Pennon Group PLC (LSE:PNN, OTC:PEGRY) announced results in line with expectations for the first half with profits and revenue boosted by a recovery in demand from non-household customers.
The utility noted that its South West Water arm cut pollution incidents by 50% in the period. The comment came after the recent announcement that the Environment Agency (EA) and Ofwat are investigating illegal releases of untreated waste into rivers by the water industry.
Pennons said underlying revenue grew by 21.8% to £389.3mln in the six months to 30 September 2021, with recently acquired Bristol Water contributing £41.6mln.
Organic underlying revenue rose by 8.8% following a recovery in non-household demand and contract wins at Pennon Water Services.
Underlying EBITDA was 14.3% higher at £199.4mln, while pre-tax profit surged 29.1% to £79.9mln.
The group reported a loss per share of 6.3 pence, compared with EPS of 420.9 pence in the first half last year, mostly due to a deferred tax charge of £96.9mln for the future change in tax rate.
Pennon is paying an interim dividend of 11.70p, up from 11.15p last year.
In the summer, the EA said Pennon subsidiary South West Water had performed “significantly below target” for pollution for the 10th year in a row.
In its interim earnings release, Pennon said the use of technology to predict events had helped South West Water halve pollution incidents compared with last year.
It reported a decline of 40% in internal flooding and a 20% reduction in external flooding, both ahead of target, and a 40% improvement in sewer collapses.
South West Water saw demand recovering near to pre-COVID-19 levels in the first half, with cash collections remaining robust and complaints dropping by 60%, Pennon said.
Commenting on the results, chief executive Susan Davy said: “We are reporting resilient performance across the group, we continue to build momentum, driving sustainable growth, and ensuring we are well positioned to help tackle climate change. This, together with an evolving environmental strategy will deliver the step change we all want to see for the health of our region now and for generations to come.”