Latest news with #PennonGroup
BBC News
3 days ago
- Business
- BBC News
Water firm's losses deepen after Devon parasite outbreak
South West Water's parent company has reported widening losses following a parasite outbreak in Group posted a pre-tax loss of £72.7m for the year ending March, a sharp increase from the £9.1m loss recorded the previous year. A major contributor was the cryptosporidium outbreak in Brixham, south Devon, which cost the company about £21m, it increased water bills by 28% on average from April, which it said would fund ongoing investment plans. The parasite outbreak, which contaminated the local water supply, led to hospitalisations and more than 100 reported cases of illness, including symptoms such as diarrhoea. Pennon said about 800 staff and supply chain partners worked intensively over eight weeks to restore safe drinking water to the affected addition to the outbreak costs, the company also absorbed £15.8m in restructuring expenses over the the financial hit, Pennon said it was pushing ahead with plans to invest £3.2bn in its infrastructure by 2030. The investment will fund new reservoirs, storm overflow repairs, net zero initiatives, and service support this, SWW customers saw their bills rise by an average from April. Customers of Bristol Water and Sutton and East Surrey Water, also owned by Pennon, faced increases of 5% and 3%, respectively. Pennon said the bill hikes would cover about a third of the planned investment. 'Tough decision' "We know customers are worried about rising bills to fund this level of investment," said Susan Davy, chief executive of Pennon. "While we have made the tough decision to put bills up in 2025/26, for the first time in over a decade, two-thirds of our investments are being funded by our supportive investors and debt providers."Ultimately everyone will benefit from the investments we are making, from building reservoirs, to fixing storm overflows, powering our net zero ambitions and helping to create economic growth."Despite ongoing dry weather, Ms Davy said the South West was not expected to face a hosepipe ban this summer. Pennon said it anticipates a return to profitability in the coming year, driven by increased revenues and streamlined business operations. A landmark review by the independent Water Commission found the water sector in England and Wales is failing and needs stronger regulation to better protect billpayers and the environment.
Reuters
3 days ago
- Business
- Reuters
UK utility Pennon swings to pretax annual loss on investment costs
June 3 (Reuters) - British water utility Pennon Group (PNN.L), opens new tab swung to an annual pretax loss on Tuesday, hurt by costs associated with the Brixham water supply incident and higher investments to upgrade its infrastructure. Britain's water companies are facing increased scrutiny due to pollution issues and mounting pressure to improve environmental standards while managing rising costs and regulatory demands. Water bills in England and Wales will increase by an average of 31 pounds per year between 2025 and 2030, according to industry regulator Ofwat's 2024 price review, to help finance essential investment in the sector. This is 8 pounds lower per year than what companies proposed in their plans, on average. Pennon, along with listed peers United Utilities (UU.L), opens new tab and Severn Trent (SVT.L), opens new tab, agreed to Ofwat's price review, unlike several privately owned water firms that appealed. In exchange for higher permitted income, Pennon is committing to invest 3.2 billion pounds ($4.33 billion) over five years in infrastructure upgrades. Ofwat's latest price review permits South West Water, the group's largest revenue contributor, to raise household bills by 23% leading to an average bill of 610 pounds by 2029-30. The group is partly relying on these higher tariffs to fund upgrades and meet tougher environmental standards, while restoring public confidence following recent pollution incidents. "While we have made the tough decision to put bills up in 2025-26, for the first time in over a decade, two-thirds of our investments are being funded by our supportive investors and debt providers," CEO Susan Davy said in a statement. Pennon reported adjusted loss before tax of 35.1 million pounds for the year ended March 31, narrower than market expectations of about 37 million pounds loss, according to data compiled by LSEG. ($1 = 0.7392 pounds)
BBC News
23-05-2025
- Business
- BBC News
South West Water boss apologises over parasite outbreak
The boss of South West Water (SWW) has said she unreservedly apologises for a parasite outbreak in south Devon a year an interview with the BBC, Pennon Group CEO Susan Davy said she suffered "sleepless nights" as communities in Brixham and Kingswear grappled with the outbreak at the than 100 cases of cryptosporidiosis were linked to the outbreak, while tourism firms reported losing millions of pounds, after the parasite was found in a reservoir on 15 May to criticism over bill rises, Ms Davy conceded the increases were "too much" for some, but were needed to fund an upgrade of the sewerage network in Devon and Cornwall, a process that could take 15 years. Thousands of residents in Brixham and surrounding areas last year were put under a boil water notice after the parasite was found in the water supply and residents became unwell, including some who were admitted to hospital, with the diarrhoea-type firm was criticised for acting too slowly to warn residents while an industry association estimated tourism businesses lost £34m in bookings at the time. Ms Davy said she wanted to "reiterate my unreserved apology" for the affect on residents and businesses."It was a very difficult time for them and they showed a lot of patience with us as we got the drinking water back to where it needed to be," she how she had personally coped during the crisis, she added: "I certainly had sleepless nights last year and I had sleepless nights through the 2022 drought as well. "This is a 24/7 operation and my focus is on making sure we supply our customers and they get the services they need." The SWW boss said she regretted if people felt she was absent during the crisis."I wasn't absent, I was there," she said."I was meeting customers, meeting the community and making sure everything was happening as it needed to for that very difficult operation."So, I wasn't hiding, I was there in Brixham." Ms Davy said "sometimes things do go wrong" with a large network."Occasionally, things go wrong and this went wrong," she said."This is our network, it was our water." Regarding sewage spills, Ms Davy said SWW "had to redesign" its overflow systems to prevent them."We have to stop those spills, we want to stop those spills and we're working on it now," she said. "I can't lie, it's going to take us 15 years to get this programme of redesigning done, and we have £3.2bn of investment that we're putting in over the next few years to assist with redesigning our waste water system."She said the company had listened to customers and its priority was ensuring water quality on bathing beaches. "We want to make sure they're as good as they can be," she said. 'Tailored' bills Ms Davy also responded to criticism following last month's bill increases when the average SWW customer saw their bills rise by 28%.Customers had said they were angry and concerned with the increase, with one describing it as "daylight robbery".When asked what the company was doing to address the issue, Ms Davy said SWW "tailored" bills to customers by offering different support and tariffs, some which deduct 85% off bills."The bills this year on average have been about £1.85 a day," she said."I know for some customers that is £1.85 too much and we need to sit there and support them and work out how we can do that."
Yahoo
11-03-2025
- Business
- Yahoo
Estimating The Intrinsic Value Of Pennon Group Plc (LON:PNN)
Pennon Group's estimated fair value is UK£4.89 based on Dividend Discount Model With UK£3.95 share price, Pennon Group appears to be trading close to its estimated fair value The UK£5.53 analyst price target for PNN is 13% more than our estimate of fair value How far off is Pennon Group Plc (LON:PNN) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by projecting its future cash flows and then discounting them to today's value. The Discounted Cash Flow (DCF) model is the tool we will apply to do this. There's really not all that much to it, even though it might appear quite complex. We would caution that there are many ways of valuing a company and, like the DCF, each technique has advantages and disadvantages in certain scenarios. Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model. See our latest analysis for Pennon Group As Pennon Group operates in the water utilities sector, we need to calculate the intrinsic value slightly differently. Instead of using free cash flows, which are hard to estimate and often not reported by analysts in this industry, dividends per share (DPS) payments are used. This often underestimates the value of a stock, but it can still be good as a comparison to competitors. We use the Gordon Growth Model, which assumes dividend will grow into perpetuity at a rate that can be sustained. For a number of reasons a very conservative growth rate is used that cannot exceed that of a company's Gross Domestic Product (GDP). In this case we used the 5-year average of the 10-year government bond yield (2.3%). The expected dividend per share is then discounted to today's value at a cost of equity of 6.4%. Relative to the current share price of UK£4.0, the company appears about fair value at a 19% discount to where the stock price trades currently. Valuations are imprecise instruments though, rather like a telescope - move a few degrees and end up in a different galaxy. Do keep this in mind. Value Per Share = Expected Dividend Per Share / (Discount Rate - Perpetual Growth Rate) = UK£0.3 / (6.4% – 2.3%) = UK£4.9 The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. Part of investing is coming up with your own evaluation of a company's future performance, so try the calculation yourself and check your own assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Pennon Group as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 6.4%, which is based on a levered beta of 0.800. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. Strength Dividend is in the top 25% of dividend payers in the market. Weakness Interest payments on debt are not well covered. Opportunity Expected to breakeven next year. Has sufficient cash runway for more than 3 years based on current free cash flows. Good value based on P/S ratio and estimated fair value. Threat Debt is not well covered by operating cash flow. Paying a dividend but company is unprofitable. Valuation is only one side of the coin in terms of building your investment thesis, and it ideally won't be the sole piece of analysis you scrutinize for a company. The DCF model is not a perfect stock valuation tool. Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation. For instance, if the terminal value growth rate is adjusted slightly, it can dramatically alter the overall result. For Pennon Group, we've put together three pertinent factors you should assess: Risks: Every company has them, and we've spotted 3 warning signs for Pennon Group (of which 2 are potentially serious!) you should know about. Future Earnings: How does PNN's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the LSE every day. If you want to find the calculation for other stocks just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Yahoo
30-01-2025
- Business
- Yahoo
Reservoir could be built in quarry to supply South West
A quarry could be flooded to become a new reservoir to supply water to thousands of homes in the South West. Plans are in the "earliest stages", according to water companies, but they are looking at a site in the Mendip Hills in Somerset. It comes as the government has given its backing to nine new reservoirs in England, including two in Somerset. The other would be a second reservoir at Cheddar, where survey work has already started. The government said it had reached an agreement with water companies which "unlocked" £7.9bn of investment over the next five years including the nine new reservoirs. The Mendip Quarries plan is a joint venture between Wessex Water and the Pennon Group, which owns Bristol Water and South West Water. A report has been done looking at Torr Works quarry at East Cranmore near Shepton Mallet - where quarrying is due to end in 2040. A public consultation would take place, but not until 2028-29. Meanwhile plans for 'Cheddar 2', as it is being called, are at the early design and environmental studied phase, with a public consultation expected later this year. Kim Williams, Head of Water Resources & Water Efficiency at Pennon Group, which owns Bristol Water and South West Water, said the quarry site was an exciting proposition. "The scale is new for our region but a really good water resource opportunity of using something that's already there rather than a brand new construction," Ms Williams said. She added that 2040 is the end of planned quarrying and construction would start after that. Current early plans for the Mendip Quarries site would give an output annual average of 50 mega litres (50,000,000 litres) each day with a peak of 100 mega litres per day. A Wessex Water spokesperson said: "The Mendip Quarries plan is both Wessex Water's and Pennon's as part of our West Country Water and Environment collaboration. "This reservoir is in the earliest stages of development at the moment, so there isn't a lot we can say on it, but it will be used to supply both Wessex Water and Bournemouth Water (Pennon) customers, with the possibility of it extending to include other areas further east." A sector summary report from the regulator Ofwat, published in December 2024, said the other new reservoirs would be built in Lincolnshire, Cambridgeshire, Oxfordshire, Suffolk, Kent, East Sussex and the West Midlands. It said these, plus the two planned for Somerset, have the potential to produce 670m litres of extra water per day, once completed. Follow BBC Somerset on Facebook and X. Send your story ideas to us on email or via WhatsApp on 0800 313 4630. Surveys begin as new reservoir plans resurrected New reservoir planned for Somerset village
