Pennon Group Plc

How we generate and preserve value

Our Group business model is driven by our strategy of promoting the success of the Group for the benefit of our shareholders, customers and other stakeholders through our focus on the business areas of water and sewerage services, recycling, renewable energy generation and waste management. We aim to be a pre-eminent provider of customer services to high standards of quality, efficiency and reliability, and to provide value for our shareholders.

• How we create value

  We create value for our shareholders by developing our two environmental utility infrastructure businesses, South West Water and Viridor, and by efficient financing and strong management of the Group as a whole.

   

  • South West Water, the water and sewerage services provider for Devon, Cornwall and parts of Dorset and Somerset, is focused on delivering further efficiencies, improving operating standards and providing a high quality service to its customers.

     

    Viridor is focused on transforming waste into a resource, having developed from being a traditional waste management company to a leading UK recycling, renewable energy and resource management business.

     

    • South West Water

      Provides water and sewerage services in Devon, Cornwall and parts of Dorset and Somerset.

      South West Water's business model is based on delivering its 'Pure Water, Pure Service and Pure Environment' strategy while ensuring long-term profitability, resilience and sustainability.

    • Viridor

      One of the leading UK recycling, renewable energy generation and waste management businesses.

      Viridor's business model is based on growing and adding value by proactively expanding its recycling operations, growing its EfW and PPP operations and exploiting the huge potential inherent in waste-based renewable energy generation, whilst capitalising in the long-term on its strong position in landfill waste disposal.

    
    

• How we manage our businesses to create value

  To achieve our strategy we are focused on the key areas of customer satisfaction, financial performance, maximising shareholder returns, strong governance and employee engagement.

   

  • Customer satisfaction 

    Both South West Water and Viridor are fully committed to meeting the needs of their customers which are key to the success of each business. How we respond to the needs of our customers and assess customer satisfaction is set out on pages 15, 17, 22 and 36 of the 2012 Pennon Group Annual Report.

  • Financial performance 

    Our Group has set itself challenging financial targets. Financial performance is measured through a range of key performance indicators including profit before tax, dividend per share, earnings per share before deferred tax and the interest rate on average net debt. Our focus on setting such targets is to achieve sustainable performance over the short, medium and long-term. Pages 24 to 27 of the 2012 Pennon Group Annual Report explain in more detail our financial performance.

  • Maximising shareholder returns 

    We are committed to maximising shareholder returns, including our policy to grow the Group dividend by 4% above inflation per annum up to at least the end of 2014/15.

  • Strong governance 

    We are aware that our businesses can, and do, have a material impact on the environment and communities in which they operate. We take a responsible and transparent approach to environmental, social and governance (ESG) matters. Our sustainable practices not only benefit communities, but also enable our businesses to be more successful. More information on our sustainability targets and our achievements over the past twelve months are set out on pages 34 to 39 of the 2012 Pennon Group Annual Report.

  • Employee engagement 

    We are aware that the success of our Group is due to the talent, commitment and hard work of our employees and we aim to be a responsible employer. We are focused on ensuring workforce well-being, continuity, efficiency and productivity and we carefully manage the successful integration of employees into Viridor following acquisitions. More information on the initiatives we have introduced to improve employee engagement in each of our businesses is set out on pages 17, 23, 40 and 41 of the 2012 Pennon Group Annual Report.