Pennon Regulatory News (PNN)

PENNON GROUP PLC

26 September 2025

Trading Statement -

A robust start to K8

Pennon Group announces the following trading update for the period from 1 April to 25 September 2025.

Susan Davy, Group Chief Executive Officer commented:

"We're driving real improvements for our customers and communities whilst delivering a return to strong profitability. Despite the pressures of a hot summer, we've maintained resilient water supplies and continued to improve services for our customers. Whilst there is more to do, our pollution reduction plans are delivering tangible benefits, halving the number of pollutions and spills from storm overflows, reducing our impact on the environment."

Key highlights

· On track against expectations in 2025/26, with a strong return to profitability

· Target RORE of 7% underpinned by efficient financing for FY26

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

· Robust liquidity position enhanced by £300m new issuance in September 2025 under EMTN programme

Financial performance for the full year 2025/26 remains on track to deliver a strong return to profitability.

High demand for clean water over the summer period due to the hot weather has been more than offset in revenues by increased meter optants and profiling of tariffs to smooth customer bills, deferring revenue into 2026/27. The hot weather has also resulted in higher operational costs to respond to the increased demand and operational pressure on the networks. Despite this, we have made a strong return to profitability, with EBITDA anticipated to increase by c.60% year on year, net of revenue deferred into 2026/27. We are on track to deliver our 7% RORE target, supported in-year by efficient financing costs, whilst efficiencies in delivering the capital programme are more than offsetting other cost pressures.

In Wastewater Services, 2025/26 Outcome Delivery Incentives are tracking to be net neutral - a first for South West Water since ODIs were introduced. Pollution incidents have halved in the eight months to August 2025, as our pollution reduction plans deliver benefits. In addition, storm overflow spills have reduced by nearly 50% year-on-year, benefitting from interventions and investment in our wastewater network, alongside lower rainfall year on year in the South West.

In Water Services, Outcome Delivery Incentives have been impacted by supply interruptions from a burst main at our Dousland Water Treatment Works. Despite the hot weather and high demand our water resources position benefitted from our investments following the 2022 drought, although dry ground conditions across our regions have led to increased network incidents and leakage.

Our five-year capital programme is on track to deliver the Year 1 Price Control Deliverables associated and we are making good progress in delivering our wider investment programme, with efficiencies being secured as projects progress from design into delivery.

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, with action already taken to resolve any issues. In September, the DWI progressed the court process in respect of the 2024 water quality incident.

We continue to support the relevant authorities with their investigations.

Pennon Power

Construction is underway on all four of the Pennon Power major projects with Dunfermline in Fife and Cullerlie in Aberdeenshire both fully constructed and scheduled to be connected to the Grid and generating power during October[1]. 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.

Board changes

Following the announcement of Susan Davy's intention to retire from the Group, the Board is progressing a rigorous search process to appoint the next Chief Executive Officer.

​Our half year results for FY26 will be announced on Thursday 27th November.

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.