Annual Report and Accounts 2016

Group Chief Executive Officer's overview

The year 2015/16 has been transformative for Pennon Group. While continuing to deliver market-leading performance in many areas of our businesses, we have been fine-tuning our strategic focus to meet the changing demands of our sector, evolving our governance and internal structures and beginning to draw new synergistic benefits from the closer alignment of our subsidiaries.

As the new Group Chief Executive Officer I am pleased to report that Pennon has performed very well in 2015/16.

South West Water is outperforming its regulatory contract having begun the K6 (2015-2020) period in a position of confidence following a successful Price Review, which saw its business plan deemed best-in-class. The drive towards further efficiency and improved performance has been complemented by the successful acquisition and merger with Bournemouth Water. Integration is substantially complete and the bringing together of these two good companies is allowing for substantial efficiency savings, the sharing of best practice and operational synergies. The combined water business is well placed for the regulatory changes ahead, including the opening of the non-household retail market in 2017, and there is a 94% probability it will set the efficiency frontier at the 2019 Price Review(1).

In waste management, Viridor has also performed well. The company has made a clear transition from landfill to a greater focus on recycling and the recovery of energy from waste. Eight of the 11 committed Energy Recovery Facilities (ERFs) are now on stream with the remainder under construction (at Glasgow, Dunbar and Beddington).

Read the Group Chief Executive Officer's overview in full (PDF)
  1. Oxera modelling for South West Water and Bournemouth Water submission to the Competition and Markets Authority. This estimate provides the probability of the merged company, with synergy savings, being within the UQ (the efficiency benchmark as used by Ofwat in PR14) at PR19.