PENNON GROUP PLC
25
March 2024
TRADING
STATEMENT
Pennon Group announces the following
trading update for the year ending 31 March 2024.
Financial performance for the full
year 2023/24[1], remains in line with
management expectations.
Key
highlights
·
The acquisition of SES Water is progressing
through the Competition and Markets Authority (CMA) review, as
expected
·
Four renewable energy generation sites acquired,
Dunfermline solar construction commenced
·
Record levels of K7 (2020-25) water and wastewater
investment - expectation of c.£850 million capex to 2025
·
90% strategic reservoir capacity achieved ahead of
1 April 2024 target
·
Targeted for 2023 to retain EPA[2] performance gains delivered in 2022 (EPA
2*)
o 50%
increase in rainfall over the long-term average has impacted
headline levels for storm overflows and wastewater
pollutions
o 78
interventions at storm overflow sites underway to improve water
quality at 49 of 151 beaches through our WaterFit programme to
2025
·
Supporting our customers - over £95 million
customer support unlocked to date
o Innovative water efficiency campaigns launched across Devon
& Cornwall
·
Well positioned to deliver on our ambitious
business plan for K8 (2025-30)
o New
K8 capital delivery partners mobilised on over 1,000
schemes
o The
Group is well positioned with liquidity for the current regulatory
period - over £700 million funding secured since March
2023.
Investment in water resource diversification delivering
results and long-term resilience
100% of the programme of work to
diversify the Group's portfolio of water resources in Devon is now
complete, with 70% of the programme of work in Cornwall also
complete. This has contributed to the early achievement of 90%
storage for our strategic reservoirs in the region.
Construction work at Blackpool Pit is
now complete which brings our portfolio of repurposed quarries to
four. Blackpool Pit, along with Stannon, Park and Hawks Tor, will
have all been used this year to support an improvement in water
resources in Cornwall. In Devon, our winter pump storage work at
Gatherley is also now operational, and along with the Lyd pumping
scheme delivered last year, both new schemes have been used this
year to support improvement in our water resources in
Devon.
In addition to these, our
desalination plant in South Cornwall is on track to be operational
in 2024/25 and our Porth Rialton water abstraction and treatment
scheme will be operational under its winter licence in 2024/25.
With these projects we are improving the long-term resilience of
the region following a year-long drought. We are on track to reach
our target of a 45% increase in Cornwall water resources by 2025,
having already achieved our targeted 30% increase in Devon water
resources one year ahead of schedule.
Waste water operational performance impacted by challenging
weather conditions
Annual rainfall in the South West has
increased by 50% in the second half of the year, when compared to
long term averages, in addition to the 10 named storms since
September 2023[3] and 12 yellow weather
warnings for rain in the region. The significantly increased
wastewater flows have impacted our headline performance for
wastewater pollutions and use of storm overflows.
That said, we continue to make
sustainable progress on delivering environmental improvements
across the region, with 78 interventions underway to improve 49 of
151 beaches through our WaterFit programme by 2025.
We anticipate retaining 2 star EPA
status for 2023, assuming Environment Agency confirmation of our
improved water resource position.
For 2024, whilst six of the seven EPA
metrics are tracking positively towards 4 star equivalent
performance, current operating conditions have meant the benefits
of our Pollution Incident Reduction Plan (PIRP) will not be seen
until 2025. As such overall 4 star EPA status is now reprofiled for
2025.
Supporting our customers
Over £95 million of customer support
has been delivered for customers to date in K7, whilst keeping
bills as low as possible with below inflation increases to 2025. We
are investing record levels whilst keeping bills low for all
customers, and are pleased that more than 125,000 customers are now
benefiting from one or more of our extensive package of
affordability support.
Alongside this, our suite of
innovative water efficiency initiatives has helped customers save
money on their bills whilst enabling a sustained reduction in
demand of 2%. This included a 65% increase in free customer leak
repairs along with issuing over 300,000 water efficiency devices to
date.
Executing our strategy for growth
Acquisition of SES Water
Following the successful acquisition
of SES Water in January 2024, the customary CMA review process is
now underway, with potential for clearance at phase 1 in summer
2024.
Progress to Net Zero
As planned, a total of four renewable
energy generation sites have been acquired at a cost of c.£40
million. Construction has commenced at one of the four sites,
Dunfermline, where 39 GWh generation is anticipated annually,
alongside 60 MWh battery storage, with grid connection in expected
in late 2024.
Liquidity
The Group is well positioned with
liquidity for the current regulatory period and has secured over
£700 million through Pennon's Sustainable Financing Framework (SFF)
since March 2023. New debt will be raised through the SFF through
access to public and private markets, whilst maintaining the
Group's diverse portfolio of debt.
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For further information,
please contact:
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|
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Pennon Group
plc
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+44 (0)1392 443
168
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Steve
Buck
|
Group Chief
Financial Officer
|
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Jennifer
Cooke
|
Group Head
of Investor Relations
|
|
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Media
Enquiries
|
+44 (0)207 251
3801
|
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James
Murgatroyd
|
FGS
Global
|
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Harry
Worthington
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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 2023 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.