Pennon Group Plc · LSE:PNN
Pennon — FY2024/25 Earnings Presentation
45 slides from Pennon's earnings presentation, Jun 3, 2025
Slide 1: Full Year Results 2024/25
Full Year Results 2024/25 3 June 2025
Slide 2: Disclaimer
Disclaimer For the purposes of the following disclaimers, references to There are a number of factors that could cause actual results, Without prejudice to the above, whilst Pennon Group accepts this “document” shall mean this presentation pack and shall be performance or achievements of Pennon Grou
Slide 3: Susan Davy, Pennon Chief Executive Officer
Susan Davy Pennon Chief Executive Officer © Pennon Group plc 2025 3
Slide 4: A resilient end to K7, robust outlook for K8
A resilient end to K7 Delivering on our four strategic priorities Serving more customers and communities across our regions Point of inflection – reset and rebased for K8 Strong platform secured for the future © Pennon Group plc 2025 Robust outlook for K8 4
Slide 5: Delivering on our four strategic priorities in K7
Delivering on our four strategic priorities in K7 Building water Tackling storm Driving Supporting resources, improving overflows environmental affordability, delivering water quality and pollutions gains for customers Sector- Sector- 144,000 Breaking the drought leading 100% Bathing Water leading R
Slide 6: Serving more customers and communities across our regions
Serving more customers and communities across our regions – a growing footprint Delivering efficiently Two new state-of-the-art treatment works First time sewerage and step change in water quality Cheddar 2 investment approved Securing financial resilience and Bough beach reservoir opportunities Gro
Slide 7: Point of inflection: reset and rebased for K8
Point of inflection Water Record efficiency Resetting capital Strong initiatives the cost base investment Cumulative balance sheet Rebased driving Delivering WaterShare dividend lower c.£76m RORE £1.3bn post Rights annualised our outcomes for Issue revenue savings our customers 10.4% 1 funding raise
Slide 8: Strong platform for the future
Strong platform for the future ‘outstanding’ Solid business plans – already delivering Business Plan 2025-2030 Our business plan 2025 to 2030 Summary October 2023 We’re doing this ‘standard’ Step change in investment – 34% growth in RCV Driving efficiency and innovation Targeting c.7% RORE in K8 – c
Slide 9: Laura Flowerdew, Group Chief Financial Officer
Laura Flowerdew Group Chief Financial Officer © Pennon Group plc 2025 9
Slide 10: Financial highlights
Financial highlights Resilient underlying Underlying loss SWW Return on EBITDA before tax Regulated Equity £336m £(35.1m) 6.0% 1 Rebased dividend Record investment Water Group gearing 2 per share CAPEX £652m 61.8% 31.57p © Pennon Group plc 2025 1 Real cumulative RORE on underlying totex, financing a
Slide 11: FY25 results shaped by customer demand measures and record K7 investment
FY25 results shaped by customer demand measures and record K7 investment Full year results from Underlying1 (£m unless otherwise stated) 2024/25 2023/242 SES Group Revenue 1,047.8 907.8 SWW revenue flat, EBITDA 335.6 338.3 resulting from lower customer consumption Operating profit 148.5 166.3 Net fi
Slide 12: Revenue
Revenue Pennon Group • Full year benefit of SES Group – Water and non-regulated businesses • SWW revenue reduced by customer demand measures, offset by inflation and tariff increases • Strong PWS performance, benefiting from new contract wins and tariff inflation, offsetting lower customer usage Rev
Slide 13: Underlying EBITDA
Underlying EBITDA Pennon Group • Full year of SES Group – revenues and costs • Investment in new technology – new customer platform and • Flat revenues year on year for SWW network monitoring programme • Operational efficiencies offsetting inflation impacts • Increased front line activity to drive w
Slide 14: Delivering efficient performance
Delivering efficient performance c. £86m targeted K8 run rate annualised 2024/25 TARGETED K8 RUN RATE Bristol Water savings integration • Integration synergies achieved in full £20m c. £20m Fully delivered Reshaping Business Plan 2025-2030 • Improving how we work, being more efficient the business •
Slide 15: Investing to deliver our four priorities
Investing to deliver our four priorities Group capital investment (£m) 2024/25 2023/24 South West Water 588.7 582.9 Clean water 325.2 369.3 Wastewater 263.5 213.6 Pennon Power 40.7 59.0 Other Group 0.4 0.5 Total Group (excl. SES) 629.8 642.4 SES 22.7 7.1 Total Group 652.5 649.5 • Record investment t
Slide 16: Financing our growth
Financing our growth Strong liquidity and Diversified debt portfolio Efficient financing funding position Preference shares Water Group SWW effective £12.5m Private placements £836.1m Leases £1,052.4m gearing 61.8% interest rate 2 5.4% £1.3bn Average maturity 14 years raised in 2024/25 Cash £476.1m
Slide 17: Funding secured for next phase of growth
Funding secured for next phase of growth Unprecedented growth from UK water • £ K7 outperformance £3.2bn Nominal K8 base Cumulative SWW returns 2 Shareholder value allowances RCV growth 6.0% 10.4% K7 shareholder value c.£910m (£m) Growth1 c.£200m 75% 34% Dividends paid real nominal Retained value 3
Slide 18: Financial framework over K8
Financial framework over K8 RORE 7% target returns 1 160 bps outperformance, 30 bps reward Capital investment £3.2bn investment programme RCV growth 34% to 2030 Dividend policy Growing in line with CPIH Resilient balance sheet 55-65% gearing policy for Water Group Investment grade credit ratings Moo
Slide 19: Outlook 2025/26 – Strong return to profitability
Outlook 2025/26 – Strong return to profitability Revenue EBITDA • Regulated Water Group revenue increasing by £180-240m, • Water Group EBITDA materially improving due to higher aligned with Final Determination allowed revenues revenues • Non-household retailers increase revenue in line with sector •
Slide 20: Susan Davy, Pennon Chief Executive Officer
Susan Davy Pennon Chief Executive Officer © Pennon Group plc 2025 20
Slide 21: Tackling pollutions and storm overflows
Tackling pollutions and storm overflows Prioritising the impact on homes and businesses Pollution incident reduction a key focus Internal sewer flooding (per 10,000 properties) Total emissions1 (per 10,000km) 68% Industry-leading 2.5 1,400 Lowest number 2.0 performance 1.200 of pollutions 1.5 1,000
Slide 22: Tackling storm overflows and pollutions
Tackling storm overflows and pollutions Progress made despite 2024 being the wettest hydrological year on record Driving spills down through interventions Focus on bathing waters 20% Spill reductions (%) Bathing water/ Bathing season spills One of only 5 50 (number) companies to 40 reduce 30 spills
Slide 23: Building water resources, improving water quality
Building water resources, improving water quality Securing supply resilience into the future Reducing demand and driving water efficiency Supplemented resources (%) Cornwall 34% 100% 30% Supply Demand Balance index Devon Sector-leading demand 2022 2024 reduction scheme Exceeded target Innovative tar
Slide 24: Building water resources, improving water quality
Building water resources, improving water quality Clean, safe, drinking water – our customers’ number 1 priority CRI score1 16 14 Quality First 12 approach delivering results 10 8 Industry-leading 6 average CRI 4 >67% 2 ODI deadband improvement 0 Water Only Companies (WOC) Water and Sewerage Compani
Slide 25: Driving environmental gains
Driving environmental gains Improving water quality 80% RNAGs 2 phosphorus reduced to reduction at 37 sites 1 12% from 19% over K7 Enhancing biodiversity c.144,000 hectares improved – Leveraging third party contributions c.£25m K7 ODI benefit for peatland restoration Commitment to Net Zero 3 sites 1
Slide 26: Pennon Power
Pennon Power Strategic rationale Standalone, debt-funded plan to complete • Equity returns in the range • Remaining funding until completion will be via debt of 11-15%1 • We will review and • Consistent with our 2030 net optimise ownership and zero strategy financing closer to or • Provides natural
Slide 27: Supporting affordability, delivering for customers and communities
Supporting affordability, delivering for customers and communities Supporting vulnerable Significant support Working with our customers packages local communities Priority Services Register (reach %) 16 14 12 10 8 6 4 2 Target 0 SWW BRL SES SWW BRL SES 2020/21 2024/25 Exceeding our target every year
Slide 28: Sector-leading retailers
Sector-leading retailers EBITDA £7.6m “So easy and friendly to deal 4.8 with. I couldn’t be happier with their service.” 80% ownership 2021/22 2022/23 2023/24 2024/25 EBITDA £6.5m “It is a pleasure to deal with a company 5.0 that obviously invests in its team so they can help and 30% ownership1 aid
Slide 29: Delivering through our colleagues
Delivering through our colleagues c.4,000 Confident brilliant colleagues in delivery – delivering for customers – working with innovative and the environment supply chain Supporting 2,000 jobs across our region c.4,000 courses through our training centres 680 graduates & apprentices © Pennon Group p
Slide 30: A resilient end to K7, robust outlook for K8
A resilient end to K7 Delivering on our four strategic priorities Serving more customers and communities across our regions Point of inflection – reset and rebased for K8 Strong platform secured for the future © Pennon Group plc 2025 Robust outlook for K8 30
Slide 31: Appendix
Appendix © Pennon Group plc 2024 31
Slide 32: A growing footprint – strong platform for delivery
A growing footprint – strong platform for delivery RCV growth 34% K8 K7 30% SES / BRL 20% Additional investment Water Renewable 25% 1 1 retail energy Base services generation © Pennon Group plc 2025 1 Pennon Water Services – 80:20 joint venture with South Staffs, water2business – 30:70 joint venture
Slide 33: Bristol Water and SES – acquisitions driving growth
Bristol Water and SES – acquisitions driving growth Merging our water operations and investment • Sharing control room capability and incident management practises • Water resources teams with integrated action plans – Acquisition WRMP24 submissions managed together June 2021 • Water Quality First a
Slide 34: Outcome Delivery Incentives
Outcome Delivery Incentives Measures New measures Strong comparative performance in K7 Unplanned outage Embodied greenhouse gas emissions – bespoke Internal sewer flooding Ofwat 2023/24 Water Company October 2024 Operational greenhouse gas Performance Report1 Water company performance report 2023-24
Slide 35: Pollution Incident Reduction Plan
South Pollution Incident Reduction Plan West Water Our plan revolves around five essential pillars Pollution Incident Reduction Plan April 2025 People & Customer Smarter Focused Asset culture & community operations capital information & engagement investment intelligence southwestwater.co.uk Increas
Slide 36: RORE outperformance
South RORE outperformance West Water Cumulative RORE performance1 (£m) Cumulative WaterShare RORE 3 2020/ 2021/ 2022/ 2023/ 2024/ Cumulative 6.0% SWW & BRL 21 22 23 24 25 total Financials 5.1% Totex 60 33 -80 -73 -80 -140 Financing 14 53 133 55 89 344 Base Totex ODIs -12 12 -10 -14 -23 -58 Financing
Slide 37: Driving financing outperformance
Driving financing outperformance Efficient & effective financing Diversified debt portfolio Hedging strategy to manage risk 12% 5.5 K8 nominal cost of debt 10% 4.5 8% 6% 3.5 4% 2.5 2% K8 nominal cost of debt Fixed rate debt 0 1.5 Fixed by swap 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22
Slide 38: Supported by our comprehensive financing package
Supported by our comprehensive financing package Key pillars of our approach Portfolio • Driving an efficient cost base, already targeting £86 million of annual benefits from reshaping the business, and realising acquisition cost synergies £2.0bn • Pennon Power: remaining investment to be fully debt
Slide 39: Flexible funding strategy
Flexible funding strategy Group debt Funding strategy at 31 March 2025 (£m) Gross Net • Maintain two strong investment grade credit ratings debt debt • Continued use of our diverse portfolio assessing the best options to support the business and our customers Pennon Group plc 247.2 202.2 • New fixed
Slide 40: Pennon Balance sheet – diversified funding portfolio
Pennon Balance sheet – diversified funding portfolio Balance at 31 March 2025 Pennon Pennon South West SES (£m) Group incl. non-regulated Water Water Leasing 1,052.2 5.1 1,045.7 1.6 Bank bilaterals 728.3 155.5 547.3 26.5 Index-linked debt (RPI) 1,030.5 90.4 715.1 224.6 Fixed rate bonds 888.9 15.6 87
Slide 41: Pennon Debt maturity profile
Pennon Debt maturity profile Group debt Liquidity position maturity profile (£m) • At 31 March 2025, Pennon Group had access to undrawn committed funds 450 and cash and cash deposits totalling 400 c.£977.9m, including cash and other 350 short-term deposits of £417.9m and 300 c.£560m of undrawn facil
Slide 42: Pennon Net debt movements
Pennon Net debt movements Pennon Group – summarised net debt flow 2024/25 2023/24 (£m) flows flows Net debt excluding fair value uplifts 1 April (3,684.8) (2,841.4) Opening balance 1 April (restated) (3,844.8) (2,965.4) Cash generated from operations 233.6 261.7 Corporation tax received 3.0 3.4 Net
Slide 43: Pennon Financing costs
Pennon Financing costs • Full year impact of SES • Reduction in inflation and rates offset by new debt to fund the ongoing investment programme • SWW effective interest rate 5.4% Total interest 47.3 4.7 184.4 charge 16.1 (£m) (9.2) (3.4) 150.2 (21.3) 2023/24 SES Interest New debt Capitalised Interes
Slide 44: Net interest analysis
South Net interest analysis West Water (£m unless otherwise stated) 2024/25 2023/24 Underlying net interest charge (170.6) (155.5) Less: pensions net interest (1.1) (1.4) Non-debt related interest (23.1) (14.1) Add: capitalised interest 4.5 - Net interest for average rate calculation (190.3) (171.0)
Slide 45: Impact of the Rights Issue on EPS and DPS
Pennon Impact of the Rights Issue on EPS and DPS Dividend (£m) Impact on reported FY 2023/24 historical per share figures £2.4m 3.4% £133.7m CPIH 44.4p £126.9m £129.3m 6.2p 36.7p 5.1p 2023/24 2023/24 2024/25 FY 2023/24 Bonus adjusted2 FY 2023/24 Bonus adjusted adjustment EPS FY 2023/24 DPS FY 2023/2