Rising LeverageLeverage has risen materially, concentrating refinancing and interest rate risk for a capital‑intensive utility. Higher gearing reduces financial flexibility, can pressure credit metrics and increases the cost of capital, limiting the firm's capacity to absorb regulatory setbacks or fund discretionary initiatives without external funding.
Negative Free Cash FlowSustained negative free cash flow driven by elevated capex (GBP 305m H1) forces reliance on external financing despite RAB recovery. That weakens internal funding for dividends and investment, increases funding costs, and raises execution risk if cash generation doesn't recover alongside regulated revenue recognition.
Operational Incidents & ODI PenaltiesRising network failures and an incurred net ODI penalty signal persistent delivery risks. Recurring incidents drive penalty costs, remediation spending and regulatory scrutiny, which can tighten future price settlements, elevate compliance obligations and damage reputation—affecting allowed returns and long‑term cash generation.