Pennon Group Plc · LSE:PNN
Pennon — Merger or Acquisition (January 2024)
11 slides from Pennon's merger presentation, Jan 10, 2024
Slide 1: Acquisition of Sutton and East Surrey Water and Equity Capital Raise
Acquisition of Sutton and East Surrey Water and Equity Capital Raise 10 January 2024
Slide 2: Transaction overview
Transaction overview Pennon is acquiring 100% of the issued capital of Sumisho Osaka Gas Water UK Limited (SOGWUK), the holding company of Sutton and East Surrey Water plc and certain other ancillary businesses for £89m, with a total enterprise value of £380m and a RCV of £351m(1) Proposed Enter
Slide 3: Key investment highlights
Key investment highlights Acquisition of SES Water and other ancillary businesses, adding a high-quality business with over 750k customers and a RCV of £351m(1) Purchase price of £89m for the equity, including repayment to the vendors of £14m of equity invested into SOGWUK since 31 March 2023, with
Slide 4: Proven track-record of acquisitive growth and value creation
Proven track-record of acquisitive growth and value creation Demonstrated ability to integrate acquired businesses, realise synergies and drive shareholder value £bn Shareholder value – Increase in Total RCV K8 increase: 37% 2.1 7.9 RCV on acquisition(1): £351m K7 increase: RCV growth K7(2): 37% RCV
Slide 5: SES Water overview
SES Water overview A high-quality, water-only business to further expand Pennon’s reach in southern England £125m Revenue Mar-23 SCOTLAND Sutton SES Water highlights £13m Cobham Purley EBITDA Leatherhead Coulsdon Caterham • Water supplier serving >750,000 customers in the South East of England Mar-2
Slide 6: SES Water is a high-quality, water-only business
SES Water is a high-quality, water-only business "Top performer" in 2022-2023 for minimising interruptions to customers' supply(1) Sustained strong performance throughout AMP7(2) One of only three companies in the industry to achieve Leakage, Supply Interruptions, Water Quality and Unplanned Outage
Slide 7: Deploying our proven integration blueprint
Deploying our proven integration blueprint 24-month programme to integrate the business Acquisition completes immediately without conditions, but requires CMA review Bristol Water acquisition indicates potential framework for potential undertakings Licence change and statutory transfer anticip
Slide 8: Acquisition offers scale benefits and returns opportunities
Acquisition offers scale benefits and returns opportunities Transaction highlights Synergies expected to reach £11m(1) p.a., resulting in value creation Upside potential from improving SES Water returns Historic AMP7 Average Rolling RoRE Comparison between PNN(3) & SESW No material impact on gea
Slide 9: Equity placing and pro forma gearing
Equity placing and pro forma gearing £m, March 2023 Net Debt RCV PF Net Debt / RCV Pennon Group standalone pre transaction 2,965 4,716 62.9% Adjustments(1) SES Water (SOGWUK) 291(1) 334 87.3% Equity consideration 89 - - Net placing proceeds to reduce debt (176) - - Pro Forma Combined Pennon Group(2)
Slide 10: Summary
Summary Attractive opportunity to acquire a high-quality, water-only UK asset ▪ Complements Pennon’s existing portfolio across southern England ▪ Fits our execution and asset integration experience – proven acquisition and integration blueprint Will deliver an estimated c.7% increase in RCV on a
Slide 11: Disclaimer
Disclaimer NOT FOR PUBLICATION, RELEASE, TRANSMISSION, FORWARDING OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN (i) "investment professionals" within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) OR INTO THE UNITED STATES OF AMER