We provide clean water and wastewater services to a population of c.3.5 million across the greater South West. 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 believe that ESG is not a bolt on, it's woven into how we do business.
We understand that we don't have all the answers and are here to serve our customers and local stakeholders; hence, we have created a framework to ensure that all voices are heard. This framework is underpinned by our innovative WaterShare+ scheme, which was developed in direct response to feedback from customers who said that they would like to share in our successes and have a greater say in our business.
In 2023, 1 in 14 customers in the South West Water region are Pennon shareholders and have the ability to have their say at our unique Customer AGM with further challenge coming from the independent WaterShare+ Advisory Panel. Those customers who are not shareholders and local interest groups have the ability to voice their concerns and share ideas at our periodic Stakeholder Engagement Forums - see the spotlight section below.
Our approach to business is based on a bedrock of good governance and a desire to be an exemplar of corporate citizenship. To this end:
Now is the time to double down on our integrated approach to ESG in order to meet the challenges faced in the communities we serve. Our impact is greater when we work in partnership and we have developed collaborative solutions to address issues, working with our customers, our people and landowners, some of which are highlighted here.
We are continuing to drive progress on our key priorities through our strategic framework.
Through the successful delivery of our twin-track strategy - driving both organic and acquisitive growth underpinned by our disciplined capital allocation, we will continue to create long-term sustainable value. Our logical and accretive water acquisitions have delivered significant value for our stakeholders along with meaningful benefits for customers and shareholders.
Our value-enhancing investment in renewable energy generation and storage will provide attractive, sustainable returns into the long term, and fast-track the achievement of our Net Zero 2030 commitments.
We are well underway in delivering on our largest environmental investment programme which also reflects the delivery of additional and accelerated investments including Green Recovery, WaterFit, our Save Every Drop water resilience investment and Ofwat's recently announced Accelerated Infrastructure Delivery.
RCV growth over K7, driven by our twin-track strategy
our largest environmental investment programme, including additional and accelerated initiatives
in renewable energy generation - 1st c.40 GWh site acquired
We continue to pursue a relentless approach to improving operational performance through innovative solutions that drive the best outcomes for all stakeholders. Our pilot, test and deploy approach to innovation helps us to mitigate risk for customers, communities and the environment.
Our new WaterFit Live tool, launched in early 2023, demonstrates our commitment to increased transparency, empowering customers and stakeholders to hold us to account on our performance and allow them to make informed decisions on water-based recreation. It features a new interactive map that provides customers and visitors to the region with more information on the performance and location of storm overflows at all designated bathing waters, as well as the investments South West Water is making now, and in the future, to reduce overflow spills across the region's coastline by 2025.
We have with our customers through our innovative and pioneering WaterShare+ scheme developed to give our customers a greater stake and a say in our business. We are delighted that since 2021 almost 90,000 customers have opted to become shareholders through WaterShare+.
returned to customers in K7 through our unique customer sharing mechanism WaterShare+
Centre for Resilience in Environment Water and Wastewater - our joint venture with the University of Exeter
Developing innovative solutions to water resources including desalination and re-purposing quarries
The Group has continued to deliver resilient services through extreme climate variability and high demand. Alongside this, we have delivered some of our best environmental performance to date, including our best ever wastewater treatment works compliance, a reduction in wastewater pollutions, and outstanding bathing water quality across the region.
Currently, over c.110,000 customers benefit from our broad range of affordability initiatives, and we continue to work hard to deliver quality services at an efficient cost, so that bills remain affordable. In 2022/23, customer bills in the South West Water region were lower than they were 10 years ago, and £10 lower than in 2021/22 and, recognising the cost-ofliving pressures customers are facing, bills across the Group for 2023/24 will see below-inflationary increases.
Driving outperformance across the Group gives us the ability to deliver more within a regulatory delivery period. As a Group, we are strategically positioned to outperform in the current macro-economic environment. Our flexible financing strategy and diverse debt portfolio, with a relatively lower level of index-linked debt compared to the industry average allows us to outperform, and is reflected in our strong return on regulated equity, with outperformance enabling reinvestment in additional initiatives.
bathing water quality across the region for the second consecutive year
Continued doubling of base returns on regulated equity across the Group
of customer support delivered to date
reduction in wastewater pollutions in 2 years
investment to diversify water resources
reduction in carbon footprint since 2021
customer support provided to date since 2020
record level of capital investment in 2022/23 – 50% increase on prior year
Double digit
RORE
Group revenue
(2021/22: £792.3 million)
Group underlying PBT
(2021/22: £143.5 million)
“We continue to focus on leading a sustainable business that delivers for customers, colleagues, our shareholders and the UK.
“In an extraordinary year, we have tackled the challenges head on, responding with agility and pace, as we have pivoted to focus on the things that matter most.
“Over the long term the elevated inflationary environment provides the Group with additional growth in long-term sustainable value with revenues and RCV linked to November and March CPIH inflation, respectively.
The natural environment of the South West is incredibly special. From our precious National Parks and Areas of Outstanding Natural Beauty, to beautiful beaches. We're proud to call it home.
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.
2022 saw some of the hottest, driest, weather on record as a consequence of climate change. A combination of a lack of rain - the 4th driest summer in 130 years, the hottest summer, low levels of soil moisture and increased demand exacerbated by the impact of the pandemic and heatwaves, uniquely converged to put pressure at just one of our five strategic reservoirs, at Colliford. Importantly, no-one served by Colliford, or across our region, or visiting our region, suffered a loss of supply or dips in water quality.
At the same time, we maintained the environmental compensation releases from our reservoirs throughout 2022, essential to river health, and have continued to do so in dry periods of 2023. We are investing £125m to increase our access to water suppliers when we need them most. In 2022/23 we have invested to secure the equivalent of 25% demand in Cornwall and 12% in Devon. We can show that, whilst the circumstances in this one area were challenging, culminating in a worse than 1 in 200-year event, our actions were appropriately timed, and we are now more resilient across the region as a consequence.
Drought presented opportunities for Pennon to further expand our control of invasive non-native species (INNs).
Burrator reservoir levels dropped to under 40%, which increased the risk of stress in the population of American signal crayfish in the reservoir which could cause them to move and spread, something which landowners are legally obliged to take action to prevent. Pennon worked with leading crayfish specialists and carried out a pilot large scale control of these highly invasive animals. With 2,470 trap days, nearly 6,000 crayfish were caught. This control programme will be repeated next year.
In 2021, we published our Promise to the Planet - our ambitious plan to reduce our operational carbon emissions to Net Zero by 2030. At the same time, we joined the UN backed Race to Zero commitment which aims to tackle GHG emissions across our entire value chain by 2045.
Our three-pillar strategy remains unchanged
Maximising self-generation from renewables at our sites across the South West - working with partnerships and utilising our expertise.
As a Group, we have committed to setting both near and long-term Science Based Targets (SBT). Further details of how we are integrating climate into our business and readying for a low carbon future can be found in our TCFD report.
Through our purpose and values, we aim to increase our social value, providing support to our people, customers and communities. As a business, we serve a regional population of c.3.5 million, which can swell to c.10 million in the summer, and our c.3000 employees go to great lengths to provide exceptional service every day of the year.
As one of the largest employers in the region, with over 3,000 colleagues, we have a responsibility and duty to make a positive societal contribution. Our goal is to be the Employer of Choice across our region through promoting social mobility, prioritising Diversity and Inclusion by addressing racial and gender inequality, or in providing safe, secure and meaningful employment where all employees are paid fairly for the work they do and where trust is high.
We were delighted to be awarded Gold Membership status into the 5% Club, where members are united in addressing the issue of poverty, a result of high youth unemployment and in ensuring the right skills in the workplace.
We are the only utility sector company to achieve the Gold Membership accolade.
Achieving Gold status demonstrates our long-term commitment to investing in structured Apprenticeship and Graduate programmes for our employees.
Stretching from Bristol to Bournemouth, Devon, and Cornwall, including the Isles of Scilly, we serve a unique population. Our region, given its dependency on agriculture and tourism, experiences large socio-economic challenges, particularly in urban and coastal areas.
We have seen the cost of living crisis put many of our customers in extremely challenging financial circumstances, some for the first time, placing even greater responsibility on the Group, to develop new, inclusive and creative solutions.
We continue to target support to those who need it the most as measured through our industry leading ambition to eradicate water poverty by 2025, which we are on track to achieve. This is at the heart of our approach and we have already made great strides with nearly 65,000 customers being helped through one of our schemes from April 2020 to March 2023, with over £30m of support provided over the same period.
The need to reach and support our communities when they need our help the most only strengthens our resolve to work harder. To help us do this, we have launched our largest ever community outreach programme with our significantly expanded Community Team attending 247 events this year to date where our presence is most needed offering support and education and the opportunity to engage face to face.
South West Water have launched two community funds which, since 2020/21, have already provided £375k of funding and will continue to provide support in the months and years ahead:
