Pennon Group CFO steps down in wake of U.K. water company's contamination scandal

By Louis Goss

Pennon Group on Thursday said its chief financial officer, Steve Buck, will be stepping down after less than eight months in his position at the troubled British water company that in May apologized for infecting dozens of its customers with parasites.

The FTSE-250 company, which owns Exeter headquartered utility South West Water, said in a regulatory filing that Buck had decided to step down for personal reasons and would be succeeded by its current chief customer and digital officer, Laura Flowerdew.

Pennon Group (UK:PNN) shares increased 8% on Thursday as the company also said U.K. water industry regulator Ofwat had given positive assessments of its business plans for its South West Water, and Sutton and East Surrey Water subsidiaries. Pennon's shares are down 9% in the year-to-date.

Buck was first appointed as Pennon Group's CFO in December 2023, having previously spent four years in the same position at Anglian Water, which supplies drinking water to customers across the East of England.

The U.K.'s water companies are currently facing intense scrutiny over their failure to sufficiently invest in infrastructure which has seen them resort to pumping raw sewage into Britain's waterways when their systems become overloaded.

In May, Pennon Group CEO Susan Davy admitted the company had "fallen significantly short" of expectations after at least 22 of its customers were infected with cryptosporidium parasites from drinking South West Water's tap water.

Pennon Group faced further criticism in June after it said it would be awarding Davy a pay package worth GBP860,000 ($1.1 million) for her work as CEO in the financial year 2023/24, up from GBP543,000 the previous year, in the wake of the May contamination scandal.

In March 2023, a U.K. parliamentary committee previously voiced concerns that Britain's water companies had been focused on generating financial returns at the expense of the environment as it said firms that fall short should be blocked from paying out bonuses to executives.

The U.K.'s new Labour government has previously vowed to "tackle failing water companies" including by giving new powers to industry regulator Ofwat and bringing criminal charges against water company executives.

Prior to her current job, Flowerdrew previously spent nearly six years working as CFO at Pennon Group subsidiary Bristol Water, having also worked at various companies including Deloitte, Anglo American, and De Beers.

"Having had the opportunity to work closely with Laura over the past few years, she is perfectly placed to take on the role. Laura has a strong understanding of our business and brings with her significant leadership experience," Pennon Group CEO Davy said.

-Louis Goss

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07-11-24 0541ET

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