Pennon Regulatory News (PNN)

PENNON GROUP PLC

10 March 2026

Trading Statement

Pennon Group announces the following trading update for the period from 30 September 2025 to 9 March 2026.

Key highlights

· EBITDA increasing by c.55% year on year, despite weather-related cost pressures and higher costs in the first year of the regulatory cycle

· Underlying profitability within the range of market expectations for 2025/26, albeit at the lower end

· 7% RORE targeted over K8, with financing and capex efficiencies for FY26 partially offset by net ODI penalties

· Price control deliverables on track for 2025/26 - with programme efficiencies being secured as delivery progresses

Our wastewater performance continues to improve year on year, reflecting underlying progress despite the exceptional storms and rainfall in the second half of the financial year. Our Pollution Incident Reduction Plan continues to deliver tangible improvements with a c.40% reduction year on year on pollutions and normalised pollutions reduced by c.55%[1]. Storm overflow use also reflects a 17% reduction over the past year, with spill duration reducing c.25% reflecting substantial investment in our infrastructure, despite South West England receiving around 150% of average rainfall in November and December.

In Water Services, water quality performance remains strong with upper quartile performance in South West Water and SES. Water resources exceed our target position, aided by increased resilience and high rainfall. Power outages during Storm Goretti and Storm Chandra resulted in a widespread impact on South West Water operations; our rapid operational response minimised customer disruption, although required increased activity in respect of mains bursts and leakage remediation. 

Due to the exceptional and sustained rainfall creating operational pressures, ODI performance across water and wastewater for the full year 2025/26 is anticipated to result in a net ODI penalty position.

Financial performance for the full year 2025/26 remains on track to deliver a robust return to profitability, notwithstanding operational cost pressures, with underlying profitability for the full year anticipated to be within the range of market expectations, albeit at the lower end.

We mobilised early for the AMP 8 capital programme and Year 1 Price Control Deliverables remain on track. Efficiencies are being successfully realised as projects move through design, whilst investment in asset health through base maintenance will allow us to ensure strong delivery of outcomes as the programme progresses.

Our robust liquidity and balance sheet position supports our ongoing funding of the delivery of our largest ever capital programme.

Regulatory investigations

Progress is being made to draw regulatory investigations to a close. The Environment Agency prosecutions in respect of wastewater incidents dating back to 2015-2021 are progressing through the relevant court process, we expect to conclude these during 2026. The DWI court process in respect of the 2024 water quality incident is progressing, and we expect it to conclude during Summer 2026.

We continue to support the relevant authorities with their investigations.

Pennon Power

Two renewable generation sites within Pennon Power are now energised, Dunfermline in Fife and Cullerlie in Aberdeenshire. The remaining sites are progressing toward connection, when all four sites are operational by the end of FY27, Pennon Power's renewable energy portfolio will generate the equivalent of 40%[2] of the Group's total consumption and the portfolio remains on track to deliver returns in line with our investment case.

Board changes

As per the announcement made by Pennon Group on 10 February 2026, Keith Haslett will join the business as Chief Executive Officer effective from 1 April 2026.

Our full year results for 2025/26 will be announced on Tuesday 2 June 2026.

Cautionary statement in respect of forward-looking statements 

Certain statements in this announcement are forward-looking statements relating to the Group's operations, performance and financial position based on current expectations of, and assumptions and forecasts made by, management. They are subject to a number of risks, uncertainties and other factors that could cause actual results, performance, or achievements of the Group to differ materially from any outcomes or results expressed or implied by such forward-looking statements.

The Group's principal risks were described in the 2025 Pennon Group Annual Report which can be viewed online at http://annualreport.pennon-group.co.uk. Such forward looking statements should therefore be construed in light of such risks, uncertainties and other factors and undue reliance should not be placed on them. They are made only as of the date of this announcement and no representation, assurance, guarantee, or warranty is given in relation to them including as to their accuracy, completeness, or the basis on which they are made. No obligation is accepted to publicly revise or update these forward-looking statements or adjust them as a result of new information or for future events or developments, except to the extent legally required. Nothing in this Statement should be construed as a profit forecast.