Pennon says performance improving, regulatory probes to close in 2026
Pennon Group PLC on Tuesday said its performance ‘continues to improve year-on-year’ and that it remains on track to deliver a ‘robust’ return to profit, despite pressures brought by exceptional weather.
It also confirmed that Keith Haslett will start as the company’s chief executive officer on April 1, and said that it believes Environmental Agency prosecutions over wastewater incidents dating from 2015 to 2021 will conclude this year.
The Exeter, England-based water utility company said in a trading update covering the period from September 30 to March 9, the period since the end of its first half, that its earnings before interest, tax, depreciation, and amortisation was up 55% annually, despite ‘weather-related cost pressures and higher costs in the first year of the regulatory cycle’.
It sees underlying profitability also within the range of expectations for the financial year, although at the lower end of the estimates, with a return on regulated equity of 7% targeted over the period ending in 2030.
The water utility company also noted how financing and capital expenditures efficiencies for the financial period, which remain ‘on track’, will be partially offset by outcome delivery incentive charges, due to ‘exceptional and sustained rainfall creating operational pressures’ resulting in a net penalty position.
Pennon also said that it expects prosecutions over wastewater incidents until 2021 is expected to be concluded this year, while the Drinking Water Inspectorate court process over the 2024 water quality incident is expected to be concluded by the summer.
Additionally, two renewable generation sites in Scotland, part of Pennon Power are now energised, with two more ‘progressing towards connection’. All fours sites are expected to be operational by the end of the 2027 financial year, and will generate around 40% of the company’s total energy consumption.
Pennon shares were up 2.6% to 549.50 pence each on Tuesday morning in London.
Pennon releases annual results on June 2.
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