Pennon posts a pre-tax loss as Brixham incident costs weigh

Shares in water firm Pennon nudged up on Wednesday despite the utility posting a loss in its first half to end-September compared to a profit in the year earlier period.

It comes after the company's South West Water (SWW) division, which serves Devon and Cornwall, was hit by a parasite outbreak in Brixham earlier this year.

In the stock market statement, Pennon said the "Brixham water contamination incident" had resulted in non-underlying costs of £16.3 million (m), which was recognised in the first half of the year.

The costs, it said, reflected the supply and delivery of bottled water to customers, extensive flushing and cleansing work on the network, sampling of water across the networks along with customer compensation.

SWW's statutory loss before tax thus was £31.5m (H1 2023/24: profit of £1.2m) the company said, with £16.3m of non-underlying costs related to the Brixham incident.

In the six months, the group as a whole posted an underlying loss before tax of £13.8m, not including its recently acquired Sutton and East Surrey Group (SES) Water business compared to a profit before tax of £9.1m a year earlier.

Underlying revenue was £450.6m, up from £448.6m in H1, 2023/34.

Susan Davy, group CEO, said in the statement: "Underpinned by solid relative operational performance, as assessed in Ofwat's latest Water Company Performance Report across all parts of the Group, we have continued to deliver to all of our customers across South West Water, Bristol Water and SES.

But she added: “When things go wrong, as they did for customers and businesses in and around Brixham earlier this year, we put it right, with no excuses. But we know we have more to do."

Pennon said the Brixham incident had highlighted "just how important it is that all customers can have confidence in their water supply".

"We continue to work with the Drinking Water Inspectorate on the lessons learned from the incident," it said.

"We supported customers throughout, ensuring homes and businesses had access to bottled water, and went over and above our customer promise of £15, with customers compensated to the equivalent of a year's annual bill, given the rarity of the incident."

Shares in London added around 3 percent on Wednesday to 597.5p.