27th Nov 2025 07:57
(Alliance News) - Pennon reports strong half-year results, while Flutter hit out at UK budget measures which offer a "big win" for illegal betting operators. North Sea operator Serica assessed the budget as a "missed opportunity".
Here is what you need to know before the London market open:
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MARKETS
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FTSE 100: called down 0.1% at 9,684.58
GBP: flat at USD1.3234 (USD1.3232 at previous London equities close)
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ECONOMICS
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Rachel Reeves will face further questions after delivering a budget that raised tax by GBP26 billion but was overshadowed by an unprecedented leak. The UK chancellor's decisions put Britain on course for a record tax burden as she hiked levies after weaker economic forecasts left holes in her previous spending plans. The increases are also needed to pay for increased welfare spending, with Reeves announcing the abolition of the two-child benefit cap, expected to lift 450,000 children out of poverty. Having abandoned plans for a manifesto-busting income tax rise, the chancellor opted for a range of smaller tax increases to pay for government spending and build a larger buffer against her borrowing rules. These include a new pay-per-mile tax for electric vehicles, increased taxes on online betting and a so-called "mansion tax" on homes worth more than GBP2 million. But she continued to face accusations of breaching Labour's election promise not to raise taxes on "working people" after deciding to keep tax thresholds frozen until 2030/31 and levying national insurance on some pension contributions.
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BROKER RATINGS
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Citigroup raises Compass to 'buy' (neutral) - price target 3,000 (2,750) pence
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COMPANIES - FTSE 250
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Water utility Pennon reports a "strong return to profitability" in the first half of its financial year, as its bottom line was supported by cost savings, while demand supported revenue. In the half-year to September 30, Pennon achieved a pretax profit of GBP65.9 million, swinging from a loss of GBP38.8 million a year prior. Revenue was up by a quarter to GBP658.1 million from GBP527.2 million. "We have made a robust start to the first half of 2025/26 and the new K8 regulatory period. With a strong return to profitability and disciplined cost control, we are on track financially and growing sustainably," Chief Executive Officer Susan Davy says. "Our strong balance sheet and funding approach position us well to deliver our largest ever capital programme through K8, focused on the four priorities that matter most to our customers - ensuring the availability of safe, clean drinking water as summers become hotter and drier, tackling pollutions and storm overflows, protecting the environment and supporting customers to use less and save more." Underlying earnings before interest, tax, depreciation and amortisation surged 56% to GBP254.4 million from GBP163.5 million. Pennon hails a "step change in underlying Ebitda as a result of disciplined cost management, with savings being released from the restructuring and efficiency programmes". Regulated water revenue was up around 26% on-year, "driven by tariff increases and higher demand over the hot summer months, net of reprofiled final determination revenue into 2026/27 customer bills". Pennon's interim dividend per share totalled 9.26 pence, a decline from 12.14p a year prior, though this reflects a share issuance as part of a rights issue. The dividend totals GBP43.7 million, up on-year from GBP42.0 million.
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OTHER COMPANIES
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Paddy Power owner Flutter Entertainment says it is "very disappointing" by measures announced in the UK budget, which increased remote gaming duty to 40% from 21%. From April 2027, a new rate of general betting duty for remote betting will be introduced at 25%, excluding self-service betting terminals, spread betting, pool bets and horse racing. Flutter warns of a "significant adverse impact on our industry". Before mitigation efforts, Flutter expects the measures to hit its adjusted earnings before interest, tax, depreciation and amortisation by USD320 million in 2026 and USD540 million in 2027. "In the near term, Flutter expects the overall mitigation opportunity to be similar to recent precedent, with a greater relative opportunity for second order mitigation offsetting a moderately lower relative level of first order mitigation. For both Online Sports betting and iGaming tax increases, direct first order mitigation, including reduced operational, promotional and marketing spend is expected to be approximately 20% of the gross impact in the first six months post implementation, rising to approximately 40% thereafter," it adds. After mitigation, it expects a net hit of USD235 million in 2026 and USD339 million in 2027. Flutter's UK & Ireland CEO Kevin Harrington says: "The chancellor rightly wants to address harm, but these changes will hand a big win to illegal, unlicensed gambling operators who will become more competitive overnight. These black market operators don't pay tax and don't invest in safer gambling. At 40%, the UK's remote gaming duty is now above countries such as the Netherlands, where a recent tax increase saw a rise in illegal gambling and a fall in government receipts. Despite this impact, I am confident that through both our scale and leading position in the UK, as well as the proactive cost initiatives that we are taking, we are well placed to navigate through today's changes." 888 and William Hill owner Evoke late Wednesday said the measures would up duty costs by approximately GBP125 million to GBP135 million on an annualised basis once fully implemented from April 2027. Evoke withdrew medium-term financial targets. Gambling software firm Playtech on Wednesday said it estimates an adjusted Ebitda hit in the "high-teens millions of euros before mitigation" in 2026. "However, given the group's geographic diversity across regulated markets and strong performance and prospects outside of the UK, Playtech remains comfortable that it can meet market expectations for the full year 2026," it added. Entain predicted an earnings hit of GBP100 million and GBP150 million in 2026 and 2027.
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Serica Energy says it has seen a "production rebound" this month, and the firm hit out at UK budget measures, which represented a "missed opportunity to kick-start investment across the UK North Sea". North Sea-focused oil and gas producer Serica says production in the third quarter amounted to 27,500 barrels of oil equivalent per day, up from 21,900 quarter-on-quarter. Revenue in the first nine months of the year was USD439 million, Serica says, USD134 million in the third quarter alone, an on-year decline from USD139 million. "Following October production of 27,900 boepd, production in November rebounded to average 50,300 boepd prior to the planned outage at Triton, which started on 23 November and is expected to complete in mid-December," Serica adds. The firm notes the average realised Brent price in the first nine months of the year fell to USD70 a barrel from USD76. CEO Chris Cox says: "Production rebounded in November to once again average above 50,000 boepd, a level that more accurately reflects the potential of our portfolio. The expected near-term addition of Lancaster production, following completion of our acquisition of Prax Upstream, will add a further short-term boost, and the resumption of regular liftings from Triton will return us to significant and sustainable cash generation going forward. This, in turn, will help us to deliver on our two-pronged growth strategy, as we seek to diversify our production both through investment in our existing portfolio and M&A. While the budget announcements yesterday were a missed opportunity to kick-start investment across the UK North Sea, we now have greater clarity about the fiscal and regulatory regimes in which our investment decisions will be made." In the budget, the government confirmed the windfall tax will remain in place until March 2030, unless oil and gas prices fall below a certain level before then.
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boohoo Group says its "turnaround is well underway", hailing growth at the Debenhams brand. In the first half ended August 31, revenue declined 23% on-year to GBP296.9 million from GBP385.4 million, though its pretax loss narrowed to GBP2.5 million from GBP130.0 million. boohoo says its fixed cost base has shrunk by around GBP160 million from GBP292 million as at February of last year. It sees fixed costs reaching GBP100 million in the near term. "Our decisive cost elimination programme is nearing completion. We are transforming into a lean, tech-enabled, best in class online platform business," it adds. "The group turnaround is well underway with the Debenhams brand continuing to grow." boohoo, which says it operates as Debenhams Group, says it will look for formally change its name once shareholders give the green light. In March, it failed to get enough shareholder support for the formal change of name. boohoo says on Thursday: "We operate as Debenhams Group. We will formally change the name of Boohoo Group PLC to Debenhams PLC, as we previously tried, as soon as all major shareholders agree, as we believe that is in the best interest of all shareholders."
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Telecommunications investor Zegona Communications, which owns Vodafone Spain, plans to return EUR1.6 billion to shareholders after sealing deal-making proceeds of EUR1.8 billion. "The EUR1.6 billion shareholder return includes a EUR1.4 billion special dividend (GBP1.62 per Zegona ordinary share) and a EUR200 million share buyback programme," Zegona adds. It also notes EUR200 million of the proceeds will go towards trimmed net debt. Zegona adds: "The full execution of this capital allocation proposal is dependent on the completion of the FibreCo transactions and shareholder approval at a general meeting to be convened shortly."
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By Eric Cunha, Alliance News news editor
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Related Shares:
Compass GroupFlutter EntertainmentSerica EnergyPennonBoohooZegona ComPlaytechEvoke PlcEntain