Pennon Group has announced a robust start to AMP8 with a strong return to profitability in its latest trading update for the period from 1 April to 25 September 2025 - a robust liquidity position has been further enhanced by £300 million new issuance in September 2025 under its EMTN funding programme.

Susan Davy, Group Chief Executive Officer commented:

"We're driving real improvements for our customers and communities whilst delivering a return to strong profitability. Despite the pressures of a hot summer, we've maintained resilient water supplies and continued to improve services for our customers. Whilst there is more to do, our pollution reduction plans are delivering tangible benefits, halving the number of pollutions and spills from storm overflows, reducing our impact on the environment."

Pennon said it is on track against expectations in 2025/26, with a target RORE (Return On Retained Earnings of 7% underpinned by efficient financing for the current financial year. The company is reporting that its price control deliverables are on track for 2025/26, with programme efficiencies being secured as delivery progresses. Financial performance for the full year 2025/26 remains on track to deliver a strong return to profitability.

The update says:

“We are on track to deliver our 7% RORE target, supported in-year by efficient financing costs, whilst efficiencies in delivering the capital programme are more than offsetting other cost pressures.”

High demand for clean water over the summer period due to the hot weather has been more than offset in Group revenues by increased meter optants and profiling of tariffs to smooth customer bills, deferring revenue into 2026/27.

The hot weather also resulted in higher operational costs to respond to the increased demand and operational pressure on the networks. However, Pennon said that despite this it has made a strong return to profitability, with EBITDA anticipated to increase by c.60% year on year, net of revenue deferred into 2026/27.

Operational highlights include:

Wastewater Services - 2025/26 Outcome Delivery Incentives are tracking to be net neutral - a first for South West Water since ODIs were introduced. Pollution incidents have halved in the eight months to August 2025, as pollution reduction plans deliver benefits. In addition, storm overflow spills have reduced by nearly 50% year-on-year, benefitting from interventions and investment in our wastewater network, alongside lower rainfall year on year in the South West.

Water Services - Outcome Delivery Incentives have been impacted by supply interruptions from a burst main at the company’s Dousland Water Treatment Works. Despite the hot weather and high demand Pennon’s water resources position benefitted from investments following the 2022 drought, although dry ground conditions across its regions have led to increased network incidents and leakage.

The update says the five-year AMP8 capital programme is on track to deliver the Year 1 Price Control Deliverables and that Pennon is making good progress in delivering its wider investment programme, with efficiencies being secured as projects progress from design into delivery.

Pennon Power

Construction is underway on all four of the Pennon Power major projects with Dunfermline in Fife and Cullerlie in Aberdeenshire both fully constructed and scheduled to be connected to the Grid and generating power during October. When all four sites are operational by the end of FY27, Pennon Power's renewable energy portfolio will generate the equivalent of 40% of the Group's total consumption.

Regulatory investigations

Commenting on regulatory investigations, Pennon says progress is being made to draw regulatory investigations to a close. The Environment Agency prosecutions in respect of wastewater incidents dating back to 2015-2021 are progressing through the relevant court process, with action already taken to resolve any issues. In September, the DWI progressed the court process in respect of the 2024 water quality incident.

“We continue to support the relevant authorities with their investigations,” the update says.

Following the announcement of Susan Davy's intention to retire from the Group, the Board is currently progressing a rigorous search process to appoint the next Chief Executive Officer.