Pennon Group has reported an underlying loss before tax of £35.1 million for the year (2023/24: underlying profit of £16.8 million) £35 million loss this morning with the publication of its full year results 2024/25 this morning.

The Group said the resulting loss before tax on both an underlying and statutory basis reflects “a point of inflection into K8” with an expected return to profitability in 2025/26 through increased revenue and a reset of its cost base..

The statutory loss before tax reflects the cost of interventions to return quality supplies following the Brixham cryptosporidium water quality event last summer (c.£21.0 million) and the costs of restructuring to reshape the Group’s activities (c.£16.6 million)

Capital expenditure for year for the Group was £652.5 million (2023/24 £649.5m), while dividend per share was 31.57p – down from 36.67p in 2023/ 24. The continued capital investment programme this year increased finance costs, which have moved from £150.2 million to £184.4 million.

Pennon said results for 2024/25 were in line with management expectations, reflecting a full year of Sutton and East Surrey Group. Successful water efficiency initiatives reducing customer demand drove lower revenues in South West Water.

Following a successful rights issue supporting £1.3 billion of funding raised in the year, Pennon said the balance sheet for the Group is robust with total Water Group RCV gearing of 61.8%.

Chief Executive Susan Davey describes 2024/25 as “a challenging year” 

Chief Executive Susan Davey described 2024/25 as “a challenging year” and ackowledged there were areas where the Group needed to improve its performance. Commenting on the results, she said:

“Of course, there are also areas where we, which is one of the reasons we have also reshaped the group with clear business lines, aligned to our four strategic priorities, building water resources and improving water quality, tackling storm overflows and pollutions, driving environmental gains and supporting affordability and delivering for customers.

“I now have in place Managing Directors leading key delivery aspects for waste water, drinking water, retail services and renewable energy. This new structure ensures there is a direct line of sight into the business systems, processes and governance. Having considered the ongoing sector wide and company specific investigations, the refreshed pillars of governance are supporting rectifications we have identified through delivery on action plans as we await any findings.

“Our capital delivery supply chain partnership 'amplify' has already been stood up delivering on over 1,000 schemes, representing one third of the £3.2 billion earmarked for investment to 2030…..

“Of course, it's not what we do but how we do it that also matters. Our operations across the Group need a reliable and efficient power supply and we are investing to increase renewable energy provision through Pennon Power, supporting resilience and our Science Based Target Initiative underpinning our Net Zero ambitions….

“With critical national infrastructure, and a network length that could wrap around the circumference of the world, occasionally things go wrong, it is how we respond and how we strive to eliminate those occurrences that matters.”

Operational higlights

Operational highlights flagged up by the Group include:

Sector leading internal sewer flooding with a reduction in 2024/25 of 14% (68% over K7) and 11% in external sewer flooding in the year (20% over K7)

One of only 5 companies to reduce storm overflows, down c.4% in 2024 compared with 2023 despite the exceptionally high rainfall and groundwater levels. Our focus on bathing waters has reduced spills by 20% over K7 (with 2024 and 2023 levels consistent)

Investment in water resources, with Blackpool pit fully operational in 2024/25 and the new water treatment works at Rialton supplementing water available for use in Cornwall by c.34%, with the interventions already delivered in the previous year in Devon by 30% compared to the levels during the 2022 drought. As a result, despite the dry start to the year we are not predicting any water restrictions this summer

Water quality investments are on track and we have already begun our planning and design for our K8 programme. Our quality first programme has delivered water quality improvements this year

Pennon Power solar investments on track with PV construction complete at Fife and underway at Aberdeenshire and Cumbria. Cold commissioning at Fife completed, with energisation in June

At the end of K7 100% of our South West and Bristol customers now find their bill affordable with c.£124m support benefiting over 150,000 customers over K7, including innovative tariffs driving water efficiency and affordability.