Pennon Group Plc · LSE:PNN
Pennon — H1 2025/26 Earnings Presentation
40 slides from Pennon's earnings presentation, Nov 27, 2025
Slide 1: Half Year Results 2025/26
Half Year Results 2025/26 27 November 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: Robust start to K8
Robust start to K8 Strong return to profitability for 2025/26 Operational successes – step change in wastewater performance Momentum in capital investment maintained into the start of K8 Well positioned as the sector evolves © Pennon Group plc 2025 4
Slide 5: Strong return to profitability for 2025/26
Strong return to profitability for 2025/26 Step change in EBITDA1 More than doubling On track for K8 RORE operating profit 1 £254m £159m 7% (H1 2024/25: £164m) (H1 2024/25: £70m) Robust funding position Earnings per share 2 Dividend per share c.£500mnew debt in H1 2025/26 14.0p 9.26p (H1 2024/25: (5
Slide 6: Operational successes – step change in performance
Operational successes – step change in performance Building water Tackling storm Driving Supporting resources, improving overflows environmental affordability, delivering water quality and pollutions gains for customers Resilient Sector- water c.50% c.45% 1 1 Biodiversity Progress gains on energy c.
Slide 7: Momentum in capital investment maintained into the start of K8
Momentum in capital investment maintained into the start of K8 Capital investment (£m) K6 K7 K8 800 700 600 500 400 300 200 H1 100 6 7 8 9 0 1 2 3 4 5 7 6 8 9 0 /2 /1 /2 /2 /2 /2 /2 /1 /2 /1 /1 /2 /2 /2 /3 16 20 17 15 18 26 27 21 24 22 25 28 23 19 29 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 © Pe
Slide 8: Well positioned for sector reform
Well positioned for sector reform Engaged in regulatory reform process and transition planning We expect the reforms to deliver: • Clear long-term direction for UK water • New single regulator and supervisory regime • Customer focused • Clear plans for improving water quality • Securing water resili
Slide 9: Laura Flowerdew, Group Chief Financial Officer
Laura Flowerdew Group Chief Financial Officer © Pennon Group plc 2025 9
Slide 10: Strong return to profitability – K8 inflection point
Strong return to profitability – K8 inflection point Step change in profitability Ongoing investment at start of K8 cycle Statutory Group operating 159 Capex 332 305 profit (£m) (£m) 49 H1 2024/25 H1 2025/26 H1 2024/25 H1 2025/26 Benefitting earnings per share 2 Gearing to supportive of K8 growth Gr
Slide 11: Step change in H1 financial performance
Step change in H1 financial performance Strong return to Underlying1 H1 H1 (£m unless otherwise stated) 2025/26 2024/25 profitability Revenue 658.1 527.2 25% increase in revenues EBITDA 254.4 163.5 Operating profit more Operating profit 158.6 69.5 than doubling year on Net finance costs (93.4) (88.6
Slide 12: 25% increase in Group revenues
25% increase in Group revenues Revenue (£m) Water Group Other 22 21 4 658 88 (4) 527 H1 Increase Volume Meter Retailers Other H1 2024/25 in allowed increase optants 2025/26 revenue/tariffs1 © Pennon Group plc 2025 1 c.£20m of regulated allowed revenues reprofiled into 2026/27 customer bills 12
Slide 13: Revenue and disciplined cost management driving EBITDA growth
Revenue and disciplined cost management driving EBITDA growth EBITDA1 Water Group (£m) 106 19 254 (25) (1) (9) 164 H1 Revenue Inflationary Impact of Efficiencies Other H1 2024/25 reset and related weather and 2025/26 costs incident © Pennon Group plc 2025 1 On an underlying basis 13
Slide 14: Investment continues to deliver our customers' priorities
Investment continues to deliver our customers’ priorities Group capital investment (£m) H1 H1 2025/26 2024/25 Clean water 154.2 185.0 Wastewater 125.0 130.8 Pennon Power 25.2 13.4 Other 0.4 2.6 Total Group 304.8 331.8 Record £3.2bn capital programme over K8 On track to deliver Year-1 Price Control D
Slide 15: Balance sheet set for K8 delivery
Balance sheet set for K8 delivery Diversified debt portfolio Responsible gearing c.60% Preference shares Water £12.5m Leases Group Private placements £1,044.1m gearing £983.5m Bank bilateral Strong liquidity and funding position Cash2 £627.4m £547.2m c.£500m Net debt at Debt raised 3 Fixed bonds 30
Slide 16: Transformative growth delivering long-term value
Transformative growth delivering long-term value On track to deliver 7% RORE target for K8 Transformative growth, long-term value Nominal 12% RCV growth (£m) Growth3 75% 34% 10% 8% (25% base, 20% K7 additional investment, 30% acquisition) floor for growth 6% 9,000 4% 8,000 Base 2% Outperformance2 FD
Slide 17: Outlook 2025/26 – Strong return to profitability
Outlook 2025/26 – Strong return to profitability Revenue EBITDA • Regulated Water Group revenue increasing by £185-210m • Water Group EBITDA materially improving due to higher • Non-household retailers revenue increase in line with sector- revenues wide tariff increases • Stable Water Group cost bas
Slide 18: Robust start to K8
Robust start to K8 Strong return to profitability for 2025/26 Operational successes – step change in wastewater performance Momentum in capital investment maintained into the start of K8 Well positioned as the sector evolves © Pennon Group plc 2025 18
Slide 19: Appendix
Appendix © Pennon Group plc 2025 19
Slide 20: Driving step change in wastewater performance
Driving step change in wastewater performance Pollution incident reduction Driving spills down Focus on bathing waters a key focus through interventions c.50% reduction in Cat 1-3 pollutions c.45% c.6,000 100% 2 c.25% reductions in storm spills avoided due water quality – reduction in spill overflow
Slide 21: Resilient water resources, industry leading water quality
Resilient water resources, industry leading water quality Resilient reservoir levels Industry leading water quality despite a hot, dry summer Supplemented resources (%) CRI score1 16 34% 100% 14 Cornwall 12 30% Supply Demand 10 Balance index 8 Devon 6 4 average 2 ODI 2022 2025 deadband 0 No restrict
Slide 22: Driving environmental gains
Driving environmental gains Commitment to Net Zero Enhancing biodiversity 2 Aberdeenshire site Peatland Programme delivering impactful restoration and engagement during H1 solar sites energised fully constructed 350+ 50 300 4 sites – Contributing to volunteer hours stakeholders events hectares 40% 1
Slide 23: Supporting our customers through increased support
Supporting our customers through increased support Significant support packages, Working with our supporting vulnerable customers local communities Priority Services Register industry c.20% increase in customers benefitting from one of more 290 drop-in sessions engaging over 5,000 customers leader o
Slide 24: Delivering on our commitments
Delivering on our commitments October 2025 Water company performance report 2024-25 Ofwat 2024/25 Water Company Performance Report 1 Company Water Wastewater categorisation performance performance 2023/24 2024/25 2025/26 6 5 Leading 3 4 3 2 2 1 1 Average 0 0 Upper quartile One off Return to in-line
Slide 25: Sector-leading retailers
Sector-leading retailers EBITDA £3.0m “Refreshing. Very professional 4.9 approach - clear, precise and informative.” 80% ownership H1 2022/23 H1 2023/24 H1 2024/25 H1 2025/26 EBITDA £5.3m “Excellent 4.9 service and extremely efficient.” 30% ownership1 H1 2022/23 H1 2023/24 H1 2024/25 H1 2025/26 EBIT
Slide 26: Delivering through our colleagues
Delivering through our colleagues c.3,600 Confident brilliant colleagues in delivery – delivering for customers – working with innovative and the environment supply chain Supporting 2,000 jobs across our region external assessments tracking towards 680 graduates & best-in-class levels apprentices ©
Slide 27: Embedding innovation in our delivery
Embedding innovation in our delivery 030 CREWW BRANDING Centre for Resilience in Environment, Water and Waste Centre for Resilience in Environment, Water and Waste State-of-the-art microplastics lab, Using AI in bid to make water focused on three main areas network lead free Microplastics in sewage
Slide 28: 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 29: Delivering efficient performance
Delivering efficient performance c. £86m targeted K8 run rate annualised 2024/25 TARGETED K8 RUN RATE savings Bristol Water integration • Integration synergies achieved in full £20m c. £20m Fully delivered Reshaping Business Plan 2025-2030 • Improved how we work, being more efficient the business •
Slide 30: 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 31: 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 Acquisition • Water resources teams with integrated action plans – June 2021 WRMP24 submissions managed together Merger • Water Quality
Slide 32: Outcome Delivery Incentives
Outcome Delivery Incentives Measures New measures Unplanned outage Embodied greenhouse gas emissions – bespoke Internal sewer flooding n/a n/a Operational greenhouse gas emissions (water) Bathing water quality n/a n/a Operational greenhouse gas emissions (wastewater) Biodiversity River water quality
Slide 33: 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 34: Flexible funding strategy
Flexible funding strategy Group debt Funding strategy at 30 September 2025 (£m) Gross Net • Maintain two strong investment grade credit ratings debt debt • Continued use of our diverse portfolio assessing the best options to Pennon Group plc 347.0 298.7 support the business and our customers Water G
Slide 35: Pennon Balance sheet – diversified funding portfolio
Pennon Balance sheet – diversified funding portfolio Balance at 30 September 2025 Pennon Water South West (£m) Group Business Water Leases 1,044.1 1,038.4 1,037.1 Bank bilaterals 627.4 520.1 520.1 RPI linked debt 946.2 946.2 715.1 Fixed bonds 1,135.1 1,135.1 1,135.1 Private placements 983.5 694.9 65
Slide 36: Pennon Balance sheet – Pensions
Pennon Balance sheet – Pensions As at As at Pensions 30 September 31 March (£m) 2025 2025 Pension schemes’ assets 604 704 Pension schemes’ liabilities (584) (673) Net pension schemes’ assets 20 31 Deferred tax (1) (4) Net of tax pension schemes’ assets 19 27 Main PGPS scheme Bristol Water scheme SES
Slide 37: Pennon Debt maturity profile
Pennon Debt maturity profile Group debt Liquidity position maturity profile (£m) At 30 September 2025, Pennon Group 700 had access to undrawn committed funds and cash and cash deposits totalling 600 c.£1,050 million, including cash and other short-term deposits of £547.2 million and 500 £560 million
Slide 38: Pennon Net debt movements
Pennon Net debt movements Pennon Group – summarised net debt flow H1 2025/26 H1 2024/25 (£m) flows flows Net debt excluding other non-cash indebtedness uplifts 1 April (3,936.2) (3,684.8) Opening balance 1 April (4,078.2) (3,844.8) Cash generated from operations 261.5 125.4 Corporation tax received
Slide 39: Pennon Financing costs
Pennon Financing costs • Stabilisation in inflation and rates increased by new debt to fund the ongoing investment programme • SWW effective interest rate 5.5% Total interest 21.4 0.5 0.9 0.6 charge 88.6 93.4 (£m) (5.2) (0.8) (5.5) (7.1) Interest H1 Floating Inflation Increased USPP Leases Capitalis
Slide 40: Pennon Net interest analysis
Pennon Net interest analysis Water Group South West Water (£m unless otherwise stated) H1 H1 H1 H1 2024/25 2025/26 2024/25 2025/26 restated Underlying net interest charge (94.6) (89.9) (86.3) (80.2) Less: pensions net interest (1.1) (0.8) (0.9) (0.6) Non-debt related interest (1.1) 0.8 (1.1) 0.8 Add