REG - Pennon Group PLC - TRADING STATEMENT

PennonAnnouncement

14/03/2023 07:15

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RNS Number : 8789S  Pennon Group PLC  14 March 2023

PENNON GROUP

14 March 2023

TRADING STATEMENT

Pennon Group announces the following trading update for the year ending 31
March 2023.

Pennon Group is on track to deliver results in line with management
expectations. Full year 2022/23 results will be announced on 1 June 2023.

Key highlights

·    Bristol Water licence merger successfully completed in February 2023

·    Reinvesting outperformance in South West Water to increase water
resilience and enhance the environment - on track to continue the delivery of
double base returns on regulated equity (RORE) in 2022/23, driven by our
strategically positioned financing portfolio

·    Accelerating environmental capital expenditure - record c.40%
increase year on year

·    Driving improvements in underlying EPA i  performance, with a c.30%
reduction in pollution incidents in 2022

·    Delivered c.100% coverage monitoring storm overflows - one year ahead
of plan

·    Reducing releases from storm overflows, with a 30% reduction in 2022

·    Water resilience initiatives progressing well - innovative 'Stop The
Drop' campaign highly successful and delivered £30 benefit per household ii 

·    Operating a socially responsible business - supporting all customers

o  Below inflation bill increases for 2023/24

o  WaterShare+ second £20 million issuance completed, including Bristol
Water customers, with more households than ever before now shareholders

o  Over 100,000 customers benefiting from one of more of our extensive
affordability initiatives.

Investing for growth and resilience

Bristol Water merger

Following clearance from the CMA in 2022 the merger of South West Water and
Bristol Water completed on 1 February 2023 with the combined water business
now operating under one licence. The merger and statutory transfer mark a
further step on our integration blueprint, focused on bringing together the
best of the best to realise operational and service improvements across the
Group.

Renewable energy generation

We are accelerating our plan to achieve c.50% self-generation by 2030, which
forms part of our broader Net Zero 2030 commitment. We are in advanced
discussions with a range of counterparties offering large scale solar
development opportunities at sites situated across the UK, ranging in capacity
up to 60 MW. These opportunities, which would be initially funded through the
Group capital allocation of c.£160 million, offer the potential for
attractive commercial returns, with actionable near-term development
timelines.

The rollout of solar generation across our operational sites is continuing and
alongside our dynamic hedging strategy, we have delivered an incremental
increase in our hedging position for 2023/24 with two thirds of energy needs
now de-risked, providing protection from global market volatility.

Water resilience

Following some of the driest, hottest weather on record in 2022, and more
recently a very dry February, the drought status declared in the South West by
the Environment Agency last year remains in place. Our focus remains on
securing resilient water supplies for current and future generations through
investment in a suite of innovative solutions and engaging with customers to
'Save Every Drop'.

Our industry-first 'Stop the Drop' campaign launched in November 2022
successfully incentivised customers to reduce their usage to support reservoir
recharges in Cornwall, resulting in a customer payment of £30 per household.

The investments we outlined at our half year results in November 2022 are now
well underway. We anticipate the first of our innovative de-salination
facilities will be operational later this year, significantly boosting our
water resource capacity. In addition, Hawkstor reservoir, purchased in March
2022, is fully operational and supporting Cornwall's supplies.  Our dedicated
teams continue to work around the clock to ensure clean, safe and reliable
supplies for customers, supporting the 24/7 recharging of our strategic
reservoirs in readiness for the summer period.

Delivering improved environmental performance

We are delivering on our ambitious environmental improvement plans and are
making good progress towards sector-leading targets, whilst recognising there
is still more to do.

We have improved our wastewater pollutions performance by over 50% in two
years, including a 75% reduction in serious pollutions in 2022 from 8 to 2,
alongside our best ever wastewater treatment works compliance at 99.4%. We
remain on track, and confident in achieving, 4* EPA for 2024.

Since the launch of our WaterFit programme in April 2022, we have
significantly progressed our commitments to protect and enhance coastal and
river water quality, with 100% bathing water quality achieved for the second
consecutive year, as measured by the Environment Agency. We accelerated the
installation of monitors across our network of c.1,600 storm overflows and now
have 100% coverage. We are also making excellent progress toward our 2025
target to achieve a reduction in releases from storm overflows, equivalent to
an average of 20 per asset, per year delivering a c.30% reduction during the
year, and ahead of our 2022 glidepath at 28 for 2022.

During March we will be launching the first phase of WaterFit Live - Your Say,
Your Beach, Our Investment - a digital resource focused on providing customers
with detailed updates on storm overflows and bathing waters. We have been
engaging extensively with key stakeholders across the region to ensure we're
delivering on our regional responsibility and providing stakeholders with the
information they need.

 For further information, please contact:

 Pennon Group plc                                         +44 (0)1392 443 168

 Paul Boote             Group Chief Financial Officer

 Jennifer Cooke         Group Head of Investor Relations

 Media Enquiries                                          +44 (0)207 251 3801

 James Murgatroyd       FGS Global

 Harry Worthington

 

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 are described in the 2022 Pennon Group Annual
Report which can be viewed online at http://annualreport.pennon-group.co.uk/
(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.

 

 

 

 

 

 i  Environment Agency's annual Environmental Performance Assessment -
performance for 2022 due to be published in June 2023

 ii  £30 paid to each household in Cornwall in January 2023.

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