Pennon Group records loss after parasite scandal
Pennon Group, the British utility firm which owns South West Water, said in a trading update this morning that the costs of last year’s Brixham water supply scandal had forced it into a loss in the second half of last year.
The water company said lower customer demand and inflationary cost pressures were offset by the firm’s reshaping and restructuring programme, which kept losses at bay.
Still, the firm recorded a loss of £18.6m in November, compared to a £19.1m profit in the previous half after the company was forced to pay £16m to return quality water supplies to Brixham.
The firm said in its update the finalisation of costs relating to the Brixham water supply scandal were around £36m.
Cryptosporidium, a parasite that causes infection, was found in the water supply in and around Brixham, leading to more than 100 confirmed cases of diarrhoea-type illness in May 2024.
Capital expenditure for the year’s second half also fell in line with investments in the first half, which the company said it expected.
It said this reflected the transitional expenditure and the finalisation of K7, its regulatory framework under Ofwat, which runs from 2020 to 2025.
Pennon said it had launched over £1bn of investment programmes for K8 – it’s next regulatory period running from 2025 to 2030.
The company said it had a strong water resources position at over 90 per cent and anticipated industry-leading water quality.
It also had a new package of around £200m customer affordability support unlocked from 2025 – 2026.
After the acceptance of Ofwat’s Final Determination for South West Water and Sutton and East Surrey Water, the company said it is well-positioned to fund its record investment programme, having raised approximately £1.3bn in 2024/25 through a combination of a rights issue, public bonds, private placements, and other funding opportunities.
The firm’s full year report is pencilled in for June 3.