Pennon Group (PNN) H1 24/25 earnings summary

Executive summary

• Delivered resilient H1 2024-25 results with revenue up to £527.2m, driven by SES acquisition and strong non-regulated business growth, despite operational challenges including the Brixham incident.

• Integration of SES and Bristol Water progressing, targeting annualised synergy savings of up to £20m, with group reshaping to align with strategic priorities and increased front-line teams.

• Record capital investment of £1.8bn over K7 and £331.8m in H1 2024-25, supporting growth, resilience, and sector-leading operational performance.

• Maintained sector-leading performance in key operational areas, achieving 100% affordability for the first time and strong customer service ratings.

• Interim dividend of 14.69p per share declared, in line with CPIH +2% policy.

Financial highlights

• Group revenue up 17.5% year-over-year to £527.2m, mainly due to SES acquisition; underlying EBITDA down to £163.5m from £168.5m as lower demand offset tariff increases.

• Statutory loss before tax widened to £38.8m, impacted by £16.3m Brixham incident costs and restructuring charges.

• Underlying operating profit reduced to £59.5m from £85.9m year-over-year.

• Group capital expenditure increased 24.6% to £332m, reflecting accelerated investment and SES inclusion.

• Group net debt increased to £4,232.2m at 30 September 2024, with liquidity of £675m.

Outlook and guidance

• Full year revenue expected to remain broadly flat year-on-year for South West Water, with SES providing incremental growth.

• Operating costs to remain elevated due to power and digital investments, but H2 costs expected lower than H1 due to efficiency gains.

• Group capital expenditure to continue at H1 run rate, including £75m accelerated storm overflow investment.

• Net finance costs to rise in H2 due to ongoing capital program and SES financing charges.

• Water businesses RCV for 2024-25 anticipated to increase with continued high capital expenditure.