Pennon Group Plc

Pennon reported H1 revenue of GBP 658 million, up 25% year-on-year, with revenue in the regulated water business up 26%. EBITDA rose about 55% to GBP 254 million from GBP 164 million, and profit before tax improved to GBP 65.9 million from an underlying loss of GBP 18.6 million and a statutory loss of GBP 38.8 million in the prior year. Adjusted EPS increased to 14p from a loss of 5.5p, while the interim dividend was 9.26p. CapEx was GBP 305 million in H1, gearing was about 60%, and the group raised over GBP 500 million in new debt during the first six months. For the full year, management expects revenue to normalize over the winter, EBITDA to increase by around 60% year-on-year, wastewater ODIs to be net neutral, and strong financing outperformance to support the 7% RORE target.

Susan Davy framed the half as a robust start to K8, emphasizing that record investment and early supply-chain mobilization are translating into operational execution. She highlighted Dawlish as an example of a tailored, nature-first storm-overflow project and said the group is focused on customers, environmental improvements, and supporting the sector transition. Her tone was confident and constructive, especially on the new regulatory framework, which she said should work for customers, companies, and investors.

Laura Flowerdew said the main financial story was the inflection point from K8: operating profit more than doubled and pre-tax profit moved to GBP 65.9 million from prior-year losses. She pointed to revenue of GBP 658 million, EBITDA of GBP 254 million, and cost growth of 6% in the Water Group, including around GBP 9 million of one-off impacts and GBP 4 million of customer compensation tied to an interruption earlier in the year. She also cited strong financing execution, with over GBP 500 million of new debt raised, an effective interest rate of 5.6% for the Water Group and 5.5% for South West Water, gearing at 60%, and guidance that full-year net interest is slightly lower than previously indicated.

Analysts focused on reopeners, the company’s RORE target, balance-sheet capacity, the EPA rating, CEO transition timing, and the potential sale of Pennon Power. Management said reopeners could support additional investment if housing growth and other needs justify it, but any spend would be worked through under the new change process and within gearing policy of roughly 55% to 65%. On the EPA, Susan Davy argued Pennon is in a good position to rerate by 2028 under the new methodology, and on the CEO handover she said there is no new timing update yet, while confirming Keith Haslett is coming in and she will support an orderly transition.