Pennon Group Plc

Pennon Group said on Wednesday it would raise about £550 million through a fully underwritten rights issue and cut its dividend as its new CEO launched an overhaul of the water utility's operations and stepped up investment. The total dividend for the 2026/2027 financial year will be cut to approximately £125 million from £138 million for 2025/2026, with the lower payout applying to both the interim and final dividends, and after accounting for the cut, the rights issue and a bonus factor, Pennon put the implied underlying reduction in dividend per share at approximately 30%, leaving an expected dividend of around 18 pence per share. The rights issue, launched on Wednesday, will fund more investment in the regulated water businesses and supports about £1 billion of additional investment, with full terms in a separate announcement and an international offering circular published the same day. Capital investment in the regulated water businesses over AMP8 is now expected to be approximately £3.6 billion, around £1 billion more than Pennon's original plan based on the AMP8 Final Determination, and the total investment programme is expected to deliver RCV growth of over 40% across AMP8, up from the 34% set at the start of the period. In a draft decision on Ofwat's 2026 cost change process, the regulator provisionally allowed £230 million, or £190 million in 2022/23 prices, which is 76% of the amount Pennon requested, and Pennon estimates it will make around £170 million of further investment through the 2027 and 2028 cost change processes, subject to Ofwat approval, targeting total additional RCV from cost change of £400 million.