement. In order to qualify for hedge accounting, the Group is required to document in advance the relationship between the item being hedged and the hedging instrument. The Group is also required to document and demonstrate an assessment of the relationship between the hedged item and the hedging instrument which shows that the hedge will be highly effective on an ongoing basis. This effectiveness testing is reperformed at the end of each reporting period to ensure that the hedge remains highly effective. The full fair value of a hedging derivative is apportioned on a straight- line basis between non-current and current assets and liabilities based on the remaining maturity of the hedging derivative. Derivative financial instruments deemed held for trading, which are not subject to hedge accounting, are classified as a current asset or liability with any change in fair value recognised immediately in the income statement. The Group uses cross-currency swaps for some of its foreign currency denominated private placement borrowings. The swaps either have the effect of (i) converting variable rate foreign currency borrowings into fixed rate sterling borrowings, (ii) converting fixed rate foreign currency borrowings into fixed rate sterling borrowings, or (iii) converting fixed rate foreign currency borrowings into floating rate sterling borrowings. v) Financial instruments at fair value through profit Financial instruments at fair value through profit reflect the fair value movement of the hedged risk on a hedged item through a fair value hedging relationship. The fair values of these financial instruments are initially recognised on the date the hedging relationship is entered into and thereafter remeasured at each subsequent balance sheet date. The gain or loss on remeasurement for the period is recognised in the income statement. vi) Receivables due from subsidiary undertakings Amounts owed by subsidiaries are classified and recorded at amortised cost and reduced by allowances for ECLs. Estimated future credit losses are first recorded on initial recognition of a receivable and are based on estimated probability of default. Individual balances are written off when management deems them not to be collectible. 2. Principal accounting policies continued (o) Taxation including deferred tax The tax charge for the year comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in the statement of comprehensive income or directly in equity. In this case the tax is also recognised in the statement of comprehensive income or directly in equity as appropriate. Current tax is calculated on the basis of tax laws enacted or substantively enacted at the balance sheet date. Management periodically evaluates tax items subject to interpretation and establishes provisions on individual tax items, where in the judgement of management, the position is uncertain. The Group includes a number of companies, including the parent company, which are part of a tax group for certain aspects of the tax legislation. One of these aspects relates to group relief whereby current tax liabilities can be offset by current tax losses arising in other companies within the same tax group. Payments for group relief are included within the current tax disclosures. Deferred tax is provided in full on temporary differences between the carrying amount of assets and liabilities in the financial statements and the tax base, except where they arise from initial recognition of an asset or liability in a transaction, other than a business combination, that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the assets can be realised. Deferred tax is determined using the tax rates enacted or substantively enacted at the balance sheet date, and expected to apply when the deferred tax liability is settled or the deferred tax asset is realised. (p) Provisions Provisions are made where there is a present legal or constructive obligation as a result of a past event and it is probable that there will be an outflow of economic benefits to settle this obligation and a reliable estimate of this amount can be made. Where the effect of the time value of money is material the current amount of a provision is the present value of the expenditures expected to be required to settle obligations. The unwinding of the discount to present value is included as notional interest within finance costs. (q) Share capital and treasury shares Ordinary shares are classified as equity. Where the Company purchases the Company\u2019s equity share capital (treasury shares) the consideration paid, including any directly attributable costs, is deducted from equity until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable transaction costs, is included in equity. The Group balance sheet includes the shares held by the Pennon Group plc Employee Benefit Trust, relating to employee share-based payments, which have not vested at the balance sheet date. These are shown as a deduction from shareholders\u2019 equity until such time as they vest. Share buy-back scheme and tender offer Shares purchased for cancellation are deducted from retained earnings at the total consideration paid or payable, including any related expenses. Where the Group has an irrevocable commitment to purchase shares for cancellation at the balance sheet date, a liability is recognised in other creditors based on the share price at the balance sheet date and retained earnings reduced by the amount of the liability. Shares purchased and held by the Group (treasury shares) are deducted from the treasury reserve at the total consideration paid or payable. On cancellation of treasury shares, the cost is transferred from the treasury reserve to retained earnings. When treasury shares are issued at below cost, an amount representing the difference between the cost of those shares and issue proceeds is transferred to retained earnings. No gain or loss is recognised in the consolidated income statement on the purchase, sale, issue or cancellation of the Group\u2019s own equity instruments. (r) Dividend distributions Dividend distributions are recognised as a liability in the financial statements in the period in which the dividends are approved by the Company\u2019s shareholders. Interim dividends are recognised when paid, final dividends when approved by shareholders at the Annual General Meeting. (s) Employee benefits i) Retirement benefit obligations The Group operates defined benefit and defined contribution pension schemes. Defined benefit pension schemes The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the year less the fair value of plan assets. If the value of a plan\u2019s assets exceeds the present value of its obligations, the resulting surplus is only recognised if the Group has an unconditional right to that surplus. The defined benefit obligation is calculated by independent actuaries who advise on the selection of Directors\u2019 best estimates of assumptions, using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds, and that have terms to maturity approximating to the terms of the related pension obligation. The increase in liabilities of the Group\u2019s defined benefit pension schemes, expected to arise from employee service in the year, is charged against operating profit. Changes in benefits granted by the employer are recognised immediately as a past service cost in the income statement. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in the statement of comprehensive income in the period in which they arise. Defined contribution scheme Costs of the defined contribution pension scheme are charged to the income statement in the year in which they arise. The Group has no further payment obligations once the contributions have been paid. ii) Share-based payment The Group operates a number of equity-settled, share-based payment plans for employees. The fair value of the employee services required in exchange for the grant is recognised as an expense over the vesting period of the grant. Fair values are calculated using an appropriate pricing model. Non- market-based vesting conditions are adjusted for assumptions as to the number of shares which are expected to vest. (t) Fair values The fair value of interest rate, inflation and cross currency swaps is based on the market price to transfer the asset or liability at the balance sheet date in an ordinary transaction between market participants. The fair values of short-term deposits, loans and overdrafts with a maturity of less than one year are assumed to approximate to their book values. In the case of non-current bank loans and other loans, the fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate available to the Group for similar financial instruments. 2. Principal accounting policies continued (u) Transfers of assets from customers Where an item of property, plant and equipment that must be used to connect customers to the network is received from a customer, or where cash is received from a customer for the acquisition or construction of such an item, that asset is recorded and measured on initial recognition at its fair value. The credit created by the recognition of the asset is recognised as a contract liability on the balance sheet. The contract liability reduces, and revenue is recognised in the income statement, as performance obligations are satisfied. The period over which the credit is recognised depends upon the nature of the service provided, as determined by the agreement with the customer. Where the service provided is solely a connection to the network, the credit is recognised at the point of connection. If the agreement does not specify a period, revenue is recognised over a period no longer than the economic life of the transferred asset used to provide the ongoing service. The fair value of assets on transfer from customers is determined using a cost valuation approach allowing for depreciation. (v) Foreign exchange Transactions denominated in foreign currencies are translated at the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in a foreign currency are translated at the closing balance sheet rate. The resulting gain or loss is recognised in the income statement. (w) Non-underlying items Non-underlying items are those that in the Directors\u2019 view should be separately disclosed by virtue of their size, nature or incidence to enable a full understanding of the Group\u2019s financial performance. (x) Grants and contributions Grants and contributions receivable in respect of property, plant and equipment which provide the customer with ongoing access to the water and sewerage networks, are treated as contract liabilities and released to revenue over the economic life of those elements of property, plant and equipment. Grants and contributions receivable in respect of expenses charged against profits in the year have been included in the income statement. Government grants are recognised where there is reasonable certainty that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. The income from such grants is presented in the financial statements as a deduction from the expense to which it relates. 3. Financial risk management (a) Financial risk factors The Group\u2019s activities expose it to a variety of financial risks: liquidity risk; market risk (interest rate and foreign currency risk); credit risk and inflation risk. The Group\u2019s treasury function seeks to ensure that sufficient funding is available to meet foreseeable needs and to maintain reasonable headroom for contingencies and manages inflation and interest rate risk. The principal financial risks faced by the Group relate to liquidity, interest rate and credit counterparty risk. These risks and treasury operations are managed by the Group Chief Financial Officer in accordance with policies established by the Board. Major transactions are individually approved by the Board. Treasury activities are reported to the Board and are subject to review by internal audit. Financial instruments are used to raise finance, manage risk, optimise the use of surplus funds and manage overall interest rate performance. The Group does not engage in speculative activity. i) Liquidity risk The Group actively maintains a mixture of long-term and short-term committed facilities which are designed to ensure the Group has sufficient available funds for operations and planned expansions equivalent to at least one year\u2019s forecast requirements at all times. Details of undrawn committed facilities and short-term facilities are provided in note 28. Refinancing risk is managed under a Group policy that requires that no more than 20% of Group net borrowings should mature in any financial year. The Group and water business have entered into covenants with lenders. While terms vary, these typically provide for limits on gearing (primarily based on the water business\u2019s regulatory capital value and unregulated EBITDA) and interest cover. Existing covenants are not impacted by subsequent changes to accounting standards. 11. Earnings per share Basic earnings per share are calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year, excluding those held in the employee share trust (note 36), which are treated as cancelled. For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to include all dilutive potential ordinary shares. The Group has two types of dilutive potential ordinary shares \u2013 those share options granted to employees where the exercise price is less than the average market price of the Company\u2019s ordinary shares during the year; and the contingently issuable shares under the Group\u2019s Performance and Co-investment Plan, the long-term incentive plan and the deferred shares element of the Annual Incentive Bonus Plan, based on performance criteria for the vesting of the awards. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfSummaryOfSignificantAccountingPoliciesExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
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"fact-435": {
"value": "(a) Basis of preparation These financial statements have been prepared on the historical cost accounting basis (except for fair value items, principally acquisitions, transfers of assets from customers and certain financial instruments as described in accounting policy notes (b), (u) and (n) respectively) and in accordance with UK-adopted international accounting standards and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006. The Company has taken advantage of section 408 of the Companies Act 2006 not to present the parent company profit and loss account. These financial statements are presented in pounds sterling and all values rounded to the nearest one-hundred thousand pounds, except when otherwise indicated. A summary of the principal accounting policies is set out below, together with an explanation where changes have been made to previous policies on the adoption of new accounting standards and interpretations in the year. The going concern basis has been adopted in preparing these financial statements. At 31 March 2023 the Group has access to undrawn committed funds and cash and cash deposits totalling \u00a3420 million, including cash and other short-term deposits of \u00a3165 million and \u00a3255 million of undrawn facilities. Cash and other short-term deposits include \u00a322 million of restricted funds deposited with lessors which are available for access, subject to being replaced by an equivalent valued security. In making their assessment, the Directors reviewed the principal risks and considered which risks might threaten the Group\u2019s going concern status, to do this the Group\u2019s business plan has been stress-tested. Whilst the Group\u2019s risk management processes seek to mitigate the impact of principal risks as set out on pages 52 to 62, individual sensitivities against these risks have been identified. These sensitivities, which are ascribed a value with reference to risk weighting, factoring in the likelihood of occurrence and financial impact, were applied to the baseline financial forecast which uses the Group\u2019s annual budget for FY 2023/24 and longer-term strategic business plan for the remainder of the going concern period to 30 June 2024. The forecast includes our new syndicated \u00a3300 million private placement. During the year we also agreed updated covenant terms on the majority of our facilities and the Directors are confident that the covenant update process for the remaining small number of lenders will be concluded satisfactorily in the very near term. For facilities where changes to covenant terms are not finalised at the date of approval of the financial statements, we have modelled the impact on the Group\u2019s solvency, using existing terms, under a stress-tested scenario, and concluded this does not compromise the going concern of the Group over the assessment period. The risks and sensitivities include consideration of; legislative impacts such as change in government policy and non-compliance with laws and regulations, macro-economic impacts such as inflation and interest rate increases, and operational impacts such as ensuring adequate water resources and failure of operational assets. A combined stress testing scenario has been performed to assess the overall impact of these individual scenarios impacting the Group collectively. The combined weighted impact of the risks occurring is c.\u00a3120m, this value is considered equivalent to an extreme one-off event that could occur within a year, the probability of such an event happening is deemed unlikely. Through this testing, it has been determined that none of the individual principal risks would in isolation, or in aggregate, compromise the going concern of the Group over the going concern period, the assessment has been considered by reviewing the impact on the solvency position as well as debt and interest covenants. In the combined scenario to ensure that the Group was able to continue as a going concern, additional mitigations could be deployed to reduce gearing and increase covenant headroom. Examples of mitigations could include; reduction in discretionary operational expenditure, deferral of capital expenditure and / or cancellation of non-essential capital expenditure, reduction in the amount of dividend payable, and raising additional funding. In addition, we have modelled a reverse engineered scenario that could possibly compromise the Group\u2019s solvency over the going concern assessment period. This scenario builds on the factors above and additionally assumes all the Group\u2019s principal risks are incurred within the going concern period, with no probability weightings attached. The Board considered the likelihood of this scenario on the Group\u2019s solvency over the going concern period, as remote, given this would require all of the principal risks to be incurred at maximum impact within the same time frame, without implementing controllable mitigations, as noted above, or raising additional funding. Having considered the Group\u2019s funding position and financial projections, which take into account a range of possible impacts, as described in this report, the Directors have a reasonable expectation that that the Group will meet the requirements of its covenants and has adequate resources to continue in operational existence for the period to at least the end of the going concern assessment period of 30 June 2024, and that there are no material uncertainties to disclose. For this reason, they continue to adopt the going concern basis in preparing the financial statements. In preparing the financial statements management has considered the impact of climate change, taking into account the relevant disclosures in the Strategic Report, including those made in accordance with the recommendations of the Taskforce on Climate-related Financial Disclosure. The expected environmental impact of climate change on the water business has been modelled noting that the physical risks are increasing. It is likely that the Group will need to invest to protect certain assets such as sewage works and pumping stations against sea level inundation and these considerations form part of the planning process for new capital expenditure. Longer term investment, outlined in the strategic plans, will be needed to manage future risks. To achieve this, combined regulatory and government support within their policy frameworks will be essential. Whilst it is estimated additional spend will be required to manage future risks, the current available information and assessment did not identify any risks that would require the useful economic lives of assets to be reduced in the year or identify the need for impairment that would impact the carrying values of such assets or have any other impact on the financial statements. The impact assessments will be continuously updated to reflect the latest available information on the impact of climate change. New standards or interpretations which were mandatory for the first time in the year beginning 1 April 2022 did not have a material impact on the net assets or results of the Group and the parent company. New standards or interpretations due to be adopted from 1 April 2023 are not expected to have a material impact on the Group\u2019s and the parent company\u2019s net assets or results. Existing borrowing covenants are not impacted by changes in accounting standards. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-495": {
"value": "These financial statements have been prepared on the historical cost accounting basis (except for fair value items, principally acquisitions, transfers of assets from customers and certain financial instruments as described in accounting policy notes (b), (u) and (n) respectively) and in accordance with UK-adopted international accounting standards and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006. The Company has taken advantage of section 408 of the Companies Act 2006 not to present the parent company profit and loss account.",
"dimensions": {
"concept": "ifrs-full:StatementOfIFRSCompliance",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-536": {
"value": "The going concern basis has been adopted in preparing these financial statements. At 31 March 2023 the Group has access to undrawn committed funds and cash and cash deposits totalling \u00a3420 million, including cash and other short-term deposits of \u00a3165 million and \u00a3255 million of undrawn facilities. Cash and other short-term deposits include \u00a322 million of restricted funds deposited with lessors which are available for access, subject to being replaced by an equivalent valued security. In making their assessment, the Directors reviewed the principal risks and considered which risks might threaten the Group\u2019s going concern status, to do this the Group\u2019s business plan has been stress-tested. Whilst the Group\u2019s risk management processes seek to mitigate the impact of principal risks as set out on pages 52 to 62, individual sensitivities against these risks have been identified. These sensitivities, which are ascribed a value with reference to risk weighting, factoring in the likelihood of occurrence and financial impact, were applied to the baseline financial forecast which uses the Group\u2019s annual budget for FY 2023/24 and longer-term strategic business plan for the remainder of the going concern period to 30 June 2024. The forecast includes our new syndicated \u00a3300 million private placement. During the year we also agreed updated covenant terms on the majority of our facilities and the Directors are confident that the covenant update process for the remaining small number of lenders will be concluded satisfactorily in the very near term. For facilities where changes to covenant terms are not finalised at the date of approval of the financial statements, we have modelled the impact on the Group\u2019s solvency, using existing terms, under a stress-tested scenario, and concluded this does not compromise the going concern of the Group over the assessment period. The risks and sensitivities include consideration of; legislative impacts such as change in government policy and non-compliance with laws and regulations, macro-economic impacts such as inflation and interest rate increases, and operational impacts such as ensuring adequate water resources and failure of operational assets. A combined stress testing scenario has been performed to assess the overall impact of these individual scenarios impacting the Group collectively. The combined weighted impact of the risks occurring is c.\u00a3120m, this value is considered equivalent to an extreme one-off event that could occur within a year, the probability of such an event happening is deemed unlikely. Through this testing, it has been determined that none of the individual principal risks would in isolation, or in aggregate, compromise the going concern of the Group over the going concern period, the assessment has been considered by reviewing the impact on the solvency position as well as debt and interest covenants. In the combined scenario to ensure that the Group was able to continue as a going concern, additional mitigations could be deployed to reduce gearing and increase covenant headroom. Examples of mitigations could include; reduction in discretionary operational expenditure, deferral of capital expenditure and / or cancellation of non-essential capital expenditure, reduction in the amount of dividend payable, and raising additional funding. In addition, we have modelled a reverse engineered scenario that could possibly compromise the Group\u2019s solvency over the going concern assessment period. This scenario builds on the factors above and additionally assumes all the Group\u2019s principal risks are incurred within the going concern period, with no probability weightings attached. The Board considered the likelihood of this scenario on the Group\u2019s solvency over the going concern period, as remote, given this would require all of the principal risks to be incurred at maximum impact within the same time frame, without implementing controllable mitigations, as noted above, or raising additional funding. Having considered the Group\u2019s funding position and financial projections, which take into account a range of possible impacts, as described in this report, the Directors have a reasonable expectation that that the Group will meet the requirements of its covenants and has adequate resources to continue in operational existence for the period to at least the end of the going concern assessment period of 30 June 2024, and that there are no material uncertainties to disclose. For this reason, they continue to adopt the going concern basis in preparing the financial statements. ",
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"concept": "ifrs-full:DisclosureOfGoingConcernExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
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"fact-437": {
"value": "(b) Basis of consolidation The Group financial statements include the results of Pennon Group plc and its subsidiaries and joint ventures. The results of subsidiaries and joint ventures are included from the date of acquisition or incorporation and excluded from the date of disposal. The results of subsidiaries are consolidated where the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The results of joint ventures are accounted for on an equity basis. Intra-group trading, loan balances and transactions are eliminated on consolidation. The acquisition method of accounting is used to account for the purchase of subsidiaries. The excess of the value transferred to the seller in return for control of the acquired business, together with the fair value of any previously held equity interest in that business over the Group\u2019s share of the fair value of the identifiable net assets, is recorded as goodwill. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-496": {
"value": "(b) Basis of consolidation The Group financial statements include the results of Pennon Group plc and its subsidiaries and joint ventures. The results of subsidiaries and joint ventures are included from the date of acquisition or incorporation and excluded from the date of disposal. The results of subsidiaries are consolidated where the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The results of joint ventures are accounted for on an equity basis. Intra-group trading, loan balances and transactions are eliminated on consolidation. The acquisition method of accounting is used to account for the purchase of subsidiaries. The excess of the value transferred to the seller in return for control of the acquired business, together with the fair value of any previously held equity interest in that business over the Group\u2019s share of the fair value of the identifiable net assets, is recorded as goodwill. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-438": {
"value": "(c) Revenue recognition Group revenue is recognised following delivery of performance obligations and an assessment of when control over the product or service is transferred to the customer. Revenue is only recognised when collection of consideration is highly probable. Revenue is recognised either when the performance obligation in the contract has been performed (point in time recognition) or \u2018over time\u2019 as the performance obligations to the customer are satisfied. For each obligation satisfied over time, the Group applies a revenue recognition method that accurately reflects performance in transferring control of the services to the customer. Where a contract with a customer includes more than one performance obligation, revenue is allocated to each obligation in proportion to a fair value assessment of the total contract sales value split across the services provided. At the inception of a contract the total transaction price is estimated, being the fair value to which the Group expects to be entitled under the contract, including any variable consideration. Variable consideration is based on the most likely outcome of the performance obligations. Revenue excludes value added tax, trade discounts and revenue arising from transactions between Group companies. Water (domestic and non-household retail) For most of the services provided to domestic customers, contract terms are implied through statute and regulation in the absence of formal, written contracts. South West Water and Bristol Water have a duty under legislation to provide domestic customers with services regardless of payment and is not permitted to disconnect domestic customers for non-payment of bills. Charges are set via the periodic review price-setting process, regulated by Ofwat. In respect of ongoing, continuous services to customers, such as the provision of drinking water and wastewater services, revenue is recognised over time. Customers with an unmeasured supply are billed at the start of the year for the full amount of the annual charge but typically take advantage of a choice of payment arrangements to pay by regular instalments. The performance obligation has been assessed as standing ready to provide water and sewerage services when required by our customers, and accordingly revenue is recognised under IFRS 15 as the stand-ready obligation is fulfilled over time. Customers with a metered supply are sent up to four bills per year, based either on actual meter readings or estimated usage. For these customers, revenue includes an estimation of the amount of unbilled usage at the period end. Payment options for domestic customers include an annual meter payment plan where customers agree to pay a fixed amount per month which is adjusted to reflect actual consumption at the end of the year. Revenue is recognised as water is supplied, based on estimate usage for unbilled elements. A range of regulated services is offered to property developers and owners who require connection to the water and sewerage networks or need the networks to be extended or altered. Typically, these customers pay an estimate of the charges in advance as a deposit, which is treated as a contract liability and are billed or refunded the difference between the estimate and actual costs on completion of the work. The principle components of these contributions are as follows: i) Where the performance obligation relates solely to a connection to the network, revenue is recognised at the point of connection when the customer is deemed to obtain control. ii) Where assets are constructed or provided by the Group or assets transferred to the Group, it is considered that there is an explicit or implied performance obligation to provide an ongoing water and/or wastewater service, with the result that revenue is recognised over a time no longer than the economic life of assets provided by or transferred to the Group. Pennon Water Services provides specialist retail water and wastewater services to business customers. It raises bills and recognises revenue in accordance with its contracts with customers and in line with the limits established for the non-household periodic price-setting process where applicable. Contract assets and liabilities A trade receivable is recognised when the Group has an unconditional right to receive consideration in exchange for performance obligations already fulfilled. A contract asset is recognised when the Group has fulfilled some of its performance obligations but has not yet obtained an unconditional right to receive consideration. The amounts for contract assets, when applicable, are disclosed within note 19 (Other non-current assets) and note 22 (Trade and other receivables) as appropriate. A contract liability is recognised when consideration is received in advance of the Group performing its performance obligations to customers, including, when appropriate, transfers of assets from customers (per paragraph (u) below). The value of contract liabilities is disclosed within note 26 (Trade and other payables) and note 29 (Other non- current liabilities) as appropriate. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-439": {
"value": "(d) Segmental reporting Each of the Group\u2019s business segments provides services which are subject to risks and returns which are different from those of the other business segments. The Group\u2019s internal organisation and management structure and its system of internal financial reporting are based primarily on business segments. The Group is organised into two operating segments. The water segment comprises the regulated water and wastewater services undertaken by South West Water. The non-household retail business reflects the services provided by Pennon Water Services. Other segments, including Pennon Group plc, are not reportable segments as they are not reported to Chief Decision makers. Segmental revenue and results include transactions between businesses. Inter-segmental transactions are eliminated on consolidation. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForSegmentReportingExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-436": {
"value": "(e) Goodwill Goodwill arising on consolidation from the acquisition of subsidiary undertakings represents the excess of the purchase consideration over the fair value of net assets acquired, less any subsequent impairment charges. Goodwill is recognised as an asset and reviewed for impairment at least annually. Any impairment is recognised immediately in the income statement and is not subsequently reversed. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units (CGUs) or group of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal reporting purposes. Goodwill is allocated and monitored at the reportable operating segment level. Further details are contained in accounting policy (i). When a subsidiary undertaking is sold, the profit or loss on disposal is determined after including the attributable amount of goodwill. (f) Other intangible assets Other intangible assets include assets acquired in business combination and are capitalised at fair value at the date of acquisition. Following initial recognition, finite life intangible assets are amortised on a straight- line basis over their estimated useful lives, with the expense charged to the income statement through operating costs. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsAndGoodwillExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-497": {
"value": "(e) Goodwill Goodwill arising on consolidation from the acquisition of subsidiary undertakings represents the excess of the purchase consideration over the fair value of net assets acquired, less any subsequent impairment charges. Goodwill is recognised as an asset and reviewed for impairment at least annually. Any impairment is recognised immediately in the income statement and is not subsequently reversed. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units (CGUs) or group of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal reporting purposes. Goodwill is allocated and monitored at the reportable operating segment level. Further details are contained in accounting policy (i). When a subsidiary undertaking is sold, the profit or loss on disposal is determined after including the attributable amount of goodwill. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-537": {
"value": "(e) Goodwill Goodwill arising on consolidation from the acquisition of subsidiary undertakings represents the excess of the purchase consideration over the fair value of net assets acquired, less any subsequent impairment charges. Goodwill is recognised as an asset and reviewed for impairment at least annually. Any impairment is recognised immediately in the income statement and is not subsequently reversed. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units (CGUs) or group of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal reporting purposes. Goodwill is allocated and monitored at the reportable operating segment level. Further details are contained in accounting policy (i). When a subsidiary undertaking is sold, the profit or loss on disposal is determined after including the attributable amount of goodwill. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsAndGoodwillExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-498": {
"value": "(f) Other intangible assets Other intangible assets include assets acquired in business combination and are capitalised at fair value at the date of acquisition. Following initial recognition, finite life intangible assets are amortised on a straight- line basis over their estimated useful lives, with the expense charged to the income statement through operating costs. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsOtherThanGoodwillExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-440": {
"value": "(g) Property, plant and equipment i) Infrastructure assets (being water mains and sewers, impounding and pumped raw water storage reservoirs, dams, pipelines and sea outfalls) Infrastructure assets were included at fair value on transition to IFRS, and subsequent additions are recorded at cost less accumulated depreciation and impairment charges. Expenditure to increase capacity or enhance infrastructure assets is capitalised where it can be reliably measured, and it is probable that incremental future economic benefits will flow to the Group. The cost of day to day servicing of infrastructure components is recognised in the income statement as it arises. Infrastructure assets are depreciated evenly over their useful economic lives, and are principally: Dams and impounding reservoirs 100 to 200 years Water mains 60 to 180 years Sewers 75 to 150 years Assets in the course of construction are not depreciated until commissioned. ii) Other assets (being property, overground plant and equipment) Other assets are included at cost less accumulated depreciation. Freehold land is not depreciated. Other assets are depreciated evenly to their residual value over their estimated economic lives, and are principally: Land and buildings \u2013 freehold buildings 10 to 80 years Land and buildings \u2013 leasehold buildings Over the estimated economic lives or the lease period, whichever is the shorter Operational properties 15 to 100 years Fixed plant 10 to 30 years Vehicles, mobile plant and computers 4 to 20 years Assets in the course of construction are not depreciated until commissioned. The cost of assets includes directly attributable labour and overhead costs which are incremental to the Group. Borrowing costs directly attributable to the construction of a qualifying asset (an asset necessarily taking a substantial period of time to be prepared for its intended use) are capitalised as part of the asset. Assets transferred from customers are recognised at fair value as set out in accounting policy (u). The assets\u2019 residual values and useful lives are reviewed annually. Gains and losses on disposal are determined by comparing sale proceeds with carrying amounts. These are included in the income statement. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForPropertyPlantAndEquipmentExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-499": {
"value": "(g) Property, plant and equipment i) Infrastructure assets (being water mains and sewers, impounding and pumped raw water storage reservoirs, dams, pipelines and sea outfalls) Infrastructure assets were included at fair value on transition to IFRS, and subsequent additions are recorded at cost less accumulated depreciation and impairment charges. Expenditure to increase capacity or enhance infrastructure assets is capitalised where it can be reliably measured, and it is probable that incremental future economic benefits will flow to the Group. The cost of day to day servicing of infrastructure components is recognised in the income statement as it arises. Infrastructure assets are depreciated evenly over their useful economic lives, and are principally: Dams and impounding reservoirs 100 to 200 years Water mains 60 to 180 years Sewers 75 to 150 years Assets in the course of construction are not depreciated until commissioned. ii) Other assets (being property, overground plant and equipment) Other assets are included at cost less accumulated depreciation. Freehold land is not depreciated. Other assets are depreciated evenly to their residual value over their estimated economic lives, and are principally: Land and buildings \u2013 freehold buildings 10 to 80 years Land and buildings \u2013 leasehold buildings Over the estimated economic lives or the lease period, whichever is the shorter Operational properties 15 to 100 years Fixed plant 10 to 30 years Vehicles, mobile plant and computers 4 to 20 years Assets in the course of construction are not depreciated until commissioned. The cost of assets includes directly attributable labour and overhead costs which are incremental to the Group. Borrowing costs directly attributable to the construction of a qualifying asset (an asset necessarily taking a substantial period of time to be prepared for its intended use) are capitalised as part of the asset. Assets transferred from customers are recognised at fair value as set out in accounting policy (u). The assets\u2019 residual values and useful lives are reviewed annually. Gains and losses on disposal are determined by comparing sale proceeds with carrying amounts. These are included in the income statement. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForDepreciationExpenseExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-538": {
"value": "(g) Property, plant and equipment i) Infrastructure assets (being water mains and sewers, impounding and pumped raw water storage reservoirs, dams, pipelines and sea outfalls) Infrastructure assets were included at fair value on transition to IFRS, and subsequent additions are recorded at cost less accumulated depreciation and impairment charges. Expenditure to increase capacity or enhance infrastructure assets is capitalised where it can be reliably measured, and it is probable that incremental future economic benefits will flow to the Group. The cost of day to day servicing of infrastructure components is recognised in the income statement as it arises. Infrastructure assets are depreciated evenly over their useful economic lives, and are principally: Dams and impounding reservoirs 100 to 200 years Water mains 60 to 180 years Sewers 75 to 150 years Assets in the course of construction are not depreciated until commissioned. ii) Other assets (being property, overground plant and equipment) Other assets are included at cost less accumulated depreciation. Freehold land is not depreciated. Other assets are depreciated evenly to their residual value over their estimated economic lives, and are principally: Land and buildings \u2013 freehold buildings 10 to 80 years Land and buildings \u2013 leasehold buildings Over the estimated economic lives or the lease period, whichever is the shorter Operational properties 15 to 100 years Fixed plant 10 to 30 years Vehicles, mobile plant and computers 4 to 20 years Assets in the course of construction are not depreciated until commissioned. The cost of assets includes directly attributable labour and overhead costs which are incremental to the Group. Borrowing costs directly attributable to the construction of a qualifying asset (an asset necessarily taking a substantial period of time to be prepared for its intended use) are capitalised as part of the asset. Assets transferred from customers are recognised at fair value as set out in accounting policy (u). The assets\u2019 residual values and useful lives are reviewed annually. Gains and losses on disposal are determined by comparing sale proceeds with carrying amounts. These are included in the income statement. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForConstructionInProgressExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-441": {
"value": "(h) Leased assets All are accounted for by recognising a right-of-use asset and a lease liability except for: \u2022 Low value assets; and \u2022 Leases with a duration of 12 months or less. Contracts are initially measured at the present value of contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless this is not readily determinable, in which case the Group\u2019s incremental borrowing rate on commencement of the lease is used. After initial measurement, lease payments are allocated between the liability and finance cost. The finance cost is charged to profit and loss over the lease period to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The interest element of cash payments in respect of these leases is included within interest payments in determining net cash generated from operating activities. The capital element of the cash payment is included within cash flows from financing activities. Right-of-use assets are amortised on a straight- line basis over the remaining term of the lease or the remaining economic life of the asset if shorter. When the Group revisits its estimate of lease term (because, for example, it reassesses an extension option), it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which is discounted at the same discount rate that applied on lease commencement. In these circumstances an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining (revised) lease term. Assets are included as property, plant and equipment as right-of-use assets at the present value of the minimum lease payments and are depreciated over their estimated economic lives or the finance lease period, whichever is the shorter. The corresponding liability is recorded as borrowings. The interest element of the rental costs is charged against profits using the actuarial method over the period of the lease. The Group regularly uses sale and leaseback transactions to finance its capital programme. A sale and leaseback transaction is where the Group sells an asset and immediately reacquires the use of the asset by entering into a lease with the buyer. Each transaction is assessed as to whether it meets the criteria within IFRS 15 \u2018Revenue from contracts with customers\u2019 for a sale to have occurred. If the sale criteria are met a lease liability is recognised, the associated property, plant and equipment asset is derecognised, and a right-of-use asset is recognised at the proportion of the carrying value relating to the right retained. Any gain or loss arising relates to the rights transferred to the buyer. If the criteria for a sale under IFRS 15 have not been met the asset is not derecognised and no sale is recorded. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-442": {
"value": "(i) Impairment of non-financial assets Assets with an indefinite useful life are not subject to amortisation and are tested annually for impairment, or whenever events or changes in circumstance indicate that the carrying amount may not be recoverable. Assets subject to amortisation or depreciation are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which an asset\u2019s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset\u2019s fair value, less costs to sell, and value- in-use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Value-in-use represents the present value of projected future cash flows expected to be derived from a CGU, discounted using a pre- tax discount rate which reflects an assessment of the market cost of capital of the CGU. Impairments are charged to the income statement in the year in which they arise. Non-financial assets other than goodwill that have been impaired are reviewed for possible reversal of the impairment at each reporting date. Where a previously impaired asset or CGU\u2019s recoverable amount is in excess of its carrying amount, previous impairments are reversed to the carrying value that would have expected to be recognised had the original impairment not occurred. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfNonfinancialAssetsExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-443": {
"value": "(j) Parent company: Investment in subsidiary undertakings Investments in subsidiary undertakings are initially recorded at cost, being the fair value of the consideration paid. Subsequently investments are reviewed for impairment on an individual basis annually or if events or changes in circumstances indicate that the carrying value may not be fully recoverable. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentsOtherThanInvestmentsAccountedForUsingEquityMethodExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-500": {
"value": "(j) Parent company: Investment in subsidiary undertakings Investments in subsidiary undertakings are initially recorded at cost, being the fair value of the consideration paid. Subsequently investments are reviewed for impairment on an individual basis annually or if events or changes in circumstances indicate that the carrying value may not be fully recoverable. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForSubsidiariesExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-501": {
"value": "(k) Investment in associated companies Associated companies are entities over which the Group exercises joint control. Investments in associated companies are accounted for using the equity method of accounting. Any excess of the cost of acquisition over the Group\u2019s share of the fair values of the identifiable net assets of the associated company at the date of acquisition is recognised as goodwill and is included in the carrying value of the investment in the associated company. The carrying value of the Group\u2019s investment is adjusted for the Group\u2019s share of post-acquisition profits or losses recognised in the income statement and statement of comprehensive income. Losses of an associated company in excess of the Group\u2019s interest are not recognised unless the Group has a legal or constructive obligation to fund those losses. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociatesAndJointVenturesExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-444": {
"value": "(k) Investment in associated companies Associated companies are entities over which the Group exercises joint control. Investments in associated companies are accounted for using the equity method of accounting. Any excess of the cost of acquisition over the Group\u2019s share of the fair values of the identifiable net assets of the associated company at the date of acquisition is recognised as goodwill and is included in the carrying value of the investment in the associated company. The carrying value of the Group\u2019s investment is adjusted for the Group\u2019s share of post-acquisition profits or losses recognised in the income statement and statement of comprehensive income. Losses of an associated company in excess of the Group\u2019s interest are not recognised unless the Group has a legal or constructive obligation to fund those losses. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociates",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-445": {
"value": "(l) Inventories Inventories are stated at the lower of cost and net realisable value. The cost of finished goods and work in progress includes raw materials and the cost of bringing stocks to their present location and condition. It excludes borrowing costs. Net realisable value is the estimated selling price less cost to sell. The costs of items of inventory are determined using weighted average costs. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForMeasuringInventories",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-446": {
"value": "(m) Cash and cash deposits Cash and cash deposits comprise cash in hand and short-term deposits held at banks. Bank overdrafts are offset against cash balances where there is a legally enforceable right to offset and there is an intention to settle the balances on a net basis. Otherwise, overdrafts are included within current borrowings. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyToDetermineComponentsOfCashAndCashEquivalents",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-556": {
"value": "(n) Financial instruments Financial instruments are recognised and measured in accordance with IFRS 9. The Group classifies its financial instruments in the following categories: i) Debt instruments at amortised cost All loans and borrowings are initially recognised at fair value, net of transaction costs incurred. Following initial recognition, interest-bearing loans and borrowings are subsequently stated at amortised cost using the effective interest method. Gains and losses are recognised in the income statement when instruments are derecognised or impaired. Premia, discounts and other costs and fees are recognised in the income statement through amortisation. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. ii) Trade receivables Trade receivables do not carry any interest receivable and are recognised initially at fair value and subsequently at amortised cost using the effective interest method, less provision for expected credit losses (ECLs). In accordance with IFRS 9, each Group entity performs an impairment analysis at each reporting date to measure the ECLs. Each entity does not track changes in credit risk but instead recognises a loss allowance based on lifetime ECLs at each reporting date. Each subsidiary has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the receivables and the economic environment. iii) Trade payables Trade payables are not interest-bearing and are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. iv) Derivative financial instruments and hedging activities The Group uses derivative financial instruments, principally interest rate swaps, cross-currency interest rate swaps and inflation swaps to hedge risks associated with interest rate and exchange rate fluctuations. Derivative instruments are initially recognised at fair value on the date the derivative contract is entered into and subsequently remeasured at fair value for the reported balance sheet. The Group designates certain hedging derivatives as either: \u2022 A hedge of a highly probable forecast transaction or change in the cash flows of a recognised asset or liability (a cash flow hedge); or \u2022 A hedge of the exposure to change in the fair value of a recognised asset or liability (a fair value hedge). The gain or loss on remeasurement is recognised in the income statement except for cash flow hedges which meet the conditions for hedge accounting, when the portion of the gain or loss on the hedging instrument which is determined to be an effective hedge is recognised directly in equity, and the ineffective portion in the income statement. The gains or losses deferred in equity in this way are subsequently recognised in the income statement in the same period in which the hedged underlying transaction or firm commitment is recognised in the income statement. In order to qualify for hedge accounting, the Group is required to document in advance the relationship between the item being hedged and the hedging instrument. The Group is also required to document and demonstrate an assessment of the relationship between the hedged item and the hedging instrument which shows that the hedge will be highly effective on an ongoing basis. This effectiveness testing is reperformed at the end of each reporting period to ensure that the hedge remains highly effective. The full fair value of a hedging derivative is apportioned on a straight- line basis between non-current and current assets and liabilities based on the remaining maturity of the hedging derivative. Derivative financial instruments deemed held for trading, which are not subject to hedge accounting, are classified as a current asset or liability with any change in fair value recognised immediately in the income statement. The Group uses cross-currency swaps for some of its foreign currency denominated private placement borrowings. The swaps either have the effect of (i) converting variable rate foreign currency borrowings into fixed rate sterling borrowings, (ii) converting fixed rate foreign currency borrowings into fixed rate sterling borrowings, or (iii) converting fixed rate foreign currency borrowings into floating rate sterling borrowings. v) Financial instruments at fair value through profit Financial instruments at fair value through profit reflect the fair value movement of the hedged risk on a hedged item through a fair value hedging relationship. The fair values of these financial instruments are initially recognised on the date the hedging relationship is entered into and thereafter remeasured at each subsequent balance sheet date. The gain or loss on remeasurement for the period is recognised in the income statement. vi) Receivables due from subsidiary undertakings Amounts owed by subsidiaries are classified and recorded at amortised cost and reduced by allowances for ECLs. Estimated future credit losses are first recorded on initial recognition of a receivable and are based on estimated probability of default. Individual balances are written off when management deems them not to be collectible. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-551": {
"value": "(n) Financial instruments Financial instruments are recognised and measured in accordance with IFRS 9. The Group classifies its financial instruments in the following categories: i) Debt instruments at amortised cost All loans and borrowings are initially recognised at fair value, net of transaction costs incurred. Following initial recognition, interest-bearing loans and borrowings are subsequently stated at amortised cost using the effective interest method. Gains and losses are recognised in the income statement when instruments are derecognised or impaired. Premia, discounts and other costs and fees are recognised in the income statement through amortisation. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. ii) Trade receivables Trade receivables do not carry any interest receivable and are recognised initially at fair value and subsequently at amortised cost using the effective interest method, less provision for expected credit losses (ECLs). In accordance with IFRS 9, each Group entity performs an impairment analysis at each reporting date to measure the ECLs. Each entity does not track changes in credit risk but instead recognises a loss allowance based on lifetime ECLs at each reporting date. Each subsidiary has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the receivables and the economic environment. iii) Trade payables Trade payables are not interest-bearing and are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. iv) Derivative financial instruments and hedging activities The Group uses derivative financial instruments, principally interest rate swaps, cross-currency interest rate swaps and inflation swaps to hedge risks associated with interest rate and exchange rate fluctuations. Derivative instruments are initially recognised at fair value on the date the derivative contract is entered into and subsequently remeasured at fair value for the reported balance sheet. The Group designates certain hedging derivatives as either: \u2022 A hedge of a highly probable forecast transaction or change in the cash flows of a recognised asset or liability (a cash flow hedge); or \u2022 A hedge of the exposure to change in the fair value of a recognised asset or liability (a fair value hedge). The gain or loss on remeasurement is recognised in the income statement except for cash flow hedges which meet the conditions for hedge accounting, when the portion of the gain or loss on the hedging instrument which is determined to be an effective hedge is recognised directly in equity, and the ineffective portion in the income statement. The gains or losses deferred in equity in this way are subsequently recognised in the income statement in the same period in which the hedged underlying transaction or firm commitment is recognised in the income statement. In order to qualify for hedge accounting, the Group is required to document in advance the relationship between the item being hedged and the hedging instrument. The Group is also required to document and demonstrate an assessment of the relationship between the hedged item and the hedging instrument which shows that the hedge will be highly effective on an ongoing basis. This effectiveness testing is reperformed at the end of each reporting period to ensure that the hedge remains highly effective. The full fair value of a hedging derivative is apportioned on a straight- line basis between non-current and current assets and liabilities based on the remaining maturity of the hedging derivative. Derivative financial instruments deemed held for trading, which are not subject to hedge accounting, are classified as a current asset or liability with any change in fair value recognised immediately in the income statement. The Group uses cross-currency swaps for some of its foreign currency denominated private placement borrowings. The swaps either have the effect of (i) converting variable rate foreign currency borrowings into fixed rate sterling borrowings, (ii) converting fixed rate foreign currency borrowings into fixed rate sterling borrowings, or (iii) converting fixed rate foreign currency borrowings into floating rate sterling borrowings. v) Financial instruments at fair value through profit Financial instruments at fair value through profit reflect the fair value movement of the hedged risk on a hedged item through a fair value hedging relationship. The fair values of these financial instruments are initially recognised on the date the hedging relationship is entered into and thereafter remeasured at each subsequent balance sheet date. The gain or loss on remeasurement for the period is recognised in the income statement. vi) Receivables due from subsidiary undertakings Amounts owed by subsidiaries are classified and recorded at amortised cost and reduced by allowances for ECLs. Estimated future credit losses are first recorded on initial recognition of a receivable and are based on estimated probability of default. Individual balances are written off when management deems them not to be collectible. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-539": {
"value": "(n) Financial instruments Financial instruments are recognised and measured in accordance with IFRS 9. The Group classifies its financial instruments in the following categories: i) Debt instruments at amortised cost All loans and borrowings are initially recognised at fair value, net of transaction costs incurred. Following initial recognition, interest-bearing loans and borrowings are subsequently stated at amortised cost using the effective interest method. Gains and losses are recognised in the income statement when instruments are derecognised or impaired. Premia, discounts and other costs and fees are recognised in the income statement through amortisation. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. ii) Trade receivables Trade receivables do not carry any interest receivable and are recognised initially at fair value and subsequently at amortised cost using the effective interest method, less provision for expected credit losses (ECLs). In accordance with IFRS 9, each Group entity performs an impairment analysis at each reporting date to measure the ECLs. Each entity does not track changes in credit risk but instead recognises a loss allowance based on lifetime ECLs at each reporting date. Each subsidiary has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the receivables and the economic environment. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForDerecognitionOfFinancialInstrumentsExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-447": {
"value": "(n) Financial instruments Financial instruments are recognised and measured in accordance with IFRS 9. The Group classifies its financial instruments in the following categories: i) Debt instruments at amortised cost All loans and borrowings are initially recognised at fair value, net of transaction costs incurred. Following initial recognition, interest-bearing loans and borrowings are subsequently stated at amortised cost using the effective interest method. Gains and losses are recognised in the income statement when instruments are derecognised or impaired. Premia, discounts and other costs and fees are recognised in the income statement through amortisation. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. ii) Trade receivables Trade receivables do not carry any interest receivable and are recognised initially at fair value and subsequently at amortised cost using the effective interest method, less provision for expected credit losses (ECLs). In accordance with IFRS 9, each Group entity performs an impairment analysis at each reporting date to measure the ECLs. Each entity does not track changes in credit risk but instead recognises a loss allowance based on lifetime ECLs at each reporting date. Each subsidiary has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the receivables and the economic environment. iii) Trade payables Trade payables are not interest-bearing and are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. iv) Derivative financial instruments and hedging activities The Group uses derivative financial instruments, principally interest rate swaps, cross-currency interest rate swaps and inflation swaps to hedge risks associated with interest rate and exchange rate fluctuations. Derivative instruments are initially recognised at fair value on the date the derivative contract is entered into and subsequently remeasured at fair value for the reported balance sheet. The Group designates certain hedging derivatives as either: \u2022 A hedge of a highly probable forecast transaction or change in the cash flows of a recognised asset or liability (a cash flow hedge); or \u2022 A hedge of the exposure to change in the fair value of a recognised asset or liability (a fair value hedge). The gain or loss on remeasurement is recognised in the income statement except for cash flow hedges which meet the conditions for hedge accounting, when the portion of the gain or loss on the hedging instrument which is determined to be an effective hedge is recognised directly in equity, and the ineffective portion in the income statement. The gains or losses deferred in equity in this way are subsequently recognised in the income statement in the same period in which the hedged underlying transaction or firm commitment is recognised in the income statement. In order to qualify for hedge accounting, the Group is required to document in advance the relationship between the item being hedged and the hedging instrument. The Group is also required to document and demonstrate an assessment of the relationship between the hedged item and the hedging instrument which shows that the hedge will be highly effective on an ongoing basis. This effectiveness testing is reperformed at the end of each reporting period to ensure that the hedge remains highly effective. The full fair value of a hedging derivative is apportioned on a straight- line basis between non-current and current assets and liabilities based on the remaining maturity of the hedging derivative. Derivative financial instruments deemed held for trading, which are not subject to hedge accounting, are classified as a current asset or liability with any change in fair value recognised immediately in the income statement. The Group uses cross-currency swaps for some of its foreign currency denominated private placement borrowings. The swaps either have the effect of (i) converting variable rate foreign currency borrowings into fixed rate sterling borrowings, (ii) converting fixed rate foreign currency borrowings into fixed rate sterling borrowings, or (iii) converting fixed rate foreign currency borrowings into floating rate sterling borrowings. v) Financial instruments at fair value through profit Financial instruments at fair value through profit reflect the fair value movement of the hedged risk on a hedged item through a fair value hedging relationship. The fair values of these financial instruments are initially recognised on the date the hedging relationship is entered into and thereafter remeasured at each subsequent balance sheet date. The gain or loss on remeasurement for the period is recognised in the income statement. vi) Receivables due from subsidiary undertakings Amounts owed by subsidiaries are classified and recorded at amortised cost and reduced by allowances for ECLs. Estimated future credit losses are first recorded on initial recognition of a receivable and are based on estimated probability of default. Individual balances are written off when management deems them not to be collectible. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-502": {
"value": "i) Debt instruments at amortised cost All loans and borrowings are initially recognised at fair value, net of transaction costs incurred. Following initial recognition, interest-bearing loans and borrowings are subsequently stated at amortised cost using the effective interest method. Gains and losses are recognised in the income statement when instruments are derecognised or impaired. Premia, discounts and other costs and fees are recognised in the income statement through amortisation. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingsExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-503": {
"value": "ii) Trade receivables Trade receivables do not carry any interest receivable and are recognised initially at fair value and subsequently at amortised cost using the effective interest method, less provision for expected credit losses (ECLs). In accordance with IFRS 9, each Group entity performs an impairment analysis at each reporting date to measure the ECLs. Each entity does not track changes in credit risk but instead recognises a loss allowance based on lifetime ECLs at each reporting date. Each subsidiary has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the receivables and the economic environment. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherReceivablesExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-563": {
"value": "ii) Trade receivables Trade receivables do not carry any interest receivable and are recognised initially at fair value and subsequently at amortised cost using the effective interest method, less provision for expected credit losses (ECLs). In accordance with IFRS 9, each Group entity performs an impairment analysis at each reporting date to measure the ECLs. Each entity does not track changes in credit risk but instead recognises a loss allowance based on lifetime ECLs at each reporting date. Each subsidiary has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the receivables and the economic environment. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForLoansAndReceivablesExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-504": {
"value": "iii) Trade payables Trade payables are not interest-bearing and are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherPayablesExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-505": {
"value": "iv) Derivative financial instruments and hedging activities The Group uses derivative financial instruments, principally interest rate swaps, cross-currency interest rate swaps and inflation swaps to hedge risks associated with interest rate and exchange rate fluctuations. Derivative instruments are initially recognised at fair value on the date the derivative contract is entered into and subsequently remeasured at fair value for the reported balance sheet. The Group designates certain hedging derivatives as either: \u2022 A hedge of a highly probable forecast transaction or change in the cash flows of a recognised asset or liability (a cash flow hedge); or \u2022 A hedge of the exposure to change in the fair value of a recognised asset or liability (a fair value hedge). The gain or loss on remeasurement is recognised in the income statement except for cash flow hedges which meet the conditions for hedge accounting, when the portion of the gain or loss on the hedging instrument which is determined to be an effective hedge is recognised directly in equity, and the ineffective portion in the income statement. The gains or losses deferred in equity in this way are subsequently recognised in the income statement in the same period in which the hedged underlying transaction or firm commitment is recognised in the income statement. In order to qualify for hedge accounting, the Group is required to document in advance the relationship between the item being hedged and the hedging instrument. The Group is also required to document and demonstrate an assessment of the relationship between the hedged item and the hedging instrument which shows that the hedge will be highly effective on an ongoing basis. This effectiveness testing is reperformed at the end of each reporting period to ensure that the hedge remains highly effective. The full fair value of a hedging derivative is apportioned on a straight- line basis between non-current and current assets and liabilities based on the remaining maturity of the hedging derivative. Derivative financial instruments deemed held for trading, which are not subject to hedge accounting, are classified as a current asset or liability with any change in fair value recognised immediately in the income statement. The Group uses cross-currency swaps for some of its foreign currency denominated private placement borrowings. The swaps either have the effect of (i) converting variable rate foreign currency borrowings into fixed rate sterling borrowings, (ii) converting fixed rate foreign currency borrowings into fixed rate sterling borrowings, or (iii) converting fixed rate foreign currency borrowings into floating rate sterling borrowings. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-540": {
"value": "iv) Derivative financial instruments and hedging activities The Group uses derivative financial instruments, principally interest rate swaps, cross-currency interest rate swaps and inflation swaps to hedge risks associated with interest rate and exchange rate fluctuations. Derivative instruments are initially recognised at fair value on the date the derivative contract is entered into and subsequently remeasured at fair value for the reported balance sheet. The Group designates certain hedging derivatives as either: \u2022 A hedge of a highly probable forecast transaction or change in the cash flows of a recognised asset or liability (a cash flow hedge); or \u2022 A hedge of the exposure to change in the fair value of a recognised asset or liability (a fair value hedge). The gain or loss on remeasurement is recognised in the income statement except for cash flow hedges which meet the conditions for hedge accounting, when the portion of the gain or loss on the hedging instrument which is determined to be an effective hedge is recognised directly in equity, and the ineffective portion in the income statement. The gains or losses deferred in equity in this way are subsequently recognised in the income statement in the same period in which the hedged underlying transaction or firm commitment is recognised in the income statement. In order to qualify for hedge accounting, the Group is required to document in advance the relationship between the item being hedged and the hedging instrument. The Group is also required to document and demonstrate an assessment of the relationship between the hedged item and the hedging instrument which shows that the hedge will be highly effective on an ongoing basis. This effectiveness testing is reperformed at the end of each reporting period to ensure that the hedge remains highly effective. The full fair value of a hedging derivative is apportioned on a straight- line basis between non-current and current assets and liabilities based on the remaining maturity of the hedging derivative. Derivative financial instruments deemed held for trading, which are not subject to hedge accounting, are classified as a current asset or liability with any change in fair value recognised immediately in the income statement. The Group uses cross-currency swaps for some of its foreign currency denominated private placement borrowings. The swaps either have the effect of (i) converting variable rate foreign currency borrowings into fixed rate sterling borrowings, (ii) converting fixed rate foreign currency borrowings into fixed rate sterling borrowings, or (iii) converting fixed rate foreign currency borrowings into floating rate sterling borrowings. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-561": {
"value": "iv) Derivative financial instruments and hedging activities The Group uses derivative financial instruments, principally interest rate swaps, cross-currency interest rate swaps and inflation swaps to hedge risks associated with interest rate and exchange rate fluctuations. Derivative instruments are initially recognised at fair value on the date the derivative contract is entered into and subsequently remeasured at fair value for the reported balance sheet. The Group designates certain hedging derivatives as either: \u2022 A hedge of a highly probable forecast transaction or change in the cash flows of a recognised asset or liability (a cash flow hedge); or \u2022 A hedge of the exposure to change in the fair value of a recognised asset or liability (a fair value hedge). The gain or loss on remeasurement is recognised in the income statement except for cash flow hedges which meet the conditions for hedge accounting, when the portion of the gain or loss on the hedging instrument which is determined to be an effective hedge is recognised directly in equity, and the ineffective portion in the income statement. The gains or losses deferred in equity in this way are subsequently recognised in the income statement in the same period in which the hedged underlying transaction or firm commitment is recognised in the income statement. In order to qualify for hedge accounting, the Group is required to document in advance the relationship between the item being hedged and the hedging instrument. The Group is also required to document and demonstrate an assessment of the relationship between the hedged item and the hedging instrument which shows that the hedge will be highly effective on an ongoing basis. This effectiveness testing is reperformed at the end of each reporting period to ensure that the hedge remains highly effective. The full fair value of a hedging derivative is apportioned on a straight- line basis between non-current and current assets and liabilities based on the remaining maturity of the hedging derivative. Derivative financial instruments deemed held for trading, which are not subject to hedge accounting, are classified as a current asset or liability with any change in fair value recognised immediately in the income statement. The Group uses cross-currency swaps for some of its foreign currency denominated private placement borrowings. The swaps either have the effect of (i) converting variable rate foreign currency borrowings into fixed rate sterling borrowings, (ii) converting fixed rate foreign currency borrowings into fixed rate sterling borrowings, or (iii) converting fixed rate foreign currency borrowings into floating rate sterling borrowings. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForHedgingExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-506": {
"value": "v) Financial instruments at fair value through profit Financial instruments at fair value through profit reflect the fair value movement of the hedged risk on a hedged item through a fair value hedging relationship. The fair values of these financial instruments are initially recognised on the date the hedging relationship is entered into and thereafter remeasured at each subsequent balance sheet date. The gain or loss on remeasurement for the period is recognised in the income statement. vi) Receivables due from subsidiary undertakings Amounts owed by subsidiaries are classified and recorded at amortised cost and reduced by allowances for ECLs. Estimated future credit losses are first recorded on initial recognition of a receivable and are based on estimated probability of default. Individual balances are written off when management deems them not to be collectible. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-507": {
"value": "(o) Taxation including deferred tax The tax charge for the year comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in the statement of comprehensive income or directly in equity. In this case the tax is also recognised in the statement of comprehensive income or directly in equity as appropriate. Current tax is calculated on the basis of tax laws enacted or substantively enacted at the balance sheet date. Management periodically evaluates tax items subject to interpretation and establishes provisions on individual tax items, where in the judgement of management, the position is uncertain. The Group includes a number of companies, including the parent company, which are part of a tax group for certain aspects of the tax legislation. One of these aspects relates to group relief whereby current tax liabilities can be offset by current tax losses arising in other companies within the same tax group. Payments for group relief are included within the current tax disclosures. Deferred tax is provided in full on temporary differences between the carrying amount of assets and liabilities in the financial statements and the tax base, except where they arise from initial recognition of an asset or liability in a transaction, other than a business combination, that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the assets can be realised. Deferred tax is determined using the tax rates enacted or substantively enacted at the balance sheet date, and expected to apply when the deferred tax liability is settled or the deferred tax asset is realised. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-448": {
"value": "(o) Taxation including deferred tax The tax charge for the year comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in the statement of comprehensive income or directly in equity. In this case the tax is also recognised in the statement of comprehensive income or directly in equity as appropriate. Current tax is calculated on the basis of tax laws enacted or substantively enacted at the balance sheet date. Management periodically evaluates tax items subject to interpretation and establishes provisions on individual tax items, where in the judgement of management, the position is uncertain. The Group includes a number of companies, including the parent company, which are part of a tax group for certain aspects of the tax legislation. One of these aspects relates to group relief whereby current tax liabilities can be offset by current tax losses arising in other companies within the same tax group. Payments for group relief are included within the current tax disclosures. Deferred tax is provided in full on temporary differences between the carrying amount of assets and liabilities in the financial statements and the tax base, except where they arise from initial recognition of an asset or liability in a transaction, other than a business combination, that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the assets can be realised. Deferred tax is determined using the tax rates enacted or substantively enacted at the balance sheet date, and expected to apply when the deferred tax liability is settled or the deferred tax asset is realised. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-449": {
"value": "(p) Provisions Provisions are made where there is a present legal or constructive obligation as a result of a past event and it is probable that there will be an outflow of economic benefits to settle this obligation and a reliable estimate of this amount can be made. Where the effect of the time value of money is material the current amount of a provision is the present value of the expenditures expected to be required to settle obligations. The unwinding of the discount to present value is included as notional interest within finance costs. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-450": {
"value": "(q) Share capital and treasury shares Ordinary shares are classified as equity. Where the Company purchases the Company\u2019s equity share capital (treasury shares) the consideration paid, including any directly attributable costs, is deducted from equity until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable transaction costs, is included in equity. The Group balance sheet includes the shares held by the Pennon Group plc Employee Benefit Trust, relating to employee share-based payments, which have not vested at the balance sheet date. These are shown as a deduction from shareholders\u2019 equity until such time as they vest. Share buy-back scheme and tender offer Shares purchased for cancellation are deducted from retained earnings at the total consideration paid or payable, including any related expenses. Where the Group has an irrevocable commitment to purchase shares for cancellation at the balance sheet date, a liability is recognised in other creditors based on the share price at the balance sheet date and retained earnings reduced by the amount of the liability. Shares purchased and held by the Group (treasury shares) are deducted from the treasury reserve at the total consideration paid or payable. On cancellation of treasury shares, the cost is transferred from the treasury reserve to retained earnings. When treasury shares are issued at below cost, an amount representing the difference between the cost of those shares and issue proceeds is transferred to retained earnings. No gain or loss is recognised in the consolidated income statement on the purchase, sale, issue or cancellation of the Group\u2019s own equity instruments. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForIssuedCapitalExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-508": {
"value": "(q) Share capital and treasury shares Ordinary shares are classified as equity. Where the Company purchases the Company\u2019s equity share capital (treasury shares) the consideration paid, including any directly attributable costs, is deducted from equity until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable transaction costs, is included in equity. The Group balance sheet includes the shares held by the Pennon Group plc Employee Benefit Trust, relating to employee share-based payments, which have not vested at the balance sheet date. These are shown as a deduction from shareholders\u2019 equity until such time as they vest. Share buy-back scheme and tender offer Shares purchased for cancellation are deducted from retained earnings at the total consideration paid or payable, including any related expenses. Where the Group has an irrevocable commitment to purchase shares for cancellation at the balance sheet date, a liability is recognised in other creditors based on the share price at the balance sheet date and retained earnings reduced by the amount of the liability. Shares purchased and held by the Group (treasury shares) are deducted from the treasury reserve at the total consideration paid or payable. On cancellation of treasury shares, the cost is transferred from the treasury reserve to retained earnings. When treasury shares are issued at below cost, an amount representing the difference between the cost of those shares and issue proceeds is transferred to retained earnings. No gain or loss is recognised in the consolidated income statement on the purchase, sale, issue or cancellation of the Group\u2019s own equity instruments. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForTreasurySharesExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-451": {
"value": "(r) Dividend distributions Dividend distributions are recognised as a liability in the financial statements in the period in which the dividends are approved by the Company\u2019s shareholders. Interim dividends are recognised when paid, final dividends when approved by shareholders at the Annual General Meeting. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForDividendsExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-452": {
"value": "(s) Employee benefits i) Retirement benefit obligations The Group operates defined benefit and defined contribution pension schemes. Defined benefit pension schemes The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the year less the fair value of plan assets. If the value of a plan\u2019s assets exceeds the present value of its obligations, the resulting surplus is only recognised if the Group has an unconditional right to that surplus. The defined benefit obligation is calculated by independent actuaries who advise on the selection of Directors\u2019 best estimates of assumptions, using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds, and that have terms to maturity approximating to the terms of the related pension obligation. The increase in liabilities of the Group\u2019s defined benefit pension schemes, expected to arise from employee service in the year, is charged against operating profit. Changes in benefits granted by the employer are recognised immediately as a past service cost in the income statement. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in the statement of comprehensive income in the period in which they arise. Defined contribution scheme Costs of the defined contribution pension scheme are charged to the income statement in the year in which they arise. The Group has no further payment obligations once the contributions have been paid. ii) Share-based payment The Group operates a number of equity-settled, share-based payment plans for employees. The fair value of the employee services required in exchange for the grant is recognised as an expense over the vesting period of the grant. Fair values are calculated using an appropriate pricing model. Non- market-based vesting conditions are adjusted for assumptions as to the number of shares which are expected to vest. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-509": {
"value": "ii) Share-based payment The Group operates a number of equity-settled, share-based payment plans for employees. The fair value of the employee services required in exchange for the grant is recognised as an expense over the vesting period of the grant. Fair values are calculated using an appropriate pricing model. Non- market-based vesting conditions are adjusted for assumptions as to the number of shares which are expected to vest. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForSharebasedPaymentTransactionsExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-453": {
"value": "(t) Fair values The fair value of interest rate, inflation and cross currency swaps is based on the market price to transfer the asset or liability at the balance sheet date in an ordinary transaction between market participants. The fair values of short-term deposits, loans and overdrafts with a maturity of less than one year are assumed to approximate to their book values. In the case of non-current bank loans and other loans, the fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate available to the Group for similar financial instruments. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForFairValueMeasurementExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-510": {
"value": "(u) Transfers of assets from customers Where an item of property, plant and equipment that must be used to connect customers to the network is received from a customer, or where cash is received from a customer for the acquisition or construction of such an item, that asset is recorded and measured on initial recognition at its fair value. The credit created by the recognition of the asset is recognised as a contract liability on the balance sheet. The contract liability reduces, and revenue is recognised in the income statement, as performance obligations are satisfied. The period over which the credit is recognised depends upon the nature of the service provided, as determined by the agreement with the customer. Where the service provided is solely a connection to the network, the credit is recognised at the point of connection. If the agreement does not specify a period, revenue is recognised over a period no longer than the economic life of the transferred asset used to provide the ongoing service. The fair value of assets on transfer from customers is determined using a cost valuation approach allowing for depreciation. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfOtherAccountingPoliciesRelevantToUnderstandingOfFinancialStatements",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-454": {
"value": "(u) Transfers of assets from customers Where an item of property, plant and equipment that must be used to connect customers to the network is received from a customer, or where cash is received from a customer for the acquisition or construction of such an item, that asset is recorded and measured on initial recognition at its fair value. The credit created by the recognition of the asset is recognised as a contract liability on the balance sheet. The contract liability reduces, and revenue is recognised in the income statement, as performance obligations are satisfied. The period over which the credit is recognised depends upon the nature of the service provided, as determined by the agreement with the customer. Where the service provided is solely a connection to the network, the credit is recognised at the point of connection. If the agreement does not specify a period, revenue is recognised over a period no longer than the economic life of the transferred asset used to provide the ongoing service. The fair value of assets on transfer from customers is determined using a cost valuation approach allowing for depreciation. ",
"dimensions": {
"concept": "pennongroupplc:DescriptionOfAccountingPolicyForTransfersOfAssetsFromCustomers",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-455": {
"value": "(v) Foreign exchange Transactions denominated in foreign currencies are translated at the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in a foreign currency are translated at the closing balance sheet rate. The resulting gain or loss is recognised in the income statement. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-456": {
"value": "(w) Non-underlying items Non-underlying items are those that in the Directors\u2019 view should be separately disclosed by virtue of their size, nature or incidence to enable a full understanding of the Group\u2019s financial performance. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForExceptionalItemsExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-457": {
"value": "(x) Grants and contributions Grants and contributions receivable in respect of property, plant and equipment which provide the customer with ongoing access to the water and sewerage networks, are treated as contract liabilities and released to revenue over the economic life of those elements of property, plant and equipment. Grants and contributions receivable in respect of expenses charged against profits in the year have been included in the income statement. Government grants are recognised where there is reasonable certainty that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. The income from such grants is presented in the financial statements as a deduction from the expense to which it relates. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForGovernmentGrants",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-458": {
"value": "3. Financial risk management (a) Financial risk factors The Group\u2019s activities expose it to a variety of financial risks: liquidity risk; market risk (interest rate and foreign currency risk); credit risk and inflation risk. The Group\u2019s treasury function seeks to ensure that sufficient funding is available to meet foreseeable needs and to maintain reasonable headroom for contingencies and manages inflation and interest rate risk. The principal financial risks faced by the Group relate to liquidity, interest rate and credit counterparty risk. These risks and treasury operations are managed by the Group Chief Financial Officer in accordance with policies established by the Board. Major transactions are individually approved by the Board. Treasury activities are reported to the Board and are subject to review by internal audit. Financial instruments are used to raise finance, manage risk, optimise the use of surplus funds and manage overall interest rate performance. The Group does not engage in speculative activity. i) Liquidity risk The Group actively maintains a mixture of long-term and short-term committed facilities which are designed to ensure the Group has sufficient available funds for operations and planned expansions equivalent to at least one year\u2019s forecast requirements at all times. Details of undrawn committed facilities and short-term facilities are provided in note 28. Refinancing risk is managed under a Group policy that requires that no more than 20% of Group net borrowings should mature in any financial year. The Group and water business have entered into covenants with lenders. While terms vary, these typically provide for limits on gearing (primarily based on the water business\u2019s regulatory capital value and unregulated EBITDA) and interest cover. Existing covenants are not impacted by subsequent changes to accounting standards. 3. Financial risk management continued (a) Financial risk factors continued Contractual undiscounted cash flows, including interest payments, at the balance sheet date were: Due within 1 year \u00a3m Due between 1 and 2 years \u00a3m Due between 2 and 5 years \u00a3m Due over 5 years \u00a3m Total \u00a3m Group 31 March 2023 Non-derivative financial liabilities Borrowings excluding lease liabilities 92.7 64.4 364.3 1,544.7 2,066.1 Interest payments on borrowings 86.7 83.0 208.3 768.7 1,146.7 Lease liabilities including interest 70.9 88.5 282.1 1,243.7 1,685.2 Trade and other payables 174.0 \u2013 \u2013 \u2013 174.0 Derivative contracts Derivative contracts \u2013 net payments/(receipts) (0.8) (4.6) (0.6) 0.3 (5.7) 31 March 2022 Non-derivative financial liabilities Borrowings excluding lease liabilities 70.0 101.4 221.0 1,596.9 1,989.3 Interest payments on borrowings 56.8 57.1 89.4 492.4 695.7 Lease liabilities including interest 189.4 46.4 227.7 1,157.7 1,621.2 Trade and other payables 134.4 \u2013 \u2013 \u2013 134.4 Derivative contracts Derivative contracts \u2013 net payments/(receipts) (3.6) (6.5) (7.9) (2.2) (20.2) Company 31 March 2023 Non-derivative financial liabilities Borrowings (including intercompany borrowings) 279.1 8.8 146.9 \u2013 434.8 Interest payments on borrowings 9.6 9.3 6.7 6.0 31.6 Trade and other payables 3.6 \u2013 \u2013 \u2013 3.6 31 March 2022 Non-derivative financial liabilities Borrowings (including intercompany borrowings) 312.8 \u2013 75.1 79.4 467.3 Interest payments on borrowings 6.5 6.6 13.8 2.5 29.4 Trade and other payables 5.7 \u2013 \u2013 \u2013 5.7 ii) Market risk The treasury policy states at least 60% of the Group\u2019s debt should be fixed, this is managed through fixed rate debt and the use of derivatives to ensure these levels are met. Of the Group\u2019s net borrowings a proportion is RPI index-linked. The interest rate for index-linked debt is based mainly upon an RPI measure; due to current Ofwat methodology the Group has considered other index linked indices which are also used in determining the amount of revenue from customers of South West Water. The Group uses a combination of fixed rate, index-linked borrowings and fixed rate interest swaps as cash flow hedges of future variable interest payments to achieve this policy. The notional principal amounts of the interest rate swaps are used to determine settlement under those swaps and are not therefore an exposure for the Group. These instruments are analysed in note 23. The Group has no significant interest-bearing assets upon which the net return fluctuates from market risk. Deposit interest receivable is expected to fluctuate in line with interest payable on floating rate borrowings. Consequently, the Group\u2019s income and cash generated from operations (note 37) are independent of changes in market interest rates. For 2023 if interest rates on variable net borrowings had been on average 1% higher/lower with all other variables held constant, post-tax profit for the year and equity would have increased/decreased by \u00a36.4 million (2022 post tax profit for the year and equity would have increased/decreased by \u00a34.3 million), for the equity sensitivity fair value, with derivative impacts excluded. This provides an indication of the changes which could be expected and can be multiplied to support sensitivity analysis, the expected volatility is within the range of 0%-2%. For 2023 if the indices on index-linked borrowings had been on average 1% higher/lower with all other variables held constant, post-tax profit for the year and equity would have decreased/increased by \u00a33.8 million (2022 post tax profit for the year and equity would have increased/decreased by \u00a36.5 million). This provides an indication of the changes which could be expected and can be multiplied to support sensitivity analysis, the expected volatility is within the range of 3%-7%. Foreign currency risk occurs at transactional and translation level from borrowings and transactions in foreign currencies. These risks are managed through forward contracts, which provide certainty over foreign currency risk. iii) Credit risk Credit counterparty risk arises from cash and cash deposits, derivative financial instruments and exposure to customers, including outstanding receivables. Further information on the credit risk relating to trade and other receivables is given in note 22. Counterparty risk arises from the investment of surplus funds and from the use of derivative financial instruments. The Board has agreed a policy for managing such risk which is controlled through credit limits, counterparty approvals, and rigorous monitoring procedures. The Group has no other significant concentration of credit risk. The Group\u2019s surplus funds are managed by the Group\u2019s treasury function and are usually placed in short-term fixed interest deposits or the overnight money markets. Deposit counterparties must meet Board approved minimum criteria based on their short-term credit ratings and therefore be of good credit quality. 3. Financial risk management continued (a) Financial risk factors continued iv) Inflation risk Market inflation has caused inflationary pressures across the Group, the Group has index linked facilities which are predominantly Retail Price Index (RPI) linked. Inflation risk arises if the indexes increase meaning the Group will either be paying or accreting the inflation, this could put pressure on the gearing or interest cover ratios. Inflation risk is mitigated through the index linked nature of our revenues and RCV calculations. (b) Capital risk management The Group\u2019s objectives when managing capital are to safeguard the Group\u2019s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to minimise the cost of capital. The Group\u2019s policy is to have a minimum of 12 months pre-funding of projected capital expenditure. At 31 March 2023 the Group had cash and facilities, including restricted funds, of \u00a3420 million (2022 \u00a3816 million), meeting this objective. In order to maintain or adjust the capital structure, the Group seeks to maintain a balance of returns to shareholders through dividends and an appropriate capital structure of debt and equity for each business segment and the Group. The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net borrowings divided by total capital. Net borrowings are analysed in note 38 and calculated as total borrowings less cash and cash deposits. Total capital is calculated as total shareholders\u2019 equity plus net borrowings. The Group currently manages a net borrowings position of \u00a32,965.4 million (2022 \u00a32,682.9 million). The gearing ratios at the balance sheet date were: 2023 \u00a3m 2022 \u00a3m Net borrowings (note 38) 2,965.4 2,682.9 Total equity 1,125.2 1,276.6 Total capital 4,090.6 3,959.5 Gearing ratio 72.6% 67.8% The water segment is also monitored on the basis of the ratio of its net borrowings to regulatory capital value. Ofwat\u2019s notional gearing target for the K7 (2020-25) regulatory period is set at 60%. South West Water* 2023 \u00a3m 2022 \u00a3m Shadow Regulatory Capital Value 4,715.9 4,236.0 Net borrowings 2,865.3 2,639.1 Net borrowings/Regulatory Capital Value 60.8% 62.3% *Net borrowing reflects South West Water Limited\u2019s group of companies, with 2022 reanalysed to exclude the impact of intra-group loans, to provide comparative performance. The Group has entered into covenants with lenders and, while terms vary, these typically provide for limits on gearing and interest cover. The Group has been in compliance with its covenants during the year. (c) Determination of fair values The Group uses the following hierarchy for determining the fair value of financial instruments by valuation technique: \u2022 Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1) \u2022 Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2) \u2022 Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3). The Group\u2019s financial instruments are valued principally using level 2 measures as analysed in note 23. The fair value of financial instruments not traded in an active market (for example over-the-counter derivatives) is determined by using valuation techniques. A variety of methods and assumptions are used based on market conditions existing at each balance sheet date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. The carrying values, less expected credit losses, of trade receivables and payables are assumed to approximate to their fair values.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-511": {
"value": "i) Liquidity risk The Group actively maintains a mixture of long-term and short-term committed facilities which are designed to ensure the Group has sufficient available funds for operations and planned expansions equivalent to at least one year\u2019s forecast requirements at all times. Details of undrawn committed facilities and short-term facilities are provided in note 28. Refinancing risk is managed under a Group policy that requires that no more than 20% of Group net borrowings should mature in any financial year. The Group and water business have entered into covenants with lenders. While terms vary, these typically provide for limits on gearing (primarily based on the water business\u2019s regulatory capital value and unregulated EBITDA) and interest cover. Existing covenants are not impacted by subsequent changes to accounting standards. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfLiquidityRiskExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-512": {
"value": "ii) Market risk The treasury policy states at least 60% of the Group\u2019s debt should be fixed, this is managed through fixed rate debt and the use of derivatives to ensure these levels are met. Of the Group\u2019s net borrowings a proportion is RPI index-linked. The interest rate for index-linked debt is based mainly upon an RPI measure; due to current Ofwat methodology the Group has considered other index linked indices which are also used in determining the amount of revenue from customers of South West Water. The Group uses a combination of fixed rate, index-linked borrowings and fixed rate interest swaps as cash flow hedges of future variable interest payments to achieve this policy. The notional principal amounts of the interest rate swaps are used to determine settlement under those swaps and are not therefore an exposure for the Group. These instruments are analysed in note 23. The Group has no significant interest-bearing assets upon which the net return fluctuates from market risk. Deposit interest receivable is expected to fluctuate in line with interest payable on floating rate borrowings. Consequently, the Group\u2019s income and cash generated from operations (note 37) are independent of changes in market interest rates. For 2023 if interest rates on variable net borrowings had been on average 1% higher/lower with all other variables held constant, post-tax profit for the year and equity would have increased/decreased by \u00a36.4 million (2022 post tax profit for the year and equity would have increased/decreased by \u00a34.3 million), for the equity sensitivity fair value, with derivative impacts excluded. This provides an indication of the changes which could be expected and can be multiplied to support sensitivity analysis, the expected volatility is within the range of 0%-2%. For 2023 if the indices on index-linked borrowings had been on average 1% higher/lower with all other variables held constant, post-tax profit for the year and equity would have decreased/increased by \u00a33.8 million (2022 post tax profit for the year and equity would have increased/decreased by \u00a36.5 million). This provides an indication of the changes which could be expected and can be multiplied to support sensitivity analysis, the expected volatility is within the range of 3%-7%. Foreign currency risk occurs at transactional and translation level from borrowings and transactions in foreign currencies. These risks are managed through forward contracts, which provide certainty over foreign currency risk. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfMarketRiskExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-513": {
"value": "iii) Credit risk Credit counterparty risk arises from cash and cash deposits, derivative financial instruments and exposure to customers, including outstanding receivables. Further information on the credit risk relating to trade and other receivables is given in note 22. Counterparty risk arises from the investment of surplus funds and from the use of derivative financial instruments. The Board has agreed a policy for managing such risk which is controlled through credit limits, counterparty approvals, and rigorous monitoring procedures. The Group has no other significant concentration of credit risk. The Group\u2019s surplus funds are managed by the Group\u2019s treasury function and are usually placed in short-term fixed interest deposits or the overnight money markets. Deposit counterparties must meet Board approved minimum criteria based on their short-term credit ratings and therefore be of good credit quality. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfCreditRiskExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-541": {
"value": "(b) Capital risk management The Group\u2019s objectives when managing capital are to safeguard the Group\u2019s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to minimise the cost of capital. The Group\u2019s policy is to have a minimum of 12 months pre-funding of projected capital expenditure. At 31 March 2023 the Group had cash and facilities, including restricted funds, of \u00a3420 million (2022 \u00a3816 million), meeting this objective. In order to maintain or adjust the capital structure, the Group seeks to maintain a balance of returns to shareholders through dividends and an appropriate capital structure of debt and equity for each business segment and the Group. The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net borrowings divided by total capital. Net borrowings are analysed in note 38 and calculated as total borrowings less cash and cash deposits. Total capital is calculated as total shareholders\u2019 equity plus net borrowings. The Group currently manages a net borrowings position of \u00a32,965.4 million (2022 \u00a32,682.9 million). The gearing ratios at the balance sheet date were: 2023 \u00a3m 2022 \u00a3m Net borrowings (note 38) 2,965.4 2,682.9 Total equity 1,125.2 1,276.6 Total capital 4,090.6 3,959.5 Gearing ratio 72.6% 67.8% The water segment is also monitored on the basis of the ratio of its net borrowings to regulatory capital value. Ofwat\u2019s notional gearing target for the K7 (2020-25) regulatory period is set at 60%. South West Water* 2023 \u00a3m 2022 \u00a3m Shadow Regulatory Capital Value 4,715.9 4,236.0 Net borrowings 2,865.3 2,639.1 Net borrowings/Regulatory Capital Value 60.8% 62.3% *Net borrowing reflects South West Water Limited\u2019s group of companies, with 2022 reanalysed to exclude the impact of intra-group loans, to provide comparative performance. The Group has entered into covenants with lenders and, while terms vary, these typically provide for limits on gearing and interest cover. The Group has been in compliance with its covenants during the year. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfObjectivesPoliciesAndProcessesForManagingCapitalExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-514": {
"value": "(c) Determination of fair values The Group uses the following hierarchy for determining the fair value of financial instruments by valuation technique: \u2022 Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1) \u2022 Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2) \u2022 Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3). The Group\u2019s financial instruments are valued principally using level 2 measures as analysed in note 23. The fair value of financial instruments not traded in an active market (for example over-the-counter derivatives) is determined by using valuation techniques. A variety of methods and assumptions are used based on market conditions existing at each balance sheet date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. The carrying values, less expected credit losses, of trade receivables and payables are assumed to approximate to their fair values.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFairValueMeasurementExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-459": {
"value": "4. Critical accounting judgements and estimates The Group\u2019s principal accounting policies are set out in note 2. Management is required to exercise significant judgement and make use of estimates and assumptions in the application of these policies. Estimates are based on factors including historical experience and expectations of future events that management believe to be reasonable. However, given the judgemental nature of such estimates, actual results could be different from the assumptions used. Estimates Provision for doubtful debts The Group has a material level of exposure to collection of trade receivables. Provisions in respect of these balances are calculated with reference to historical credit loss experience, adjusted for forward- looking factors which by their nature are subject to uncertainty. Analysis of actual recovery compared with provisioning levels have not, to date, resulted in material variances. Under its regular review procedures at the balance sheet date, the Group applies a simplified approach in calculating ECLs for trade receivables and contract assets. Therefore, the Group does not track changes in credit risk but instead recognises a loss allowance based on lifetime ECLs at each reporting date. Each subsidiary has established a provision matrix that is informed by its historical credit loss experience, adjusted for forward-looking factors specific to the receivables and the economic environment. The Group's policy is to write-off trade receivables where the expectation of recovery is considered highly unlikely. The actual level of debt collected may differ from the estimated levels of recovery. As at 31 March 2023 the Group\u2019s current trade receivables were \u00a3280.3 million (2022 \u00a3296.2 million), against which \u00a3106.5 million (2022 \u00a3100.4 million) had been provided for ECLs (note 22). Whilst the provisions are considered to be appropriate, changes in estimation basis or in economic conditions could lead to a change in the level of provisions recorded and consequently the charge or credit to the Income Statement. Retirement benefit obligations The Group operates defined benefit pension schemes for which actuarial valuations are carried out as determined by the trustees at intervals of not more than three years. The most recent triennial valuation of the main scheme was as at 31 March 2022, the outcome of which is summarised in note 30. The pension cost and liabilities under IAS 19 are assessed in accordance with Directors\u2019 best estimates using the advice of an independent qualified actuary and assumptions in the latest actuarial valuation. The assumptions are based on member data supplied to the actuary and market observations for interest rates and inflation, supplemented by discussions between the actuary and management. The mortality assumption uses a scheme-specific calculation based on CMI 2019 actuarial tables with an allowance for future longevity improvement. The principal assumptions used to measure schemes\u2019 liabilities, sensitivities to changes in those assumptions and future funding obligations are set out in note 30. Judgements Non-underlying items In establishing which items are disclosed separately as non-underlying, to enable a full understanding of the Group\u2019s financial performance, the Directors exercise their judgement in assessing the size, nature or incidence of specific items. See note 6 for further details. Goodwill allocation Goodwill arising on the acquisition of Bristol Water is allocated to the group of cash-generating units that are expected to benefit from the synergies of the combination, the \u2018Water CGU\u2019. The Water CGU comprises the regions of South West Water, Bournemouth Water and Bristol Water. The Water CGU operates under one management structure with functional integration across the operating segment generating the synergies of the combination. The recoverable amount is the higher of fair value, less costs to sell, and value-in-use. Value-in-use represents the present value of projected future cash flows expected to be derived from a CGU, discounted using a pre-tax discount rate which reflects an assessment of the market cost of capital of the CGU. Impairments are charged to the income statement in the year in which they arise. Other estimates Management assessed and resolved that the level of estimation for revenue recognition of accrued revenue relating to water and wastewater should not be considered critical as the estimates are largely calculated on a systematic basis and have not, to date, resulted in a material adjustment within the following 12-month period. However, management consider the total level of estimation of accrued revenue relating to water and wastewater to be material and highlight this as a material other estimate. The acquisition of Bristol Water in June 2021 has been accounted for using the acquisition method under IFRS 3. The identifiable assets, liabilities and contingent liabilities are recognised at their fair value at date of acquisition. The fair value of the net assets identified were determined with assistance from independent experts using professional valuation techniques appropriate to the individual category of asset or liability. Calculating the fair values of net assets, notably the fair values of property, plant and equipment given the nature of the infrastructure assets acquired, involves estimation and consequently the fair value exercise is recorded as an other accounting estimate. The depreciation charge is sensitive to the value of property, plant and equipment, a higher or lower fair value calculation would lead to a change in the depreciation charge in the period following acquisition. The operations of Bristol Water are now part of South West Water with all activities operating in the same industry, therefore identical or similar transactions within South West Water do not require new significant judgements or estimates to be made by the Group. In early June 2022 the final review of tax balances was completed, with the identification of capital assets non-qualifying for tax purposes, this has led to an increase in the deferred tax liability with an offsetting increase in the total value of goodwill recognised on acquisition of \u00a35.5 million (see note 43), consequently the balance sheet has been restated retroactively to the acquisition date. The property, plant and equipment of the Group relates primarily to infrastructure assets (being water mains and sewers, impounding and pumped raw water storage reservoirs, dams, pipelines and sea outfalls) as well as other assets which include fixed plant and operational properties. The useful economic lives of these types of asset vary from 10 to 200 years. Asset lives are reviewed annually and amended where changes are made to assumptions relating to the expected life of the asset from judgement around usage and performance experience, technological advancement and other relevant factors. Overall assessments on the impact of climate change on long life assets have been completed and will be continuously updated for the latest available information. The most recent assessment of the impact on climate change, which includes the potential to mitigate adverse impacts, has not identified any specific impact on the useful economic lives of long life assets. Environmental factors and climate change form part of the planning process for new capital expenditure. The depreciation charge is sensitive to amendments of the useful economic lives of these assets, a significant change in the estimated life of these assets could have a material impact on depreciation, this is therefore noted as a material other estimate. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-460": {
"value": "5. Segmental information Operating segments are reported in a manner consistent with internal reporting provided to the Chief Operating Decision-Maker (CODM), which has been identified as the Pennon Group plc Board. The earnings measures below are used by the Board in making decisions. The Group is organised into two operating segments. The water segment comprises the regulated water and wastewater services undertaken by South West Water. The non-household retail business reflects the services provided by Pennon Water Services. Segment assets include goodwill and other intangible assets, property, plant and equipment, inventories, trade and other receivables and cash and cash deposits. Segment liabilities comprise operating liabilities and borrowings and exclude taxation. The other segment liabilities include the Company\u2019s financing arrangements and Group taxation liabilities. Capital expenditure comprises additions to property, plant and equipment. 2023 \u00a3m 2022 \u00a3m Revenue Water 701.3 687.8 Non-household retail 218.0 195.3 Other 8.6 8.5 Less intra-segment trading 1 (102.9) (99.3) Total underlying revenue 825.0 792.3 Water non-underlying revenue (note 6) (27.8) \u2013 797.2 792.3 Operating profit/(loss) before depreciation, amortisation and non-underlying items (Underlying EBITDA) Water 308.4 385.0 Non-household retail 4.3 3.4 Other (4.9) (4.5) 307.8 383.9 Operating profit/(loss) before non-underlying items Water 159.4 244.0 Non-household retail 3.6 2.6 Other (9.9) (9.4) 153.1 237.2 Profit/(loss) before tax and non-underlying items Water 14.1 146.0 Non-household retail 1.8 1.0 Other 0.9 (3.5) 16.8 143.5 (Loss)/profit before tax Water (29.6) 144.0 Non-household retail 1.8 1.0 Other 19.3 (17.3) (8.5) 127.7 1. Intra-segment transactions between and to different segments are under normal market-based commercial terms and conditions. Intra-segment revenue of the other segment is at cost. Water \u00a3m Non- household retail \u00a3m Other \u00a3m Eliminations \u00a3m Group \u00a3m Balance sheet 31 March 2023 Assets (excluding carrying value in associated companies) 4,925.3 59.3 594.6 (403.3) 5,175.9 Carrying value in associated companies \u2013 \u2013 9.6 \u2013 9.6 Total assets 4,925.3 59.3 604.2 (403.3) 5,185.5 Liabilities (3,925.2) (55.4) (483.0) 403.3 (4,060.3) Net assets 1,000.1 3.9 121.2 \u2013 1,125.2 31 March 2022 Assets (excluding carrying value in associated companies) 4,872.8 57.1 776.3 (384.1) 5,322.1 Carrying value in associated companies 9.6 \u2013 \u2013 \u2013 9.6 Total assets 4,882.4 57.1 776.3 (384.1) 5,331.7 Liabilities (3,810.4) (54.8) (576.0) 384.1 (4,057.1) Net assets 1,072.0 2.3 200.3 \u2013 1,274.6 5. Segmental information continue d Segment liabilities of the water segment comprise of operating liabilities and borrowings. The other segment includes Company only assets and liabilities as well as Group taxation liabilities and should be considered in conjunction with the eliminations column. Notes Water \u00a3m Non-household retail \u00a3m Other and eliminations \u00a3m Group \u00a3m Other information 31 March 2023 Intangible asset additions 16 4.5 0.1 \u2013 4.6 Amortisation of other intangible assets 7 3.4 0.2 \u2013 3.6 Capital expenditure (Property, plant and equipment) 17 353.6 \u2013 0.1 353.7 Depreciation 7 145.6 0.5 5.0 151.1 Finance income 8 6.2 0.1 21.3 27.6 Finance costs 8 151.5 1.9 (7.6) 145.8 31 March 2022 Intangible asset additions 16 3.4 0.2 \u2013 3.6 Amortisation of other intangible assets 7 3.2 0.2 \u2013 3.4 Capital expenditure (Property, plant and equipment) 17 237.3 \u2013 \u2013 237.3 Depreciation 7 137.8 0.7 4.8 143.3 Finance income 8 3.9 \u2013 (1.3) 2.6 Finance costs 8 101.8 1.6 (7.1) 96.3 Finance income and costs above reflect the segment in which the amounts arise and exclude intercompany transactions. All revenue is generated in the United Kingdom. The grouping of revenue streams by how they are affected by economic factors, as required by IFRS 15, is as follows: Year ended 31 March 2023 Water \u00a3m Non-household retail \u00a3m Other \u00a3m Total \u00a3m Segment revenue \u2013 underlying 701.3 218.0 8.6 927.9 Segment revenue \u2013 non-underlying (note 6) (27.8) \u2013 \u2013 (27.8) Inter-segment revenue (94.7) \u2013 (8.2) (102.9) Revenue from external customers 578.8 218.0 0.4 797.2 Significant service lines Water 578.8 \u2013 \u2013 578.8 Non-household retail \u2013 218.0 \u2013 218.0 Other \u2013 \u2013 0.4 0.4 578.8 218.0 0.4 797.2 Year ended 31 March 2022 Water \u00a3m Non-household retail \u00a3m Other \u00a3m Total \u00a3m Segment revenue \u2013 underlying 687.8 195.3 8.5 891.6 Inter-segment revenue (90.9) (0.2) (8.2) (99.3) Revenue from external customers 596.9 195.1 0.3 792.3 Significant service lines Water 596.9 \u2013 \u2013 596.9 Non-household retail \u2013 195.1 \u2013 195.1 Other \u2013 \u2013 0.3 0.3 596.9 195.1 0.3 792.3 The Group\u2019s country of domicile is the United Kingdom and this is the country in which it generates the majority of its revenue. The Group\u2019s non- current assets are all located in the United Kingdom.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-515": {
"value": "5. Segmental information Operating segments are reported in a manner consistent with internal reporting provided to the Chief Operating Decision-Maker (CODM), which has been identified as the Pennon Group plc Board. The earnings measures below are used by the Board in making decisions. The Group is organised into two operating segments. The water segment comprises the regulated water and wastewater services undertaken by South West Water. The non-household retail business reflects the services provided by Pennon Water Services. Segment assets include goodwill and other intangible assets, property, plant and equipment, inventories, trade and other receivables and cash and cash deposits. Segment liabilities comprise operating liabilities and borrowings and exclude taxation. The other segment liabilities include the Company\u2019s financing arrangements and Group taxation liabilities. Capital expenditure comprises additions to property, plant and equipment. 2023 \u00a3m 2022 \u00a3m Revenue Water 701.3 687.8 Non-household retail 218.0 195.3 Other 8.6 8.5 Less intra-segment trading 1 (102.9) (99.3) Total underlying revenue 825.0 792.3 Water non-underlying revenue (note 6) (27.8) \u2013 797.2 792.3 Operating profit/(loss) before depreciation, amortisation and non-underlying items (Underlying EBITDA) Water 308.4 385.0 Non-household retail 4.3 3.4 Other (4.9) (4.5) 307.8 383.9 Operating profit/(loss) before non-underlying items Water 159.4 244.0 Non-household retail 3.6 2.6 Other (9.9) (9.4) 153.1 237.2 Profit/(loss) before tax and non-underlying items Water 14.1 146.0 Non-household retail 1.8 1.0 Other 0.9 (3.5) 16.8 143.5 (Loss)/profit before tax Water (29.6) 144.0 Non-household retail 1.8 1.0 Other 19.3 (17.3) (8.5) 127.7 1. Intra-segment transactions between and to different segments are under normal market-based commercial terms and conditions. Intra-segment revenue of the other segment is at cost. Water \u00a3m Non- household retail \u00a3m Other \u00a3m Eliminations \u00a3m Group \u00a3m Balance sheet 31 March 2023 Assets (excluding carrying value in associated companies) 4,925.3 59.3 594.6 (403.3) 5,175.9 Carrying value in associated companies \u2013 \u2013 9.6 \u2013 9.6 Total assets 4,925.3 59.3 604.2 (403.3) 5,185.5 Liabilities (3,925.2) (55.4) (483.0) 403.3 (4,060.3) Net assets 1,000.1 3.9 121.2 \u2013 1,125.2 31 March 2022 Assets (excluding carrying value in associated companies) 4,872.8 57.1 776.3 (384.1) 5,322.1 Carrying value in associated companies 9.6 \u2013 \u2013 \u2013 9.6 Total assets 4,882.4 57.1 776.3 (384.1) 5,331.7 Liabilities (3,810.4) (54.8) (576.0) 384.1 (4,057.1) Net assets 1,072.0 2.3 200.3 \u2013 1,274.6 ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfProfitLossFromOperatingActivitiesExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-542": {
"value": "5. Segmental information Operating segments are reported in a manner consistent with internal reporting provided to the Chief Operating Decision-Maker (CODM), which has been identified as the Pennon Group plc Board. The earnings measures below are used by the Board in making decisions. The Group is organised into two operating segments. The water segment comprises the regulated water and wastewater services undertaken by South West Water. The non-household retail business reflects the services provided by Pennon Water Services. Segment assets include goodwill and other intangible assets, property, plant and equipment, inventories, trade and other receivables and cash and cash deposits. Segment liabilities comprise operating liabilities and borrowings and exclude taxation. The other segment liabilities include the Company\u2019s financing arrangements and Group taxation liabilities. Capital expenditure comprises additions to property, plant and equipment. 2023 \u00a3m 2022 \u00a3m Revenue Water 701.3 687.8 Non-household retail 218.0 195.3 Other 8.6 8.5 Less intra-segment trading 1 (102.9) (99.3) Total underlying revenue 825.0 792.3 Water non-underlying revenue (note 6) (27.8) \u2013 797.2 792.3 Operating profit/(loss) before depreciation, amortisation and non-underlying items (Underlying EBITDA) Water 308.4 385.0 Non-household retail 4.3 3.4 Other (4.9) (4.5) 307.8 383.9 Operating profit/(loss) before non-underlying items Water 159.4 244.0 Non-household retail 3.6 2.6 Other (9.9) (9.4) 153.1 237.2 Profit/(loss) before tax and non-underlying items Water 14.1 146.0 Non-household retail 1.8 1.0 Other 0.9 (3.5) 16.8 143.5 (Loss)/profit before tax Water (29.6) 144.0 Non-household retail 1.8 1.0 Other 19.3 (17.3) (8.5) 127.7 1. Intra-segment transactions between and to different segments are under normal market-based commercial terms and conditions. Intra-segment revenue of the other segment is at cost. Water \u00a3m Non- household retail \u00a3m Other \u00a3m Eliminations \u00a3m Group \u00a3m Balance sheet 31 March 2023 Assets (excluding carrying value in associated companies) 4,925.3 59.3 594.6 (403.3) 5,175.9 Carrying value in associated companies \u2013 \u2013 9.6 \u2013 9.6 Total assets 4,925.3 59.3 604.2 (403.3) 5,185.5 Liabilities (3,925.2) (55.4) (483.0) 403.3 (4,060.3) Net assets 1,000.1 3.9 121.2 \u2013 1,125.2 31 March 2022 Assets (excluding carrying value in associated companies) 4,872.8 57.1 776.3 (384.1) 5,322.1 Carrying value in associated companies 9.6 \u2013 \u2013 \u2013 9.6 Total assets 4,882.4 57.1 776.3 (384.1) 5,331.7 Liabilities (3,810.4) (54.8) (576.0) 384.1 (4,057.1) Net assets 1,072.0 2.3 200.3 \u2013 1,274.6 5. Segmental information continue d Segment liabilities of the water segment comprise of operating liabilities and borrowings. The other segment includes Company only assets and liabilities as well as Group taxation liabilities and should be considered in conjunction with the eliminations column. Notes Water \u00a3m Non-household retail \u00a3m Other and eliminations \u00a3m Group \u00a3m Other information 31 March 2023 Intangible asset additions 16 4.5 0.1 \u2013 4.6 Amortisation of other intangible assets 7 3.4 0.2 \u2013 3.6 Capital expenditure (Property, plant and equipment) 17 353.6 \u2013 0.1 353.7 Depreciation 7 145.6 0.5 5.0 151.1 Finance income 8 6.2 0.1 21.3 27.6 Finance costs 8 151.5 1.9 (7.6) 145.8 31 March 2022 Intangible asset additions 16 3.4 0.2 \u2013 3.6 Amortisation of other intangible assets 7 3.2 0.2 \u2013 3.4 Capital expenditure (Property, plant and equipment) 17 237.3 \u2013 \u2013 237.3 Depreciation 7 137.8 0.7 4.8 143.3 Finance income 8 3.9 \u2013 (1.3) 2.6 Finance costs 8 101.8 1.6 (7.1) 96.3 Finance income and costs above reflect the segment in which the amounts arise and exclude intercompany transactions. All revenue is generated in the United Kingdom. The grouping of revenue streams by how they are affected by economic factors, as required by IFRS 15, is as follows: Year ended 31 March 2023 Water \u00a3m Non-household retail \u00a3m Other \u00a3m Total \u00a3m Segment revenue \u2013 underlying 701.3 218.0 8.6 927.9 Segment revenue \u2013 non-underlying (note 6) (27.8) \u2013 \u2013 (27.8) Inter-segment revenue (94.7) \u2013 (8.2) (102.9) Revenue from external customers 578.8 218.0 0.4 797.2 Significant service lines Water 578.8 \u2013 \u2013 578.8 Non-household retail \u2013 218.0 \u2013 218.0 Other \u2013 \u2013 0.4 0.4 578.8 218.0 0.4 797.2 Year ended 31 March 2022 Water \u00a3m Non-household retail \u00a3m Other \u00a3m Total \u00a3m Segment revenue \u2013 underlying 687.8 195.3 8.5 891.6 Inter-segment revenue (90.9) (0.2) (8.2) (99.3) Revenue from external customers 596.9 195.1 0.3 792.3 Significant service lines Water 596.9 \u2013 \u2013 596.9 Non-household retail \u2013 195.1 \u2013 195.1 Other \u2013 \u2013 0.3 0.3 596.9 195.1 0.3 792.3 The Group\u2019s country of domicile is the United Kingdom and this is the country in which it generates the majority of its revenue. The Group\u2019s non- current assets are all located in the United Kingdom.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfRevenueExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-461": {
"value": "6. Non-underlying items Non-underlying items are those that in the Directors\u2019 view should be separately disclosed by virtue of their size, nature or incidence to enable a full understanding of the Group\u2019s financial performance in the year and business trends over time. The presentation of results is consistent with internal performance monitoring. Revenue Notes 2023 \u00a3m 2022 \u00a3m WaterShare+1 (20.2) \u2013 Drought incentive 2 (7.6) \u2013 Operating costs Drought costs2 (9.4) \u2013 WaterShare+1 (2.2) \u2013 Integration and CMA merger review costs3 (4.3) (6.9) Bristol Water acquisition costs 3 \u2013 (8.9) Earnings before interest, tax, depreciation and amortisation (43.7) (15.8) Bond redemption 4 18.4 \u2013 Net tax credit arising on non-underlying items above 5 9 4.7 1.3 Deferred tax change in rate6 9 0.6 (99.5) Net non-underlying charge (20.0) (114.0) 1. In September 2020, the Group offered its WaterShare+ scheme to its customers whereby customers could choose to accept a credit on their bill or take shares in Pennon Group plc. The scheme has operated again in the year ended 31 March 2023. The value of the rebate equated to \u00a313 per customer and the total value of \u00a320.2 million was recognised in full as a non-underlying reduction to revenue in the year ended 31 March 2023. \u00a319.9 million of the WaterShare+ credits were taken as credits on customers\u2019 bills, with the balance of \u00a30.3 million being taken as shares in Pennon Group Plc. This item was non-underlying in nature given its individual size and its non-recurring nature. Additional costs of \u00a32.2 million were incurred in relation to the offering. 2. 2022 was one of the driest and hottest years on record. Elevated demand on the South West Water region from increased tourism and the hot, dry weather led to an approximate 15% increase in distribution input in the year against the expected level from 2017 included in the drought plan. The combination of these individually extreme factors led to extremely low water storage levels in the Colliford Water Resource Zone, with the main supply of Colliford reservoir falling to around 14% capacity in October. A drought was declared by the Environment Agency in Devon and Cornwall in August 2022. In order to react to the drought and water shortage, South West Water invoked a series of emergency measures and one-off expenditure to ensure the region could be supplied with water over the summer and continuing into 2023. Due to the exceptional combination of these events and the significance of the emergency actions, certain costs have been classified as non-underlying given their size, nature and non-recurring incidence. The costs directly addressing these exceptional circumstances include charges for drought permits, water tankering and other water saving measures. In November 2022, South West Water asked households in Cornwall to reduce water usage as part of the \u2018Stop The Drop\u2019 campaign to increase reservoir levels. Household customers were offered a \u00a330 bill credit if Colliford reservoir reached 30% storage capacity by 31 December 2022 from a low of around 14%. In December 2022 the company announced the water level in Colliford reservoir reached 30% and as a result all household customers in Cornwall received a \u00a330 credit on their bill. This one-off incentive was provided as part of the response to the drought conditions in the Cornwall area in order to further prompt customers to reduce water usage. The total value of the bill credits amounted to \u00a37.6 million. 3. The Group incurred expenses of \u00a34.3 million in the year ended 31 March 2023. These related to the integration and statutory transfer of Bristol Water into South West Water. These costs are classified as non-underlying due to their non-recurring nature. In the year ended 31 March 2022, the Group incurred expenses of \u00a38.9 million in relation to the acquisition of Bristol Water and \u00a36.9 million on the resulting merger review by the Competition and Markets Authority and other integration costs. 4. On 17 October 2022 Bristol Water plc gave notice of redemption of the \u00a340 million bonds due to be repaid in March 2041. The bonds were redeemed as part of the statutory transfer of the business of Bristol Water to South West Water. The Group carrying value of the bonds at redemption was \u00a391.3 million. The bonds were redeemed on 17 November 2022 for \u00a372.3 million, and the difference arising on early settlement was credited to finance costs in the year. Associated legal costs of c.\u00a31 million have been incurred in relation to the bond redemption. The redemption of the bonds is non-recurring and of a material value, hence the credit has been treated as non-underlying. 5. The tax credit arising on non-underlying items reflects a \u00a32.8 million current tax credit in respect of losses which will be carried back against prior year taxable profits. A deferred tax credit of \u00a31.9 million relates to tax losses carried forwards and the deferred tax unwind of the fair value adjustment in relation to the Bristol Water bond terminated in the year. The prior year credit of \u00a31.3 million related to a current tax credit on Group strategic review costs. 6. Following the Chancellor's Budget on 4 March 2021 and subsequent substantial enactment of the Finance Act on 24 May 2021, the UK's main rate of corporation tax increased to 25% from 1 April 2023. All deferred tax assets and liabilities were therefore reviewed and where they will crystallise after 1 April 2023 recalculated to crystallise at 25%, hence giving a non-underlying deferred tax charge in the year ended 31 March 2022 of \u00a399.5 million. This charge is considered non-underlying due to it arising from a material legislative change and its treatment is consistent with that applied in relation to previous changes in corporation tax rates. A \u00a30.6 million deferred tax credit in respect of rate change arises on losses carried forwards which will be relieved at 25%.",
"dimensions": {
"concept": "pennongroupplc:DisclosureOfNonUnderlyingItems",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-557": {
"value": "7. Operating costs Notes 2023 \u00a3m 2022 \u00a3m Employment costs before non-underlying items 13 102.2 90.4 Raw materials and consumables 33.6 22.9 Other operating expenses before non-underlying items include: Profit on disposal of property, plant and equipment (0.4) (1.0) Short-term/low value asset lease expense 5.3 1.7 Government grant receivable (18.6) \u2013 Trade receivables impairment 22 7.8 5.6 Depreciation of property, plant and equipment: \u2022 Owned assets 17 118.3 105.5 \u2022 Under leases 17 32.8 37.8 Amortisation of other intangible assets 16 3.6 3.4 During the year the group received financial support from the UK Government\u2019s Energy Relief Bill Scheme totalling \u00a318.6 million (2022 nil). Operating costs include a charge of \u00a315.9 million (2022 \u00a315.8 million) relating to non-underlying items, as detailed in note 6. Fees payable to the Company\u2019s auditor in the year were: 2023 \u00a3000 2022 \u00a3000 Fees payable to the Company\u2019s auditor and its associates for the audit of parent company and consolidated financial statements 384 360 Fees payable to the Company\u2019s auditor and its associates for other services: The audit of Company\u2019s subsidiaries 932 474 Audit-related assurance services 120 108 Other non-audit services 43 28 Total fees 1,479 970 Fees payable to the Company\u2019s auditor in respect of Pennon Group pension schemes: Audit 55 55 Expenses reimbursed to the auditor in relation to the audit of the Group were \u00a379,000 (2022 \u00a350,000). A description of the work of the Audit Committee is set out in its report on pages 120 to 125 which includes an explanation of how the auditor\u2019s objectivity and independence are safeguarded when non-audit services are provided by the auditor\u2019s firm. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfExpensesByNatureExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-552": {
"value": "7. Operating costs Notes 2023 \u00a3m 2022 \u00a3m Employment costs before non-underlying items 13 102.2 90.4 Raw materials and consumables 33.6 22.9 Other operating expenses before non-underlying items include: Profit on disposal of property, plant and equipment (0.4) (1.0) Short-term/low value asset lease expense 5.3 1.7 Government grant receivable (18.6) \u2013 Trade receivables impairment 22 7.8 5.6 Depreciation of property, plant and equipment: \u2022 Owned assets 17 118.3 105.5 \u2022 Under leases 17 32.8 37.8 Amortisation of other intangible assets 16 3.6 3.4 During the year the group received financial support from the UK Government\u2019s Energy Relief Bill Scheme totalling \u00a318.6 million (2022 nil). Operating costs include a charge of \u00a315.9 million (2022 \u00a315.8 million) relating to non-underlying items, as detailed in note 6. Fees payable to the Company\u2019s auditor in the year were: 2023 \u00a3000 2022 \u00a3000 Fees payable to the Company\u2019s auditor and its associates for the audit of parent company and consolidated financial statements 384 360 Fees payable to the Company\u2019s auditor and its associates for other services: The audit of Company\u2019s subsidiaries 932 474 Audit-related assurance services 120 108 Other non-audit services 43 28 Total fees 1,479 970 Fees payable to the Company\u2019s auditor in respect of Pennon Group pension schemes: Audit 55 55 Expenses reimbursed to the auditor in relation to the audit of the Group were \u00a379,000 (2022 \u00a350,000). A description of the work of the Audit Committee is set out in its report on pages 120 to 125 which includes an explanation of how the auditor\u2019s objectivity and independence are safeguarded when non-audit services are provided by the auditor\u2019s firm. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfExpensesExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-543": {
"value": "7. Operating costs Notes 2023 \u00a3m 2022 \u00a3m Employment costs before non-underlying items 13 102.2 90.4 Raw materials and consumables 33.6 22.9 Other operating expenses before non-underlying items include: Profit on disposal of property, plant and equipment (0.4) (1.0) Short-term/low value asset lease expense 5.3 1.7 Government grant receivable (18.6) \u2013 Trade receivables impairment 22 7.8 5.6 Depreciation of property, plant and equipment: \u2022 Owned assets 17 118.3 105.5 \u2022 Under leases 17 32.8 37.8 Amortisation of other intangible assets 16 3.6 3.4 During the year the group received financial support from the UK Government\u2019s Energy Relief Bill Scheme totalling \u00a318.6 million (2022 nil). Operating costs include a charge of \u00a315.9 million (2022 \u00a315.8 million) relating to non-underlying items, as detailed in note 6. Fees payable to the Company\u2019s auditor in the year were: 2023 \u00a3000 2022 \u00a3000 Fees payable to the Company\u2019s auditor and its associates for the audit of parent company and consolidated financial statements 384 360 Fees payable to the Company\u2019s auditor and its associates for other services: The audit of Company\u2019s subsidiaries 932 474 Audit-related assurance services 120 108 Other non-audit services 43 28 Total fees 1,479 970 Fees payable to the Company\u2019s auditor in respect of Pennon Group pension schemes: Audit 55 55 Expenses reimbursed to the auditor in relation to the audit of the Group were \u00a379,000 (2022 \u00a350,000). A description of the work of the Audit Committee is set out in its report on pages 120 to 125 which includes an explanation of how the auditor\u2019s objectivity and independence are safeguarded when non-audit services are provided by the auditor\u2019s firm.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfDepreciationAndAmortisationExpenseExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-516": {
"value": "7. Operating costs Notes 2023 \u00a3m 2022 \u00a3m Employment costs before non-underlying items 13 102.2 90.4 Raw materials and consumables 33.6 22.9 Other operating expenses before non-underlying items include: Profit on disposal of property, plant and equipment (0.4) (1.0) Short-term/low value asset lease expense 5.3 1.7 Government grant receivable (18.6) \u2013 Trade receivables impairment 22 7.8 5.6 Depreciation of property, plant and equipment: \u2022 Owned assets 17 118.3 105.5 \u2022 Under leases 17 32.8 37.8 Amortisation of other intangible assets 16 3.6 3.4 During the year the group received financial support from the UK Government\u2019s Energy Relief Bill Scheme totalling \u00a318.6 million (2022 nil). Operating costs include a charge of \u00a315.9 million (2022 \u00a315.8 million) relating to non-underlying items, as detailed in note 6. Fees payable to the Company\u2019s auditor in the year were: 2023 \u00a3000 2022 \u00a3000 Fees payable to the Company\u2019s auditor and its associates for the audit of parent company and consolidated financial statements 384 360 Fees payable to the Company\u2019s auditor and its associates for other services: The audit of Company\u2019s subsidiaries 932 474 Audit-related assurance services 120 108 Other non-audit services 43 28 Total fees 1,479 970 Fees payable to the Company\u2019s auditor in respect of Pennon Group pension schemes: Audit 55 55 Expenses reimbursed to the auditor in relation to the audit of the Group were \u00a379,000 (2022 \u00a350,000). A description of the work of the Audit Committee is set out in its report on pages 120 to 125 which includes an explanation of how the auditor\u2019s objectivity and independence are safeguarded when non-audit services are provided by the auditor\u2019s firm. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfAuditorsRemunerationExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-462": {
"value": "7. Operating costs Notes 2023 \u00a3m 2022 \u00a3m Employment costs before non-underlying items 13 102.2 90.4 Raw materials and consumables 33.6 22.9 Other operating expenses before non-underlying items include: Profit on disposal of property, plant and equipment (0.4) (1.0) Short-term/low value asset lease expense 5.3 1.7 Government grant receivable (18.6) \u2013 Trade receivables impairment 22 7.8 5.6 Depreciation of property, plant and equipment: \u2022 Owned assets 17 118.3 105.5 \u2022 Under leases 17 32.8 37.8 Amortisation of other intangible assets 16 3.6 3.4 During the year the group received financial support from the UK Government\u2019s Energy Relief Bill Scheme totalling \u00a318.6 million (2022 nil). Operating costs include a charge of \u00a315.9 million (2022 \u00a315.8 million) relating to non-underlying items, as detailed in note 6. Fees payable to the Company\u2019s auditor in the year were: 2023 \u00a3000 2022 \u00a3000 Fees payable to the Company\u2019s auditor and its associates for the audit of parent company and consolidated financial statements 384 360 Fees payable to the Company\u2019s auditor and its associates for other services: The audit of Company\u2019s subsidiaries 932 474 Audit-related assurance services 120 108 Other non-audit services 43 28 Total fees 1,479 970 Fees payable to the Company\u2019s auditor in respect of Pennon Group pension schemes: Audit 55 55 Expenses reimbursed to the auditor in relation to the audit of the Group were \u00a379,000 (2022 \u00a350,000). A description of the work of the Audit Committee is set out in its report on pages 120 to 125 which includes an explanation of how the auditor\u2019s objectivity and independence are safeguarded when non-audit services are provided by the auditor\u2019s firm. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfOtherOperatingExpenseExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-562": {
"value": "8. Net finance costs 2023 2022 Notes Finance cost \u00a3m Finance income \u00a3m Total \u00a3m Finance cost \u00a3m Finance income \u00a3m Total \u00a3m Cost of servicing debt Bank borrowings and overdrafts (111.3) \u2013 (111.3) (73.9) \u2013 (73.9) Interest element of lease payments (30.8) \u2013 (30.8) (20.3) \u2013 (20.3) Other finance costs (3.7) \u2013 (3.7) (2.1) \u2013 (2.1) Interest received \u2013 4.9 4.9 \u2013 2.0 2.0 Net gains on derivative financial instruments \u2013 2.3 2.3 \u2013 \u2013 \u2013 (145.8) 7.2 (138.6) (96.3) 2.0 (94.3) Notional interest Retirement benefit obligations 30 \u2013 2.0 2.0 \u2013 0.6 0.6 Net finance costs (underlying) (145.8) 9.2 (136.6) (96.3) 2.6 (93.7) Finance income (non-underlying) 6 \u2013 18.4 18.4 \u2013 \u2013 \u2013 Net finance costs (including non-underlying) (145.8) 27.6 (118.2) (96.3) 2.6 (93.7) In addition to the above, finance costs of \u00a35.0 million (2022 \u00a31.3 million) have been capitalised on qualifying assets included in property, plant and equipment, at an average borrowing rate of 5.7% (2022 4.1%). Other finance costs include \u00a31.1 million (2022 \u00a30.9 million) of dividends payable on listed preference shares issued by Bristol Water, which are classified as debt (see note 28). ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfInterestIncomeExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-558": {
"value": "8. Net finance costs 2023 2022 Notes Finance cost \u00a3m Finance income \u00a3m Total \u00a3m Finance cost \u00a3m Finance income \u00a3m Total \u00a3m Cost of servicing debt Bank borrowings and overdrafts (111.3) \u2013 (111.3) (73.9) \u2013 (73.9) Interest element of lease payments (30.8) \u2013 (30.8) (20.3) \u2013 (20.3) Other finance costs (3.7) \u2013 (3.7) (2.1) \u2013 (2.1) Interest received \u2013 4.9 4.9 \u2013 2.0 2.0 Net gains on derivative financial instruments \u2013 2.3 2.3 \u2013 \u2013 \u2013 (145.8) 7.2 (138.6) (96.3) 2.0 (94.3) Notional interest Retirement benefit obligations 30 \u2013 2.0 2.0 \u2013 0.6 0.6 Net finance costs (underlying) (145.8) 9.2 (136.6) (96.3) 2.6 (93.7) Finance income (non-underlying) 6 \u2013 18.4 18.4 \u2013 \u2013 \u2013 Net finance costs (including non-underlying) (145.8) 27.6 (118.2) (96.3) 2.6 (93.7) In addition to the above, finance costs of \u00a35.0 million (2022 \u00a31.3 million) have been capitalised on qualifying assets included in property, plant and equipment, at an average borrowing rate of 5.7% (2022 4.1%). Other finance costs include \u00a31.1 million (2022 \u00a30.9 million) of dividends payable on listed preference shares issued by Bristol Water, which are classified as debt (see note 28). 18",
"dimensions": {
"concept": "ifrs-full:DisclosureOfInterestExpenseExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-553": {
"value": "8. Net finance costs 2023 2022 Notes Finance cost \u00a3m Finance income \u00a3m Total \u00a3m Finance cost \u00a3m Finance income \u00a3m Total \u00a3m Cost of servicing debt Bank borrowings and overdrafts (111.3) \u2013 (111.3) (73.9) \u2013 (73.9) Interest element of lease payments (30.8) \u2013 (30.8) (20.3) \u2013 (20.3) Other finance costs (3.7) \u2013 (3.7) (2.1) \u2013 (2.1) Interest received \u2013 4.9 4.9 \u2013 2.0 2.0 Net gains on derivative financial instruments \u2013 2.3 2.3 \u2013 \u2013 \u2013 (145.8) 7.2 (138.6) (96.3) 2.0 (94.3) Notional interest Retirement benefit obligations 30 \u2013 2.0 2.0 \u2013 0.6 0.6 Net finance costs (underlying) (145.8) 9.2 (136.6) (96.3) 2.6 (93.7) Finance income (non-underlying) 6 \u2013 18.4 18.4 \u2013 \u2013 \u2013 Net finance costs (including non-underlying) (145.8) 27.6 (118.2) (96.3) 2.6 (93.7) In addition to the above, finance costs of \u00a35.0 million (2022 \u00a31.3 million) have been capitalised on qualifying assets included in property, plant and equipment, at an average borrowing rate of 5.7% (2022 4.1%). Other finance costs include \u00a31.1 million (2022 \u00a30.9 million) of dividends payable on listed preference shares issued by Bristol Water, which are classified as debt (see note 28). ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfInterestIncomeExpenseExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-544": {
"value": "8. Net finance costs 2023 2022 Notes Finance cost \u00a3m Finance income \u00a3m Total \u00a3m Finance cost \u00a3m Finance income \u00a3m Total \u00a3m Cost of servicing debt Bank borrowings and overdrafts (111.3) \u2013 (111.3) (73.9) \u2013 (73.9) Interest element of lease payments (30.8) \u2013 (30.8) (20.3) \u2013 (20.3) Other finance costs (3.7) \u2013 (3.7) (2.1) \u2013 (2.1) Interest received \u2013 4.9 4.9 \u2013 2.0 2.0 Net gains on derivative financial instruments \u2013 2.3 2.3 \u2013 \u2013 \u2013 (145.8) 7.2 (138.6) (96.3) 2.0 (94.3) Notional interest Retirement benefit obligations 30 \u2013 2.0 2.0 \u2013 0.6 0.6 Net finance costs (underlying) (145.8) 9.2 (136.6) (96.3) 2.6 (93.7) Finance income (non-underlying) 6 \u2013 18.4 18.4 \u2013 \u2013 \u2013 Net finance costs (including non-underlying) (145.8) 27.6 (118.2) (96.3) 2.6 (93.7) In addition to the above, finance costs of \u00a35.0 million (2022 \u00a31.3 million) have been capitalised on qualifying assets included in property, plant and equipment, at an average borrowing rate of 5.7% (2022 4.1%). Other finance costs include \u00a31.1 million (2022 \u00a30.9 million) of dividends payable on listed preference shares issued by Bristol Water, which are classified as debt (see note 28). ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFinanceIncomeExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-517": {
"value": "8. Net finance costs 2023 2022 Notes Finance cost \u00a3m Finance income \u00a3m Total \u00a3m Finance cost \u00a3m Finance income \u00a3m Total \u00a3m Cost of servicing debt Bank borrowings and overdrafts (111.3) \u2013 (111.3) (73.9) \u2013 (73.9) Interest element of lease payments (30.8) \u2013 (30.8) (20.3) \u2013 (20.3) Other finance costs (3.7) \u2013 (3.7) (2.1) \u2013 (2.1) Interest received \u2013 4.9 4.9 \u2013 2.0 2.0 Net gains on derivative financial instruments \u2013 2.3 2.3 \u2013 \u2013 \u2013 (145.8) 7.2 (138.6) (96.3) 2.0 (94.3) Notional interest Retirement benefit obligations 30 \u2013 2.0 2.0 \u2013 0.6 0.6 Net finance costs (underlying) (145.8) 9.2 (136.6) (96.3) 2.6 (93.7) Finance income (non-underlying) 6 \u2013 18.4 18.4 \u2013 \u2013 \u2013 Net finance costs (including non-underlying) (145.8) 27.6 (118.2) (96.3) 2.6 (93.7) In addition to the above, finance costs of \u00a35.0 million (2022 \u00a31.3 million) have been capitalised on qualifying assets included in property, plant and equipment, at an average borrowing rate of 5.7% (2022 4.1%). Other finance costs include \u00a31.1 million (2022 \u00a30.9 million) of dividends payable on listed preference shares issued by Bristol Water, which are classified as debt (see note 28). ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFinanceCostExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-463": {
"value": "8. Net finance costs 2023 2022 Notes Finance cost \u00a3m Finance income \u00a3m Total \u00a3m Finance cost \u00a3m Finance income \u00a3m Total \u00a3m Cost of servicing debt Bank borrowings and overdrafts (111.3) \u2013 (111.3) (73.9) \u2013 (73.9) Interest element of lease payments (30.8) \u2013 (30.8) (20.3) \u2013 (20.3) Other finance costs (3.7) \u2013 (3.7) (2.1) \u2013 (2.1) Interest received \u2013 4.9 4.9 \u2013 2.0 2.0 Net gains on derivative financial instruments \u2013 2.3 2.3 \u2013 \u2013 \u2013 (145.8) 7.2 (138.6) (96.3) 2.0 (94.3) Notional interest Retirement benefit obligations 30 \u2013 2.0 2.0 \u2013 0.6 0.6 Net finance costs (underlying) (145.8) 9.2 (136.6) (96.3) 2.6 (93.7) Finance income (non-underlying) 6 \u2013 18.4 18.4 \u2013 \u2013 \u2013 Net finance costs (including non-underlying) (145.8) 27.6 (118.2) (96.3) 2.6 (93.7) In addition to the above, finance costs of \u00a35.0 million (2022 \u00a31.3 million) have been capitalised on qualifying assets included in property, plant and equipment, at an average borrowing rate of 5.7% (2022 4.1%). Other finance costs include \u00a31.1 million (2022 \u00a30.9 million) of dividends payable on listed preference shares issued by Bristol Water, which are classified as debt (see note 28). ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFinanceIncomeExpenseExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-464": {
"value": "9. Taxation Before non- underlying items 2023 \u00a3m Non- underlying items (note 6) 2023 \u00a3m Total 2023 \u00a3m Before non- underlying items 2022 \u00a3m Non- underlying items (note 6) 2022 \u00a3m Total 2022 \u00a3m Analysis of charge in year Current tax (credit)/charge (2.7) (2.8) (5.5) 5.0 (1.3) 3.7 Deferred tax \u2013 other (0.6) (1.9) (2.5) 8.9 \u2013 8.9 Deferred tax arising on change of rate of corporation tax (0.3) (0.6) (0.9) \u2013 99.5 99.5 Total deferred tax charge/(credit) (0.9) (2.5) (3.4) 8.9 99.5 108.4 Tax (credit)/charge for year (3.6) (5.3) (8.9) 13.9 98.2 112.1 UK corporation tax is calculated at 19% (2022 19%) of the estimated assessable profit for the year. UK corporation tax for the Group is stated after a credit relating to prior year current tax of \u00a32.7 million (2022 \u00a31.7 million credit) and a prior year deferred tax charge of \u00a31.0 million (2022 \u00a310.2 million credit). These items arise following the recording of the routine return to provision adjustments following the submission of the tax computations for the year ended 31 March 2022 to HMRC ahead of the 31 March 2023 filing deadline. The tax for the year differs from the theoretical amount which would arise using the standard rate of corporation tax in the UK of 19% (2022 19%) as follows: 2023 \u00a3m 2022 \u00a3m Reconciliation of total tax charge (Loss)/profit before tax (8.5) 127.7 (Loss)/profit multiplied by the standard rate of UK corporation tax of 19% (2022 19%) (1.6) 24.3 Effects of: (Income)/expenses not deductible for tax purposes (0.4) 1.8 Joint venture profits not taxable (0.1) \u2013 Adjustments to tax charge in respect of prior years (1.7) (11.9) Change in UK tax rates (1.0) 99.5 Depreciation charged on non-qualifying assets 0.7 0.7 Other (4.8) (2.3) Tax (credit)/charge for year (8.9) 112.1 2023 \u00a3m 2022 \u00a3m Reconciliation of current tax charge (Loss)/profit before tax (8.5) 127.7 (Loss)/profit multiplied by the standard rate of UK corporation tax of 19% (2021 19%) (1.6) 24.3 Effects of: Relief for capital allowances in place of depreciation (37.6) (36.3) Disallowance of depreciation charged in the accounts 24.4 22.4 Other timing differences (11.1) (7.2) (Income)/expenses not deductible for tax purposes (0.4) 1.8 Joint venture profits not taxable (0.1) \u2013 Accounting policy alignment adjustment on acquisition of Bristol Water 5.0 \u2013 Adjustments to tax charge in respect of prior years (2.7) (1.7) Depreciation charged on non-qualifying assets 0.7 0.6 Tax losses carried forward 18.6 \u2013 Relief for capitalised interest and foreign exchange gains/losses (0.7) (0.2) Current tax (credit)/charge for year (5.5) 3.7 The Group's current tax credit is higher than the UK headline rate of 19%, primarily due to capital allowances. Capital allowances provide tax relief when a business incurs expenditure on qualifying capital items such as plant and machinery used by the business. As an infrastructure business, these allowances help the Group to plan major investment and consequentially to maintain lower customer bills, as corporation tax relief is given against the investments made. The Group benefits from the 130% super-deductions and 50% enhanced allowances in respect of qualifying spend relating to contracts entered into after 3 March 2021.The Group incurs significant capital expenditure each year as it maintains and enhances it assets for the benefit of its customers, communities and the environment. These enhanced allowances have increased capital allowance claims for the year and contributed significantly to the current tax credit for the year. There is also a consequently higher deferred tax liability and charge due to the additional capital allowance deductions together with the increase in the rate of corporation tax to 25% from April 2023. 9. Taxation continued Other differences relate to the timing of relief for items including pensions, fair value items and financial derivatives. The increase in the year relates mainly to the unwind of the fair value adjustment on the Bristol Water bond which was terminated in the year and additional pension contributions relief as a result of spreading in accordance with tax legislation. Profits from joint ventures are included in the consolidated accounts on an after tax basis, as such these profits are not taxable in the Group accounts. The accounting policy alignment relates to Bristol Water plc aligning their accounting policy in relation to deferred income to that of South West Water on acquisition. Despite the accounting adjustments reflecting the restated 2022 figures, for tax purposes the adjustment will be subject to corporation tax during the year ended 31 March 2023, hence the adjustment in the year. Adjustments to the tax charge in respect of prior year arise from the return to provision adjustments booked having completed and submitted the corporation tax returns for the year ended 31 March 2022 in March 2023. This is a routine item with any adjustments reflected in the following years tax charge. Depreciation charge on non-qualifying assets generates a permanent adjustment which increases the tax charge. Non-qualifying assets are those which do not qualify for writing down tax allowances, including certain fixed assets typically in relation to older buildings and premises where tax relief is not available. Tax losses generated in the year and carried forward generate a deferred tax rather than current tax credit, hence the adjustment to current tax. When utilised, the adjustment will be reflected through a movement from deferred to current tax. Immediate tax relief is available in respect of capitalised interest and foreign exchange gains/losses. In addition to the amounts recognised in the income statement, the following tax charges / (credits) (which include the effect of the change in tax rate) were recognised: 2023 \u00a3m 2022 \u00a3m Amounts recognised directly in other comprehensive income Deferred tax credit on defined benefit pension schemes (9.8) (2.4) Deferred tax charge on cash flow hedges 7.3 6.5 Amounts recognised directly in equity Deferred tax charge on share-based payments 0.5 \u2013 Factors affecting future tax charges The UK main rate of corporation tax will increase to 25% from 1 April 2023. This change was substantively enacted on 24 May 2021, as such deferred tax liabilities and assets were recalculated and recorded at the rate they are expected to unwind. This increased the tax charge in the income statement during the year ended 31 March 2022 by \u00a399.5m, with a credit of \u00a38.7m taken through the SOCI/Equity in respect of retirement obligations, derivatives and share based payments. The Chancellor announced in the March 2023 Budget that super deductions will be replaced by full expensing for the next three years in respect of plant and machinery assets. The 50% first year allowance in relation to special rate assets will also continue until 31 March 2026. The Group therefore anticipates generating current tax losses for the next few years. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-465": {
"value": "10. Profit of the parent company 2023 \u00a3m 2022 \u00a3m Profit attributable to ordinary shareholders\u2019 equity dealt within the accounts of the parent company 8.4 74.5 As permitted by Section 408 of the Companies Act 2006, no income statement or statement of comprehensive income is presented for the Company. ",
"dimensions": {
"concept": "pennongroupplc:DisclosureOfProfitOfTheParentCompany",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-466": {
"value": "11. Earnings per share Basic earnings per share are calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year, excluding those held in the employee share trust (note 36), which are treated as cancelled. For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to include all dilutive potential ordinary shares. The Group has two types of dilutive potential ordinary shares \u2013 those share options granted to employees where the exercise price is less than the average market price of the Company\u2019s ordinary shares during the year; and the contingently issuable shares under the Group\u2019s Performance and Co-investment Plan, the long-term incentive plan and the deferred shares element of the Annual Incentive Bonus Plan, based on performance criteria for the vesting of the awards. The weighted average number of shares and earnings used in the calculations were: 2023 2022 Number of shares (millions) For basic earnings per share 261.9 312.1 Effect of dilutive potential ordinary shares from share options 0.9 1.7 For diluted earnings per share 262.8 313.8 11. Earnings per share continued Basic and diluted earnings per ordinary share Earnings per ordinary share before non-underlying items and deferred tax are presented as the Directors believe that this measure provides a more useful year on year comparison of business trends and performance. Deferred tax is excluded as the Directors believe it reflects a distortive effect of changes in corporation tax rates and the level of long-term capital investment. Earnings per share have been calculated as follows: 2023 2022 (Loss)/profit after tax \u00a3m Earnings per share Profit after tax \u00a3m Earnings per share Basic p Diluted p Basic p Diluted p Statutory earnings attributable to ordinary shareholders of the parent 0.1 \u2013 \u2013 15.4 4.9 4.9 Deferred tax (credit)/charge before non-underlying items (0.9) (0.3) (0.3) 8.9 2.9 2.8 Non-underlying items (net of tax) 20.0 7.6 7.6 114.0 36.5 36.4 Adjusted earnings 19.2 7.3 7.3 138.3 44.3 44.1 ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfEarningsPerShareExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-518": {
"value": "11. Earnings per share Basic earnings per share are calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year, excluding those held in the employee share trust (note 36), which are treated as cancelled. For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to include all dilutive potential ordinary shares. The Group has two types of dilutive potential ordinary shares \u2013 those share options granted to employees where the exercise price is less than the average market price of the Company\u2019s ordinary shares during the year; and the contingently issuable shares under the Group\u2019s Performance and Co-investment Plan, the long-term incentive plan and the deferred shares element of the Annual Incentive Bonus Plan, based on performance criteria for the vesting of the awards. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForEarningsPerShareExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-467": {
"value": "12. Dividends 2023 \u00a3m 2022 \u00a3m Amounts recognised as distributions to ordinary equity holders in the year Interim dividend paid for the year ended 31 March 2022 11.70p (2021 6.77p) per share 31.6 28.6 Final dividend paid for the year ended 31 March 2022 26.83p (2021 14.97p) per share 70.0 63.2 Special dividend paid for the year ended 31 March 2022 nil (2021 355.0p) per share \u2013 1,498.5 101.6 1,590.3 Proposed dividends Proposed interim dividend for the year ended 31 March 2023: 12.96p (2022 11.70p) per share 33.9 32.4 Proposed final dividend for the year ended 31 March 2023: 29.77p (2022 26.83p) per share 77.8 69.6 111.7 102.0 The proposed interim and final dividends have not been included as liabilities in these financial statements. The proposed interim dividend for 2023 was paid on 5 April 2023 and the proposed final dividend is subject to approval by shareholders at the AGM. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfDividendsExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-519": {
"value": "0.2977",
"decimals": 3,
"dimensions": {
"concept": "ifrs-full:DividendsRecognisedAsDistributionsToOwnersPerShare",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00",
"unit": "iso4217:GBP/xbrli:shares"
}
},
"fact-520": {
"value": "0.2683",
"decimals": 3,
"dimensions": {
"concept": "ifrs-full:DividendsRecognisedAsDistributionsToOwnersPerShare",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2021-04-01T00:00:00/2022-04-01T00:00:00",
"unit": "iso4217:GBP/xbrli:shares"
}
},
"fact-468": {
"value": "13. Employment costs Notes 2023 \u00a3m 2022 \u00a3m Wages and salaries 110.0 96.3 Social security costs 12.1 9.7 Pension costs 30 11.0 11.1 Share-based payments 33 2.4 2.2 Total employment costs 135.5 119.3 Charged: \u2022 Employment costs (excluding non-underlying items) \u2013 consolidated income statement 102.2 90.4 \u2022 Employment costs (non-underlying items) \u2013 consolidated income statement \u2013 1.7 \u2022 Capital schemes \u2013 property, plant and equipment 32.7 27.2 \u2022 Research and development 0.6 \u2013 Total employment costs 135.5 119.3 Details of Directors\u2019 emoluments are set out in note 14. There are no personnel, other than Directors, who as key management exercise authority and responsibility for planning, directing and controlling the activities of the Group. Members of other executive committees assist the Directors in their duties but do not hold authority to control the activities of the Group. 2023 2022 Employees (average full-time equivalent number) The average monthly number of employees (including Executive Directors) was: Water 2,639 2,394 Non-household retail 158 177 Other 67 65 Total 2,864 2,636 ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfInformationAboutEmployeesExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-469": {
"value": "14. Directors\u2019 emoluments 2023 \u00a3000 2022 \u00a3000 Executive Directors: \u2022 Salary 784 775 \u2022 Performance-related bonus paid or payable 51 149 \u2022 Share-based payments 786 707 \u2022 Other emoluments, including payments in lieu of pension provision 111 116 Non-Executive Directors 583 523 2,315 2,270 The cost of share-based payments represents the amount charged to the income statement, as described in note 33. The aggregate gains on vesting of Directors\u2019 share-based awards amounted to a total of \u00a3142,000 (2022 \u00a3180,000). Total emoluments include nil (2022 nil) payable to Directors for services as directors of subsidiary undertakings. At 31 March 2023 no Directors (2022 none) are accruing retirement benefits under defined benefit pension schemes in respect of which the Group contributed. In the previous year ending 31 March 2022, the defined benefit pension scheme closed to future accrual, on 30 June 2021, and during the prior period up to the date of closure to future accrual the company contributed \u00a312,000 in respect of one Director. At 31 March 2023 two Directors (2022 two) are members of the Group\u2019s defined contribution pension scheme in respect of which the Group contributed \u00a34,000 (2022 \u00a33,000). At 31 March 2023 two Directors received payments in lieu of pension provision (2022 two). More detailed information concerning Directors\u2019 emoluments (including pensions and the highest paid Director) and share interests is shown in the Directors\u2019 remuneration report on pages 136 to 157. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfInformationAboutKeyManagementPersonnelExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-521": {
"value": "15. Goodwill \u00a3m Cost: At 1 April 2021 42.3 Acquisition of Bristol Water Group (note 43) 121.6 At 31 March 2022 163.9 At 31 March 2023 163.9 Carrying amount: At 1 April 2021 42.3 At 31 March 2022 (restated) 163.9 At 31 March 2023 163.9 Goodwill acquired in a business combination is allocated at acquisition to the CGU expected to benefit from that business combination. During the year ended 31 March 2022, the Group acquired the Bristol Water Group, adding \u00a3121.6 million to goodwill (see note 43). All goodwill represents the water business, therefore this is the lowest level at which goodwill is monitored and tested. An adjustment to the preliminary accounting for the Bristol Water acquisition has been made within the measurement period ending 2 June 2022, this adjustment is presented retrospectively and the 31 March 2022 balance sheet figures have been adjusted accordingly (see note 4). Impairment testing of goodwill The Group tests goodwill for impairment annually, or more frequently if there are any indications that impairment may have arisen. The recoverable amount of the water business segment is assessed using level 2 fair value hierarchy techniques, with reference to the market value of the water business, using a market-based observable premium, based on historical water industry merger and acquisition activity, to regulated capital value as defined by ofwat. The results of tests performed during the year demonstrate significant headroom in the water CGU, and it is judged that no reasonable change in the key assumptions would cause the carrying amount of the CGUs to exceed the recoverable amount. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfGoodwillExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-470": {
"value": "15. Goodwill \u00a3m Cost: At 1 April 2021 42.3 Acquisition of Bristol Water Group (note 43) 121.6 At 31 March 2022 163.9 At 31 March 2023 163.9 Carrying amount: At 1 April 2021 42.3 At 31 March 2022 (restated) 163.9 At 31 March 2023 163.9 Goodwill acquired in a business combination is allocated at acquisition to the CGU expected to benefit from that business combination. During the year ended 31 March 2022, the Group acquired the Bristol Water Group, adding \u00a3121.6 million to goodwill (see note 43). All goodwill represents the water business, therefore this is the lowest level at which goodwill is monitored and tested. An adjustment to the preliminary accounting for the Bristol Water acquisition has been made within the measurement period ending 2 June 2022, this adjustment is presented retrospectively and the 31 March 2022 balance sheet figures have been adjusted accordingly (see note 4). Impairment testing of goodwill The Group tests goodwill for impairment annually, or more frequently if there are any indications that impairment may have arisen. The recoverable amount of the water business segment is assessed using level 2 fair value hierarchy techniques, with reference to the market value of the water business, using a market-based observable premium, based on historical water industry merger and acquisition activity, to regulated capital value as defined by ofwat. The results of tests performed during the year demonstrate significant headroom in the water CGU, and it is judged that no reasonable change in the key assumptions would cause the carrying amount of the CGUs to exceed the recoverable amount. 16. Other intangible assets Patents \u00a3m Other \u00a3m Total \u00a3m Cost: At 1 April 2021 0.2 4.0 4.2 Additions \u2013 3.6 3.6 Acquisition of Bristol Water Group \u2013 12.8 12.8 Disposals (0.2) (0.8) (1.0) At 31 March 2022 \u2013 19.6 19.6 Additions \u2013 4.6 4.6 Disposals \u2013 (1.9) (1.9) At 31 March 2023 \u2013 22.3 22.3 Accumulated amortisation: At 1 April 2021 0.2 2.8 3.0 Charge for year \u2013 3.4 3.4 Disposals (0.2) (0.5) (0.7) At 31 March 2022 \u2013 5.7 5.7 Charge for year \u2013 3.6 3.6 Disposals \u2013 (1.9) (1.9) At 31 March 2023 \u2013 7.4 7.4 Carrying amount: At 1 April 2021 \u2013 1.2 1.2 At 31 March 2022 \u2013 13.9 13.9 At 31 March 2023 \u2013 14.9 14.9 Other, including computer software, is amortised over the useful life of the assets which at acquisition was ten years. The average remaining life is one year (2022 two years). The carrying values of other intangible assets are reviewed annually or when events or changes in circumstance indicate that the carrying amounts may not be fully recoverable. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-545": {
"value": "Impairment testing of goodwill The Group tests goodwill for impairment annually, or more frequently if there are any indications that impairment may have arisen. The recoverable amount of the water business segment is assessed using level 2 fair value hierarchy techniques, with reference to the market value of the water business, using a market-based observable premium, based on historical water industry merger and acquisition activity, to regulated capital value as defined by ofwat. The results of tests performed during the year demonstrate significant headroom in the water CGU, and it is judged that no reasonable change in the key assumptions would cause the carrying amount of the CGUs to exceed the recoverable amount. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfImpairmentOfAssetsExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-522": {
"value": "16. Other intangible assets Patents \u00a3m Other \u00a3m Total \u00a3m Cost: At 1 April 2021 0.2 4.0 4.2 Additions \u2013 3.6 3.6 Acquisition of Bristol Water Group \u2013 12.8 12.8 Disposals (0.2) (0.8) (1.0) At 31 March 2022 \u2013 19.6 19.6 Additions \u2013 4.6 4.6 Disposals \u2013 (1.9) (1.9) At 31 March 2023 \u2013 22.3 22.3 Accumulated amortisation: At 1 April 2021 0.2 2.8 3.0 Charge for year \u2013 3.4 3.4 Disposals (0.2) (0.5) (0.7) At 31 March 2022 \u2013 5.7 5.7 Charge for year \u2013 3.6 3.6 Disposals \u2013 (1.9) (1.9) At 31 March 2023 \u2013 7.4 7.4 Carrying amount: At 1 April 2021 \u2013 1.2 1.2 At 31 March 2022 \u2013 13.9 13.9 At 31 March 2023 \u2013 14.9 14.9 Other, including computer software, is amortised over the useful life of the assets which at acquisition was ten years. The average remaining life is one year (2022 two years). The carrying values of other intangible assets are reviewed annually or when events or changes in circumstance indicate that the carrying amounts may not be fully recoverable.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-471": {
"value": "17. Property, plant and equipment Land and buildings \u00a3m Infrastructure assets \u00a3m Operational properties \u00a3m Fixed and mobile plant, vehicles and computers \u00a3m Construction in progress \u00a3m Total \u00a3m Group Cost: At 31 March 2021 126.4 2,042.4 777.6 2,078.9 117.8 5,143.1 Additions 1.3 40.5 7.5 67.3 120.7 237.3 Acquisition of Bristol Water Group 56.4 644.0 161.3 60.2 22.9 944.8 Assets adopted at fair value \u2013 11.0 \u2013 \u2013 \u2013 11.0 Grants and contributions \u2013 \u2013 \u2013 \u2013 (3.2) (3.2) Disposals (0.2) (1.2) (1.3) (2.4) \u2013 (5.1) Transfers/reclassifications 2.8 17.7 7.2 46.3 (74.0) \u2013 At 31 March 2022 186.7 2,754.4 952.3 2,250.3 184.2 6,327.9 Additions 0.7 52.3 11.4 85.3 204.0 353.7 Assets adopted at fair value \u2013 14.3 \u2013 \u2013 \u2013 14.3 Disposals (0.3) (1.5) (0.6) (2.4) \u2013 (4.8) Transfers/reclassifications 1.7 43.8 8.5 43.8 (97.8) \u2013 At 31 March 2023 188.8 2,863.3 971.6 2,377.0 290.4 6,691.1 Accumulated depreciation: At 31 March 2021 18.9 335.6 294.0 1,273.6 \u2013 1,922.1 Charge for year 4.2 33.7 19.2 89.5 \u2013 146.6 Disposals \u2013 (1.2) (1.3) (2.3) \u2013 (4.8) At 31 March 2022 23.1 368.1 311.9 1,360.8 \u2013 2,063.9 Charge for year 4.5 36.3 20.6 93.4 \u2013 154.8 Disposals (0.3) (1.5) (0.4) (2.3) \u2013 (4.5) At 31 March 2023 27.3 402.9 332.1 1,451.9 \u2013 2,214.2 Net book value: At 31 March 2021 107.5 1,706.8 483.6 805.3 117.8 3,221.0 At 31 March 2022 163.6 2,386.3 640.4 889.5 184.2 4,264.0 At 31 March 2023 161.5 2,460.4 639.5 925.1 290.4 4,476.9 Of the total depreciation charge of \u00a3154.8 million (2022 \u00a3146.6 million), \u00a31.5 million (2022 \u00a31.3 million) has been charged to capital projects, \u00a32.2 million (2022 \u00a32.0 million) has been offset by deferred income and \u00a3151.1 million (2022 \u00a3143.3 million) has been charged against profits. Asset lives and residual values are reviewed annually. During the year borrowing costs of \u00a35.0 million (2022 \u00a31.3 million) have been capitalised on qualifying assets, at an average borrowing rate of 5.7% (2022 4.1%). Groups of assets forming cash generating units are reviewed for indicators of impairment. No indicators of impairment were identified during the year. Asset lives are reviewed annually. No significant changes were required in 2022/23. 17. Property, plant and equipment continued The Group leases many assets as a lessee, across several categories of asset. Right-of-use assets held under leases included in property, plant and equipment above were: Land and buildings \u00a3m Infrastructure assets \u00a3m Operational properties \u00a3m Fixed and mobile plant, vehicles and computers \u00a3m Construction in progress \u00a3m Total \u00a3m Group Cost: At 1 April 2021 35.3 413.7 482.2 524.7 \u2013 1,455.9 Additions \u2013 \u2013 7.7 7.9 \u2013 15.6 Acquisition of Bristol Water Group 0.5 0.1 \u2013 1.7 \u2013 2.3 Disposals \u2013 (14.1) (114.3) (152.6) \u2013 (281.0) At 31 March 2022 35.8 399.7 375.6 381.7 \u2013 1,192.8 Additions 0.1 19.3 0.5 20.9 \u2013 40.8 Disposals (0.5) (35.1) (41.0) (13.6) \u2013 (90.2) At 31 March 2023 35.4 383.9 335.1 389.0 \u2013 1,143.4 Accumulated depreciation: At 31 March 2021 2.8 78.0 142.8 304.3 \u2013 527.9 Charge / (credit) for year 1.3 5.1 8.0 23.4 \u2013 37.8 Disposals \u2013 (3.5) (48.1) (143.2) \u2013 (194.8) At 31 March 2022 4.1 79.6 102.7 184.5 \u2013 370.9 Charge for year 1.2 4.9 6.0 20.7 \u2013 32.8 Disposals (0.2) (14.7) (18.1) (13.4) \u2013 (46.4) At 31 March 2023 5.1 69.8 90.6 191.8 \u2013 357.3 Net book amount: At 31 March 2021 32.5 335.7 339.4 220.4 \u2013 928.0 At 31 March 2022 31.7 320.1 272.9 197.2 \u2013 821.9 At 31 March 2023 30.3 314.1 244.5 197.2 \u2013 786.1 When the group enters into sale and leaseback arrangements, the accounting for the arrangement depends on whether the transaction meets the criteria within IFRS 15 for a sale to have occurred. If the sale criteria are met, the associated property, plant and equipment asset is derecognised, and a right-of-use asset is recognised at the proportion of the carrying value relating to the right retained. If the criteria for a sale under IFRS 15 have not been met the asset is not derecognised, but is reclassified to right-of-use assets (within property, plant and equipment). Right of use assets includes assets held under sale and leaseback arrangements with a carrying value of \u00a3785.2 million (2022 \u00a3793.7 million). Fixed and mobile plant, vehicles and computers \u00a3m Company Cost: At 31 March 2021 0.3 At 31 March 2022 0.3 At 31 March 2023 0.3 Accumulated depreciation: At 31 March 2021 0.2 At 31 March 2022 0.2 At 31 March 2023 0.2 Net book value: At 31 March 2021 0.1 At 31 March 2022 0.1 At 31 March 2023 0.1 Asset lives and residual values are reviewed annually. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-472": {
"value": "18. Financial instruments by category The accounting policies for financial instruments that have been applied to line items are: Fair value Amortised cost Notes Derivatives used for fair value hedging \u00a3m Derivatives used for cash flow hedging \u00a3m Debt instruments at amortised cost \u00a3m Trade receivables and trade payables \u00a3m Total \u00a3m Group 31 March 2023 Financial assets Amounts owed by joint ventures 19 \u2013 \u2013 9.3 \u2013 9.3 Trade receivables 22 \u2013 \u2013 \u2013 173.8 173.8 Derivative financial instruments 23 0.4 53.5 \u2013 \u2013 53.9 Cash and cash deposits 25 \u2013 \u2013 165.4 \u2013 165.4 Total 0.4 53.5 174.7 173.8 402.4 F F i i n n a a n n c c i i a a l l l l i i a a b b i i l l i i t t i i e e s s Borrowings 28 \u2013 \u2013 (3,130.8) \u2013 (3,130.8) Derivative financial instruments 23 \u2013 (4.8) \u2013 \u2013 (4.8) Trade payables 26 \u2013 \u2013 \u2013 (150.7) (150.7) Total \u2013 (4.8) (3,130.8) (150.7) (3,286.3) 31 March 2022 Financial assets Amounts owed by joint ventures 19 \u2013 \u2013 9.6 \u2013 9.6 Trade receivables 22 \u2013 \u2013 \u2013 180.9 180.9 Derivative financial instruments 23 1.2 19.2 \u2013 \u2013 20.4 Cash and cash deposits 25 \u2013 \u2013 519.0 \u2013 519.0 Total 1.2 19.2 528.6 180.9 729.9 Financial liabilities Borrowings 28 \u2013 \u2013 (3,201.9) \u2013 (3,201.9) Amounts owed by joint ventures 26 \u2013 \u2013 \u2013 (1.8) (1.8) Trade payables 26 \u2013 \u2013 \u2013 (107.5) (107.5) Total \u2013 \u2013 (3,201.9) (109.3) (3,311.2) Company 31 March 2023 F F i i n n a a n n c c i i a a l l a a s s s s e e t t s s Amounts owed by subsidiaries 19,22 \u2013 \u2013 101.8 \u2013 101.8 Other receivables 22 \u2013 \u2013 3.4 \u2013 3.4 Derivative financial instruments 23 0.4 0.7 \u2013 \u2013 1.1 Cash and cash deposits 25 \u2013 \u2013 104.1 \u2013 104.1 Total 0.4 0.7 209.3 \u2013 210.4 Financial liabilities Borrowings 28 \u2013 \u2013 (434.8) \u2013 (434.8) Trade payables 26 \u2013 \u2013 \u2013 (2.0) (2.0) Total \u2013 \u2013 (434.8) (2.0) (436.8) 31 March 2022 Financial assets Amounts owed by subsidiaries 19, 22 \u2013 \u2013 79.7 \u2013 79.7 Other receivables 22 \u2013 \u2013 0.7 \u2013 0.7 Derivative financial instruments 23 1.2 0.4 \u2013 \u2013 1.6 Cash and cash deposits 25 \u2013 \u2013 306.7 \u2013 306.7 Total 1.2 0.4 387.1 \u2013 388.7 Financial liabilities Borrowings 28 \u2013 \u2013 (467.3) \u2013 (467.3) Trade payables 26 \u2013 \u2013 \u2013 (0.7) (0.7) Total \u2013 \u2013 (467.3) (0.7) (468.0) ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-523": {
"value": "18. Financial instruments by category The accounting policies for financial instruments that have been applied to line items are: Fair value Amortised cost Notes Derivatives used for fair value hedging \u00a3m Derivatives used for cash flow hedging \u00a3m Debt instruments at amortised cost \u00a3m Trade receivables and trade payables \u00a3m Total \u00a3m Group 31 March 2023 Financial assets Amounts owed by joint ventures 19 \u2013 \u2013 9.3 \u2013 9.3 Trade receivables 22 \u2013 \u2013 \u2013 173.8 173.8 Derivative financial instruments 23 0.4 53.5 \u2013 \u2013 53.9 Cash and cash deposits 25 \u2013 \u2013 165.4 \u2013 165.4 Total 0.4 53.5 174.7 173.8 402.4 F F i i n n a a n n c c i i a a l l l l i i a a b b i i l l i i t t i i e e s s Borrowings 28 \u2013 \u2013 (3,130.8) \u2013 (3,130.8) Derivative financial instruments 23 \u2013 (4.8) \u2013 \u2013 (4.8) Trade payables 26 \u2013 \u2013 \u2013 (150.7) (150.7) Total \u2013 (4.8) (3,130.8) (150.7) (3,286.3) 31 March 2022 Financial assets Amounts owed by joint ventures 19 \u2013 \u2013 9.6 \u2013 9.6 Trade receivables 22 \u2013 \u2013 \u2013 180.9 180.9 Derivative financial instruments 23 1.2 19.2 \u2013 \u2013 20.4 Cash and cash deposits 25 \u2013 \u2013 519.0 \u2013 519.0 Total 1.2 19.2 528.6 180.9 729.9 Financial liabilities Borrowings 28 \u2013 \u2013 (3,201.9) \u2013 (3,201.9) Amounts owed by joint ventures 26 \u2013 \u2013 \u2013 (1.8) (1.8) Trade payables 26 \u2013 \u2013 \u2013 (107.5) (107.5) Total \u2013 \u2013 (3,201.9) (109.3) (3,311.2) Company 31 March 2023 F F i i n n a a n n c c i i a a l l a a s s s s e e t t s s Amounts owed by subsidiaries 19,22 \u2013 \u2013 101.8 \u2013 101.8 Other receivables 22 \u2013 \u2013 3.4 \u2013 3.4 Derivative financial instruments 23 0.4 0.7 \u2013 \u2013 1.1 Cash and cash deposits 25 \u2013 \u2013 104.1 \u2013 104.1 Total 0.4 0.7 209.3 \u2013 210.4 Financial liabilities Borrowings 28 \u2013 \u2013 (434.8) \u2013 (434.8) Trade payables 26 \u2013 \u2013 \u2013 (2.0) (2.0) Total \u2013 \u2013 (434.8) (2.0) (436.8) 31 March 2022 Financial assets Amounts owed by subsidiaries 19, 22 \u2013 \u2013 79.7 \u2013 79.7 Other receivables 22 \u2013 \u2013 0.7 \u2013 0.7 Derivative financial instruments 23 1.2 0.4 \u2013 \u2013 1.6 Cash and cash deposits 25 \u2013 \u2013 306.7 \u2013 306.7 Total 1.2 0.4 387.1 \u2013 388.7 Financial liabilities Borrowings 28 \u2013 \u2013 (467.3) \u2013 (467.3) Trade payables 26 \u2013 \u2013 \u2013 (0.7) (0.7) Total \u2013 \u2013 (467.3) (0.7) (468.0) ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFairValueOfFinancialInstrumentsExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-473": {
"value": "19. Other non-current assets Non-current receivables Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Amounts owed by subsidiary undertakings \u2013 \u2013 26.1 31.5 Amounts owed by related parties (note 42) 9.3 9.6 \u2013 \u2013 Interest receivable 13.9 \u2013 \u2013 \u2013 23.2 9.6 26.1 31.5 Non-current receivables were due: Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Between 1 and 2 years 13.9 9.6 5.2 5.2 Over 2 years and less than 5 years 9.3 \u2013 15.7 15.6 Over 5 years \u2013 \u2013 5.2 10.7 23.2 9.6 26.1 31.5 The fair values of non-current receivables were: Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Amounts owed by subsidiary undertakings \u2013 \u2013 26.1 31.5 Amounts owed by joint ventures 9.3 9.6 \u2013 \u2013 Interest receivable 13.0 \u2013 \u2013 \u2013 22.3 9.6 26.1 31.5 ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfOtherNoncurrentAssetsExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-474": {
"value": "20. Investments Subsidiary undertakings \u00a3m Company At 31 March 2021 846.4 Investment in subsidiary undertakings: Bristol Water acquisition 419.6 South West Water share acquisition 45.0 Impairment of investment in subsidiary (0.2) At 31 March 2022 1,310.8 Investment in subsidiary undertakings: Bristol Water disposal (407.5) South West Water share acquisition 413.3 At 31 March 2023 1,316.6 The recoverable amount of investments is determined based on value-in-use calculations, which are set out in note 15. During the year, as part of the statutory licence transfer of Bristol Water to South West Water, the Company transferred its shareholding in Bristol Water plc to South West Water Limited for \u00a3413 million. The consideration was satisfied through the Company subscribing for an additional \u00a31 of share capital of South West Water Limited at a premium of \u00a3413 million. In the year ended 31 March 2022, the Company subscribed to 45 million \u00a31 ordinary shares in South West Water Limited at a cost \u00a345 million. Investment in associates and joint ventures Name of entity Principal activity Place of business/country of incorporation % of ownership Measurement method Water 2 Business Limited (\u201cW2B\u201d) National retailer in the non-household market and provides retail water services to non- household customers England 30% Equity Bristol Wessex Billing Services Limited (\u201cBWBSL\u201d) Meter reading, billing, debt recovery and customer contact management services England 50% Equity Searchlight Collection Limited Debt collection services England 50% Equity The carrying value of the Group\u2019s share of these investments in associates and joint ventures at 31 March 2022 and at 31 March 2023 is \u00a30.3 million. The Group\u2019s share of the profits and other comprehensive income of these investments in associates and joint ventures for the year ended 31 March 2023 is \u00a30.3 million (year ended 31 March 2022 nil). 20. Investments continued The Group\u2019s joint ventures and associates are all private companies and there are no quoted market prices available for the shares. Summarised financial information for the joint ventures and investments in associates is set out below: Summarised balance sheets 2023 \u00a3m 2022 \u00a3m W2B BWBSL Searchlight W2B BWBSL Searchlight Current Cash and cash equivalents 1.5 1.3 \u2013 \u2013 1.1 \u2013 Other current assets 60.1 2.2 0.1 53.6 2.0 0.1 Total current assets 61.6 3.5 0.1 53.6 3.1 0.1 Non-current assets 5.5 \u2013 \u2013 6.5 \u2013 \u2013 Financial liabilities (excluding trade payables) \u2013 \u2013 \u2013 (1.1) \u2013 \u2013 Current liabilities (including trade payables) (35.0) (3.5) \u2013 (28.0) (3.1) \u2013 Total current liabilities (35.0) (3.5) \u2013 (29.1) (3.1) \u2013 Non-current liabilities (31.1) \u2013 \u2013 (32.2) \u2013 \u2013 Net assets 1.0 \u2013 0.1 (1.2) \u2013 0.1 Summarised statement of comprehensive income 2023 \u00a3m 2022 \u00a3m W2B BWBSL Searchlight W2B BWBSL Searchlight Revenue 232.9 17.5 0.3 193.5 15.8 0.3 Cost of sales and other operating expenses (228.7) (17.5) (0.3) (190.9) (15.8) (0.3) Interest (1.3) \u2013 \u2013 (0.7) \u2013 \u2013 Pre-tax profit 2.9 \u2013 \u2013 1.9 \u2013 \u2013 Taxation charge (0.7) \u2013 \u2013 (0.6) \u2013 \u2013 Total comprehensive income 2.2 \u2013 \u2013 1.3 \u2013 \u2013 The information above reflects the amounts presented in the financial statements of the associates (and not the Group\u2019s share of these amounts) adjusted for differences in accounting policies between the Group and associates. W2B\u2019s year-end date is 30 June. BWBSL\u2019s and Searchlight\u2019s year ends are 31 March. The Group's carrying amount of the investments held is \u00a30.3m (2022 nil) which comprises 30% of the Group's share of equity of W2B. For BWBSL and Searchlight, the net equity is \u00a3nil (2022 \u00a3nil). The Group\u2019s share of profit from associated companies is \u00a30.3m (2022 \u00a3nil) which comprises 30% of the Group\u2019s share of W2B, restricted by brought forward losses. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfInvestmentsAccountedForUsingEquityMethodExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-475": {
"value": "21. Inventories Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Raw materials and consumables 10.0 7.7 \u2013 \u2013 ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfInventoriesExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-559": {
"value": "22. Trade and other receivables \u2013 current Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Trade receivables 280.3 296.2 \u2013 \u2013 Less: allowance for expected credit losses in respect of trade receivables (106.5) (100.4) \u2013 \u2013 Net trade receivables 173.8 195.8 \u2013 \u2013 Amounts owed by parent undertaking \u2013 \u2013 \u2013 \u2013 Amounts owed by subsidiary undertakings \u2013 \u2013 75.7 48.2 Amounts owed by associated companies 0.1 \u2013 \u2013 \u2013 Other receivables 20.8 41.1 3.4 0.7 Accrued income 34.1 26.4 \u2013 0.1 Prepayments 9.2 7.6 1.3 0.8 238.0 270.9 80.4 49.8 Trade receivables include accrued income relating to customers with water budget payment plans. Trade receivables have decreased year on year, largely due to the one-off bill reductions in the final quarter of the year in relation to Watershare+ and the drought incentive (see note 6) along with tariff reductions in the South West Water region. Accrued income includes \u00a325.7 million (2022 \u00a322.0 million) in respect of metered accrual revenue in the retail water business. Metered accrual revenue relates to performance obligations that have been fully extinguished in providing services to customers prior to the reporting date. Payment in respect of these services is a matter of time following issuance of invoices. The Directors consider that the carrying amounts of trade and other receivables approximate to their fair value. 22. Trade and other receivables \u2013 current continued There is no concentration of credit risk in trade receivables. The Group has a large number of customers who are dispersed and there is no significant loss on trade receivables expected that has not been provided for. The Group applies the simplified approach in calculating the expected credit losses for trade receivables allowing a provision matrix to be used which is based on the expected life of trade receivables, default rates for different customer categories within the collection process and forward-looking information. As at 31 March, an analysis of the ageing of trade receivables is as follows: 2023 \u00a3m 2022 \u00a3m Group Not due 57.5 68.9 Past due 1 \u2013 30 days 14.7 17.4 Past due 31 \u2013 120 days 17.1 20.2 More than 120 days 191.0 189.7 280.3 296.2 The aged trade receivables above are taken directly from aged sales ledger records. The Group\u2019s operating businesses specifically review separate categories of debt to identify an appropriate allowance for expected credit losses as outlined in note 2 (n) ii). South West Water Limited has a duty under legislation to continue to provide domestic customers with services regardless of payment. Given the different nature of customer demographics within South West Water\u2019s operating area and the non-household retail business of Pennon Water Services, different provision matrices are adopted by each business. The provision matrix adopted for household customers in the most significant operating region of Devon and Cornwall is outlined in the table below, showing the range of provision rates dependent on phase of collection. The table also includes the gross debt and provision rates for other customer areas: Trade receivables 2023 \u00a3m AAlllloowwaannccee ffoorr eexxppeecctteedd ccrreeddiitt lloosssseess 22002233 \u00a3\u00a3mm Devon and Cornwall (household customers) \u2022 Current occupier < 12 months: 1% - 30% 35.3 00..22 \u2022 Current occupier 12 \u2013 24 months: 10% \u2013 60% 14.6 22..88 \u2022 Current occupier 24 \u2013 36 months: 15% \u2013 80% 10.8 33..44 \u2022 Current occupier > 36 months: 20% \u2013 100% 90.4 4499..55 \u2022 Previous occupier: 55% \u2013 100% 51.9 3311..33 Bristol 31.0 55..44 Pennon Water Services 38.3 1133..55 Other 8.0 00..44 280.3 110066..55 No material expected credit loss provision has been recognised in respect of amounts owed by subsidiary undertakings. The movement in the allowance for expected credit losses in respect of trade receivables was: 2023 \u00a3m 2022 \u00a3m At 1 April 100.4 102.3 Provision for expected credit losses 7.8 5.5 Receivables written off during the year as uncollectable (1.7) (7.4) At 31 March 106.5 100.4 ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfPrepaymentsAndOtherAssetsExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-554": {
"value": "22. Trade and other receivables \u2013 current Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Trade receivables 280.3 296.2 \u2013 \u2013 Less: allowance for expected credit losses in respect of trade receivables (106.5) (100.4) \u2013 \u2013 Net trade receivables 173.8 195.8 \u2013 \u2013 Amounts owed by parent undertaking \u2013 \u2013 \u2013 \u2013 Amounts owed by subsidiary undertakings \u2013 \u2013 75.7 48.2 Amounts owed by associated companies 0.1 \u2013 \u2013 \u2013 Other receivables 20.8 41.1 3.4 0.7 Accrued income 34.1 26.4 \u2013 0.1 Prepayments 9.2 7.6 1.3 0.8 238.0 270.9 80.4 49.8 Trade receivables include accrued income relating to customers with water budget payment plans. Trade receivables have decreased year on year, largely due to the one-off bill reductions in the final quarter of the year in relation to Watershare+ and the drought incentive (see note 6) along with tariff reductions in the South West Water region. Accrued income includes \u00a325.7 million (2022 \u00a322.0 million) in respect of metered accrual revenue in the retail water business. Metered accrual revenue relates to performance obligations that have been fully extinguished in providing services to customers prior to the reporting date. Payment in respect of these services is a matter of time following issuance of invoices. The Directors consider that the carrying amounts of trade and other receivables approximate to their fair value. 22. Trade and other receivables \u2013 current continued There is no concentration of credit risk in trade receivables. The Group has a large number of customers who are dispersed and there is no significant loss on trade receivables expected that has not been provided for. The Group applies the simplified approach in calculating the expected credit losses for trade receivables allowing a provision matrix to be used which is based on the expected life of trade receivables, default rates for different customer categories within the collection process and forward-looking information. As at 31 March, an analysis of the ageing of trade receivables is as follows: 2023 \u00a3m 2022 \u00a3m Group Not due 57.5 68.9 Past due 1 \u2013 30 days 14.7 17.4 Past due 31 \u2013 120 days 17.1 20.2 More than 120 days 191.0 189.7 280.3 296.2 The aged trade receivables above are taken directly from aged sales ledger records. The Group\u2019s operating businesses specifically review separate categories of debt to identify an appropriate allowance for expected credit losses as outlined in note 2 (n) ii). South West Water Limited has a duty under legislation to continue to provide domestic customers with services regardless of payment. Given the different nature of customer demographics within South West Water\u2019s operating area and the non-household retail business of Pennon Water Services, different provision matrices are adopted by each business. The provision matrix adopted for household customers in the most significant operating region of Devon and Cornwall is outlined in the table below, showing the range of provision rates dependent on phase of collection. The table also includes the gross debt and provision rates for other customer areas: Trade receivables 2023 \u00a3m AAlllloowwaannccee ffoorr eexxppeecctteedd ccrreeddiitt lloosssseess 22002233 \u00a3\u00a3mm Devon and Cornwall (household customers) \u2022 Current occupier < 12 months: 1% - 30% 35.3 00..22 \u2022 Current occupier 12 \u2013 24 months: 10% \u2013 60% 14.6 22..88 \u2022 Current occupier 24 \u2013 36 months: 15% \u2013 80% 10.8 33..44 \u2022 Current occupier > 36 months: 20% \u2013 100% 90.4 4499..55 \u2022 Previous occupier: 55% \u2013 100% 51.9 3311..33 Bristol 31.0 55..44 Pennon Water Services 38.3 1133..55 Other 8.0 00..44 280.3 110066..55 No material expected credit loss provision has been recognised in respect of amounts owed by subsidiary undertakings. The movement in the allowance for expected credit losses in respect of trade receivables was: 2023 \u00a3m 2022 \u00a3m At 1 April 100.4 102.3 Provision for expected credit losses 7.8 5.5 Receivables written off during the year as uncollectable (1.7) (7.4) At 31 March 106.5 100.4 ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfOtherCurrentAssetsExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-546": {
"value": "22. Trade and other receivables \u2013 current Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Trade receivables 280.3 296.2 \u2013 \u2013 Less: allowance for expected credit losses in respect of trade receivables (106.5) (100.4) \u2013 \u2013 Net trade receivables 173.8 195.8 \u2013 \u2013 Amounts owed by parent undertaking \u2013 \u2013 \u2013 \u2013 Amounts owed by subsidiary undertakings \u2013 \u2013 75.7 48.2 Amounts owed by associated companies 0.1 \u2013 \u2013 \u2013 Other receivables 20.8 41.1 3.4 0.7 Accrued income 34.1 26.4 \u2013 0.1 Prepayments 9.2 7.6 1.3 0.8 238.0 270.9 80.4 49.8 Trade receivables include accrued income relating to customers with water budget payment plans. Trade receivables have decreased year on year, largely due to the one-off bill reductions in the final quarter of the year in relation to Watershare+ and the drought incentive (see note 6) along with tariff reductions in the South West Water region. Accrued income includes \u00a325.7 million (2022 \u00a322.0 million) in respect of metered accrual revenue in the retail water business. Metered accrual revenue relates to performance obligations that have been fully extinguished in providing services to customers prior to the reporting date. Payment in respect of these services is a matter of time following issuance of invoices. The Directors consider that the carrying amounts of trade and other receivables approximate to their fair value. 22. Trade and other receivables \u2013 current continued There is no concentration of credit risk in trade receivables. The Group has a large number of customers who are dispersed and there is no significant loss on trade receivables expected that has not been provided for. The Group applies the simplified approach in calculating the expected credit losses for trade receivables allowing a provision matrix to be used which is based on the expected life of trade receivables, default rates for different customer categories within the collection process and forward-looking information. As at 31 March, an analysis of the ageing of trade receivables is as follows: 2023 \u00a3m 2022 \u00a3m Group Not due 57.5 68.9 Past due 1 \u2013 30 days 14.7 17.4 Past due 31 \u2013 120 days 17.1 20.2 More than 120 days 191.0 189.7 280.3 296.2 The aged trade receivables above are taken directly from aged sales ledger records. The Group\u2019s operating businesses specifically review separate categories of debt to identify an appropriate allowance for expected credit losses as outlined in note 2 (n) ii). South West Water Limited has a duty under legislation to continue to provide domestic customers with services regardless of payment. Given the different nature of customer demographics within South West Water\u2019s operating area and the non-household retail business of Pennon Water Services, different provision matrices are adopted by each business. The provision matrix adopted for household customers in the most significant operating region of Devon and Cornwall is outlined in the table below, showing the range of provision rates dependent on phase of collection. The table also includes the gross debt and provision rates for other customer areas: Trade receivables 2023 \u00a3m AAlllloowwaannccee ffoorr eexxppeecctteedd ccrreeddiitt lloosssseess 22002233 \u00a3\u00a3mm Devon and Cornwall (household customers) \u2022 Current occupier < 12 months: 1% - 30% 35.3 00..22 \u2022 Current occupier 12 \u2013 24 months: 10% \u2013 60% 14.6 22..88 \u2022 Current occupier 24 \u2013 36 months: 15% \u2013 80% 10.8 33..44 \u2022 Current occupier > 36 months: 20% \u2013 100% 90.4 4499..55 \u2022 Previous occupier: 55% \u2013 100% 51.9 3311..33 Bristol 31.0 55..44 Pennon Water Services 38.3 1133..55 Other 8.0 00..44 280.3 110066..55 No material expected credit loss provision has been recognised in respect of amounts owed by subsidiary undertakings. The movement in the allowance for expected credit losses in respect of trade receivables was: 2023 \u00a3m 2022 \u00a3m At 1 April 100.4 102.3 Provision for expected credit losses 7.8 5.5 Receivables written off during the year as uncollectable (1.7) (7.4) At 31 March 106.5 100.4 ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfOtherAssetsExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-524": {
"value": "22. Trade and other receivables \u2013 current Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Trade receivables 280.3 296.2 \u2013 \u2013 Less: allowance for expected credit losses in respect of trade receivables (106.5) (100.4) \u2013 \u2013 Net trade receivables 173.8 195.8 \u2013 \u2013 Amounts owed by parent undertaking \u2013 \u2013 \u2013 \u2013 Amounts owed by subsidiary undertakings \u2013 \u2013 75.7 48.2 Amounts owed by associated companies 0.1 \u2013 \u2013 \u2013 Other receivables 20.8 41.1 3.4 0.7 Accrued income 34.1 26.4 \u2013 0.1 Prepayments 9.2 7.6 1.3 0.8 238.0 270.9 80.4 49.8 Trade receivables include accrued income relating to customers with water budget payment plans. Trade receivables have decreased year on year, largely due to the one-off bill reductions in the final quarter of the year in relation to Watershare+ and the drought incentive (see note 6) along with tariff reductions in the South West Water region. Accrued income includes \u00a325.7 million (2022 \u00a322.0 million) in respect of metered accrual revenue in the retail water business. Metered accrual revenue relates to performance obligations that have been fully extinguished in providing services to customers prior to the reporting date. Payment in respect of these services is a matter of time following issuance of invoices. The Directors consider that the carrying amounts of trade and other receivables approximate to their fair value. 22. Trade and other receivables \u2013 current continued There is no concentration of credit risk in trade receivables. The Group has a large number of customers who are dispersed and there is no significant loss on trade receivables expected that has not been provided for. The Group applies the simplified approach in calculating the expected credit losses for trade receivables allowing a provision matrix to be used which is based on the expected life of trade receivables, default rates for different customer categories within the collection process and forward-looking information. As at 31 March, an analysis of the ageing of trade receivables is as follows: 2023 \u00a3m 2022 \u00a3m Group Not due 57.5 68.9 Past due 1 \u2013 30 days 14.7 17.4 Past due 31 \u2013 120 days 17.1 20.2 More than 120 days 191.0 189.7 280.3 296.2 The aged trade receivables above are taken directly from aged sales ledger records. The Group\u2019s operating businesses specifically review separate categories of debt to identify an appropriate allowance for expected credit losses as outlined in note 2 (n) ii). South West Water Limited has a duty under legislation to continue to provide domestic customers with services regardless of payment. Given the different nature of customer demographics within South West Water\u2019s operating area and the non-household retail business of Pennon Water Services, different provision matrices are adopted by each business. The provision matrix adopted for household customers in the most significant operating region of Devon and Cornwall is outlined in the table below, showing the range of provision rates dependent on phase of collection. The table also includes the gross debt and provision rates for other customer areas: Trade receivables 2023 \u00a3m AAlllloowwaannccee ffoorr eexxppeecctteedd ccrreeddiitt lloosssseess 22002233 \u00a3\u00a3mm Devon and Cornwall (household customers) \u2022 Current occupier < 12 months: 1% - 30% 35.3 00..22 \u2022 Current occupier 12 \u2013 24 months: 10% \u2013 60% 14.6 22..88 \u2022 Current occupier 24 \u2013 36 months: 15% \u2013 80% 10.8 33..44 \u2022 Current occupier > 36 months: 20% \u2013 100% 90.4 4499..55 \u2022 Previous occupier: 55% \u2013 100% 51.9 3311..33 Bristol 31.0 55..44 Pennon Water Services 38.3 1133..55 Other 8.0 00..44 280.3 110066..55 No material expected credit loss provision has been recognised in respect of amounts owed by subsidiary undertakings. The movement in the allowance for expected credit losses in respect of trade receivables was: 2023 \u00a3m 2022 \u00a3m At 1 April 100.4 102.3 Provision for expected credit losses 7.8 5.5 Receivables written off during the year as uncollectable (1.7) (7.4) At 31 March 106.5 100.4 ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfAllowanceForCreditLossesExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-476": {
"value": "22. Trade and other receivables \u2013 current Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Trade receivables 280.3 296.2 \u2013 \u2013 Less: allowance for expected credit losses in respect of trade receivables (106.5) (100.4) \u2013 \u2013 Net trade receivables 173.8 195.8 \u2013 \u2013 Amounts owed by parent undertaking \u2013 \u2013 \u2013 \u2013 Amounts owed by subsidiary undertakings \u2013 \u2013 75.7 48.2 Amounts owed by associated companies 0.1 \u2013 \u2013 \u2013 Other receivables 20.8 41.1 3.4 0.7 Accrued income 34.1 26.4 \u2013 0.1 Prepayments 9.2 7.6 1.3 0.8 238.0 270.9 80.4 49.8 Trade receivables include accrued income relating to customers with water budget payment plans. Trade receivables have decreased year on year, largely due to the one-off bill reductions in the final quarter of the year in relation to Watershare+ and the drought incentive (see note 6) along with tariff reductions in the South West Water region. Accrued income includes \u00a325.7 million (2022 \u00a322.0 million) in respect of metered accrual revenue in the retail water business. Metered accrual revenue relates to performance obligations that have been fully extinguished in providing services to customers prior to the reporting date. Payment in respect of these services is a matter of time following issuance of invoices. The Directors consider that the carrying amounts of trade and other receivables approximate to their fair value. 22. Trade and other receivables \u2013 current continued There is no concentration of credit risk in trade receivables. The Group has a large number of customers who are dispersed and there is no significant loss on trade receivables expected that has not been provided for. The Group applies the simplified approach in calculating the expected credit losses for trade receivables allowing a provision matrix to be used which is based on the expected life of trade receivables, default rates for different customer categories within the collection process and forward-looking information. As at 31 March, an analysis of the ageing of trade receivables is as follows: 2023 \u00a3m 2022 \u00a3m Group Not due 57.5 68.9 Past due 1 \u2013 30 days 14.7 17.4 Past due 31 \u2013 120 days 17.1 20.2 More than 120 days 191.0 189.7 280.3 296.2 The aged trade receivables above are taken directly from aged sales ledger records. The Group\u2019s operating businesses specifically review separate categories of debt to identify an appropriate allowance for expected credit losses as outlined in note 2 (n) ii). South West Water Limited has a duty under legislation to continue to provide domestic customers with services regardless of payment. Given the different nature of customer demographics within South West Water\u2019s operating area and the non-household retail business of Pennon Water Services, different provision matrices are adopted by each business. The provision matrix adopted for household customers in the most significant operating region of Devon and Cornwall is outlined in the table below, showing the range of provision rates dependent on phase of collection. The table also includes the gross debt and provision rates for other customer areas: Trade receivables 2023 \u00a3m AAlllloowwaannccee ffoorr eexxppeecctteedd ccrreeddiitt lloosssseess 22002233 \u00a3\u00a3mm Devon and Cornwall (household customers) \u2022 Current occupier < 12 months: 1% - 30% 35.3 00..22 \u2022 Current occupier 12 \u2013 24 months: 10% \u2013 60% 14.6 22..88 \u2022 Current occupier 24 \u2013 36 months: 15% \u2013 80% 10.8 33..44 \u2022 Current occupier > 36 months: 20% \u2013 100% 90.4 4499..55 \u2022 Previous occupier: 55% \u2013 100% 51.9 3311..33 Bristol 31.0 55..44 Pennon Water Services 38.3 1133..55 Other 8.0 00..44 280.3 110066..55 No material expected credit loss provision has been recognised in respect of amounts owed by subsidiary undertakings. The movement in the allowance for expected credit losses in respect of trade receivables was: 2023 \u00a3m 2022 \u00a3m At 1 April 100.4 102.3 Provision for expected credit losses 7.8 5.5 Receivables written off during the year as uncollectable (1.7) (7.4) At 31 March 106.5 100.4 ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfTradeAndOtherReceivablesExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-477": {
"value": "23. Derivative financial instruments Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Derivatives used for cash flow hedging Non-current assets 32.9 14.1 0.2 0.3 Current assets 20.6 5.1 0.5 0.1 Current liabilities (2.4) \u2013 \u2013 \u2013 Non-current liabilities (2.4) \u2013 \u2013 \u2013 Derivatives used for fair value hedging Non-current assets 0.3 0.7 0.3 0.7 Current assets 0.1 0.5 0.1 0.5 The Group\u2019s financial risks and risk management policies are set out in note 3. The fair value of derivatives is split between current and non-current assets or liabilities based on the maturity of the cash flows. The ineffective portion recognised in the income statement arising from hedging relationships was \u00a3nil (2022 \u00a3nil). 23. Derivative financial instruments contin ued During the year a \u00a35.0 million charge (2022 \u00a35.8 million charge) was recognised in profit and loss relating to cash flow hedges previously recognised through other comprehensive income and recorded in the hedging reserve. A \u00a329.1 million credit (2022 \u00a340.6 million credit) was recognised in other comprehensive income for cash flow hedges that may be classified subsequently to profit and loss. Interest rate swaps, primarily cash flow hedges, and fixed rate borrowings are used to manage the mix of fixed and floating rates to ensure at least 60% of Group net borrowings are at fixed rate. At 31 March 2023 the Group had interest rate swaps to swap from floating to fixed rate and hedged financial liabilities with a notional value of \u00a3853 million and a weighted average maturity of 3.4 years (2022 \u00a3718 million, with 3.5 years). The weighted average interest rate of the swaps for their nominal amount was 1.54% (2022 1.14%). The Group has established a hedge ratio of 1:1 for the hedging relationships as the underlying risks of the swaps are identical to the hedged risk components. To test the hedge effectiveness, the Group uses the hypothetical derivative method and compares the changes in the fair value of the hedging instrument against the changes in fair value of the hedged item attributable to the hedged risk. The hedge ineffectiveness can arise from: \u2022 Different interest rate curve applied to discount the hedged item and hedging instrument \u2022 Differences in timing of cash flows of the hedged item and hedging instrument \u2022 The counterparties\u2019 credit risk differently impacting the fair value movements of the hedging instrument and hedged item The impact of the hedging instrument on the statement of financial position is as follows: GGrroouupp Notional amount \u00a3m Carrying amount \u00a3m Line item in the statement of financial position Change in fair value used for measuring ineffectiveness in the period \u00a3m AAss aatt 3311 MMaarrcchh 22002233 Interest rate swaps 853.4 52.4 Derivative financial instruments 33.6 RPI swaps 300.0 (4.4) Derivative financial instruments (4.4) Cross currency swaps 24.0 1.1 Derivative financial instruments (0.5) As at 31 March 2022 Interest rate swaps 717.9 18.8 Derivative financial instruments 40.6 Cross currency swaps 24.0 1.6 Derivative financial instruments 1.5 CCoommppaannyy Notional amount \u00a3m Carrying amount \u00a3m Line item in the statement of financial position Change in fair value used for measuring ineffectiveness in the period \u00a3m AAss aatt 3311 MMaarrcchh 22002233 Cross currency swaps 24.0 1.1 Derivative financial instruments (0.5) As at 31 March 2022 Cross currency swaps 24.0 1.6 Derivative financial instruments 1.5 The periods for which the cash flow hedges are expected to affect future profit or loss are as follows: Due within 1 year \u00a3m Due between 1 and 2 years \u00a3m Due between 2 and 5 years \u00a3m Due over 5 years \u00a3m Total \u00a3m Group 31 March 2023 Assets 20.8 19.0 8.8 5.3 53.9 Liabilities (2.4) (2.0) (0.2) (0.2) (4.8) 31 March 2022 Assets 5.1 5.0 7.0 2.1 19.2 Company 31 March 2023 Assets 0.5 0.2 \u2013 \u2013 0.7 Liabilities \u2013 \u2013 \u2013 \u2013 \u2013 31 March 2022 Assets 0.1 0.2 0.1 \u2013 0.4 Valuation hierarchy The Group uses the following hierarchy for determining the fair value of financial instruments by valuation technique: \u2022 Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1) \u2022 Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2) \u2022 Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3). 23. Derivative financial instruments contin ued The fair value of financial instruments not traded in an active market (level 2, for example over-the-counter derivatives) is determined by using valuation techniques. A variety of methods and assumptions are used based on market conditions existing at each balance sheet date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. The Group\u2019s financial derivatives are valued using level 2 measures: Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Assets Derivatives used for cash flow hedging 53.5 19.2 0.7 0.4 Derivatives used for fair value hedging 0.4 1.2 0.4 1.2 Total assets 53.9 20.4 1.1 1.6 Liabilities Derivatives used for cash flow hedging (4.8) \u2013 \u2013 \u2013 Total liabilities (4.8) \u2013 \u2013 \u2013 ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfDerivativeFinancialInstrumentsExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-478": {
"value": "24. Financial instruments at fair value through profit Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Current liabilities 2.6 2.5 0.1 0.1 Non-current liabilities 34.0 36.1 \u2013 \u2013 Non-current assets 1.3 \u2013 1.3 \u2013 Financial instruments at fair value through profit reflect the fair value movement of the hedged risk on the hedged item which had been designated in a fair value hedging relationship. The hedged item was the \u00a3150 million bond issued by South West Water Finance Plc in 2010 which matures in July 2040 (see note 28). The hedging relationship was de-designated in previous periods at which point the fair value amount recognised at that point ceased to be revalued. The fixed financial liability at the point of de-designation is released to the income statement over the remaining life of the debt. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-525": {
"value": "25. Cash and cash deposits Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Cash at bank and in hand 69.7 57.3 34.0 6.7 Short-term bank deposits 25.0 50.0 25.0 50.0 Other deposits 70.7 411.7 45.1 250.0 Total cash and cash deposits 165.4 519.0 104.1 306.7 Group short-term deposits have an average maturity of one working day (2022 one working day). Group other deposits have an average maturity of 45 days (2022 78 days). Group other deposits include restricted funds of \u00a321.7 million (2022 \u00a3161.7 million) to settle long-term lease liabilities (note 28) and \u00a3nil (2022 \u00a36.1 million) held in an instant access account under the terms of other loan agreements. Restricted funds are available for access, subject to being replaced by an equivalent valued security. For the purposes of the cash flow statement cash and cash equivalents comprise: Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Cash and cash deposits as above 165.4 519.0 104.1 306.7 Less: deposits with a maturity of three months or more (restricted funds) (21.7) (167.8) \u2013 \u2013 143.7 351.2 104.1 306.7 ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfRestrictedCashAndCashEquivalentsExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-479": {
"value": "25. Cash and cash deposits Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Cash at bank and in hand 69.7 57.3 34.0 6.7 Short-term bank deposits 25.0 50.0 25.0 50.0 Other deposits 70.7 411.7 45.1 250.0 Total cash and cash deposits 165.4 519.0 104.1 306.7 Group short-term deposits have an average maturity of one working day (2022 one working day). Group other deposits have an average maturity of 45 days (2022 78 days). Group other deposits include restricted funds of \u00a321.7 million (2022 \u00a3161.7 million) to settle long-term lease liabilities (note 28) and \u00a3nil (2022 \u00a36.1 million) held in an instant access account under the terms of other loan agreements. Restricted funds are available for access, subject to being replaced by an equivalent valued security. For the purposes of the cash flow statement cash and cash equivalents comprise: Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Cash and cash deposits as above 165.4 519.0 104.1 306.7 Less: deposits with a maturity of three months or more (restricted funds) (21.7) (167.8) \u2013 \u2013 143.7 351.2 104.1 306.7 ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-560": {
"value": "26. Trade and other payables \u2013 current Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Trade payables 150.7 107.5 2.0 0.7 Contract liabilities 3.7 3.3 \u2013 \u2013 Other tax and social security 3.4 4.3 0.4 0.8 Accruals 44.3 29.5 2.3 2.1 Other payables 23.3 25.1 1.6 2.0 Amounts owed to joint venture \u2013 1.8 \u2013 \u2013 225.4 171.5 6.3 5.6 The Directors consider that the carrying amount of trade and other payables approximates to their fair value. 26. Trade and other payables \u2013 current continued The movement in the contract liabilities was: Contract liabilities Group 2023 \u00a3m 2022 \u00a3m At 1 April 140.5 130.3 Revenue recognised in the year (6.4) (2.0) Consideration received in advance of completion of performance obligations 24.9 12.2 At 31 March 159.0 140.5 The analysis of contract liabilities between current and non-current is: Group 2023 \u00a3m 2022 \u00a3m Current 3.7 3.3 Non-current (note 29) 155.3 137.2 159.0 140.5 Performance obligations related to the current contract liabilities balance above are expected to be satisfied, and revenue will be recognised, within the financial year ended 31 March 2024. 29. Other non-current liabilities Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Amounts owed to subsidiary undertakings \u2013 \u2013 8.5 8.6 Contract liabilities 155.3 137.2 \u2013 \u2013 155.3 137.2 8.5 8.6 Non-current contract liabilities relate to consideration received in advance of the Group performing its performance obligations to customers where performance obligations will not be completed within 12 months of the balance sheet date. The overall movement in total contract liabilities is disclosed in note 26. Contract liabilities reflect the fair value of assets transferred from customers in the water segment. The majority of the contract liabilities included above are expected to unwind after five years. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfDeferredIncomeExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-555": {
"value": "26. Trade and other payables \u2013 current Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Trade payables 150.7 107.5 2.0 0.7 Contract liabilities 3.7 3.3 \u2013 \u2013 Other tax and social security 3.4 4.3 0.4 0.8 Accruals 44.3 29.5 2.3 2.1 Other payables 23.3 25.1 1.6 2.0 Amounts owed to joint venture \u2013 1.8 \u2013 \u2013 225.4 171.5 6.3 5.6 The Directors consider that the carrying amount of trade and other payables approximates to their fair value. 26. Trade and other payables \u2013 current continued The movement in the contract liabilities was: Contract liabilities Group 2023 \u00a3m 2022 \u00a3m At 1 April 140.5 130.3 Revenue recognised in the year (6.4) (2.0) Consideration received in advance of completion of performance obligations 24.9 12.2 At 31 March 159.0 140.5 The analysis of contract liabilities between current and non-current is: Group 2023 \u00a3m 2022 \u00a3m Current 3.7 3.3 Non-current (note 29) 155.3 137.2 159.0 140.5 Performance obligations related to the current contract liabilities balance above are expected to be satisfied, and revenue will be recognised, within the financial year ended 31 March 2024. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfOtherCurrentLiabilitiesExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-547": {
"value": "26. Trade and other payables \u2013 current Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Trade payables 150.7 107.5 2.0 0.7 Contract liabilities 3.7 3.3 \u2013 \u2013 Other tax and social security 3.4 4.3 0.4 0.8 Accruals 44.3 29.5 2.3 2.1 Other payables 23.3 25.1 1.6 2.0 Amounts owed to joint venture \u2013 1.8 \u2013 \u2013 225.4 171.5 6.3 5.6 The Directors consider that the carrying amount of trade and other payables approximates to their fair value. 26. Trade and other payables \u2013 current continued The movement in the contract liabilities was: Contract liabilities Group 2023 \u00a3m 2022 \u00a3m At 1 April 140.5 130.3 Revenue recognised in the year (6.4) (2.0) Consideration received in advance of completion of performance obligations 24.9 12.2 At 31 March 159.0 140.5 The analysis of contract liabilities between current and non-current is: Group 2023 \u00a3m 2022 \u00a3m Current 3.7 3.3 Non-current (note 29) 155.3 137.2 159.0 140.5 Performance obligations related to the current contract liabilities balance above are expected to be satisfied, and revenue will be recognised, within the financial year ended 31 March 2024. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfOtherLiabilitiesExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-526": {
"value": "26. Trade and other payables \u2013 current Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Trade payables 150.7 107.5 2.0 0.7 Contract liabilities 3.7 3.3 \u2013 \u2013 Other tax and social security 3.4 4.3 0.4 0.8 Accruals 44.3 29.5 2.3 2.1 Other payables 23.3 25.1 1.6 2.0 Amounts owed to joint venture \u2013 1.8 \u2013 \u2013 225.4 171.5 6.3 5.6 The Directors consider that the carrying amount of trade and other payables approximates to their fair value. 26. Trade and other payables \u2013 current continued The movement in the contract liabilities was: Contract liabilities Group 2023 \u00a3m 2022 \u00a3m At 1 April 140.5 130.3 Revenue recognised in the year (6.4) (2.0) Consideration received in advance of completion of performance obligations 24.9 12.2 At 31 March 159.0 140.5 The analysis of contract liabilities between current and non-current is: Group 2023 \u00a3m 2022 \u00a3m Current 3.7 3.3 Non-current (note 29) 155.3 137.2 159.0 140.5 Performance obligations related to the current contract liabilities balance above are expected to be satisfied, and revenue will be recognised, within the financial year ended 31 March 2024. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfAccruedExpensesAndOtherLiabilitiesExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-480": {
"value": "26. Trade and other payables \u2013 current Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Trade payables 150.7 107.5 2.0 0.7 Contract liabilities 3.7 3.3 \u2013 \u2013 Other tax and social security 3.4 4.3 0.4 0.8 Accruals 44.3 29.5 2.3 2.1 Other payables 23.3 25.1 1.6 2.0 Amounts owed to joint venture \u2013 1.8 \u2013 \u2013 225.4 171.5 6.3 5.6 The Directors consider that the carrying amount of trade and other payables approximates to their fair value. 26. Trade and other payables \u2013 current continued The movement in the contract liabilities was: Contract liabilities Group 2023 \u00a3m 2022 \u00a3m At 1 April 140.5 130.3 Revenue recognised in the year (6.4) (2.0) Consideration received in advance of completion of performance obligations 24.9 12.2 At 31 March 159.0 140.5 The analysis of contract liabilities between current and non-current is: Group 2023 \u00a3m 2022 \u00a3m Current 3.7 3.3 Non-current (note 29) 155.3 137.2 159.0 140.5 Performance obligations related to the current contract liabilities balance above are expected to be satisfied, and revenue will be recognised, within the financial year ended 31 March 2024. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfTradeAndOtherPayablesExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-481": {
"value": "27. Current tax assets/(liabilities) Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Current year debtor / (creditor) 3.1 2.8 (0.2) (0.2) Prior year tax items 5.3 (1.3) (3.2) (3.2) 8.4 1.5 (3.4) (3.4) ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfTaxReceivablesAndPayablesExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-482": {
"value": "28. Borrowings Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Current Bank and other loans 92.7 40.0 \u2013 \u2013 Private placements \u2013 30.0 \u2013 30.0 Amounts owed to subsidiary undertakings \u2013 \u2013 279.1 282.8 92.7 70.0 279.1 312.8 Leases 32.0 170.2 \u2013 \u2013 Total current borrowings 124.7 240.2 279.1 312.8 Non-current Bank and other loans 697.0 641.9 49.8 49.9 Private placements 305.3 279.3 105.9 104.6 Fixed rate bonds 214.6 213.2 \u2013 \u2013 RPI index-linked bonds 744.0 773.0 \u2013 \u2013 Listed preference shares 12.5 12.5 \u2013 \u2013 1,973.4 1,919.9 155.7 154.5 Leases 1,032.7 1,041.8 \u2013 \u2013 Total non-current borrowings 3,006.1 2,961.7 155.7 154.5 Total borrowings 3,130.8 3,201.9 434.8 467.3 South West Water Finance Plc issued a \u00a3150 million fixed rate bond in July 2010 maturing in 2040 with a cash coupon of 5.875%. South West Water Finance Plc issued a \u00a3200 million RPI index-linked bond in July 2008 maturing in 2057 with a cash coupon of 1.99%. Bournemouth Water Limited issued a \u00a365 million RPI index-linked bond in April 2005 maturing in 2033 with a cash coupon of 3.084%. This instrument was transferred to South West Water Limited in April 2017. Prior to acquisition by Pennon, Bristol Water Plc issued RPI index-linked bonds totalling \u00a391 million maturing in 2032 with a cash coupon of 3.635%. In November 2022 Bristol Water plc redeemed \u00a340m of bonds due to be repaid in March 2041 at a value of \u00a372.3 million. The Group carrying value of the bonds at redemption was \u00a391.7 million and costs were incurred of \u00a31.0m, resulting in a net gain on settlement of \u00a318.4 million. Fair value adjustments of \u00a3124 million (2022 \u00a3169 million) in relation to the acquisition of Bournemouth Water Limited and Bristol Water Plc have been allocated to the instruments to which they relate. 28. Borrowings continued The listed preference shares were issued by Bristol Water Plc at \u00a31 in 1992. They are held by external shareholders and are listed on the London Stock Exchange. Shareholders are entitled to receive dividends at 8.75% per annum on the par value of the shares on a cumulative basis; these dividends are payable half yearly on 1 April and 1 October. On winding up, the preference shareholders rank ahead of Bristol Water ordinary shareholders and are entitled to receive \u00a31 per share and any dividends accrued but unpaid in respect of their shares. In the event that dividends on the preference shares are in arrears for six months or more, holders of the preference shares become entitled to vote at general meetings of members. The authorised preference share capital consists of 14,000,000 8.75% irredeemable cumulative preference shares of \u00a31 each. The preference shares are classified as liabilities in the consolidated balance sheet of the Group and the related dividends are classified as finance costs. The fair values of borrowings, are valued using level 2 measures, unless otherwise stated below, (as set out in note 23) were: 2023 2022 Book value \u00a3m Fair value \u00a3m Book value \u00a3m Fair value \u00a3m Group Bank and other loans 92.7 92.7 40.0 40.0 Private placement \u2013 \u2013 30.0 30.0 92.7 92.7 70.0 70.0 Leases 32.0 \u2013 170.2 \u2013 Total current borrowings 124.7 92.7 240.2 70.0 Group Bank and other loans 697.0 684.1 641.9 650.5 Private placements 305.3 288.2 279.3 272.0 Fixed rate bonds (level 1) 135.8 137.8 135.3 181.5 Fixed rate bonds 78.8 66.8 77.9 75.2 RPI index-linked bond 744.0 614.5 773.0 885.9 Listed preference shares 12.5 21.5 12.5 24.9 1,973.4 1,812.9 1,919.9 2,090.0 Leases 1,032.7 \u2013 1,041.8 \u2013 Total non-current borrowings 3,006.1 1,812.9 2,961.7 2,090.0 Total borrowings 3,130.8 1,905.6 3,201.9 2,160.0 Company Private placements \u2013 \u2013 30.0 30.0 Amounts owed to subsidiary undertakings 279.1 279.1 282.8 282.8 Total current borrowings 279.1 279.1 312.8 312.8 Bank and other loans 49.8 50.4 49.9 51.8 Private placements 105.9 105.7 104.6 105.1 Total non-current borrowings 155.7 156.1 154.5 156.9 Total borrowings 434.8 435.2 467.3 469.7 Under IFRS 16 the disclosure of the fair value of leases is not required. Where market values are not available, fair values of borrowings have been calculated by discounting expected future cash flows at prevailing interest rates. During the year, as part of its ongoing programme to renew and raise new financing, the Group entered into \u00a3200 million of new terms loans and leasing facility arrangements, with an average maturity of 9 years, a \u00a325 million private placement and \u00a3195 million of new and renewed revolving credit facilities. The maturity of non-current borrowings, excluding leases, was: Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Between 1 and 2 years 64.4 101.4 8.7 \u2013 Over 2 years and less than 5 years 364.2 221.0 147.0 75.1 Over 5 years 1,544.8 1,597.5 \u2013 79.4 1,973.4 1,919.9 155.7 154.5 The weighted average maturity of non-current borrowings, excluding leases, was 13.2 years (2022 14.2 years). Undrawn committed borrowing facilities at the balance sheet date were: Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Floating rate: Expiring within 1 year 119.8 50.0 80.0 25.0 Expiring after 1 year 135.0 247.0 25.0 80.0 254.8 297.0 105.0 105.0 28. Borrowings continued Information on leases The Group has leases for various assets as shown in note 17. The maturity of lease liabilities was: Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Within 1 year 32.0 170.1 \u2013 \u2013 Over 1 year and less than 5 years 181.7 180.6 \u2013 \u2013 Over 5 years 851.0 861.2 \u2013 \u2013 1,064.7 1,211.9 \u2013 \u2013 Analysed as: Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Current 32.0 170.1 \u2013 \u2013 Non-current 1,032.7 1,041.8 \u2013 \u2013 1,064.7 1,211.9 \u2013 \u2013 For the purposes of calculating debt or borrowings under the Group\u2019s financing agreements, all of which were negotiated under IFRS prior to the implementation of IFRS 16, borrowings that were previously categorised as operating leases under IAS 17 are excluded from the definition of debt. As at 31 March 2023 the carrying value of leases previously categorised as IAS 17 operating leases was \u00a337.3 million (2022 \u00a336.9 million). The Group does not face a significant liquidity risk with regard to its lease liabilities. Lease liabilities are monitored within the Group\u2019s treasury function. The discount rate used to calculate the lease liabilities above involves estimation. Where the Group cannot readily determine the rate implicit in the lease the Group uses an estimated incremental borrowing rate (IBR). At 31 March 2023 the range of IBRs used was between 2.6% and 3.9% (2022 between 2.6% and 3.9%) and the weighted average IBR across all leases was 3.3% (2021 3.8%). If the weighted average rate used increased or decreased by 10bps, this would result in a c.1.1% increase or reduction in the present value of lease liabilities recognised at 31 March 2023 (2022 c.1.1%). The period for repayment of certain leases includes an agreement to deposit with the lessor group amounts equal to the difference between the original and revised payments due. The accumulated deposits, \u00a321.6 million at 31 March 2023 (2022 \u00a3161.7 million), are currently being held to settle the lease liability\u202fsubject to rights to release by negotiation with the lessor. The deposits are subject to a registered charge given as security to the lessor for the balance outstanding. Cash outflows in respect of leasing relate to principal repayments of \u00a3120.3 million (2022 \u00a3231.4 million) and interest repayments of \u00a3100.5 million (2022 \u00a317.2 million), in addition to inflows from lease financing arrangements of \u00a340.2 million (2022 \u00a315.0 million). Other information required to be disclosed under IFRS 16 is included in note 17. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfBorrowingsExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-527": {
"value": "28. Borrowings Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Current Bank and other loans 92.7 40.0 \u2013 \u2013 Private placements \u2013 30.0 \u2013 30.0 Amounts owed to subsidiary undertakings \u2013 \u2013 279.1 282.8 92.7 70.0 279.1 312.8 Leases 32.0 170.2 \u2013 \u2013 Total current borrowings 124.7 240.2 279.1 312.8 Non-current Bank and other loans 697.0 641.9 49.8 49.9 Private placements 305.3 279.3 105.9 104.6 Fixed rate bonds 214.6 213.2 \u2013 \u2013 RPI index-linked bonds 744.0 773.0 \u2013 \u2013 Listed preference shares 12.5 12.5 \u2013 \u2013 1,973.4 1,919.9 155.7 154.5 Leases 1,032.7 1,041.8 \u2013 \u2013 Total non-current borrowings 3,006.1 2,961.7 155.7 154.5 Total borrowings 3,130.8 3,201.9 434.8 467.3 South West Water Finance Plc issued a \u00a3150 million fixed rate bond in July 2010 maturing in 2040 with a cash coupon of 5.875%. South West Water Finance Plc issued a \u00a3200 million RPI index-linked bond in July 2008 maturing in 2057 with a cash coupon of 1.99%. Bournemouth Water Limited issued a \u00a365 million RPI index-linked bond in April 2005 maturing in 2033 with a cash coupon of 3.084%. This instrument was transferred to South West Water Limited in April 2017. Prior to acquisition by Pennon, Bristol Water Plc issued RPI index-linked bonds totalling \u00a391 million maturing in 2032 with a cash coupon of 3.635%. In November 2022 Bristol Water plc redeemed \u00a340m of bonds due to be repaid in March 2041 at a value of \u00a372.3 million. The Group carrying value of the bonds at redemption was \u00a391.7 million and costs were incurred of \u00a31.0m, resulting in a net gain on settlement of \u00a318.4 million. Fair value adjustments of \u00a3124 million (2022 \u00a3169 million) in relation to the acquisition of Bournemouth Water Limited and Bristol Water Plc have been allocated to the instruments to which they relate. 28. Borrowings continued The listed preference shares were issued by Bristol Water Plc at \u00a31 in 1992. They are held by external shareholders and are listed on the London Stock Exchange. Shareholders are entitled to receive dividends at 8.75% per annum on the par value of the shares on a cumulative basis; these dividends are payable half yearly on 1 April and 1 October. On winding up, the preference shareholders rank ahead of Bristol Water ordinary shareholders and are entitled to receive \u00a31 per share and any dividends accrued but unpaid in respect of their shares. In the event that dividends on the preference shares are in arrears for six months or more, holders of the preference shares become entitled to vote at general meetings of members. The authorised preference share capital consists of 14,000,000 8.75% irredeemable cumulative preference shares of \u00a31 each. The preference shares are classified as liabilities in the consolidated balance sheet of the Group and the related dividends are classified as finance costs. The fair values of borrowings, are valued using level 2 measures, unless otherwise stated below, (as set out in note 23) were: 2023 2022 Book value \u00a3m Fair value \u00a3m Book value \u00a3m Fair value \u00a3m Group Bank and other loans 92.7 92.7 40.0 40.0 Private placement \u2013 \u2013 30.0 30.0 92.7 92.7 70.0 70.0 Leases 32.0 \u2013 170.2 \u2013 Total current borrowings 124.7 92.7 240.2 70.0 Group Bank and other loans 697.0 684.1 641.9 650.5 Private placements 305.3 288.2 279.3 272.0 Fixed rate bonds (level 1) 135.8 137.8 135.3 181.5 Fixed rate bonds 78.8 66.8 77.9 75.2 RPI index-linked bond 744.0 614.5 773.0 885.9 Listed preference shares 12.5 21.5 12.5 24.9 1,973.4 1,812.9 1,919.9 2,090.0 Leases 1,032.7 \u2013 1,041.8 \u2013 Total non-current borrowings 3,006.1 1,812.9 2,961.7 2,090.0 Total borrowings 3,130.8 1,905.6 3,201.9 2,160.0 Company Private placements \u2013 \u2013 30.0 30.0 Amounts owed to subsidiary undertakings 279.1 279.1 282.8 282.8 Total current borrowings 279.1 279.1 312.8 312.8 Bank and other loans 49.8 50.4 49.9 51.8 Private placements 105.9 105.7 104.6 105.1 Total non-current borrowings 155.7 156.1 154.5 156.9 Total borrowings 434.8 435.2 467.3 469.7 Under IFRS 16 the disclosure of the fair value of leases is not required. Where market values are not available, fair values of borrowings have been calculated by discounting expected future cash flows at prevailing interest rates. During the year, as part of its ongoing programme to renew and raise new financing, the Group entered into \u00a3200 million of new terms loans and leasing facility arrangements, with an average maturity of 9 years, a \u00a325 million private placement and \u00a3195 million of new and renewed revolving credit facilities. The maturity of non-current borrowings, excluding leases, was: Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Between 1 and 2 years 64.4 101.4 8.7 \u2013 Over 2 years and less than 5 years 364.2 221.0 147.0 75.1 Over 5 years 1,544.8 1,597.5 \u2013 79.4 1,973.4 1,919.9 155.7 154.5 The weighted average maturity of non-current borrowings, excluding leases, was 13.2 years (2022 14.2 years). Undrawn committed borrowing facilities at the balance sheet date were: Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Floating rate: Expiring within 1 year 119.8 50.0 80.0 25.0 Expiring after 1 year 135.0 247.0 25.0 80.0 254.8 297.0 105.0 105.0 28. Borrowings continued Information on leases The Group has leases for various assets as shown in note 17. The maturity of lease liabilities was: Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Within 1 year 32.0 170.1 \u2013 \u2013 Over 1 year and less than 5 years 181.7 180.6 \u2013 \u2013 Over 5 years 851.0 861.2 \u2013 \u2013 1,064.7 1,211.9 \u2013 \u2013 Analysed as: Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Current 32.0 170.1 \u2013 \u2013 Non-current 1,032.7 1,041.8 \u2013 \u2013 1,064.7 1,211.9 \u2013 \u2013 For the purposes of calculating debt or borrowings under the Group\u2019s financing agreements, all of which were negotiated under IFRS prior to the implementation of IFRS 16, borrowings that were previously categorised as operating leases under IAS 17 are excluded from the definition of debt. As at 31 March 2023 the carrying value of leases previously categorised as IAS 17 operating leases was \u00a337.3 million (2022 \u00a336.9 million). The Group does not face a significant liquidity risk with regard to its lease liabilities. Lease liabilities are monitored within the Group\u2019s treasury function. The discount rate used to calculate the lease liabilities above involves estimation. Where the Group cannot readily determine the rate implicit in the lease the Group uses an estimated incremental borrowing rate (IBR). At 31 March 2023 the range of IBRs used was between 2.6% and 3.9% (2022 between 2.6% and 3.9%) and the weighted average IBR across all leases was 3.3% (2021 3.8%). If the weighted average rate used increased or decreased by 10bps, this would result in a c.1.1% increase or reduction in the present value of lease liabilities recognised at 31 March 2023 (2022 c.1.1%). The period for repayment of certain leases includes an agreement to deposit with the lessor group amounts equal to the difference between the original and revised payments due. The accumulated deposits, \u00a321.6 million at 31 March 2023 (2022 \u00a3161.7 million), are currently being held to settle the lease liability\u202fsubject to rights to release by negotiation with the lessor. The deposits are subject to a registered charge given as security to the lessor for the balance outstanding. Cash outflows in respect of leasing relate to principal repayments of \u00a3120.3 million (2022 \u00a3231.4 million) and interest repayments of \u00a3100.5 million (2022 \u00a317.2 million), in addition to inflows from lease financing arrangements of \u00a340.2 million (2022 \u00a315.0 million). Other information required to be disclosed under IFRS 16 is included in note 17. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfDebtSecuritiesExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-548": {
"value": "28. Borrowings Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Current Bank and other loans 92.7 40.0 \u2013 \u2013 Private placements \u2013 30.0 \u2013 30.0 Amounts owed to subsidiary undertakings \u2013 \u2013 279.1 282.8 92.7 70.0 279.1 312.8 Leases 32.0 170.2 \u2013 \u2013 Total current borrowings 124.7 240.2 279.1 312.8 Non-current Bank and other loans 697.0 641.9 49.8 49.9 Private placements 305.3 279.3 105.9 104.6 Fixed rate bonds 214.6 213.2 \u2013 \u2013 RPI index-linked bonds 744.0 773.0 \u2013 \u2013 Listed preference shares 12.5 12.5 \u2013 \u2013 1,973.4 1,919.9 155.7 154.5 Leases 1,032.7 1,041.8 \u2013 \u2013 Total non-current borrowings 3,006.1 2,961.7 155.7 154.5 Total borrowings 3,130.8 3,201.9 434.8 467.3 South West Water Finance Plc issued a \u00a3150 million fixed rate bond in July 2010 maturing in 2040 with a cash coupon of 5.875%. South West Water Finance Plc issued a \u00a3200 million RPI index-linked bond in July 2008 maturing in 2057 with a cash coupon of 1.99%. Bournemouth Water Limited issued a \u00a365 million RPI index-linked bond in April 2005 maturing in 2033 with a cash coupon of 3.084%. This instrument was transferred to South West Water Limited in April 2017. Prior to acquisition by Pennon, Bristol Water Plc issued RPI index-linked bonds totalling \u00a391 million maturing in 2032 with a cash coupon of 3.635%. In November 2022 Bristol Water plc redeemed \u00a340m of bonds due to be repaid in March 2041 at a value of \u00a372.3 million. The Group carrying value of the bonds at redemption was \u00a391.7 million and costs were incurred of \u00a31.0m, resulting in a net gain on settlement of \u00a318.4 million. Fair value adjustments of \u00a3124 million (2022 \u00a3169 million) in relation to the acquisition of Bournemouth Water Limited and Bristol Water Plc have been allocated to the instruments to which they relate. 28. Borrowings continued The listed preference shares were issued by Bristol Water Plc at \u00a31 in 1992. They are held by external shareholders and are listed on the London Stock Exchange. Shareholders are entitled to receive dividends at 8.75% per annum on the par value of the shares on a cumulative basis; these dividends are payable half yearly on 1 April and 1 October. On winding up, the preference shareholders rank ahead of Bristol Water ordinary shareholders and are entitled to receive \u00a31 per share and any dividends accrued but unpaid in respect of their shares. In the event that dividends on the preference shares are in arrears for six months or more, holders of the preference shares become entitled to vote at general meetings of members. The authorised preference share capital consists of 14,000,000 8.75% irredeemable cumulative preference shares of \u00a31 each. The preference shares are classified as liabilities in the consolidated balance sheet of the Group and the related dividends are classified as finance costs. The fair values of borrowings, are valued using level 2 measures, unless otherwise stated below, (as set out in note 23) were: 2023 2022 Book value \u00a3m Fair value \u00a3m Book value \u00a3m Fair value \u00a3m Group Bank and other loans 92.7 92.7 40.0 40.0 Private placement \u2013 \u2013 30.0 30.0 92.7 92.7 70.0 70.0 Leases 32.0 \u2013 170.2 \u2013 Total current borrowings 124.7 92.7 240.2 70.0 Group Bank and other loans 697.0 684.1 641.9 650.5 Private placements 305.3 288.2 279.3 272.0 Fixed rate bonds (level 1) 135.8 137.8 135.3 181.5 Fixed rate bonds 78.8 66.8 77.9 75.2 RPI index-linked bond 744.0 614.5 773.0 885.9 Listed preference shares 12.5 21.5 12.5 24.9 1,973.4 1,812.9 1,919.9 2,090.0 Leases 1,032.7 \u2013 1,041.8 \u2013 Total non-current borrowings 3,006.1 1,812.9 2,961.7 2,090.0 Total borrowings 3,130.8 1,905.6 3,201.9 2,160.0 Company Private placements \u2013 \u2013 30.0 30.0 Amounts owed to subsidiary undertakings 279.1 279.1 282.8 282.8 Total current borrowings 279.1 279.1 312.8 312.8 Bank and other loans 49.8 50.4 49.9 51.8 Private placements 105.9 105.7 104.6 105.1 Total non-current borrowings 155.7 156.1 154.5 156.9 Total borrowings 434.8 435.2 467.3 469.7 Under IFRS 16 the disclosure of the fair value of leases is not required. Where market values are not available, fair values of borrowings have been calculated by discounting expected future cash flows at prevailing interest rates. During the year, as part of its ongoing programme to renew and raise new financing, the Group entered into \u00a3200 million of new terms loans and leasing facility arrangements, with an average maturity of 9 years, a \u00a325 million private placement and \u00a3195 million of new and renewed revolving credit facilities. The maturity of non-current borrowings, excluding leases, was: Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Between 1 and 2 years 64.4 101.4 8.7 \u2013 Over 2 years and less than 5 years 364.2 221.0 147.0 75.1 Over 5 years 1,544.8 1,597.5 \u2013 79.4 1,973.4 1,919.9 155.7 154.5 The weighted average maturity of non-current borrowings, excluding leases, was 13.2 years (2022 14.2 years). Undrawn committed borrowing facilities at the balance sheet date were: Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Floating rate: Expiring within 1 year 119.8 50.0 80.0 25.0 Expiring after 1 year 135.0 247.0 25.0 80.0 254.8 297.0 105.0 105.0 28. Borrowings continued Information on leases The Group has leases for various assets as shown in note 17. The maturity of lease liabilities was: Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Within 1 year 32.0 170.1 \u2013 \u2013 Over 1 year and less than 5 years 181.7 180.6 \u2013 \u2013 Over 5 years 851.0 861.2 \u2013 \u2013 1,064.7 1,211.9 \u2013 \u2013 Analysed as: Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Current 32.0 170.1 \u2013 \u2013 Non-current 1,032.7 1,041.8 \u2013 \u2013 1,064.7 1,211.9 \u2013 \u2013 For the purposes of calculating debt or borrowings under the Group\u2019s financing agreements, all of which were negotiated under IFRS prior to the implementation of IFRS 16, borrowings that were previously categorised as operating leases under IAS 17 are excluded from the definition of debt. As at 31 March 2023 the carrying value of leases previously categorised as IAS 17 operating leases was \u00a337.3 million (2022 \u00a336.9 million). The Group does not face a significant liquidity risk with regard to its lease liabilities. Lease liabilities are monitored within the Group\u2019s treasury function. The discount rate used to calculate the lease liabilities above involves estimation. Where the Group cannot readily determine the rate implicit in the lease the Group uses an estimated incremental borrowing rate (IBR). At 31 March 2023 the range of IBRs used was between 2.6% and 3.9% (2022 between 2.6% and 3.9%) and the weighted average IBR across all leases was 3.3% (2021 3.8%). If the weighted average rate used increased or decreased by 10bps, this would result in a c.1.1% increase or reduction in the present value of lease liabilities recognised at 31 March 2023 (2022 c.1.1%). The period for repayment of certain leases includes an agreement to deposit with the lessor group amounts equal to the difference between the original and revised payments due. The accumulated deposits, \u00a321.6 million at 31 March 2023 (2022 \u00a3161.7 million), are currently being held to settle the lease liability\u202fsubject to rights to release by negotiation with the lessor. The deposits are subject to a registered charge given as security to the lessor for the balance outstanding. Cash outflows in respect of leasing relate to principal repayments of \u00a3120.3 million (2022 \u00a3231.4 million) and interest repayments of \u00a3100.5 million (2022 \u00a317.2 million), in addition to inflows from lease financing arrangements of \u00a340.2 million (2022 \u00a315.0 million). Other information required to be disclosed under IFRS 16 is included in note 17. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfLeasesExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-483": {
"value": "29. Other non-current liabilities Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Amounts owed to subsidiary undertakings \u2013 \u2013 8.5 8.6 Contract liabilities 155.3 137.2 \u2013 \u2013 155.3 137.2 8.5 8.6 Non-current contract liabilities relate to consideration received in advance of the Group performing its performance obligations to customers where performance obligations will not be completed within 12 months of the balance sheet date. The overall movement in total contract liabilities is disclosed in note 26. Contract liabilities reflect the fair value of assets transferred from customers in the water segment. The majority of the contract liabilities included above are expected to unwind after five years. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfOtherNoncurrentLiabilitiesExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-484": {
"value": "30. Retirement benefit obligations During the year the Group operated a number of defined benefit pension schemes and also defined contribution schemes. The principal plan within the Group is the Pennon Group Pension Scheme (PGPS), which is a funded defined benefit, final salary pension scheme in the UK. Following the acquisition of Bristol Water, the Group also assumed defined benefit obligations through Bristol Water\u2019s membership of Water Companies Pension Scheme (\u2018WCPS\u2019). The Group\u2019s pension schemes are established under trust law and comply with all relevant UK legislation. The assets of the Group\u2019s pension schemes are held in separate trustee administered funds. The trustees of the funds are required to act in the best interest of the funds\u2019 beneficiaries. The appointment of schemes\u2019 trustees is determined by the schemes\u2019 trust documentation. The Group has a policy for the PGPS that one-half of all trustees, other than the Chair, are nominated by members of the schemes, including pensioners. Bristol Water\u2019s membership of WCPS is through a separate section of that scheme. The assets of the section are held separately from those of the Group and are invested by discretionary fund managers appointed by the trustees of the scheme. The employees in the section ceased to earn additional defined benefit pensions on 31 March 2016. There were no employer contributions to the scheme from that date and from 30 June 2016, with the agreement of the trustees, deficit contributions also ceased. All eligible employees were offered membership of a stakeholder pension scheme. In 2018 the trustees of the Bristol Water section of the WCPS purchased a bulk annuity policy to insure the benefits for members of the section. Following this the method for valuing the liabilities of the pension scheme has remained the same. However, the scheme assets, in the form of the insurance policy, now materially match the value of the liabilities. The process to buy up and wind up the scheme is continuing, including discussions regarding the release of the surplus on completion of this process. PGPS is closed to future accrual. 30. Retirement benefit obligations continued Defined contribution schemes Pension costs for defined contribution schemes were \u00a39.4 million (2022 \u00a37.6 million). Defined benefit schemes Assumptions The principal actuarial assumptions at 31 March were: 2023 % 2022 % Rate of increase in pensionable pay 2.7 3.0 Rate of increase for current and future pensions 2.8 3.1 Rate used to discount schemes\u2019 liabilities and expected return on schemes\u2019 assets 4.7 2.8 Inflation 3.3 3.6 Mortality Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statistics and experience. The mortality assumption uses a scheme-specific calculation based on CMI 2019 actuarial tables with an allowance for future longevity improvement. The average life expectancy in years of a member having retired at age 62 on the balance sheet date is projected as: 2023 2022 Male 24.2 24.9 Female 26.7 27.2 The average life expectancy in years of a future pensioner retiring at age 62, 20 years after the balance sheet date, is projected as: 2023 2022 Male 25.6 26.0 Female 28.2 28.3 The sensitivities regarding the principal assumptions used to measure the schemes\u2019 liabilities are: Change in assumption Impact on schemes\u2019 liabilities Rate of increase in current and future pensions +/\u2013 0.5% +/\u2013 4.3% Rate used to discount schemes\u2019 liabilities +/\u2013 0.5% \u2013/+ 6.5% Inflation +/\u2013 0.5% +/\u2013 5.0% Life expectancy +/\u2013 1 year +/\u2013 3.7% The sensitivity analysis shows the effect of changes in the principal assumptions used for the measurement of the pension liability. The method used to calculate the sensitivities is approximate and has been determined taking into account the duration of the liabilities and the overall profile of each scheme\u2019s membership. This is the same approach as has been adopted in previous years. The amounts recognised in the balance sheet were: Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Present value of financial obligations (719.5) (985.9) (139.5) (190.7) Fair value of plan assets 753.2 1,056.5 144.2 203.1 Surplus/(deficit) of funded plans 33.7 70.6 4.7 12.4 Less: restriction of surplus (4.4) (4.3) \u2013 \u2013 Net asset/(liability) recognised in the balance sheet 29.3 66.3 4.7 12.4 30. Retirement benefit obligations continued The movement in the net defined benefit obligation over the accounting period is as follows: 2023 2022 Present value of obligation \u00a3m Fair value of plan assets \u00a3m Total \u00a3m Present value of obligation \u00a3m Fair value of plan assets \u00a3m Total \u00a3m At 1 April (985.9) 1,052.2 66.3 (901.7) 910.5 8.8 Acquisition Bristol Water Group \u2013 \u2013 \u2013 (175.4) 183.2 7.8 Current service cost (1.0) (0.6) (1.6) (2.9) (0.6) (3.5) Past service cost, curtailments and gains/losses on settlements \u2013 \u2013 \u2013 (0.1) \u2013 (0.1) Interest (expense)/income (26.5) 28.5 2.0 (20.8) 21.4 0.6 (27.5) 27.9 0.4 (23.8) 20.8 (3.0) Remeasurements: Loss on plan assets excluding amounts included in interest expense \u2013 (288.7) (288.7) \u2013 (33.1) (33.1) Gain/(loss) from change in demographic assumptions 9.7 \u2013 9.7 (0.7) \u2013 (0.7) Gain from change in financial assumptions 266.0 \u2013 266.0 80.4 \u2013 80.4 Experience (losses)/gains (25.9) (0.1) (26.0) (22.2) 0.5 (21.7) 249.8 (288.8) (39.0) 57.5 (32.6) 24.9 Contributions: Employers \u2013 1.6 1.6 \u2013 27.8 27.8 Payments from plans: \u2013 \u2013 \u2013 Benefit payments 44.1 (44.1) \u2013 57.5 (57.5) \u2013 44.1 (42.5) 1.6 57.5 (29.7) 27.8 At 31 March (719.5) 748.8 29.3 (985.9) 1,052.2 66.3 Recognition of surplus on principal pension scheme In accordance with IAS 19 \u2018Employee Benefits\u2019 the value of the net pension scheme surplus that can be recognised in the statement of financial position is restricted to the present value of economic benefits available in the form of refunds from the scheme or reductions in future contributions. In respect of the Group\u2019s principal pension scheme, PGPS, the surplus has been recognised as the Group believes that ultimately it has an unconditional right to a refund of any surplus assuming the full settlement of the plan\u2019s liabilities in a single event, such as a scheme wind up. Bristol Water The Group believes that it has an unconditional right to a refund of surplus and that the gross pension surplus can be recognised. This benefit is only available as a refund as no additional defined pension benefits are being earned. Under UK tax legislation a tax deduction of 35% is applied to a refund from a UK pension scheme, before it is passed to the employer. This tax deduction has been applied to restrict the value of the surplus recognised for this scheme. The movement in the Company\u2019s net defined benefit obligation over the accounting period is as follows: 2023 2022 Present value of obligation \u00a3m Fair value of plan assets \u00a3m Total \u00a3m Present value of obligation \u00a3m Fair value of plan assets \u00a3m Total \u00a3m At 1 April (190.7) 203.1 12.4 (205.7) 200.2 (5.5) Current service cost (0.4) \u2013 (0.4) (0.4) \u2013 (0.4) Past service cost and gains and losses on settlements \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 Interest (expense)/income (5.2) 5.6 0.4 (4.2) 4.2 \u2013 (5.6) 5.6 \u2013 (4.6) 4.2 (0.4) Remeasurements: Loss on plan assets excluding amounts included in interest expense \u2013 (56.4) (56.4) \u2013 (13.7) (13.7) Loss from change in demographic assumptions 2.0 \u2013 2.0 \u2013 \u2013 \u2013 Gain/(loss) from change in financial assumptions 52.6 \u2013 52.6 12.3 \u2013 12.3 Experience losses (6.2) \u2013 (6.2) (4.6) \u2013 (4.6) 48.4 (56.4) (8.0) 7.7 (13.7) (6.0) Contributions: Employers \u2013 0.3 0.3 \u2013 24.3 24.3 Payments from plans: Benefit payments 8.4 (8.4) \u2013 11.9 (11.9) \u2013 8.4 (8.1) 0.3 11.9 12.4 24.3 At 31 March (139.5) 144.2 4.7 (190.7) 203.1 12.4 30. Retirement benefit obligations continued The schemes\u2019 assets relating to the Group were: 2023 2022 Quoted prices in active market \u00a3m Prices not quoted in active market \u00a3m Fund % Quoted prices in active market \u00a3m Prices not quoted in active market \u00a3m Fund % Equities 124.3 \u2013 17 219.0 \u2013 21 Government bonds 14.4 \u2013 2 96.1 \u2013 9 Other bonds 175.8 72.1 33 270.1 79.3 33 Diversified growth 43.9 \u2013 6 67.8 \u2013 6 Property/Infrastructure 19.0 22.4 5 69.6 11.4 8 Insurance linked security 41.2 107.0 20 78.2 147.8 22 LDI investments 109.2 \u2013 14 \u2013 \u2013 \u2013 Other (including cash funds) 6.3 13.2 3 3.9 9.0 1 534.1 214.7 100 804.7 247.5 100 The Company\u2019s share of the schemes\u2019 assets at the balance sheet date was: 2023 2022 Quoted prices in active market \u00a3m Prices not quoted in active market \u00a3m Fund % Quoted prices in active market \u00a3m Prices not quoted in active market \u00a3m Fund % Equities 28.5 \u2013 20 49.7 \u2013 24 Government bonds 3.3 \u2013 2 21.8 \u2013 11 Other bonds 40.3 16.5 39 61.3 18.0 39 Diversified growth 10.1 \u2013 7 15.4 \u2013 8 Property/Infrastructure 4.4 5.2 7 15.8 2.6 9 Insurance linked security 9.5 \u2013 7 17.7 \u2013 9 LDI investments 25.1 \u2013 17 \u2013 \u2013 \u2013 Other 1.4 \u2013 1 0.8 \u2013 \u2013 122.6 21.7 100 182.5 20.6 100 Through its defined benefit pension plan, the Group is exposed to a number of risks, the most significant of which are detailed below: Asset volatility The liabilities are calculated using a discount rate set with reference to corporate bond yields; if assets underperform this yield, this will create a deficit. The schemes hold a proportion of growth assets (equities and diversified growth funds) which are expected to outperform corporate bonds in the long term, but can give rise to volatility and risk in the short term. As the funding of the schemes improves, an increasing proportion of the schemes\u2019 assets are invested in less volatile asset classes such as cash and bonds which more closely reflect market movements in the schemes\u2019 liabilities. The allocation to growth assets is monitored such that it is suitable with the schemes\u2019 long- term objectives. Changes in bond yields A decrease in corporate bond yields will increase the schemes\u2019 liabilities, although this will be partially offset by an increase in the value of the schemes\u2019 bond holdings. Inflation risk The majority of the schemes\u2019 benefit obligations are linked to inflation, and higher inflation will lead to higher liabilities (although, in most cases, caps on the level of inflationary increases are in place to protect against extreme inflation). The scheme uses LDIs (\u2018Liability Driven Investment Funds\u2019) within the asset portfolios to hedge against the value of liabilities changing as a result of movements in long-term interest rates and inflation expectations. The structure allows the scheme to both hedge against the risks and retain capital investment in assets that are expected to generate higher returns. Whilst LDIs are an integral part of the hedging strategy, risk management and monitoring strategies are in place to ensure that the collateral requirements to maintain these structures are closely managed. Life expectancy The majority of the schemes\u2019 obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the liabilities. In conjunction with its investment advisers, the trustees have structured the schemes\u2019 investments with the objective of balancing investment returns and levels of risk. The asset allocation for the main scheme has three principal elements: \u2022 Holding of cash funds and bonds which are expected to be less volatile than most other asset classes and reflects market movements in the schemes\u2019 liabilities \u2022 A proportion of equities with fund managers having freedom in making investment decisions to maximise returns, and \u2022 Investment of a proportion of the schemes\u2019 assets in alternative asset classes which give the potential for diversification (currently property, insurance linked securities and diversified growth). The liabilities of the defined benefit schemes are measured by using the projected unit credit method which is an accrued benefits valuation method in which the scheme liabilities make allowance for projected increases in pensionable pay. 30. Retirement benefit obligations continued As funding of our principal pension scheme has improved the investment portfolio has been de-risked through increasing the scheme\u2019s real gilts hedging position through LDIs (Liability Driven Investments), which are commonly used by UK pension schemes. As has been widely reported, the unprecedented increases in gilt yields in late September 2022 resulted in rapid reductions in collateral in LDI arrangements which schemes are required to increase or the hedging structure is unwound. As permitted by the scheme rules and legislation, Pennon approved a temporary loan facility on 28 September 2022 to provide short-term liquidity to the scheme whilst investments were re-balanced. \u00a325 million was provided on this date and this was fully repaid within 6 days. This loan facility remains undrawn and available for use. The future cash flows arising from the payment of the defined benefits are expected to be settled primarily in the period between 15 and 40 years from the balance sheet date. The 2022 triennial actuarial valuation of the principal defined benefit scheme was agreed in 2023 with an actuarial valuation surplus of \u00a38.0 million. No deficit recovery contributions are required as a result of the 2022 valuation. Additional contributions of \u00a31.6 million were paid into the scheme in respect of scheme expenses (2022: \u00a323 million including use of proceeds from the Viridor disposal). The Group monitors funding levels on an annual basis and the Group expects to pay only scheme expenses of around \u00a31.7 million, during the year ended 31 March 2024. The last formal actuarial valuation of the Bristol Water section of the WCPS was at 31 March 2017. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-528": {
"value": "Defined contribution schemes Pension costs for defined contribution schemes were \u00a39.4 million (2022 \u00a37.6 million). ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfDefinedContributionPlansExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-529": {
"value": "Defined benefit schemes Assumptions The principal actuarial assumptions at 31 March were: 2023 % 2022 % Rate of increase in pensionable pay 2.7 3.0 Rate of increase for current and future pensions 2.8 3.1 Rate used to discount schemes\u2019 liabilities and expected return on schemes\u2019 assets 4.7 2.8 Inflation 3.3 3.6 Mortality Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statistics and experience. The mortality assumption uses a scheme-specific calculation based on CMI 2019 actuarial tables with an allowance for future longevity improvement. The average life expectancy in years of a member having retired at age 62 on the balance sheet date is projected as: 2023 2022 Male 24.2 24.9 Female 26.7 27.2 The average life expectancy in years of a future pensioner retiring at age 62, 20 years after the balance sheet date, is projected as: 2023 2022 Male 25.6 26.0 Female 28.2 28.3 The sensitivities regarding the principal assumptions used to measure the schemes\u2019 liabilities are: Change in assumption Impact on schemes\u2019 liabilities Rate of increase in current and future pensions +/\u2013 0.5% +/\u2013 4.3% Rate used to discount schemes\u2019 liabilities +/\u2013 0.5% \u2013/+ 6.5% Inflation +/\u2013 0.5% +/\u2013 5.0% Life expectancy +/\u2013 1 year +/\u2013 3.7% The sensitivity analysis shows the effect of changes in the principal assumptions used for the measurement of the pension liability. The method used to calculate the sensitivities is approximate and has been determined taking into account the duration of the liabilities and the overall profile of each scheme\u2019s membership. This is the same approach as has been adopted in previous years. The amounts recognised in the balance sheet were: Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Present value of financial obligations (719.5) (985.9) (139.5) (190.7) Fair value of plan assets 753.2 1,056.5 144.2 203.1 Surplus/(deficit) of funded plans 33.7 70.6 4.7 12.4 Less: restriction of surplus (4.4) (4.3) \u2013 \u2013 Net asset/(liability) recognised in the balance sheet 29.3 66.3 4.7 12.4 The movement in the net defined benefit obligation over the accounting period is as follows: 2023 2022 Present value of obligation \u00a3m Fair value of plan assets \u00a3m Total \u00a3m Present value of obligation \u00a3m Fair value of plan assets \u00a3m Total \u00a3m At 1 April (985.9) 1,052.2 66.3 (901.7) 910.5 8.8 Acquisition Bristol Water Group \u2013 \u2013 \u2013 (175.4) 183.2 7.8 Current service cost (1.0) (0.6) (1.6) (2.9) (0.6) (3.5) Past service cost, curtailments and gains/losses on settlements \u2013 \u2013 \u2013 (0.1) \u2013 (0.1) Interest (expense)/income (26.5) 28.5 2.0 (20.8) 21.4 0.6 (27.5) 27.9 0.4 (23.8) 20.8 (3.0) Remeasurements: Loss on plan assets excluding amounts included in interest expense \u2013 (288.7) (288.7) \u2013 (33.1) (33.1) Gain/(loss) from change in demographic assumptions 9.7 \u2013 9.7 (0.7) \u2013 (0.7) Gain from change in financial assumptions 266.0 \u2013 266.0 80.4 \u2013 80.4 Experience (losses)/gains (25.9) (0.1) (26.0) (22.2) 0.5 (21.7) 249.8 (288.8) (39.0) 57.5 (32.6) 24.9 Contributions: Employers \u2013 1.6 1.6 \u2013 27.8 27.8 Payments from plans: \u2013 \u2013 \u2013 Benefit payments 44.1 (44.1) \u2013 57.5 (57.5) \u2013 44.1 (42.5) 1.6 57.5 (29.7) 27.8 At 31 March (719.5) 748.8 29.3 (985.9) 1,052.2 66.3 Recognition of surplus on principal pension scheme In accordance with IAS 19 \u2018Employee Benefits\u2019 the value of the net pension scheme surplus that can be recognised in the statement of financial position is restricted to the present value of economic benefits available in the form of refunds from the scheme or reductions in future contributions. In respect of the Group\u2019s principal pension scheme, PGPS, the surplus has been recognised as the Group believes that ultimately it has an unconditional right to a refund of any surplus assuming the full settlement of the plan\u2019s liabilities in a single event, such as a scheme wind up. Bristol Water The Group believes that it has an unconditional right to a refund of surplus and that the gross pension surplus can be recognised. This benefit is only available as a refund as no additional defined pension benefits are being earned. Under UK tax legislation a tax deduction of 35% is applied to a refund from a UK pension scheme, before it is passed to the employer. This tax deduction has been applied to restrict the value of the surplus recognised for this scheme. The movement in the Company\u2019s net defined benefit obligation over the accounting period is as follows: 2023 2022 Present value of obligation \u00a3m Fair value of plan assets \u00a3m Total \u00a3m Present value of obligation \u00a3m Fair value of plan assets \u00a3m Total \u00a3m At 1 April (190.7) 203.1 12.4 (205.7) 200.2 (5.5) Current service cost (0.4) \u2013 (0.4) (0.4) \u2013 (0.4) Past service cost and gains and losses on settlements \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 Interest (expense)/income (5.2) 5.6 0.4 (4.2) 4.2 \u2013 (5.6) 5.6 \u2013 (4.6) 4.2 (0.4) Remeasurements: Loss on plan assets excluding amounts included in interest expense \u2013 (56.4) (56.4) \u2013 (13.7) (13.7) Loss from change in demographic assumptions 2.0 \u2013 2.0 \u2013 \u2013 \u2013 Gain/(loss) from change in financial assumptions 52.6 \u2013 52.6 12.3 \u2013 12.3 Experience losses (6.2) \u2013 (6.2) (4.6) \u2013 (4.6) 48.4 (56.4) (8.0) 7.7 (13.7) (6.0) Contributions: Employers \u2013 0.3 0.3 \u2013 24.3 24.3 Payments from plans: Benefit payments 8.4 (8.4) \u2013 11.9 (11.9) \u2013 8.4 (8.1) 0.3 11.9 12.4 24.3 At 31 March (139.5) 144.2 4.7 (190.7) 203.1 12.4 The schemes\u2019 assets relating to the Group were: 2023 2022 Quoted prices in active market \u00a3m Prices not quoted in active market \u00a3m Fund % Quoted prices in active market \u00a3m Prices not quoted in active market \u00a3m Fund % Equities 124.3 \u2013 17 219.0 \u2013 21 Government bonds 14.4 \u2013 2 96.1 \u2013 9 Other bonds 175.8 72.1 33 270.1 79.3 33 Diversified growth 43.9 \u2013 6 67.8 \u2013 6 Property/Infrastructure 19.0 22.4 5 69.6 11.4 8 Insurance linked security 41.2 107.0 20 78.2 147.8 22 LDI investments 109.2 \u2013 14 \u2013 \u2013 \u2013 Other (including cash funds) 6.3 13.2 3 3.9 9.0 1 534.1 214.7 100 804.7 247.5 100 The Company\u2019s share of the schemes\u2019 assets at the balance sheet date was: 2023 2022 Quoted prices in active market \u00a3m Prices not quoted in active market \u00a3m Fund % Quoted prices in active market \u00a3m Prices not quoted in active market \u00a3m Fund % Equities 28.5 \u2013 20 49.7 \u2013 24 Government bonds 3.3 \u2013 2 21.8 \u2013 11 Other bonds 40.3 16.5 39 61.3 18.0 39 Diversified growth 10.1 \u2013 7 15.4 \u2013 8 Property/Infrastructure 4.4 5.2 7 15.8 2.6 9 Insurance linked security 9.5 \u2013 7 17.7 \u2013 9 LDI investments 25.1 \u2013 17 \u2013 \u2013 \u2013 Other 1.4 \u2013 1 0.8 \u2013 \u2013 122.6 21.7 100 182.5 20.6 100 Through its defined benefit pension plan, the Group is exposed to a number of risks, the most significant of which are detailed below: Asset volatility The liabilities are calculated using a discount rate set with reference to corporate bond yields; if assets underperform this yield, this will create a deficit. The schemes hold a proportion of growth assets (equities and diversified growth funds) which are expected to outperform corporate bonds in the long term, but can give rise to volatility and risk in the short term. As the funding of the schemes improves, an increasing proportion of the schemes\u2019 assets are invested in less volatile asset classes such as cash and bonds which more closely reflect market movements in the schemes\u2019 liabilities. The allocation to growth assets is monitored such that it is suitable with the schemes\u2019 long- term objectives. Changes in bond yields A decrease in corporate bond yields will increase the schemes\u2019 liabilities, although this will be partially offset by an increase in the value of the schemes\u2019 bond holdings. Inflation risk The majority of the schemes\u2019 benefit obligations are linked to inflation, and higher inflation will lead to higher liabilities (although, in most cases, caps on the level of inflationary increases are in place to protect against extreme inflation). The scheme uses LDIs (\u2018Liability Driven Investment Funds\u2019) within the asset portfolios to hedge against the value of liabilities changing as a result of movements in long-term interest rates and inflation expectations. The structure allows the scheme to both hedge against the risks and retain capital investment in assets that are expected to generate higher returns. Whilst LDIs are an integral part of the hedging strategy, risk management and monitoring strategies are in place to ensure that the collateral requirements to maintain these structures are closely managed. Life expectancy The majority of the schemes\u2019 obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the liabilities. In conjunction with its investment advisers, the trustees have structured the schemes\u2019 investments with the objective of balancing investment returns and levels of risk. The asset allocation for the main scheme has three principal elements: \u2022 Holding of cash funds and bonds which are expected to be less volatile than most other asset classes and reflects market movements in the schemes\u2019 liabilities \u2022 A proportion of equities with fund managers having freedom in making investment decisions to maximise returns, and \u2022 Investment of a proportion of the schemes\u2019 assets in alternative asset classes which give the potential for diversification (currently property, insurance linked securities and diversified growth). The liabilities of the defined benefit schemes are measured by using the projected unit credit method which is an accrued benefits valuation method in which the scheme liabilities make allowance for projected increases in pensionable pay. As funding of our principal pension scheme has improved the investment portfolio has been de-risked through increasing the scheme\u2019s real gilts hedging position through LDIs (Liability Driven Investments), which are commonly used by UK pension schemes. As has been widely reported, the unprecedented increases in gilt yields in late September 2022 resulted in rapid reductions in collateral in LDI arrangements which schemes are required to increase or the hedging structure is unwound. As permitted by the scheme rules and legislation, Pennon approved a temporary loan facility on 28 September 2022 to provide short-term liquidity to the scheme whilst investments were re-balanced. \u00a325 million was provided on this date and this was fully repaid within 6 days. This loan facility remains undrawn and available for use. The future cash flows arising from the payment of the defined benefits are expected to be settled primarily in the period between 15 and 40 years from the balance sheet date. The 2022 triennial actuarial valuation of the principal defined benefit scheme was agreed in 2023 with an actuarial valuation surplus of \u00a38.0 million. No deficit recovery contributions are required as a result of the 2022 valuation. Additional contributions of \u00a31.6 million were paid into the scheme in respect of scheme expenses (2022: \u00a323 million including use of proceeds from the Viridor disposal). The Group monitors funding levels on an annual basis and the Group expects to pay only scheme expenses of around \u00a31.7 million, during the year ended 31 March 2024. The last formal actuarial valuation of the Bristol Water section of the WCPS was at 31 March 2017. ",
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"fact-485": {
"value": "31. Deferred tax Deferred tax is provided in full on temporary differences under the liability method using enacted tax rates. Movements on deferred tax were: Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Liabilities/(assets) at 1 April 512.4 259.6 (13.1) (12.5) Acquisition of Bristol Water Group \u2013 140.3 \u2013 \u2013 (Credited)/charged to the income statement (0.9) 8.9 (2.4) 3.1 Charged/(credited) to equity, including impact of change in tax rate (2.0) 4.1 (1.8) (3.5) Other non-underlying charges/(credits) in the income statement (2.5) 99.5 (1.3) (0.2) Liabilities/(assets) at 31 March 507.0 512.4 (18.6) (13.1) An adjustment to the preliminary accounting for the Bristol Water acquisition has been made within the measurement period ending 2 June 2022, this adjustment is presented retrospectively and the 31 March 2022 balance sheet figures for deferred tax have been adjusted accordingly (see note 4). Deferred tax assets have been recognised in respect of all temporary differences giving rise to deferred tax assets because it is probable that these assets will be recovered. The majority of the Group\u2019s deferred tax liability is expected to be recovered over more than one year. The majority of the Company\u2019s deferred tax asset is expected to be recovered over more than one year. All deferred tax assets and liabilities within the same jurisdiction are offset. The movements in deferred tax assets and liabilities were: Group Deferred tax liabilities Derivatives \u00a3m Accelerated tax depreciation \u00a3m Fair value adjustments \u00a3m Short-term liabilities including provisions \u00a3m Retirement benefit obligations \u00a3m Total \u00a3m At 1 April 2021 \u2013 276.3 17.0 \u2013 \u2013 293.3 Acquisition of Bristol Water Group \u2013 92.2 74.3 (12.5) \u2013 154.0 Charged/(credited) to the income statement \u2013 2.6 (0.9) \u2013 \u2013 1.7 Non-underlying charge to the income statement \u2013 88.5 5.3 \u2013 \u2013 93.8 Reclassification from deferred tax assets \u2013 \u2013 \u2013 18.6 9.7 28.3 At 31 March 2022 \u2013 459.6 95.7 6.1 9.7 571.1 Charged/(credited) to the income statement \u2013 13.6 (1.2) (4.6) 3.0 10.8 Non-underlying credit to the income statement \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 Charged/(credited) to equity \u2013 \u2013 \u2013 \u2013 (9.8) (9.8) Reclassification 2.9 \u2013 \u2013 \u2013 \u2013 2.9 At 31 March 2023 2.9 473.2 94.5 1.5 2.9 575.0 31. Deferred tax continued Deferred tax assets Derivatives \u00a3m Share-based payments \u00a3m Tax losses \u00a3m Fair value adjustment \u00a3m Short-term liabilities including provisions \u00a3m Retirement benefit obligations \u00a3m Total \u00a3m At 1 April 2021 (12.0) (1.7) (4.8) (8.3) (0.9) (6.0) (33.7) Charged/(credited) to the income statement 0.5 (0.1) (3.3) 1.9 0.4 7.8 7.2 Acquisition of Bristol Water Group \u2013 \u2013 \u2013 (32.8) 19.1 \u2013 (13.7) Non-underlying charge/(credit) to the income statement 0.3 (0.2) (2.5) (2.2) \u2013 10.3 5.7 (Credited)/charged to equity, including impact on change in tax rate 6.5 \u2013 \u2013 \u2013 \u2013 (2.4) 4.1 Reclassified to deferred tax liabilities \u2013 \u2013 \u2013 \u2013 (18.6) (9.7) (28.3) At 31 March 2022 (4.7) (2.0) (10.6) (41.4) \u2013 \u2013 (58.7) Charged/(credited) to the income statement 0.3 0.5 (14.7) 2.2 \u2013 \u2013 (11.7) Non-underlying charge/(credit) to the income statement \u2013 \u2013 (10.6) 8.1 \u2013 \u2013 (2.5) Reclassification to deferred tax liabilities (2.9) \u2013 \u2013 \u2013 \u2013 \u2013 (2.9) Charged to equity, including impact on change in tax rate 7.3 0.5 \u2013 \u2013 \u2013 \u2013 7.8 At 31 March 2023 \u2013 (1.0) (35.9) (31.1) \u2013 \u2013 (68.0) Net liability At 31 March 2022 512.4 At 31 March 2023 507.0 Company Deferred tax assets Retirement benefit obligations \u00a3m Derivatives \u00a3m Share-based payments \u00a3m Tax losses \u00a3m Total \u00a3m At 1 April 2021 (6.8) \u2013 \u2013 (0.9) (4.8) (12.5) Charged/(credited) to the income statement 6.5 \u2013 \u2013 (0.1) (3.3) 3.1 Non-underlying credit to the income statement 2.5 \u2013 \u2013 (0.2) (2.5) (0.2) Credited to equity, including impact on change in tax rate (3.5) \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 (3.5) At 31 March 2022 (1.3) \u2013 \u2013 (1.2) (10.6) (13.1) Charged/(credited) to the income statement 2.0 \u2013 0.3 (4.7) (2.4) Non-underlying charge/(credit) to the income statement \u2013 \u2013 \u2013 (1.3) (1.3) Charged/(credited) to equity, including impact on change in tax rate (2.0) \u2013 0.2 \u2013 (1.8) At 31 March 2023 (1.3) \u2013 (0.7) (16.6) (18.6) Deferred tax charged/(credited) to equity or other comprehensive income during the year was: Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Remeasurement of defined benefit obligations (9.8) 2.4 (2.0) (3.5) Cash flow hedges 7.3 (6.5) \u2013 \u2013 \u2013 Share-based payments 0.5 \u2013 0.2 \u2013 \u2013 (2.0) (4.1) (1.8) (3.5) Capital allowances are available when a business incurs qualifying expenditure on capital items such as infrastructure assets. Capital allowances provide tax relief on these items in place of accounting depreciation which is not tax deductible. Over the period of ownership of an asset, cumulative depreciation and capital allowances will equalise. Capital allowance rates are set by the UK Government and every business receives the same rate of allowance. Capital allowance rates typically vary from 3% up to 100% in certain instances. In recent years enhanced allowances known as super deductions at 130% have been available on plant and machinery assets acquired after 3 March 2021 together with 50% first year allowances on special rate assets. From 1 April 2023, super deductions will be replaced by full expensing for three years whilst the 50% first year allowance will be maintained for the same period. Given the Group's continuing capital expenditure programme, it is unlikely that the deferred tax liability will crystallise in the near future. The different accounting treatment of property, plant and equipment for tax and accounting purposes means that the taxable income of the Group is not the same as the profit reported in the financial statements. The adjustments for this are reflected in the current tax reconciliation. As explained in note 9, the Government has introduced capital expenditure super-deduction allowance incentives for the two year period to April 2023 which increases the rate of capital allowances to up to 130% for expenditure on qualifying plant and machinery. This provides an increase in current tax relief for the Group with a consequently higher deferred tax liability and charge due to the additional capital allowance deductions and the increase in the rate of corporation tax to 25% from April 2023. 31. Deferred tax continued Short term temporary differences arise on items such as retirement benefit obligations, derivatives and share based payments because the treatment of such items are different for tax and accounting purposes. These differences reverse over future years following that in which they arise, as is reflected in the deferred tax charge in these financial statements. Specifically, retirement benefit obligations will crystallise over the life of the pension scheme and/or the period when spreading applies (this can be up to three years for spreading purposes), whilst share based payments will crystallise over the remaining life of the share schemes which are up to 5 years. Short term liabilities including provisions will typically crystallise in the following year. The fair value liability relates to the revaluation of tangible fixed assets on the acquisition of Bournemouth Water and Bristol Water. The fair value asset relates to the revaluation of debt on the acquisition of Bournemouth Water and Bristol Water. These items will be released over their remaining life which is up to 142 years. Where interest charges or other costs are capitalised in the accounts, tax relief is either given as the charges are incurred or when the costs are taken to the income statement. Derivatives reflect the fair value movements on treasury derivatives, these can fluctuate considerably each year. The balance will crystallise when derivative items are either terminated or mature, the life of these items can be up to ten years. Tax losses relate to trading losses generated in the year and non-trade deficits carried forwards in relation to the UK's corporate interest restriction rules, these are anticipated to be utilised within the next five years. ",
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"value": "32. Provisions Restructuring \u00a3m Total \u00a3m Group At 1 April 2022 1.0 1.0 Utilised (0.6) (0.6) Charged to the income statement \u2013 \u2013 \u2013 \u2013 At 31 March 2023 0.4 0.4 The restructuring provision relates principally to severance costs and will be utilised within one year. ",
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"fact-487": {
"value": "33. Share capital Allotted, called\u2013up and fully paid Number of shares Treasury shares Ordinary shares \u00a3m Group and Company At 1 April 2021 ordinary shares of 40.7p each 8,443 422,120,181 171.8 Share consolidation (2,815) (140,708,916) \u2013 \u2013 For consideration of \u00a33.8 million, shares issued under the Company\u2019s Sharesave Scheme \u2013 \u2013 582,427 0.4 Shares cancelled \u2013 \u2013 (17,146,744) (10.5) At 31 March 2022 ordinary shares of 61.05p each 5,628 264,846,948 161.7 For consideration of \u00a32.3 million, shares issued under the Company\u2019s Sharesave Scheme \u2013 \u2013 379,044 0.2 Shares cancelled \u2013 \u2013 (3,910,503) (2.4) At 31 March 2023 ordinary shares of 61.05p each 5,628 261,315,489 159.5 Shares held as treasury shares may be sold or reissued for any of the Company\u2019s share schemes or cancelled. On 16 July 2021, the Group paid a special dividend of \u00a31.5 billion to shareholders in relation to the return of capital to shareholders announced on 3 June 2021. In order to maintain the comparability of the Company\u2019s share price before and after the special dividend, a share consolidation was approved at the General Meeting held on 28 June 2021. Shareholders received 2 New Ordinary shares of 61.05 pence each for every 3 Existing Ordinary shares of 40.7 pence each. During the prior year, the Group announced and began a process to purchase ordinary shares at an aggregate cost of up to \u00a3400 million by September 2022. During the prior year the Group purchased \u00a3199.6 million of ordinary shares from the market at an average ordinary share price of 1,164 pence. The shares acquired under the tender offer were immediately cancelled, creating a capital redemption reserve of \u00a310.5 million. The maximum number of shares that can be repurchased in connection with the Programme is 42,183,689 (being the maximum authority granted by Pennon's shareholders at Pennon's AGM on 22 July 2021). During the year ended 31 March 2023, the Group purchased a further \u00a339.9 million of ordinary shares from the market at an average ordinary share price of 1,022 pence. The total aggregate cost of the Buy-back programme, which has terminated, was \u00a3239.5 million. The shares acquired under the tender offer were immediately cancelled, creating a capital redemption reserve of \u00a32.4 million. Employee share schemes The Group operates a number of equity-settled share plans for the benefit of employees. Details of each plan are: i) Sharesave Scheme An all-employee savings-related plan is operated that enables employees, including Executive Directors, to invest up to a maximum of \u00a3500 per month for three or five years. These savings can then be used to buy ordinary shares, at a price set at a 17% or 20% discount to the market value at the start of the savings period, at the third or fifth year anniversary of the option being granted. Options expire six months following the exercise date and, except for certain specific circumstances such as redundancy, lapse if the employee leaves the Group before the option exercise period commences. 33. Share capital continued Outstanding options to subscribe for ordinary shares of 61.05 pence each under the Company\u2019s share option schemes are: Date granted and subscription price fully paid Period when options normally exercisable Thousands of shares in respect of which options outstanding at 31 March 2023 2022 28 June 2017 767p 2020 \u2013 2022 \u2013 28 3 July 2018 635p 2021 \u2013 2023 100 112 9 July 2019 620p 2022 \u2013 2024 84 447 19 July 2020 928p 2023 \u2013 2025 193 234 6 July 2021 879p 2024 \u2013 2026 552 680 5 July 2022 828p 2025 \u2013 2027 533 \u2013 \u2013 1,462 1,501 The number and weighted average exercise price of Sharesave options are: 2023 2022 Number of ordinary shares (thousands) Weighted average exercise price per share (p) Number of ordinary shares (thousands) Weighted average exercise price per share (p) At 1 April 1,501 789 1,494 687 Granted 598 828 723 879 Forfeited (215) 781 (43) 695 Exercised (379) 633 (582) 640 Expired (43) 859 (91) 817 At 31 March 1,462 835 1,501 789 The weighted average price of the Company\u2019s shares at the date of exercise of Sharesave options during the year was 927 pence (2022 1,216 pence). The options outstanding at 31 March 2023 had a weighted average exercise price of 620 pence (2022 789 pence) and a weighted average remaining contractual life of 1.91 years (2022 1.96 years). The number of exercisable Sharesave options at 31 March 2023 was 1,000 (2022 2,000) and the weighted average exercise price of exercisable Sharesave options was 620 pence (2022 635 pence). The aggregate fair value of Sharesave options granted during the year was \u00a30.7 million (2022 \u00a32.0 million), determined using the Black-Scholes valuation model. The significant inputs into the valuation model at the date of issue of the options were: 2023 2022 Weighted average share price (pence) 957 1,187 Weighted average exercise price (pence) 828 879 Expected volatility 25% 27% Expected life 3.3 years 3.4 years Risk-free rate 1.3% 0.10% Expected dividend yield 4.0% 3.0% Expected volatility was determined by calculating the historical volatility of the Group\u2019s share price over the previous three years. ii) Long-term incentive plan (LTIP) Executive Directors and senior management receive an annual grant of conditional shares. Share awards vest subject to the achievement of specific performance conditions measured over a performance period of not less than three years. The number and price of shares in the LTIP are: 2023 2022 Number of ordinary shares (thousands) Weighted average exercise price per share (p) Number of ordinary shares (thousands) Weighted average exercise price per share (p) At 1 April 1,170 902 999 843 Granted 255 1,038 221 1,141 Vested (357) 790 \u2013 \u2013 Lapsed (188) 876 (50) 790 At 31 March 880 990 1,170 902 The awards outstanding at 31 March 2023 had a weighted exercise price of 990 pence (2022 902 pence) and a weighted average remaining contractual life of 2.6 years (2022 2.3 years). The aggregate fair value of awards granted during the year was \u00a31.1 million (2022 \u00a31.0 million), determined from market value. No option pricing methodology is applied since the vesting of the shares depends on non-market performance vesting conditions. Having reflected on the exceptional economic backdrop and in particular the cost-of-living crises faced by many of our customers, the CEO recommended that the Remuneration Committee consider lapsing her bonus and 2020 LTIP awards in full, and diverting an equivalent value into the Group\u2019s Watershare+ scheme. The Watershare+ scheme directly benefits the Group\u2019s customers by either providing money off their bill or via ownership of Pennon Group plc shares. While recognising the performance delivered, the Remuneration Committee accepted and approved the CEO\u2019s recommendation regarding her awards. 33. Share capital continued iii) Annual Incentive Bonus Plan \u2013 deferred shares Awards under the plan to Executive Directors and senior management involve the release of ordinary shares in the Company to participants. There is no performance condition since vesting is conditional upon continuous service with the Group for a period of three years from the award. The number and weighted average price of shares in the Annual Incentive Bonus Plan are: 2023 2022 Number of ordinary shares (thousands) Weighted average exercise price per share (p) Number of ordinary shares (thousands) Weighted average exercise price per share (p) At 1 April 206 955 345 847 Granted 54 988 82 1,141 Vested (110) 756 (75) 761 Lapsed (9) 1,001 (2) 941 Cancelled \u2013 \u2013 (144) 903 At 31 March 141 1,065 206 955 The awards outstanding at 31 March 2023 had a weighted average exercise price of 1,065 pence (2022 955 pence) and a weighted average remaining contractual life of 1.3 years (2022 1.1 years). The Company\u2019s share price at the date of the awards ranged from 988 pence to 1,141 pence (2022 756 pence to 1,141 pence). The aggregate fair value of awards granted during the year was \u00a30.5 million (2022 \u00a30.9 million), determined from market value. No option pricing methodology is applied since dividends paid on the shares are receivable by the participants in the scheme. Further details of the plans and options granted to Directors, included above, are shown in the Directors\u2019 remuneration report. 34. Share premium account \u00a3m Group and Company At 1 April 2021 232.1 Shares issued under the Sharesave Scheme 3.4 At 31 March 2022 235.5 Shares issued under the Sharesave Scheme 2.1 At 31 March 2023 237.6 35. Capital redemption reserve The capital redemption reserve represents the redemption of B shares and cancellation of deferred shares arising from a capital return to shareholders undertaken during 2006, together with the redemption of shares during the years ended 31 March 2023 and 31 March 2022. \u00a3m Group and Company At 1 April 2021 144.2 Share capital redeemed 10.5 At 31 March 2022 154.7 Share capital redeemed 2.4 At 31 March 2023 157.1 36. Retained earnings and other reserves Own shares \u00a3m Hedging reserve \u00a3m Retained earnings \u00a3m Total \u00a3m Group At 31 March 2021 (3.5) (17.0) 2,457.3 2,436.8 Profit for the year \u2013 \u2013 15.4 15.4 Other comprehensive income for the year \u2013 34.1 27.3 61.4 Dividends paid relating to 2021 \u2013 \u2013 (1,590.3) (1,590.3) Credit to equity in respect of share-based payments (net of tax) \u2013 \u2013 2.2 2.2 Charge in respect of share options vesting 0.8 \u2013 (0.8) \u2013 Own shares acquired by the Pennon Employee Share Trust in respect of share options granted (1.2) \u2013 \u2013 (1.2) Shares purchased for cancellation (included related expenses) \u2013 \u2013 (201.7) (201.7) At 31 March 2022 (3.9) 17.1 709.4 722.6 Profit for the year \u2013 \u2013 0.1 0.1 Other comprehensive income/(loss) for the year \u2013 21.8 (29.2) (7.4) Dividends paid relating to 2022 \u2013 \u2013 (101.6) (101.6) Credit to equity in respect of share-based payments (net of tax) \u2013 \u2013 1.9 1.9 Charge in respect of share options vesting 5.4 \u2013 (5.4) \u2013 Own shares acquired by the Pennon Employee Share Trust in respect of share options granted (5.0) \u2013 \u2013 (5.0) Shares purchased for cancellation (included related expenses) \u2013 \u2013 (40.0) (40.0) At 31 March 2023 (3.5) 38.9 535.2 570.6 The own shares reserve represents the cost of ordinary shares in Pennon Group plc issued to or purchased in the market and held by the Pennon Group plc Employee Benefit Trust to satisfy awards under the Group\u2019s Annual Incentive Bonus Plan. The market value of the 152,000 ordinary shares (2022 238,000 ordinary shares) held by the Trust at 31 March 2023 was \u00a31.2 million (2022 \u00a32.6 million). Hedging reserve \u00a3m Retained earnings \u00a3m Total \u00a3m Company At 1 April 2021 (0.1) 2,410.9 2,410.8 Profit for the year \u2013 74.5 74.5 Other comprehensive income/(loss) for the year 0.1 (2.6) (2.5) Dividends paid relating to 2021 (including \u00a31.5 billion special dividend) \u2013 (1,590.3) (1,590.3) Shares purchased for cancellation (including related expenses) \u2013 (201.7) (201.7) Credit to equity in respect of share-based payments (net of tax) \u2013 0.9 0.9 Charge in respect of share options vesting \u2013 (2.6) (2.6) At 31 March 2022 \u2013 689.1 689.1 Profit for the year \u2013 8.4 8.4 Other comprehensive loss for the year \u2013 (6.1) (6.1) Dividends paid relating to 2022 \u2013 (101.6) (101.6) Shares purchased for cancellation (including related expenses) \u2013 (40.0) (40.0) Credit to equity in respect of share-based payments (net of tax) \u2013 1.3 1.3 Charge in respect of share options vesting \u2013 (5.4) (5.4) At 31 March 2023 \u2013 545.7 545.7 In making decisions about the level of dividends to be proposed the Directors take steps to check that retained earnings reflect realised profits and are therefore distributable within the requirements of the Companies Act 2006. ",
"dimensions": {
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"language": "en",
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"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-530": {
"value": "33. Share capital Allotted, called\u2013up and fully paid Number of shares Treasury shares Ordinary shares \u00a3m Group and Company At 1 April 2021 ordinary shares of 40.7p each 8,443 422,120,181 171.8 Share consolidation (2,815) (140,708,916) \u2013 \u2013 For consideration of \u00a33.8 million, shares issued under the Company\u2019s Sharesave Scheme \u2013 \u2013 582,427 0.4 Shares cancelled \u2013 \u2013 (17,146,744) (10.5) At 31 March 2022 ordinary shares of 61.05p each 5,628 264,846,948 161.7 For consideration of \u00a32.3 million, shares issued under the Company\u2019s Sharesave Scheme \u2013 \u2013 379,044 0.2 Shares cancelled \u2013 \u2013 (3,910,503) (2.4) At 31 March 2023 ordinary shares of 61.05p each 5,628 261,315,489 159.5 Shares held as treasury shares may be sold or reissued for any of the Company\u2019s share schemes or cancelled. On 16 July 2021, the Group paid a special dividend of \u00a31.5 billion to shareholders in relation to the return of capital to shareholders announced on 3 June 2021. In order to maintain the comparability of the Company\u2019s share price before and after the special dividend, a share consolidation was approved at the General Meeting held on 28 June 2021. Shareholders received 2 New Ordinary shares of 61.05 pence each for every 3 Existing Ordinary shares of 40.7 pence each. During the prior year, the Group announced and began a process to purchase ordinary shares at an aggregate cost of up to \u00a3400 million by September 2022. During the prior year the Group purchased \u00a3199.6 million of ordinary shares from the market at an average ordinary share price of 1,164 pence. The shares acquired under the tender offer were immediately cancelled, creating a capital redemption reserve of \u00a310.5 million. The maximum number of shares that can be repurchased in connection with the Programme is 42,183,689 (being the maximum authority granted by Pennon's shareholders at Pennon's AGM on 22 July 2021). During the year ended 31 March 2023, the Group purchased a further \u00a339.9 million of ordinary shares from the market at an average ordinary share price of 1,022 pence. The total aggregate cost of the Buy-back programme, which has terminated, was \u00a3239.5 million. The shares acquired under the tender offer were immediately cancelled, creating a capital redemption reserve of \u00a32.4 million. Employee share schemes The Group operates a number of equity-settled share plans for the benefit of employees. Details of each plan are: i) Sharesave Scheme An all-employee savings-related plan is operated that enables employees, including Executive Directors, to invest up to a maximum of \u00a3500 per month for three or five years. These savings can then be used to buy ordinary shares, at a price set at a 17% or 20% discount to the market value at the start of the savings period, at the third or fifth year anniversary of the option being granted. Options expire six months following the exercise date and, except for certain specific circumstances such as redundancy, lapse if the employee leaves the Group before the option exercise period commences. 33. Share capital continued Outstanding options to subscribe for ordinary shares of 61.05 pence each under the Company\u2019s share option schemes are: Date granted and subscription price fully paid Period when options normally exercisable Thousands of shares in respect of which options outstanding at 31 March 2023 2022 28 June 2017 767p 2020 \u2013 2022 \u2013 28 3 July 2018 635p 2021 \u2013 2023 100 112 9 July 2019 620p 2022 \u2013 2024 84 447 19 July 2020 928p 2023 \u2013 2025 193 234 6 July 2021 879p 2024 \u2013 2026 552 680 5 July 2022 828p 2025 \u2013 2027 533 \u2013 \u2013 1,462 1,501 The number and weighted average exercise price of Sharesave options are: 2023 2022 Number of ordinary shares (thousands) Weighted average exercise price per share (p) Number of ordinary shares (thousands) Weighted average exercise price per share (p) At 1 April 1,501 789 1,494 687 Granted 598 828 723 879 Forfeited (215) 781 (43) 695 Exercised (379) 633 (582) 640 Expired (43) 859 (91) 817 At 31 March 1,462 835 1,501 789 The weighted average price of the Company\u2019s shares at the date of exercise of Sharesave options during the year was 927 pence (2022 1,216 pence). The options outstanding at 31 March 2023 had a weighted average exercise price of 620 pence (2022 789 pence) and a weighted average remaining contractual life of 1.91 years (2022 1.96 years). The number of exercisable Sharesave options at 31 March 2023 was 1,000 (2022 2,000) and the weighted average exercise price of exercisable Sharesave options was 620 pence (2022 635 pence). The aggregate fair value of Sharesave options granted during the year was \u00a30.7 million (2022 \u00a32.0 million), determined using the Black-Scholes valuation model. The significant inputs into the valuation model at the date of issue of the options were: 2023 2022 Weighted average share price (pence) 957 1,187 Weighted average exercise price (pence) 828 879 Expected volatility 25% 27% Expected life 3.3 years 3.4 years Risk-free rate 1.3% 0.10% Expected dividend yield 4.0% 3.0% Expected volatility was determined by calculating the historical volatility of the Group\u2019s share price over the previous three years. ii) Long-term incentive plan (LTIP) Executive Directors and senior management receive an annual grant of conditional shares. Share awards vest subject to the achievement of specific performance conditions measured over a performance period of not less than three years. The number and price of shares in the LTIP are: 2023 2022 Number of ordinary shares (thousands) Weighted average exercise price per share (p) Number of ordinary shares (thousands) Weighted average exercise price per share (p) At 1 April 1,170 902 999 843 Granted 255 1,038 221 1,141 Vested (357) 790 \u2013 \u2013 Lapsed (188) 876 (50) 790 At 31 March 880 990 1,170 902 The awards outstanding at 31 March 2023 had a weighted exercise price of 990 pence (2022 902 pence) and a weighted average remaining contractual life of 2.6 years (2022 2.3 years). The aggregate fair value of awards granted during the year was \u00a31.1 million (2022 \u00a31.0 million), determined from market value. No option pricing methodology is applied since the vesting of the shares depends on non-market performance vesting conditions. Having reflected on the exceptional economic backdrop and in particular the cost-of-living crises faced by many of our customers, the CEO recommended that the Remuneration Committee consider lapsing her bonus and 2020 LTIP awards in full, and diverting an equivalent value into the Group\u2019s Watershare+ scheme. The Watershare+ scheme directly benefits the Group\u2019s customers by either providing money off their bill or via ownership of Pennon Group plc shares. While recognising the performance delivered, the Remuneration Committee accepted and approved the CEO\u2019s recommendation regarding her awards. 33. Share capital continued iii) Annual Incentive Bonus Plan \u2013 deferred shares Awards under the plan to Executive Directors and senior management involve the release of ordinary shares in the Company to participants. There is no performance condition since vesting is conditional upon continuous service with the Group for a period of three years from the award. The number and weighted average price of shares in the Annual Incentive Bonus Plan are: 2023 2022 Number of ordinary shares (thousands) Weighted average exercise price per share (p) Number of ordinary shares (thousands) Weighted average exercise price per share (p) At 1 April 206 955 345 847 Granted 54 988 82 1,141 Vested (110) 756 (75) 761 Lapsed (9) 1,001 (2) 941 Cancelled \u2013 \u2013 (144) 903 At 31 March 141 1,065 206 955 The awards outstanding at 31 March 2023 had a weighted average exercise price of 1,065 pence (2022 955 pence) and a weighted average remaining contractual life of 1.3 years (2022 1.1 years). The Company\u2019s share price at the date of the awards ranged from 988 pence to 1,141 pence (2022 756 pence to 1,141 pence). The aggregate fair value of awards granted during the year was \u00a30.5 million (2022 \u00a30.9 million), determined from market value. No option pricing methodology is applied since dividends paid on the shares are receivable by the participants in the scheme. Further details of the plans and options granted to Directors, included above, are shown in the Directors\u2019 remuneration report. ",
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"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-549": {
"value": "33. Share capital Allotted, called\u2013up and fully paid Number of shares Treasury shares Ordinary shares \u00a3m Group and Company At 1 April 2021 ordinary shares of 40.7p each 8,443 422,120,181 171.8 Share consolidation (2,815) (140,708,916) \u2013 \u2013 For consideration of \u00a33.8 million, shares issued under the Company\u2019s Sharesave Scheme \u2013 \u2013 582,427 0.4 Shares cancelled \u2013 \u2013 (17,146,744) (10.5) At 31 March 2022 ordinary shares of 61.05p each 5,628 264,846,948 161.7 For consideration of \u00a32.3 million, shares issued under the Company\u2019s Sharesave Scheme \u2013 \u2013 379,044 0.2 Shares cancelled \u2013 \u2013 (3,910,503) (2.4) At 31 March 2023 ordinary shares of 61.05p each 5,628 261,315,489 159.5 Shares held as treasury shares may be sold or reissued for any of the Company\u2019s share schemes or cancelled. On 16 July 2021, the Group paid a special dividend of \u00a31.5 billion to shareholders in relation to the return of capital to shareholders announced on 3 June 2021. In order to maintain the comparability of the Company\u2019s share price before and after the special dividend, a share consolidation was approved at the General Meeting held on 28 June 2021. Shareholders received 2 New Ordinary shares of 61.05 pence each for every 3 Existing Ordinary shares of 40.7 pence each. During the prior year, the Group announced and began a process to purchase ordinary shares at an aggregate cost of up to \u00a3400 million by September 2022. During the prior year the Group purchased \u00a3199.6 million of ordinary shares from the market at an average ordinary share price of 1,164 pence. The shares acquired under the tender offer were immediately cancelled, creating a capital redemption reserve of \u00a310.5 million. The maximum number of shares that can be repurchased in connection with the Programme is 42,183,689 (being the maximum authority granted by Pennon's shareholders at Pennon's AGM on 22 July 2021). During the year ended 31 March 2023, the Group purchased a further \u00a339.9 million of ordinary shares from the market at an average ordinary share price of 1,022 pence. The total aggregate cost of the Buy-back programme, which has terminated, was \u00a3239.5 million. The shares acquired under the tender offer were immediately cancelled, creating a capital redemption reserve of \u00a32.4 million. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfTreasurySharesExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-550": {
"value": "ii) Long-term incentive plan (LTIP) Executive Directors and senior management receive an annual grant of conditional shares. Share awards vest subject to the achievement of specific performance conditions measured over a performance period of not less than three years. The number and price of shares in the LTIP are: 2023 2022 Number of ordinary shares (thousands) Weighted average exercise price per share (p) Number of ordinary shares (thousands) Weighted average exercise price per share (p) At 1 April 1,170 902 999 843 Granted 255 1,038 221 1,141 Vested (357) 790 \u2013 \u2013 Lapsed (188) 876 (50) 790 At 31 March 880 990 1,170 902 The awards outstanding at 31 March 2023 had a weighted exercise price of 990 pence (2022 902 pence) and a weighted average remaining contractual life of 2.6 years (2022 2.3 years). The aggregate fair value of awards granted during the year was \u00a31.1 million (2022 \u00a31.0 million), determined from market value. No option pricing methodology is applied since the vesting of the shares depends on non-market performance vesting conditions. Having reflected on the exceptional economic backdrop and in particular the cost-of-living crises faced by many of our customers, the CEO recommended that the Remuneration Committee consider lapsing her bonus and 2020 LTIP awards in full, and diverting an equivalent value into the Group\u2019s Watershare+ scheme. The Watershare+ scheme directly benefits the Group\u2019s customers by either providing money off their bill or via ownership of Pennon Group plc shares. While recognising the performance delivered, the Remuneration Committee accepted and approved the CEO\u2019s recommendation regarding her awards. iii) Annual Incentive Bonus Plan \u2013 deferred shares Awards under the plan to Executive Directors and senior management involve the release of ordinary shares in the Company to participants. There is no performance condition since vesting is conditional upon continuous service with the Group for a period of three years from the award. The number and weighted average price of shares in the Annual Incentive Bonus Plan are: 2023 2022 Number of ordinary shares (thousands) Weighted average exercise price per share (p) Number of ordinary shares (thousands) Weighted average exercise price per share (p) At 1 April 206 955 345 847 Granted 54 988 82 1,141 Vested (110) 756 (75) 761 Lapsed (9) 1,001 (2) 941 Cancelled \u2013 \u2013 (144) 903 At 31 March 141 1,065 206 955 The awards outstanding at 31 March 2023 had a weighted average exercise price of 1,065 pence (2022 955 pence) and a weighted average remaining contractual life of 1.3 years (2022 1.1 years). The Company\u2019s share price at the date of the awards ranged from 988 pence to 1,141 pence (2022 756 pence to 1,141 pence). The aggregate fair value of awards granted during the year was \u00a30.5 million (2022 \u00a30.9 million), determined from market value. No option pricing methodology is applied since dividends paid on the shares are receivable by the participants in the scheme. Further details of the plans and options granted to Directors, included above, are shown in the Directors\u2019 remuneration report. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-531": {
"value": "36. Retained earnings and other reserves Own shares \u00a3m Hedging reserve \u00a3m Retained earnings \u00a3m Total \u00a3m Group At 31 March 2021 (3.5) (17.0) 2,457.3 2,436.8 Profit for the year \u2013 \u2013 15.4 15.4 Other comprehensive income for the year \u2013 34.1 27.3 61.4 Dividends paid relating to 2021 \u2013 \u2013 (1,590.3) (1,590.3) Credit to equity in respect of share-based payments (net of tax) \u2013 \u2013 2.2 2.2 Charge in respect of share options vesting 0.8 \u2013 (0.8) \u2013 Own shares acquired by the Pennon Employee Share Trust in respect of share options granted (1.2) \u2013 \u2013 (1.2) Shares purchased for cancellation (included related expenses) \u2013 \u2013 (201.7) (201.7) At 31 March 2022 (3.9) 17.1 709.4 722.6 Profit for the year \u2013 \u2013 0.1 0.1 Other comprehensive income/(loss) for the year \u2013 21.8 (29.2) (7.4) Dividends paid relating to 2022 \u2013 \u2013 (101.6) (101.6) Credit to equity in respect of share-based payments (net of tax) \u2013 \u2013 1.9 1.9 Charge in respect of share options vesting 5.4 \u2013 (5.4) \u2013 Own shares acquired by the Pennon Employee Share Trust in respect of share options granted (5.0) \u2013 \u2013 (5.0) Shares purchased for cancellation (included related expenses) \u2013 \u2013 (40.0) (40.0) At 31 March 2023 (3.5) 38.9 535.2 570.6 The own shares reserve represents the cost of ordinary shares in Pennon Group plc issued to or purchased in the market and held by the Pennon Group plc Employee Benefit Trust to satisfy awards under the Group\u2019s Annual Incentive Bonus Plan. The market value of the 152,000 ordinary shares (2022 238,000 ordinary shares) held by the Trust at 31 March 2023 was \u00a31.2 million (2022 \u00a32.6 million). Hedging reserve \u00a3m Retained earnings \u00a3m Total \u00a3m Company At 1 April 2021 (0.1) 2,410.9 2,410.8 Profit for the year \u2013 74.5 74.5 Other comprehensive income/(loss) for the year 0.1 (2.6) (2.5) Dividends paid relating to 2021 (including \u00a31.5 billion special dividend) \u2013 (1,590.3) (1,590.3) Shares purchased for cancellation (including related expenses) \u2013 (201.7) (201.7) Credit to equity in respect of share-based payments (net of tax) \u2013 0.9 0.9 Charge in respect of share options vesting \u2013 (2.6) (2.6) At 31 March 2022 \u2013 689.1 689.1 Profit for the year \u2013 8.4 8.4 Other comprehensive loss for the year \u2013 (6.1) (6.1) Dividends paid relating to 2022 \u2013 (101.6) (101.6) Shares purchased for cancellation (including related expenses) \u2013 (40.0) (40.0) Credit to equity in respect of share-based payments (net of tax) \u2013 1.3 1.3 Charge in respect of share options vesting \u2013 (5.4) (5.4) At 31 March 2023 \u2013 545.7 545.7 In making decisions about the level of dividends to be proposed the Directors take steps to check that retained earnings reflect realised profits and are therefore distributable within the requirements of the Companies Act 2006. ",
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"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-488": {
"value": "37. Analysis of cash flows given in the statement of cash flows Reconciliation of profit for the year to cash generated from operations: Cash generated from operations Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Profit for the year 0.4 15.6 8.4 74.5 Adjustments for: Share-based payments 2.4 2.2 1.5 1.1 Profit on disposal of property, plant and equipment (0.4) (1.0) \u2013 \u2013 Depreciation charge 151.1 143.3 \u2013 \u2013 Amortisation of intangible assets 3.6 3.4 \u2013 \u2013 Investment impairment charge \u2013 \u2013 \u2013 0.4 non-underlying bond early redemption gain (18.4) \u2013 non-underlying Bristol Water acquisition costs \u2013 8.9 \u2013 8.9 non-underlying CMA merger review and integration costs \u2013 6.9 \u2013 4.8 Share of post-tax profit from associated companies (0.3) \u2013 \u2013 \u2013 Finance income (before non-underlying items) (9.2) (2.6) (11.8) (6.5) Finance costs (before non-underlying items) 145.8 96.3 13.3 10.8 Dividends receivable \u2013 \u2013 (15.7) (94.5) Taxation (credit)/charge (8.9) 112.1 (4.3) (2.7) Changes in working capital: Increase in inventories (2.3) (0.6) \u2013 \u2013 Decrease/(increase) in trade and other receivables 15.9 (14.3) (31.0) 6.9 Increase/(decrease) in trade and other payables 34.6 (12.2) 0.6 (9.6) Increase/(decrease) in retirement benefit obligations from contributions \u2013 (24.2) 0.1 (24.0) (Decrease)/increase in provisions (0.6) 0.4 \u2013 \u2013 Cash generated/(outflow) from operations 313.7 334.2 (38.9) (29.9) Reconciliation of total interest paid: Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Interest paid in operating activities 159.7 74.6 7.7 6.0 Interest paid in investing activities 5.0 1.3 \u2013 \u2013 Total interest paid 164.7 75.9 7.7 6.0 During the year, the Group completed a number of sale and leaseback transactions in respect of its infrastructure assets as part of its ongoing financing arrangements. Cash proceeds of \u00a340.2 million (2022 \u00a315.0 million) were received and a gain of \u00a3nil (2022 \u00a3nil) was recognised. These assets are being leased back at market rentals over varying lease terms from 7.5 to 9.5 years. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfCashFlowStatementExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-489": {
"value": "38. Net borrowings Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Cash and cash deposits 165.4 519.0 104.1 306.7 Borrowings \u2013 current Bank and other current borrowings (92.7) (70.0) \u2013 (30.0) Lease obligations (32.0) (170.2) \u2013 \u2013 Amounts owed to subsidiary undertakings \u2013 \u2013 (279.1) (282.8) Total current borrowings (124.7) (240.2) (279.1) (312.8) Borrowings \u2013 non-current Bank and other non-current borrowings (1,960.9) (1,907.4) (155.7) (154.5) Listed preference shares (12.5) (12.5) \u2013 \u2013 Lease obligations (1,032.7) (1,041.8) \u2013 \u2013 Total non-current borrowings (3,006.1) (2,961.7) (155.7) (154.5) Total net borrowings (2,965.4) (2,682.9) (330.7) (160.6) 38. Net borrowings continued The movements in net borrowings during the periods presented were as follows: Group Net borrowings at 1 April 2021 \u00a3m Bristol Water acquisition \u00a3m Cash flows \u00a3m Transfer between non-current and current \u00a3m Other non-cash movements \u00a3m Net borrowings at 31 March 2022 \u00a3m Cash and cash deposits 2,919.3 6.1 (2,406.4) \u2013 \u2013 519.0 Bank and other current borrowings (40.1) (9.0) 49.4 (70.4) 0.1 (70.0) Current lease obligations (48.2) (0.2) 232.8 (365.5) 10.9 (170.2) Bank and other non-current borrowings (1,375.7) (516.7) (61.0) 70.4 (24.4) (1,907.4) Listed preference shares \u2013 (12.5) \u2013 \u2013 \u2013 (12.5) Non-current lease obligations (1,391.0) (1.2) (15.0) 365.5 (0.1) (1,041.8) Net cash/(borrowings) 64.3 (533.5) (2,200.2) \u2013 (13.5) (2,682.9) Net borrowings at 1 April 2022 \u00a3m Cash flows \u00a3m Transfer between non-current and current \u00a3m Other non-cash movements \u00a3m Net borrowings at 31 March 2023 \u00a3m Cash and cash deposits 519.0 (353.6) \u2013 \u2013 165.4 Bank and other current borrowings (70.0) 20.4 (43.3) 0.2 (92.7) Current lease obligations (170.2) 221.1 (49.1) (33.8) (32.0) Bank and other non-current borrowings (1,907.4) (57.2) 43.3 (39.6) (1,960.9) Listed preference shares (12.5) \u2013 \u2013 \u2013 (12.5) Non-current lease obligations (1,041.8) (40.2) 49.1 0.2 (1,032.7) Net borrowings (2,682.9) (209.5) \u2013 (73.0) (2,965.4) Other non-cash movements for the Group in 2023 includes the increase in borrowings from interest which is rolled into the amount repayable. The movements in net borrowings during the periods presented were as follows: Company Net borrowings at 1 April 2021 \u00a3m Cash flows \u00a3m Other non-cash movements \u00a3m Net borrowings at 31 March 2022 \u00a3m Cash and cash deposits 2,495.6 (2,188.9) \u2013 306.7 Bank and other loans due within one year \u2013 \u2013 (30.0) (30.0) Amounts due to subsidiary undertakings (283.4) 0.5 0.1 (282.8) Bank and other loans due after one year (184.4) \u2013 29.9 (154.5) 2,027.8 (2,188.4) \u2013 (160.6) Net borrowings at 1 April 2022 \u00a3m Cash flows \u00a3m Other non-cash movements \u00a3m Net borrowings at 31 March 2023 \u00a3m Cash and cash deposits 306.7 (202.6) \u2013 104.1 Bank and other loans due within one year (30.0) 30.0 \u2013 \u2013 Amounts due to subsidiary undertakings (282.8) 3.7 \u2013 (279.1) Bank and other loans due after one year (154.5) \u2013 (1.2) (155.7) (160.6) (168.9) (1.2) (330.7) ",
"dimensions": {
"concept": "pennongroupplc:DisclosureOfNetBorrowings",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-490": {
"value": "39. Subsidiary and joint venture undertakings at 31 March 2023 Principal subsidiary companies Registered office address Country of incorporation, registration and principal operations Water Bristol Water Plc Bridgwater Road, Bristol, BS13 7AT England South West Water Limited* Peninsula House, Rydon Lane, Exeter, EX2 7HR England South West Water Finance Plc Peninsula House, Rydon Lane, Exeter, EX2 7HR England South West Water Customer Services Limited Peninsula House, Rydon Lane, Exeter, EX2 7HR England Non-household retail Pennon Water Services Limited* (1) Peninsula House, Rydon Lane, Exeter, EX2 7HR England Other Peninsula Insurance Limited* (2) Level 5, Mill Court, La Charroterie, St Peter Port, GY1 1EJ Guernsey * Indicates the shares are held directly by Pennon Group plc, the Company. 1. 80% of share capital owned by Pennon Group plc. All shares in issue are ordinary shares. 2. Captive insurance company established with the specific objective of financing risks emanating from within the Group. Other trading companies Registered office address Country of incorporation Bristol Water Holdings UK Limited* Bridgwater Road, Bristol, BS13 7AT England Bristol Water Core Holdings Limited Bridgwater Road, Bristol, BS13 7AT England Bristol Water Holdings Limited Bridgwater Road, Bristol, BS13 7AT England Peninsula Properties (Exeter) Limited Peninsula House, Rydon Lane, Exeter, EX2 7HR England Peninsula Trustees Limited* Peninsula House, Rydon Lane, Exeter, EX2 7HR England Pennon Defined Contribution Pension Trustee Limited* Peninsula House, Rydon Lane, Exeter, EX2 7HR England Pennon Pension Trustees Limited* Peninsula House, Rydon Lane, Exeter, EX2 7HR England Pennon Trustee Limited* Peninsula House, Rydon Lane, Exeter, EX2 7HR England Avon Valley Water Limited Peninsula House, Rydon Lane, Exeter, EX2 7HR England Bournemouth Water Investments Limited Peninsula House, Rydon Lane, Exeter, EX2 7HR England Bournemouth Water Limited Peninsula House, Rydon Lane, Exeter, EX2 7HR England BWH Enterprises Limited Peninsula House, Rydon Lane, Exeter, EX2 7HR England D.M.P (Holdings) Limited* \u00a7 Peninsula House, Rydon Lane, Exeter, EX2 7HR England Exe Continental \u00a7 Peninsula House, Rydon Lane, Exeter, EX2 7HR England Greenhill Environmental Limited* \u00a7 Peninsula House, Rydon Lane, Exeter, EX2 7HR England Haul Waste Limited* \u00a7 Peninsula House, Rydon Lane, Exeter, EX2 7HR England Pennon Share Scheme Trustees Limited* Peninsula House, Rydon Lane, Exeter, EX2 7HR England Pennon South West Limited* \u00a7 Peninsula House, Rydon Lane, Exeter, EX2 7HR England Pennon Waste Management Limited* \u00a7 Peninsula House, Rydon Lane, Exeter, EX2 7HR England Seal Security Systems Limited* \u00a7 Peninsula House, Rydon Lane, Exeter, EX2 7HR England Source for Business Limited Peninsula House, Rydon Lane, Exeter, EX2 7HR England SSWB Limited Peninsula House, Rydon Lane, Exeter, EX2 7HR England SWW Pension Trustees Limited* Peninsula House, Rydon Lane, Exeter, EX2 7HR England Viridor Contracting Limited \u00a7 Peninsula House, Rydon Lane, Exeter, EX2 7HR England The subsidiary undertakings are wholly owned unless stated otherwise and all shares in issue are ordinary shares. All companies above are consolidated in the Group financial statements. Joint Ventures and Associates Registered office address Country of incorporation Stake (%) Bristol Wessex Billing Services Limited 1 Clevedon Walk, Nailsea, Bristol, BS48 1WA England 50 CREWW Executive Board Limited Peninsula House, Rydon Lane, Exeter, EX2 7HR England 50 Searchlight Collections Limited PO BOX 930 Galmington Office, Galmington Trading Estate, Cornishway West, Taunton, Somerset, TA1 9LQ England 50 Water 2 Business Limited 21e Somerset Square, Nailsea, Bristol, United Kingdom, BS48 1RQ England 30 * Indicates the shares are held directly by Pennon Group plc, the Company. *\u00a7 Indicates the subsidiary was dissolved since the balance sheet date. 39. Subsidiary and joint venture undertakings at 31 March 2023 continued Subsidiary audit exemption Pennon Group plc has issued guarantees over the liabilities of the following companies at 31 March 2021 under section 479C of Companies Act 2006 and these entities are exempt from the requirements of the Act relating to the audit of individual accounts by virtue of section 479A of the Act. Company Company number Bristol Water Core Holdings Limited 04637554 Bristol Water Holdings Limited 02630760 Bristol Water Holdings UK Limited 04789566 Peninsula Properties (Exeter) Limited 02307220 Pennon Power Limited 00736732 South West Water Customer Services Limited 07620338 Viridor Waste 2 Limited 02298543 ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-532": {
"value": "39. Subsidiary and joint venture undertakings at 31 March 2023 Principal subsidiary companies Registered office address Country of incorporation, registration and principal operations Water Bristol Water Plc Bridgwater Road, Bristol, BS13 7AT England South West Water Limited* Peninsula House, Rydon Lane, Exeter, EX2 7HR England South West Water Finance Plc Peninsula House, Rydon Lane, Exeter, EX2 7HR England South West Water Customer Services Limited Peninsula House, Rydon Lane, Exeter, EX2 7HR England Non-household retail Pennon Water Services Limited* (1) Peninsula House, Rydon Lane, Exeter, EX2 7HR England Other Peninsula Insurance Limited* (2) Level 5, Mill Court, La Charroterie, St Peter Port, GY1 1EJ Guernsey * Indicates the shares are held directly by Pennon Group plc, the Company. 1. 80% of share capital owned by Pennon Group plc. All shares in issue are ordinary shares. 2. Captive insurance company established with the specific objective of financing risks emanating from within the Group. Other trading companies Registered office address Country of incorporation Bristol Water Holdings UK Limited* Bridgwater Road, Bristol, BS13 7AT England Bristol Water Core Holdings Limited Bridgwater Road, Bristol, BS13 7AT England Bristol Water Holdings Limited Bridgwater Road, Bristol, BS13 7AT England Peninsula Properties (Exeter) Limited Peninsula House, Rydon Lane, Exeter, EX2 7HR England Peninsula Trustees Limited* Peninsula House, Rydon Lane, Exeter, EX2 7HR England Pennon Defined Contribution Pension Trustee Limited* Peninsula House, Rydon Lane, Exeter, EX2 7HR England Pennon Pension Trustees Limited* Peninsula House, Rydon Lane, Exeter, EX2 7HR England Pennon Trustee Limited* Peninsula House, Rydon Lane, Exeter, EX2 7HR England Avon Valley Water Limited Peninsula House, Rydon Lane, Exeter, EX2 7HR England Bournemouth Water Investments Limited Peninsula House, Rydon Lane, Exeter, EX2 7HR England Bournemouth Water Limited Peninsula House, Rydon Lane, Exeter, EX2 7HR England BWH Enterprises Limited Peninsula House, Rydon Lane, Exeter, EX2 7HR England D.M.P (Holdings) Limited* \u00a7 Peninsula House, Rydon Lane, Exeter, EX2 7HR England Exe Continental \u00a7 Peninsula House, Rydon Lane, Exeter, EX2 7HR England Greenhill Environmental Limited* \u00a7 Peninsula House, Rydon Lane, Exeter, EX2 7HR England Haul Waste Limited* \u00a7 Peninsula House, Rydon Lane, Exeter, EX2 7HR England Pennon Share Scheme Trustees Limited* Peninsula House, Rydon Lane, Exeter, EX2 7HR England Pennon South West Limited* \u00a7 Peninsula House, Rydon Lane, Exeter, EX2 7HR England Pennon Waste Management Limited* \u00a7 Peninsula House, Rydon Lane, Exeter, EX2 7HR England Seal Security Systems Limited* \u00a7 Peninsula House, Rydon Lane, Exeter, EX2 7HR England Source for Business Limited Peninsula House, Rydon Lane, Exeter, EX2 7HR England SSWB Limited Peninsula House, Rydon Lane, Exeter, EX2 7HR England SWW Pension Trustees Limited* Peninsula House, Rydon Lane, Exeter, EX2 7HR England Viridor Contracting Limited \u00a7 Peninsula House, Rydon Lane, Exeter, EX2 7HR England 39. Subsidiary and joint venture undertakings at 31 March 2023 continued Subsidiary audit exemption Pennon Group plc has issued guarantees over the liabilities of the following companies at 31 March 2021 under section 479C of Companies Act 2006 and these entities are exempt from the requirements of the Act relating to the audit of individual accounts by virtue of section 479A of the Act. Company Company number Bristol Water Core Holdings Limited 04637554 Bristol Water Holdings Limited 02630760 Bristol Water Holdings UK Limited 04789566 Peninsula Properties (Exeter) Limited 02307220 Pennon Power Limited 00736732 South West Water Customer Services Limited 07620338 Viridor Waste 2 Limited 02298543 ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfSignificantInvestmentsInSubsidiariesExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-533": {
"value": "The subsidiary undertakings are wholly owned unless stated otherwise and all shares in issue are ordinary shares. All companies above are consolidated in the Group financial statements. Joint Ventures and Associates Registered office address Country of incorporation Stake (%) Bristol Wessex Billing Services Limited 1 Clevedon Walk, Nailsea, Bristol, BS48 1WA England 50 CREWW Executive Board Limited Peninsula House, Rydon Lane, Exeter, EX2 7HR England 50 Searchlight Collections Limited PO BOX 930 Galmington Office, Galmington Trading Estate, Cornishway West, Taunton, Somerset, TA1 9LQ England 50 Water 2 Business Limited 21e Somerset Square, Nailsea, Bristol, United Kingdom, BS48 1RQ England 30 * Indicates the shares are held directly by Pennon Group plc, the Company. *\u00a7 Indicates the subsidiary was dissolved since the balance sheet date. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfJointVenturesExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-534": {
"value": "40. Contingencies Contingent liabilities Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Guarantees: Performance bonds 9.7 9.7 9.7 9.7 9.7 9.7 9.7 9.7 Guarantees in respect of performance bonds relate to changes to the collateral requirements for the non-household retail business with other wholesalers. Other contractual and litigation uncertainties Ofwat and the Environment Agency announced an industry-wide investigation into sewage treatment works on 18 November 2021. On 27 June 2022, as part of its ongoing investigation, Ofwat announced enforcement action against South West Water Limited, the company is now included alongside the five companies which received enforcement notices in March 2022. The company continues to work openly with Ofwat to comply with the notice as part of this ongoing investigation. The potential outcome of these investigations continues to be unknown. On 23 May 2023 Ofwat announced an investigation into South West Water's 2021/22 operational performance data relating to leakage and per capita consumption. This operational performance data was reported in South West Water's Annual Performance Report 2021/22. This report is subject to assurance processes which include independent checks and balances carried out by an external technical auditor. The company will work openly and constructively with Ofwat to comply with the formal notice issued to South West Water as part of this investigation. The potential outcome of this investigation is currently unknown. The Group establishes provisions in connection with contracts and litigation where it has a present legal or constructive obligation as a result of past events and where it is more likely than not an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Where it is uncertain that these conditions are met, a contingent liability is disclosed unless the likelihood of the obligation arising is remote or the matter is not deemed material.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfContingentLiabilitiesExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-491": {
"value": "40. Contingencies Contingent liabilities Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Guarantees: Performance bonds 9.7 9.7 9.7 9.7 9.7 9.7 9.7 9.7 Guarantees in respect of performance bonds relate to changes to the collateral requirements for the non-household retail business with other wholesalers. Other contractual and litigation uncertainties Ofwat and the Environment Agency announced an industry-wide investigation into sewage treatment works on 18 November 2021. On 27 June 2022, as part of its ongoing investigation, Ofwat announced enforcement action against South West Water Limited, the company is now included alongside the five companies which received enforcement notices in March 2022. The company continues to work openly with Ofwat to comply with the notice as part of this ongoing investigation. The potential outcome of these investigations continues to be unknown. On 23 May 2023 Ofwat announced an investigation into South West Water's 2021/22 operational performance data relating to leakage and per capita consumption. This operational performance data was reported in South West Water's Annual Performance Report 2021/22. This report is subject to assurance processes which include independent checks and balances carried out by an external technical auditor. The company will work openly and constructively with Ofwat to comply with the formal notice issued to South West Water as part of this investigation. The potential outcome of this investigation is currently unknown. The Group establishes provisions in connection with contracts and litigation where it has a present legal or constructive obligation as a result of past events and where it is more likely than not an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Where it is uncertain that these conditions are met, a contingent liability is disclosed unless the likelihood of the obligation arising is remote or the matter is not deemed material. 41. Capital commitments Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Contracted but not provided 72.0 59.5 \u2013 \u2013 ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfCommitmentsAndContingentLiabilitiesExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
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},
"fact-535": {
"value": "41. Capital commitments Group Company 2023 \u00a3m 2022 \u00a3m 2023 \u00a3m 2022 \u00a3m Contracted but not provided 72.0 59.5 \u2013 \u2013 ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfCommitmentsExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-492": {
"value": "42. Related party transactions Group companies entered into the following transactions with joint ventures which were not members of the Group. Bristol Wessex Billing Services Limited and Water 2 Business Limited are joint venture investments of Bristol Water Holdings Limited. 2023 \u00a3m 2022 \u00a3m Sales of goods and services Water 2 Business Limited 17.9 14.5 Purchase of goods and services Bristol Wessex Billing Services Limited 3.5 2.4 Year-end balances 2023 \u00a3m 2022 \u00a3m Receivables due from related parties Water 2 Business Limited (including loan receivable of \u00a39.3 million (2022 \u00a39.6 million) 10.8 11.1 Bristol Wessex Billing Services Limited 1.6 0.9 Payables due to related parties Water 2 Business Limited \u2013 0.4 Bristol Wessex Billing Services Limited \u2013 1.4 42. Related party transactions continued The receivables due from related parties are unsecured and will be settled in cash. No guarantees have been given or received. No provisions have been made, or are considered necessary, for doubtful debts in respect of these amounts due. The loans to Water 2 Business Limited are due to be repaid on 28 February 2025 and carry interest at SONIA plus 2.00%. Company The following transactions with subsidiary undertakings occurred in the year: 2023 \u00a3m 2022 \u00a3m Sales of goods and services (management fees) 7.9 9.0 Purchase of goods and services (support services) 0.5 0.5 Interest receivable 3.0 1.3 Dividends received 15.7 94.5 Sales of goods and services to subsidiary undertakings are at cost. Purchases of goods and services from subsidiary undertakings are under normal commercial terms and conditions which would also be available to unrelated third parties. Year-end balances 2023 \u00a3m 2022 \u00a3m Receivables due from subsidiary undertakings Loans 99.2 31.5 Trading balances and other receivables 2.6 48.2 The loan balance comprises two loans. A loan with a balance of \u00a326.1m is due for repayment in instalments over a five-year period following a receipt of a request to repay. No request to repay has been issued at the current time. Interest on \u00a313.1 million (2022 \u00a313.1 million) of the loans has been charged at a fixed rate of 5%. Interest on \u00a313.0 million (2022 \u00a313.0 million) of the loans has been charged at 12-month SONIA +3.0%. A loan with a balance of \u00a373.1m was repaid on 16 May 2023. This loan was issued on 16 November 2022 to Bristol Water plc and novated to South West Water limited on 1 February 2023. Interest was charged on the loan balance at Bank of England base rate +0.75%. No material expected credit loss provision has been recognised in respect of loans to subsidiaries (2022 nil). 2023 \u00a3m 2022 \u00a3m Payables due to subsidiary undertakings Loans 279.1 282.8 Trading balances 8.5 8.6 The loans from subsidiary undertakings are unsecured and interest-free without any terms for repayment. ",
"dimensions": {
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"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-493": {
"value": "43. Acquisition of Bristol Water Group On 2 June 2021, the Company acquired 100% of the issued share capital and voting rights of Bristol Water Holdings UK Limited, the holding company of the Bristol Water Group. Bristol Water Group comprises Bristol Water plc, a regulated water only company and a 30% share in Water 2 Business Limited, a joint venture with Wessex Water. The purpose of the acquisition was to grow the Group\u2019s core water business by expanding into a geographically contiguous region. The acquisition of the Bristol Water Group was reviewed by the Competition and Markets Authority and given full clearance on 7 March 2022. The Bristol Water Group is consolidated in Pennon\u2019s accounts with effect from the completion of acquisition at midnight on 2 June 2021. The net assets recognised in the 31 March 2022 financial statements were based on a provisional assessment of their fair value. The Group had not completed a full tax review by the date the 2022 financial statements were approved for issue by the Board of Directors. In early June 2022 the final review of tax balances was completed, this has led to an increase in the deferred tax liability with an offsetting increase in the total value of goodwill recognised on acquisition of \u00a35.5 million, the amortisation of this deferred tax liability to 31 March 2023 is immaterial. Final fair values on acquisition are shown in the table below. Corresponding amounts for the financial year ended 31 March 2022 have also been restated. The goodwill that arose on the acquisition can be attributed to synergies expected to be derived from the combination and the value of the workforce which cannot be recognised as a separately identifiable intangible asset. Goodwill has been allocated to the water segment. The goodwill arising is not expected to be tax deductible. 43. Acquisition of Bristol Water Group continued The details of the business combination are as follows: \u00a3m Fair value of consideration transferred Amount settled in cash 419.6 Recognised amounts of identifiable net assets Property, plant and equipment 944.8 Intangible assets 12.8 Other non-current assets 9.9 Inventories 1.7 Trade and other receivables 22.3 Cash and cash deposits (including restricted cash of \u00a36.1 million) 18.9 Current tax liability (2.2) Borrowings (545.1) Trade and other payables (32.2) Provisions (0.3) Retirement benefit obligations 7.8 Deferred tax liabilities (140.4) Identifiable net assets 298.0 Goodwill on acquisition 121.6 Consideration for equity settled in cash 419.6 Payment to acquire loan to former parent 5.5 Cash and cash equivalents acquired (excluding restricted cash) (12.8) Net cash outflow on acquisition 412.3 Acquisition costs paid charged to expenses 8.9 Net cash paid relating to the acquisition 421.2 Acquisition related costs of \u00a38.9 million are not included as part of the consideration transferred and were recognised as an expense in the consolidated income statement within other operating expenses. The fair value of trade and other receivables acquired as part of the business combination amounted to \u00a322.3 million with a gross contractual amount of \u00a338.9 million. At the acquisition date the Group\u2019s best estimate of the contractual cash flows expected not to be collected amounted to \u00a316.6 million. As part of the acquisition of Bristol Water, the Group acquired interests in two joint ventures, Bristol Wessex Billing Services Limited (\u201cBWBSL\u201d) and Water 2 Business Limited (\u201cwater2business\u201d). These two interests are accounted for using the equity method. Currently the carrying values of these investments equates to \u00a30.3m (2022 nil), representing the relevant share of the net assets of each of these interests. The goodwill that arose on the acquisition can be attributed to synergies expected to be derived from the combination and the value of the workforce which cannot be recognised as an intangible asset. Goodwill has been allocated to the water segment. The goodwill arising is not expected to be tax deductible. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfBusinessCombinationsExplanatory",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-494": {
"value": "44. Events after the reporting period In May 2023 the Group acquired a c.40 Gwh solar photovoltaic site in Dunfermline which is ready to build with consents in place, and is expected to commence generation in 2024, for total acquisition and build costs of c.\u00a335 million. The site also has the capacity for a two-hour 60 MW battery that will support the UK Grid\u2019s move to renewables at a cost of c.\u00a325 million. On 23 April 2023, South West Water was issued with a fine of \u00a32.15 million in relation to pollution offences occurring between 2016 and 2020, following a case brought by the Environment Agency. The liability for the fine and related costs are recorded on the balance sheet of the Group as at 31 March 2023. On 23 May 2023 Ofwat announced an investigation into South West Water's 2021/22 operational performance data relating to leakage and per capita consumption. This operational performance data was reported in South West Water's Annual Performance Report 2021/22. This report is subject to rigorous assurance processes which include independent checks and balances carried out by an external technical auditor. The company will work openly and constructively with Ofwat to comply with the formal notice issued to South West Water as part of this investigation. The potential outcome of this investigation is currently unknown. ",
"dimensions": {
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"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
"period": "2022-04-01T00:00:00/2023-04-01T00:00:00"
}
},
"fact-4": {
"value": "Peninsula House Rydon Lane Exeter Devon England EX2 7HR",
"dimensions": {
"concept": "ifrs-full:AddressOfRegisteredOfficeOfEntity",
"language": "en",
"entity": "scheme:213800V1CCTS41GWH423",
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}