Pennon Group (PNN) investor relations material

Strategic reset

• Six-month review set a 2030 pathway, identifying unclear accountability, weak performance culture and devolved asset management; actions include refreshed leadership, a new operating model, reprioritised capital plans and Maintenance Excellence.

• Five reset pillars: people and culture, operational excellence, asset management and reliability, environmental performance, and customer service.

• Centralised asset management and insourced leakage teams and operational roles aim to strengthen accountability and shift maintenance from reactive to proactive; monthly scorecards and leading indicators support delivery.

• Technology programme includes Project Fusion customer and billing platform, planning and scheduling, upgraded asset GIS and operational control-centre improvements; Fusion targets 29% fewer contacts, 25% digital-channel shift and 20% efficiency improvement, with Q3 FY27 go-live targeted.

Investment and asset growth

• AMP8 regulated-water capital investment expected at ~£3.6bn, ~£1bn above the original plan; the review identified ~£1bn of additional investment, including £400m through Ofwat Cost Change and £600m for performance and compliance.

• Ofwat provisionally allowed £230m (£190m in 2022/23 prices), 76% of the amount requested; a further £170m is targeted through later AMP8 cost-change processes, subject to approval, with final determination expected by 15 December 2026.

• RCV growth target increased from 34% to over 40% across AMP8, at ~7% CAGR; the operational plan adds >6% RCV growth.

• The £600m programme includes over £300m linked to performance commitments and over £200m for capital-project challenges; sewer rehabilitation includes £62m for infiltration reduction and £60.7m of capital maintenance targeting c.124km of gravity sewers.

Operational and customer delivery

• FY27 performance remains challenging, including a forecast miss against the South West Water year-two Compliance Risk Index target; leakage, supply interruptions, pollution and customer measures require recovery plans.

• ODI penalties were £58m in FY26 and are expected to remain broadly consistent in FY27; recovery is expected to take the rest of AMP8, with penalties targeted to fall at least 50% by FY30 and around £28m forecast by year five.

• Four-star EPA status by 2028 is considered difficult; priorities are continuous AMP8 improvement in pollution and treatment compliance, supply interruptions below eight minutes, mid-table C-MeX and a D-MeX net reward by 2030.

• Leakage, pollution and South West C-MeX are major penalty drivers; supply-interruption improvements in Bristol and the South West are targeted over the next 18 months.