We provide clean water and wastewater services. We believe the role of responsible business is one of stewardship for sustainable living, supporting communities, customers and the environment to thrive, now and into the future.
We are committed to supporting the people and places of the Great South West. Through community programmes, graduate schemes, and environmental efforts, we strive to deliver for the region.
One of the key strategic milestones of the year was the £425m acquisition of Bristol Water in June 2021. In line with our growth strategy, the merger of Bristol Water with South West Water is all about bringing together the best of the best to deliver for our customers, communities, and the environment in the Greater South West. We have a track record of delivery and are working across both businesses to deploy our proven integration strategy, which we are confident will deliver meaningful benefits for all stakeholders.
Innovation is fundamental to our environmental approach. As part of our innovation strategy, we're investing in research and development to ensure that our customers and the environment benefit in the short and longer term.
Working with the University of Exeter, we have developed our Innovation Centre for Resilience, Environment, Water and Waste. All of our innovation, research and development is being piloted through this research facility. This will be a unique collaboration to develop solutions to some of the most pressing industry challenges. The new facility incorporates state of the art laboratory facilities and designated spaces to encourage collaborative research between academics, experts from the water industry and SMEs.
worth of research and innovation projects targeted in collaboration by 2027.
Protecting the places we and our customers love is critical. That's why we're making significant investment and new commitments to deliver for the benefit of all.
WaterFit has been developed, building on our existing plans to ensure we can deliver this – across a wider range of commitments, as well as going faster and further with a new ambition. By front-loading and rebalancing £330m investment, we will focus on those projects that will deliver multiple benefits, focused on a catchment by catchment, community by community investment approach, ensuring all areas in our region are benefiting with no additional impact on bills.
coastal bathing water quality
We couldn't do what we do without our c.3,000 colleagues working to deliver for our customers, communities and the environment. We continue to invest in training and development, increase employee engagement, prioritise health and wellbeing and diversity and inclusion to support our talented people.
In 2021, we successfully launched our brand new Graduate programme, committing to graduate recruitment for many years to come. We set a commitment to recruit 100 new graduates on a structured two-year programme of training, work experience and career development over the next five years.
graduate recruitment commitment over the next five years by 2025
We are committed to ensuring the continuous supply of clean, safe and reliable drinking water to our customers, whilst protecting the natural resources within the Great South West. We recognise that customers expect their drinking water to look and taste great, and that water quality plays an important part in maintaining our customers' trust in the safety of our supply.
We are improving the resilience of the region's wastewater services to minimise our impact on the environment. We care deeply about sustainability and take our guardianship of the natural environment very seriously and want to do more.
We are pleased that our investments since privatisation have now led to all bathing waters in our region achieving the quality standard, as measured by the Environment Agency.
coastal bathing waters achieving quality standard
Our purpose - Bringing water to life - supporting the lives of people and the places they love for generations to come - shapes how we conduct our business in an open and transparent way through robust governance, creating value for our stakeholders today and reinvesting in a responsible and sustainable way to safeguard the future.
Our commitment to meeting the challenges arising as a result of climate change forms part of our principal risks. Our TCFD disclosure sets out some of the key climate-related risks and opportunities being addressed by the Group.
Group revenue
(2020/21: £624.1m)
Group underlying PBT
(2020/21: £157.0m)
Basic (statutory) EPS
(2020/21: 418.5p)
Group PBT
(2020/21: £132.1m)
Dividend per share
(2020/21: 35.61p)
Adjusted earnings per share
(+5.0%)
“We have prioritised listening to our wider stakeholders, so we can set the right priorities for the business, confident we can meet the needs of our customers and communities.
“We're building real momentum, executing our strategy and driving sustainable growth. We're doing more for customers today than ever before, and going further faster, in delivering the step change demanded for the environment.
“Financial performance across the Group has been robust with a strong contribution from the newly acquired Bristol Water.
In the last few years, we have seen increased focus on the need to improve river and sea quality. The popularity of water-based activities, such as wild swimming and paddle boarding has increased, and through the pandemic we saw greater appreciation for our green and blue spaces.
Alongside this, since we submitted our last business plan, there has been a broader policy shift with the Government's 25-year Environment Plan, COP26, the race to Net Zero, and the new Environment Act 2021.
Our purpose is to protect and enhance the environment for generations to come, therefore as a business so closely associated with the environment, we are very aware of our environmental impact and obligations.
Published our Net Zero and Climate Change Adaptation plans.
Enhanced biodiversity through exceeding habitat restoration and tree planting targets.
Trialled Smart Water Butts to reduce storm response and impacts of bad weather.
In addition to significant progress targeting reduced pollution events, we published new environmental water quality commitments and targets through our groundbreaking WaterFit programme.
In December 2021, we published our climate change adaptation report. We have invested to ensure that we have the tools and data to understand the impact of climate change on our operations and services and have assessed over 60 climate related risks that could affect the services and the environment we rely on, each of which has been assessed using our Corporate Risk Framework. Assessing climate change risks, and the potential impacts, and possible mitigations on our various operations, assets and networks, is an ongoing and iterative process.
The key headline risks and themes, which reflect the most significant risks, and how we will address these are:
WaterFit has been developed, building on existing plans to ensure we can deliver this - across a wider range of commitments, as well as going faster and further with a new ambition. By front-loading and rebalancing £330m investment, we will focus on those projects that will deliver multiple benefits, focused on a catchment by catchment, community by community investment approach, ensuring all areas in our region are benefiting with no additional impact on bills.
With the expectations of our customers and stakeholders increasing, the impact of climate change, uncertainty in world economic markets and the importance of the environmental agenda, the need for us to innovate is critical.
Our innovation strategy is mapped to our core values to guide not just how, but ultimately for what purpose and towards what aims we innovate. These core values form the pillars of our innovation strategy.
The world is facing a climate emergency. We need to act now to protect our planet. In 2021, we set our ambitious plans to reduce our operational carbon emissions and hit our Net Zero target by 2030. Since then we have gone further, adding a Race to Zero commitment to reduce greenhouse gas emissions (GHG) reduction across our entire value chain by 2045.
As a Group, we have also committed to setting both near and long-term Science Based Targets (SBT) in accordance with the Science Based Targets Initiative (SBTi) criteria and Corporate Net Zero Standard.
Our Net Zero strategy is driven by three pillars:
Reducing emissions through operational practices, including our on-site water usage, increasing energy efficiency and using lower carbon fuel sources.
We use standalone power generators at our operational sites as back up so that we can provide an uninterrupted continual service in the event of a power cut. The majority of these generators run on diesel. As part of our Net Zero fuel switching strategy, we have undertaken a trial of the use of Hydrotreated Vegetable Oil (HVO) biofuel, as a diesel substitute. The trial demonstrated operation using HVO reduced GHG emissions as well as reducing air quality emissions (NOx, CO), when compared to diesel. Importantly the trial demonstrated no adverse impact to the generator's operation. As a result of the successful trial, we are exploring roll out of HVO to all our wastewater sites.
Investment is underway to support the achievement of 50% renewable energy generation at our sites by 2030.
Achieving our Net Zero plan will a require significant expansion of renewable energy across our sites. This will include both tried and tested technology which we already use, for example, Solar PV and Hydropower but will also require new and innovative solutions. Our first year of championing renewables has focused on both. We've approved investment in a large expansion of our solar schemes with an additional 4MW to be deployed during 2022. The projects are a mixture of rooftop and ground mount schemes across our sites including a 440kW array at Lords Meadow wastewater treatment works in Crediton. We are also investigating the potential role of hydrogen, geothermal energy and floating solar in our future energy mix. Where we cannot generate enough to meet all our needs ourselves, 100% of the electricity we purchase will be from renewable sources.
Working in partnership to deliver natural carbon sequestration through peatland restoration and tree planting. We restored around 500 hectares of peatland in K7, and we are now targeting planting 250,000 trees by 2025 after having achieved our initial five-year plan of 100,000 trees in 2021.
In March 2022, a group of colleagues from across Estates, Commercial, Property, Drinking Water, Asset Management, Communications and Natural Resources teams went out to Park Lake on Bodmin Moor in Cornwall, on a mission to plant 335 trees.
Professional arborculturalist, Steve Evans from Tree Investment, gave a lesson on how to successfully plant the trees to encourage growth and diversity. The gorgeous location, a field very close to Colliford Lake, is now the home to Oaks, Hawthorns, Willows and Birch trees and is one of many tree planting initiatives we have planned.
Our purpose is to support our people and communities to increase our social value. As a business with c.3.5 million customers and c.3,000 employees we go to great lengths to protect one of our most precious resources.
At Pennon, we believe our people are our most valuable asset. We are proud of the values we live by in all that we do.
This means that we are focused on doing everything we can to recruit, train, develop and support all of our employees, whatever their background, experience or outlook, unlocking their potential now and for the longer term.
This year saw Bristol Water launch its first future leaders programme - LEAD Aspire. The course, run over four days, gives budding managers an insight into what is required to be a successful modern day leader whilst equipping them with some of the tools required to make a success of it. Topics range from general management and leadership techniques, how to adopt a growth mindset, assessing your own strengths through self-reflection and how to be an inclusive leader to name a few.
We believe there's no better way to respond to or capture public sentiment than building a deeper relationship with customers - really engaging with them and putting them at the heart of our decision-making.
As part of our New Deal Business Plan, we launched our innovative and pioneering WaterShare+ scheme, sharing £20 million of outperformance with customers and giving them not only a say in what we do but a stake too.
Shaped by customers for customers, its origins were in the largest ever customer consultation we have undertaken. One in 16 households in the South West Water region are now shareholders as well as customers, heralding a new era in customer ownership - a true partnership.
Sharing our success with customers is at the heart of WaterShare+ and put simply, if we deliver, customers also benefit. With the announcement of the Bristol Water acquisition, our intention is to include Bristol Water customers in the second run of our pioneering WaterShare+ scheme (subject to Shareholders approval at the 2022 Pennon AGM), sharing the benefits of common ownership with Pennon.
There are many amazing community projects which make a real difference to the lives of our region's people and the places they love. That is why we are tapping into the social consciousness of our customers in new ways through the industry's first Water-Saving Community Fund, empowering customers to champion and drive initiatives to save water locally, as well as our Neighbourhood Fund which is supporting communities with much needed help.
Having opened the doors to our educational visitor centre at Roadford Lake last year, this year South West Water launched a new educational programme to help us inspire future generations to be environmental champions right across the South West. Since the relaunch of our programme in primary schools in January 2022, 70% of children went away from these lessons saying they had learnt something new.
