top of page
  • by Trevor Loveday

Pre tax profits at Pennon group tumble 88% as inflation hits costs and debt

Pennon Group reported an 88% fall year-on-year in underlying profit before tax to £16.8m for the 12 months to 30 March 2023 citing “the impact of elevated inflation on power and interest costs,” on its near-term earnings.


Non-underlying costs including a £20m issue Pennon’s shares-based affordability scheme, Watershare+, reduced pre-tax earnings by a further £27.8m. Underlying group revenue was up 4.1% on the previous year to £825m fuelled by some £19m growth in business market contract wins by its retail arm Pennon and the first full-year contribution from its Bristol Water acquisition. Group operating profit was down 35.5% to £153m reflecting a 26.6% hike in operating costs and a 5.5 increase in depreciation and amortisation.


Underlying group net finance costs were up 46% to £136.6m in line with its index-linked debt exposure along with two months of Bristol Water finance cost contribution. Following the Bristol acquisition about 30% Pennon Group’s regulated water business gross debt was index linked, the company reported.


Pennon’s South West Water subsidiary reported an underlying profit before tax down 90% from the previous year at £14.1m. Its financial performance included that of Bristol Water in the previous and current reporting years.


Underlying revenue at the water and sewerage company was up year-on-year by £13.5m to £701m. Adjusting for the two months of Bristol Water revenue during 2021-22 at £22.5m, South West Water’s like-for-like revenue was reduced by £9m. Pennon reported that Bristol’s tariff increases were erased by reduction in demand and regulatory adjustments including outcome deliver incentive penalties for 2020-21.


Underlying operating costs at South West Water were up £89.9m to £392.9m which included a £48.6m hike in energy costs. The company’s net interest charge was up £47.3m to £145.3m reflecting the impact of inflation on index-linked debt.

Pennon’s business retail arm, Pennon Water Services reported profit before tax up from £1m in the previous year to £1.8m on revenue up 11.6% to £218m. Underlying operating costs increased 11.4% to £213.7m.

Comments


bottom of page