Pennon Group pre-tax profits fall 3.3% to £127.7m, pledges £20m to WaterShare+ scheme

Pennon Group shares were down 1.4% to 1,013.6p in late morning trading on Tuesday, after the firm announced a FY 2021-2022 pre-tax profit decline of 3.3% to £127.7 million from £132.1 million in FY 202-2021.

However it saw a 22% underlying revenue climb of £792.3 million compared to £644.6 million in the previous year.

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The company confirmed that its acquisition of Bristol Water contributed £104.4 million to its revenues, with a 6.7% increase in organic underlying revenue as a result of recovery in non-household demand and £19 million in contract wins for Pennon Water Services.

Pennon Group highlighted an underlying EBITDA rise of 14.7% to £383.9 million against £334.7 million, on the back of growth linked to Bristol Water from 3 June 2021.

However, organic underlying EBITDA dropped 1.2% on higher costs to deliver on high demand and cost pressures from rising levels of inflation.

Pennon Group mentioned an underlying operating profit growth of 10.2% to £237.2 million compared to £215.3 million, alongside an underlying pre-tax profit fall of 8.6% to £143.5 million against £157 million year-on-year.

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The firm commented that it had reduced customer bills in real terms to lower costs than 10 years ago, and committed to keeping utilities expenses at a reduced level to support consumers with the cost of living crisis across the next year.

The South West Water parent company also built on its WaterShare+ scheme, launched in 2020, during which one in 16 households in the Great South West region became Pennon shareholders.

Pennon Group further reported that it would use £20 million of outperformance to underpin its additional issuance of the WaterShare+ scheme over 2022-2023, extending the scheme to Bristol Water customers alongside South West Water and Bournemouth Water customers.

“At Pennon, we believe every customer should benefit from what we do. That’s why in February, we announced average bills in the South West would fall, lower now than 10 years ago, supporting the cost of living crisis,” said Pennon Group CEO Susan Davy.

“We’ve also announced plans to share an additional c.£20 million of outperformance with every household in the South West, part of our unique WaterShare+ scheme, putting customers in control, choosing either to take £20 off their bill or investing in shares in Pennon Group, building on the 1 in 16 households who have already done so, in 2020.”

The firm reported a dividend of rise of 8.2% to 38.5p per share compared to 35.6p in the last year.

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