Pennon Group plc (LON:PNN) has announced its results for the half year ended 30 September 2025.
Susan Davy, Pennon Group Chief Executive Officer, commented:
“We have made a robust start to the first half of 2025/26 and the new K8 regulatory period. With a strong return to profitability and disciplined cost control, we are on track financially and growing sustainably.
Focused on our customers’ priorities, we are delivering step change improvements in our wastewater business, with pollution incidents halved compared to last year. This reflects our operational focus and continued momentum of record capital investment over the last two years, thanks to the early mobilisation of our supply chain.
Our strong balance sheet and funding approach position us well to deliver our largest ever capital programme through K8, focused on the four priorities that matter most to our customers – ensuring the availability of safe, clean drinking water as summers become hotter and drier, tackling pollutions and storm overflows, protecting the environment and supporting customers to use less and save more.
As the only water company to have received three successive outstanding business plan ratings, we understand what we do each day really matters. That’s why my brilliant colleagues are firmly focused on ensuring we deliver on our five-year plan for the communities we serve, the places they call home, recognising there is always more to do.”
FINANCIAL PERFORMANCE
| H1 2025/26 | H1 2024/25 | |
| Revenue | £658.1m | £527.2m |
| Underlying EBITDA^ | £254.4m | £163.5m |
| Underlying profit/(loss) before tax^ | £65.9m | (£18.6m) |
| Non-underlying items before tax1 | – | (£20.2m) |
| Profit/(loss) before tax – statutory | £65.9m | (£38.8m) |
| Profit/(loss) after tax – statutory | £57.3m | (£30.0m) |
| Earnings/(loss) per share | ||
| Adjusted basic EPS^ | 14.0p | (5.5p)2 |
| Basic EPS | 12.1p | (8.8p)2 |
| Dividend per share3 | 9.26p | 12.14p |
| Capital expenditure | £304.8m | £331.8m |
Financial highlights for H1 2025/26
· Strong return to profitability for H1 2025/26, with statutory profit before tax of £65.9 million (H1 2024/25: loss of £38.8 million)
· Step change in underlying EBITDA as a result of disciplined cost management, with savings being released from the restructuring and efficiency programmes
· Regulated water revenue up c.26% year on year, driven by tariff increases and higher demand over the hot summer months, net of reprofiled Final Determination revenue into 2026/27 customer bills
· Continued efficient financing, with £300 million new bond issuances in South West Water demonstrating strong outperformance against the allowed cost of debt
· On track for Return on Regulated Equity^ (RORE) of 7%4, underpinned in 2025/26 by efficient financing, with efficiencies in capital programme offsetting other cost pressures
· Strong start to our K8 capital investment programme, with £304.8 million of capital investment across the Group in H1 – in line with expectations, as programmes continue momentum from K7 run rate
· Interim dividend of £43.7 million (2024/25: interim dividend £42.0 million), resulting in a dividend per share basis of 9.26p.
Operational highlights
· Pollutions Incident Reduction Plan (PIRP) driving results with pollution incidents in 2025 reducing by c.50%5, and our proactive approach has reduced repeat pollutions by c.75%
· Storm overflow spills cut by c.45%5, supported by interventions that avoided c.6,000 spills, bringing a total of c.20,0006 spills avoided over 18 months
· Spill duration down by a quarter over the bathing season and 100% bathing water quality for the fifth consecutive year7
· Water resources position has remained strong through the hot summer, thanks to strategic planning and investment following the 2022 drought, although changing weather fronts have tested the networks
· SES remains top performer for water quality, South West Water upper quartile, Bristol remains above average
· Our award-winning Upstream Thinking programme continues to expand and deliver impact and was recognised with two major industry awards this half year:
o Biodiversity Challenge Award for Water Management (CIRIA)
o Natural Capital Initiative of the Year (Water Industry Awards)
· Investment in Pennon Power has continued with two of our four sites, Fife and Aberdeenshire, fully constructed with Aberdeenshire now energised
· Continuing to support our customers with bill affordability, with a c.20% increase in customers on one or more of our support tariffs8. Cash collections remain robust, with debt charges as a percentage of revenue broadly stable
· Launched our £5 million Better Futures Fund.
Outlook
· Pennon Group are fully supportive of the Government’s regulatory reform agenda, and we are actively engaged in Defra’s Transition Planning process. We look forward to the publication of the forthcoming White Paper
· In FY 2025/26, we are returning to profitability, with Group underlying EBIDTA expected to increase by c.60%9 year on year
· First year investment underpinning growth in RCV^ of c.8% this year rising by over a third by 2030
· Targeting K8 7% Return on Regulated Equity, underpinned by efficient financing for FY 2025/26
Notes
^ Measures with this symbol are defined in the Alternative Performance Measures (APM) section of this document, underlying measures are presented before non-underlying items
1 Non-underlying items are adjusted for by virtue of their size, nature or incidence to enable a full understanding of financial performance (note 5)
2 Restated to reflect the bonus element of the rights issue commenced in January 2025 in accordance with IAS 33
3 Dividend policy of CPIH. The proposed interim dividend for 2025/26 is increased by 4.1% reflecting an increase in line with CPIH. Dividend per share reflects the share issuance post rights issue with H1 2024/25 restated on this basis.
4 7% RORE – 5.1% base returns, 0.3% enhanced uplift to cost of equity, 1.6% outperformance
5 Reduction over 10 months to October 2025 compared with October 2024
6 Cumulative spills avoided, reflecting impact of wetter weather in 2024
7 On a like for like basis excluding those beaches designated in 2024
8 Since H1 2024/25
9 Assuming normalised demand in the second half of the year
Results presentation
A presentation of the Half Year 2025/26 results hosted by Susan Davy, Group Chief Executive Officer and Laura Flowerdew, Group Chief Financial Officer, will be available at 08:00am (GMT) today, 27 November 2025. This will be followed by a live Q&A session at 08:45am (GMT). The presentation and Q&A session can be accessed here: www.pennon-group.co.uk/investor-information
