Pennon Group Plc has released its half-year results for 2023/24, showing progress in delivering for customers and shareholders. The company has focused on improving operational resilience and has increased investment by 87%. The twin-track strategy of organic and acquisitive growth in the UK water sector has been successful, with the Bristol acquisition benefits on track. The company has also expanded its portfolio of complementary services and renewable energy generation.
Financially, Pennon Group has reported a 5.4% increase in both statutory and underlying revenue, driven by inflationary tariff increases. Underlying profit before tax decreased by 59.6% compared to the previous year, primarily due to higher inflation-driven costs. Non-underlying items before tax amounted to £5.9 million, including one-off costs of business transformation, drought, and renewable energy acquisitions. Statutory profit after tax was £1.8 million, down from £18.5 million in the previous year.
The company has made progress in various areas, including achieving 100% bathing water quality for the third consecutive year and reducing serious pollution incidents. Pennon Group is also focused on improving environmental performance, keeping bills as low as possible, developing new water resources, and investing in renewable energy generation. The company aims to create 2,000 new jobs in the region and deliver a sustainable future.
Pennon Group has increased its investment across the group, with a focus on sustainable environmental improvements. The company is on track for 60% regulated capital value growth by 2025 and approximately 100% growth by 2030. The Bristol Water acquisition has delivered annualized synergies of around £16 million to date. The company has also made progress in areas such as drought management, achieving upper quartile performance in industry comparative rankings, and accelerating its Net Zero 2030 commitment through investments in renewable energy generation.
The company's strong balance sheet and sector-leading financing portfolio have contributed to its robust fundamentals. Pennon Group has a responsible and sustainable gearing of 61.0% and a track record of outperforming returns on regulated equity. The company is now looking ahead to its ambitious plan for K8 (2025-30) and has received strong support from customers for its most ambitious plan to date.
Overall, Pennon Group has made progress in delivering for customers and shareholders, with a focus on improving operational resilience, investing in sustainable growth, and achieving environmental targets. The company's financial performance has been impacted by higher inflation-driven costs, but it remains committed to delivering long-term value and a sustainable future.