Pennon Group, the owner of South West Water and SES Water, has swung back to profitability in its latest full-year results, reporting a statutory profit before tax of £114.4 million for the year ended 31 March 2026, reversing a loss of £72.7 million in the prior year.
The turnaround was driven by a 23% rise in revenue to £1.29 billion, alongside improved cost management that helped push underlying EBITDA up 55% to £519.2 million. Regulated water revenues climbed around 25% year-on-year, benefiting from higher regulatory allowances and increased customer consumption. The results come as newly appointed Group Chief Executive Keith Haslett takes the helm, pledging to focus on operational excellence, capital delivery and a performance-driven culture.
The Group invested £643.6 million in capital expenditure during the year, with £588.5 million directed into its water businesses as part of its AMP8 investment programme — the current five-year regulatory cycle running through to 2030. A Return on Regulated Equity (RoRE) of 6.7% was recorded, with outperformance on financing and capital costs partly offset by operational penalty charges.
On the environmental front, the company reported a 34% reduction in pollution incidents year-on-year, with normalised pollutions falling by around 53%. Storm overflow usage dropped 17%, with spill duration down roughly 25%, notable given that South West England received approximately 150% of average rainfall during November and December. Peatland restoration reached 250 hectares during the year.
However, the results were not without challenges. Exceptional storms, sustained rainfall and a step-up in regulatory targets at the start of the new cycle combined to generate a net operational ODI (Outcome Delivery Incentive) penalty of approximately £42 million. Pennon cautioned that operational performance is expected to remain in net penalty territory in the near term as it works to improve outcomes.
The Board declared a full-year dividend of 29.29 pence per share, totalling £138.2 million, compared with 31.57 pence the prior year.
Looking ahead, Pennon said it has submitted a roughly £250 million proposal to regulator Ofwat for further investment in asset health, which it says could provide additional growth while supporting infrastructure resilience. The company anticipates 34% growth in its Regulatory Capital Value over the AMP8 period. A full strategic update is expected before the end of September 2026.
