Pennon Group (PNN) H2 2025 earnings summary

Executive summary

• Ended the K7 regulatory period delivering on 70% of regulatory targets and four strategic priorities, placing the group in the sector's top quartile and setting a strong platform for K8.

• Strategic focus on water quality, environmental gains, customer support, and operational efficiency, with significant investment and business reshaping.

• Expanded customer base and regional footprint through organic and acquisitive growth, including SES Water and Bristol Water, leading to 75% RCV growth over five years.

• 2024-2025 described as a point of inflection, with a financial reset, strong balance sheet, and rebased dividend.

• Achieved record capital investment and significant operational efficiencies, with a robust outlook for K8.

Financial highlights

• Full-year revenues of £1,047.8 million, broadly flat year-on-year, with underlying EBITDA stable at £335.6 million.

• Underlying EBITDA was £336m for FY 2024/25, showing resilience despite flat revenues.

• Reported a loss before tax of £35.1 million, in line with expectations, with total loss before tax at £72.7m due to non-underlying items.

• Record group CAPEX of £652m, with £490 million raised in a rights issue and £800 million in new debt.

• Dividend rebased to 31.57p per share, growing in line with CPIH.

Outlook and guidance

• Strong outlook for 2025-2026, with a return to profitability expected and regulated Water Group revenue projected to increase by £180-240m.

• EBITDA projected to increase by around two-thirds year-on-year, driven by revenue reset and stable cost base.

• Group capital expenditure guidance of £710-740m, with front-loaded investment in K8.

• Targeting 7% RORE and neutral ODI position as new Ofwat targets are adopted.

• Net financing costs to increase by £25-35m due to record investment and new debt.