Pennon is offering customers the choice of either taking £20 off their bill or investing in shares in Pennon Group, building on the 1 in 16 households who have already done so. Bristol Water customers will also be eligible to participate for the first time.

Around 100,000 customers are separately now benefiting from one or more of South West Water’s affordability initiatives, which include discounts to bills or a level of bill certainty to suit customers’ circumstances.

Results are in line with management expectations, including a 22.9% increase in underlying revenue, with Bristol Water contributing £104.4 million and 6.7% rise in organic underlying revenue - primarily due to a recovery in non-household demand both in and out of region, and contract wins from Pennon Water Services.

Commenting on the results, Susan Davy, Group Chief Executive, said:

“2021/22 has been another year of resilient performance for Pennon.

“We’re building momentum, executing our strategy and driving sustainable growth. At the same time, we are doing more for customers than ever before as well as delivering the step change we all want for our rivers and seas, for the Great South West, and for generations to come.

“At Pennon, we believe every customer should benefit from what we do. That’s why in February, we announced average bills in the South West would fall, lower now than 10 years ago, supporting the cost of living crisis.

“We’ve also announced plans to share an additional c.£20 million of outperformance with every household in the South West, part of our unique WaterShare+ scheme, putting customers in control, choosing either to take £20 off their bill or investing in shares in Pennon Group, building on the 1 in 16 households who have already done so, in 2020.

“At the same time, we’re investing more where it matters most. With our largest ever environmental programme in 15 years, we are accelerating plans to make a step change in river and sea health, building on our track record of 100% coastal bathing water quality, with WaterFit, delivering a tangible difference to communities and customers in the region over the next 3 years, and with no impact on bills.

“We can do all this and more, because of our relentless approach to being as efficient as possible, delivering double base RORE, reinvesting outperformance where it counts, with a robust balance sheet and an optimised financing portfolio.”

Pennon has reported a “robust, resilient financial and operational performance” during the period, with its largest ever water business capital investment programme – c.£240 million in 2021/22.

South West Water has delivered a sector-leading RORE of 9.2% and around 80% of South West Water ODIs on track – delivering a net reward in 2021/22.

Bristol Water’s financial results are ahead of acquisition expectations, with around 75%2 of Bristol Water ODIs on track – delivering a net reward in 2021/22. The company’s RORE of 6.3% are delivering above allowed base returns. Following Pennon’s £425 million acquisition of Bristol Water the Competition and Markets Authority cleared the merger on 7 March 2022. Further synergies of c.£50 million have been identified over remainder of AMP7, with doubling of base returns targeted by 2025.

Pennon Group’s RORE is c.8.9% with a cumulative Group outperformance during AMP7 of c.£150 million to date. In its retail division, Pennon Water Services has made around £19 million of new contract wins, growing a sustainable national platform for business retail, the Group said.

Other key announcements highlighted in the report include:

• c.£150 million additional and accelerated investment in AMP7
• c.£45 million totex reinvestment to deliver a step change for coastal and river water quality –via the WaterFit platform
• c.£20 million accelerated second issuance of WaterShare+ return to customers
• c.£82 million accelerated and additional spend on Green Recovery, including pilots into river water quality
• Responsible gearing across the water business – 61.4%
• Pennon Water Services delivering profit before tax for the first time since market opening
• Delivering Group RCV6 growth of >40% over AMP7
• Share buy-back programme – c.£200 million complete, c.£200 million to deploy

Commenting on operational performance, Pennon Group said that WaterFit will dramatically reduce the use of storm overflows, maintain the South West’s excellent bathing water quality standards all year round, reduce and then remove the company’s impact on river water quality by 2030.

Pennon has announced a sector-leading dividend growth of 8.2% with its full year dividend per share up to 38.53 pence.

Want to know more about Pennon Group companies AMP7 investment plans? Winning new business with the water companies in England and Wales in AMP7 and AMP8 between now and 2030?

Our report Complete AMP7 Contracts Tier 1 Alliances and Tier 1 Contractors April 2020 - 2025 contains details of the companies, key investment drivers, the alliances, the contracts they’re already working on in the UK water sector, together with hundreds of key named contacts. Click here for more information and details of how to order.