CREDIT SUISSE UK UTILITIES DAY SEPTEMBER 2015

VIRIDOR

One of the leading UK renewable energy, recycling and waste management companies. Viridor provides services to more than 150 local authorities and major corporate clients as well as over 32,000 customers across the UK.

SOUTH WEST WATER

Provides water and sewerage services to a population of c.1.7 million in Devon, Cornwall and parts of Dorset and Somerset. SWW was awarded enhanced status for its 2015-2020 business plan, meaning the business has the highest potential returns in the water sector.

BOURNEMOUTH WATER

Provides water services to a population of c.0.4 million in the Bournemouth and Christchurch region. Bournemouth was acquired in April 2015 and is one of the highest performing water companies with outstanding customer service.

2

GROUP OVERVIEW UNIQUE COMBINATION OF LEADING UTILITY INFRASTRUCTURE ASSETS

GROUP OUTLOOK

• Sustainable cash dividends; policy of ten years of 4% above RPI inflation to 2020

• Viridor past strategic point of inflexion; moving from investment to delivery

• South West Water building on a strong base for K6 (2015-2020) and delivering out performance

• Well-prepared for market and regulatory reform

• Growth both organic and through strategic acquisitions; Bournemouth Water is a logical and accretive addition to the Group

3

DELIVERING SUSTAINABLE PROFIT AND DIVIDEND GROWTH

SOLID RESULTS

In line with management expectations and previous guidance:

STRONG LIQUIDITY & FUNDING

4

FINANCIAL HIGHLIGHTS 2014/15 RESILIENT FINANCIAL PERFORMANCE

REVENUE UP

+2.7% to £1,357.2m

PROFIT BEFORE TAX(1)

+1.6% to £210.7m

DIVIDEND UP

+4.9% to 31.80p

SECTOR-LEADING EFFICIENT LONG-TERM FINANCING

CASH/COMMITTED FACILITIES

£1,741m average interest rate 3.4%

(1) Before net exceptional charges

GROUP NET BORROWINGS

£2,197.1M (2013/14 £2,194.0m)

GROUP NET GEARING(1)

61.9% (2013/14 64.7%m)

GROUP NET FINANCE COSTS

£40.8M (2013/14 £53.9m)

5

AVERAGE RATE

3.4% (2013/14 3.8%)

AVERAGE DEBT MATURITY

23 YEARS

• Diversified funding mix

• Significant finance-leasing with long maturity and secured margins

• Facilities renewed in-line with expectations

GROUP FINANCING EFFICIENT LONG-TERM FINANCING

(1) Net borrowings/(equity + net borrowings)

MATCHED TO REGULATORY CYCLES AND ASSET LIVES

BOURNEMOUTH WATER

• High performing water-only company

• Outstanding customer service – leading SIM performance

EXCELLENT BUSINESS FIT WITH SOUTH WEST WATER

• Attractive opportunity to expand wholesale capabilities

• Combined retail business reducing cost to serve

• Modestly earnings enhancing following integration

• Incremental 5% growth in regulatory RCV

6

ACQUISITION OF BOURNEMOUTH WATER LOGICAL, ACCRETIVE ACQUISITION(1)

BOURNEMOUTH

WATER

SOUTH WEST

WATER

Household

Customers 185,000 722,000

Non-household

Customers 16,000 73,000

Population

served 440,000 1.7m

Revenue(2) £47m £522m

RCV(3) £148m £2,928m

RoRE range 1.7% - 7.9% 2.1% - 10.5%

(1) Competition and Markets Authority (CMA) approval required (2) As at 31 March 2015 (3) As at 1 April 2015

PROVIDES FURTHER OPPORTUNITIES AHEAD OF MARKET LIBERALISATION

SWW BUILDING ON A STRONG BASE FOR K6 OUTPERFORMANCE

WELL-PREPARED FOR MARKET AND REGULATORY REFORM

VIRIDOR HAS MOVED FROM INVESTMENT TO DELIVERY

PENNON DELIVERING SUSTAINABLE PROFIT AND DIVIDEND GROWTH

SOUTH WEST WATER

SUCCESSFUL K5 DELIVERY

• Significant financial and efficiency outperformance

STRONG FOUNDATION FOR K6 OUTPERFORMANCE

• Highest RoRE potential in the sector

• Delivery plans underway; bathing water investments and innovative new Plymouth water treatment works

9

PREPARED FOR INDUSTRY REFORMS

• Business re-organised and re-focused

• Bournemouth Water provides opportunities and growth

FOCUS ON CUSTOMER SERVICE

• Shifting from reactive inbound to proactive outbound contacts

• Sector leading digital communication channels

• Enhanced affordability schemes for vulnerable customers

SOUTH WEST WATER OVERVIEW

BENEFITS OF FINAL DETERMINATION

Consistent with Draft Determination

• Potential equity returns in excess of 10%

• Appointee vanilla WACC 3.85% (Wholesale WACC 3.7%)

Benefits of ‘enhanced’ status retained

• No reduction in cost of capital

• No capping of ODI benefits

• Uncapped enhanced Totex menu – extra 5% menu sharing rate

• Enhanced financial award - £11m additional to RCV

RCV growth of 19%(1) over K6

Licence change allows rewards in period

0.3% 0.3%

1.5% 1.5%

0.3% 0.3%

1.7% 1.8%

1.4% 1.5%

0.2% 0.2%

1.9%

2.3% 0.5%

0.5%

Ofwat Final Determination Reflecting Enhanced Status

10

SOUTH WEST WATER FINAL DETERMINATION

2.1% - 9.9% RoRE range

2.1% -10.5% RoRE range

5.9% 6.0%

(1) Nominal prices assuming 3.2% RPI (2) Includes non-household retail margin

Financing reward

Totex reward

SIM reward

ODI reward

ODI risk

Totex risk

Financing risk

SIM risk

Financing reward

Totex reward

SIM reward

ODI reward

ODI risk

Totex risk

Financing risk

SIM risk

(2)

GREATEST OUTPERFORMANCE POTENTIAL IN AREAS WHERE WE ARE ALREADY STRONG

Water restrictions

18th consecutive year with no hosepipe ban or drought order

Leakage

Leakage targets met every year since their introduction

Bathing water quality

K6 enhancements brought forward to secure returns early

Service Incentive Mechanism

Customer service improving, but step change required

11

SOUTH WEST WATER ODI POTENTIAL

CUSTOMER SERVICE IMPROVING, BUT REMAINS A KEY AREA OF FOCUS

Financial outcome delivery incentives

SOUTH WEST WATER

RE-ORGANISED AND REFOCUSED BUSINESS

Targeting TOTEX, ODI and financing outperformance

Developed wholesale and retail strategies

• K6 shadow reporting already established

Preparing for market liberalisation in 2017

• SWW’s internal programme well established

• Source for Business – campaign to non-household customers

• Focus on workforce training – retail and wholesale

12

K6 PREPARATION

ENGAGED IN FURTHER INDUSTRY-LEVEL REGULATORY REFORM

VIRIDOR

VIRIDOR IS NOW ESTABLISHED AS A LEADING UK RENEWABLE ENERGY, RECYCLING AND WASTE MANAGEMENT BUSINESS

A MARKET LEADER WELL-POSITIONED TODAY AND FOR THE FUTURE

VALUE-ENHANCING ERF PORTFOLIO

• Positioned to benefit from structural under-capacity in the residual waste market

• Supported by optimal contracted position

14

FORECAST TO DELIVER SUBSTANTIAL GROWTH OVER THE LONG-TERM

EARNINGS ENHANCING FOR PENNON GROUP

VIRIDOR OVERVIEW

UNRIVALLED EXPERTISE DELIVERING THE RIGHT STRATEGY FOR EACH BUSINESS

• Solid strategy to combat short-term challenges

• Optimally positioned for the long-term across all divisions

• Significant energy player with 270MW of total ERF portfolio capacity and 104MW of landfill gas

15

VIRIDOR STRATEGY

LEGACY

BUSINESS

RECYCLING &

RESOURCES

ENERGY

Landfill Recycling Collection

&

Contracts

Landfill

Gas

ERF

SHORT-TERM

OUTLOOK

Headwinds in

commodity

pricing

currently

creating

challenging

environment

LONG-TERM

FUNDAMENTALS

Prescribed

to close

by EU and UK

government

policy. Managed

well for cash

maximisation

and alternative

uses

FOCUSED ON CREATING VALUE FOR SHAREHOLDERS

ALL BUSINESSES WELL-POSITIONED

16

VIRIDOR OPERATIONAL PERFORMANCE

HIGH GROWTH PROFILE OF ERF PORTFOLIO (1) ROC – Renewables Obligation Certificate

(2) NFFO – Non Fossil Fuel Obligation

LANDFILL ENERGY RECYCLING CONTRACTS/ COLLECTIONS ERF

Important cash contributor Focus on recycling margin improvements

Positioned for growth in a consolidating sector

Business now successfully operational

• From 21 sites in 2014/15, to 3

strategic sites by 2020 – closed landfill sites continue

to produce landfill gas

• Landfill gas boosted by migration to higher value ROCs(1) (94%) from NFFO(2) (6%) and focus on enhanced extraction of declining volumes

• Alternative uses to maximise asset base and profitable site divestments are being explored

• Strong and growing drivers and

demand for recycling • EU expected to announce 70%

recycling target in 2015

• ITOO (Input, Throughput and Output Optimisation) programme giving positive momentum for next year

• Quality remains a key differentiator within the sector

• Managing short-term pressures; rigorous review of contracts

• Collections have increasing role in

securing material for MRFs and ERFs

• Profits increased through route optimisation and infill of rounds using proprietary in-cab technology

• Contract wins include Borough of Poole extension and Kent County Council recyclables

• Renewed focus on national wins to offset expiring contracts

• 7 operational ERFs, 5 taken

over since July 2014 – two thirds of the portfolio

capacity now in operation

• £839m spent with £460m capital budget remaining

• Peterborough & Glasgow, progressing well and on schedule

• Dunbar – Construction progressing well

• Beddington ERF – Notice to Proceed (NTP) received

17

VIRIDOR ERFS AND JOINT VENTURES

Operational ERF

2015 – 2018

Consented facility

Local authority

Viridor collections

C&I (Other contractors)

Sales target

ERF BUSINESS NOW SUCCESSFULLY OPERATIONAL

• All facilities full at opening

• Over 80% of tonnage inputs secured

• Well-balanced risk

Viridor progress in securing contracted tonnage(1)

(1) As at June 2015

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MARKET OVERVIEW COMBUSTIBLE RESIDUAL WASTE

CONSISTENT AND CONFIDENT IN OUR MARKET PROJECTIONS

• Conservative assumptions taking into account higher recycling over time and further ERF build-out

• ERF demand outstripping capacity; Viridor well-positioned to take market share

0

5

10

15

20

25

30

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Other ERF Capacity Viridor ERF Capacity UK ERF Under-capacity

VIRIDOR TARGETING 15% ERF MARKET SHARE

Source: DEFRA, SEPA, NRW and Viridor analysis

UK

Co

mb

ustib

le W

aste

Ma

rke

t (T

onn

es m

)

VIRIDOR

APPROPRIATE MIX OF WASTE SECURED

• Recently taken over plants operating in line or ahead of expectations in the post commissioning phase

• Wholly owned plants processed 209kt and generated 121 GWh in 2014/15(1)

• All operational facilities full at opening

• Over 80% of committed portfolio volumes contracted, of which three-quarters is long-term

• Non-contracted volumes provide us with the flexibility to ensure we have the optimum calorific values and returns

• A further 500kt is currently being procured through various Local Authority tenders

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ENERGY RECOVERY FACILITIES (ERF)

(1) Excludes tonnes processed and electricity generated during commissioning

ENABLING ERFS TO OUTPERFORM EXPECTATIONS

REVENUE MIX

c.70% gate fees (read across from landfill tax), c.25% power price, c.5% recovered metals

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HEAT OFF-TAKE

Already successful at Runcorn 1, looking into potential at two more plants. All plants heat-enabled

TECHNOLOGY

Viridor’s ERFs use long-established, well-proven moving grate technology. Glasgow the exception, which uses gasification

CAPACITY PAYMENTS

Ongoing review of facilities for capacity payment suitability

OVER 80% CONTRACTED

On portfolio volumes of which over 60% long-term. Contracts include escalators/inflation-linking

HEDGING

Preparing a more comprehensive hedging strategy to secure wholesale market upside and protect against sudden falls in wholesale pricing close to energy delivery

VIRIDOR ERF INVESTMENT CASE

RESILIENT INFRASTRUCTURE MODEL WITH CONTRACTED REVENUES

ENABLING ERFS TO OUTPERFORM EXPECTATIONS

APPENDIX

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SUMMARY FINANCIAL RESULTS 2014/15 STRONG PERFORMANCE, IN LINE WITH EXPECTATIONS

(£M) 2014/15 2013/14 CHANGE

Group Revenue 1,357.2 1,321.2 +2.7%

Group EBITDA(1) 411.0 407.3 +0.9%

- SWW 331.3 330.9 +0.1%

- Viridor EBITDA 80.4 76.3 +5.4%

- Share of joint venture EBITDA(2) 41.4 41.1 +0.7%

- IFRIC 12 interest 13.5 8.5 +58.8%

- Viridor underlying EBITDA 135.3 125.9 +7.5%

Viridor PBIT + JVs(1) 37.9 43.6 (13.1%)

Group profit before tax(1) 210.7 207.3 +1.6%

Exceptional items post-tax (11.0) (39.7) +72.3%

Capital Investment(3) 407.3 434.1 (6.2%)

Earnings per share(4) (p) 39.8 42.6 (6.6%)

Dividend per share (p) 31.80 30.31 +4.9%

394.8

407.3 411.0

2012/13 2013/14 2014/15

(1) Before exceptional items (2) Viridor’s share of non-recourse net debt in the JVs, excluding

shareholder loans was £204m (Viridor’s share including shareholder loans was £302m)

(3) Including construction spend on service concession arrangements

(4) Before net exceptional charges and deferred tax. Basic earnings per share (statutory basis) 32.3p

Group EBITDA (1)

£m

ERFS EXPECTED TO CONTRIBUTE

c.£100m EBITDA by 2016/17

SUCCESSFUL COMPLETION OF K5

Mitigated impact of price freeze

• NPV neutral

• growth in revenue - higher demand

• Strong cost control

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SOUTH WEST WATER FINANCIAL PERFORMANCE

(1) Excluding exceptional credit

2014/15 (£M) 2013/14 (£M) CHANGE

Revenue 522.2 520.0 +0.4%

EBITDA(1) 331.3 330.9 +0.1%

Operating Profit(1) 225.4 227.0 (0.7%)

PBT(1) 167.9 162.5 +3.3%

Capital

Expenditure 145.1 141.6 +2.5% GOOD COST

CONTROL IS KEY

FULL YEAR EBITDA EXCEEDED 2013/14 AS EXPECTED

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VIRIDOR FINANCIAL PERFORMANCE

(1) Including landfill tax (2) Including construction spend on service concession arrangements (3) Before exceptional items (4) Includes IFRIC 12 interest receivable and joint ventures’ share of

EBITDA (Lakeside, Viridor Laing Greater Manchester (VLGM) and TPSCo). For VLGM, this is the share of IFRS EBITDA plus service concession interest receivable

(5) Interest receivable on shareholder loans plus share of PAT

GROWING SIGNIFICANTLY IN FUTURE

(£M) 2014/15 2013/14 CHANGE

Revenue(1)(2) 835.9 802.0 +4.2%

EBITDA(3) 80.4 76.3 +5.4%

Underlying EBITDA(3)(4) 135.3 125.9 +7.5%

PBIT + joint ventures(3)(5) 37.9 43.6 (13.1%)

PBT(3) 27.7 27.6 +0.4%

Exceptional items post tax (21.4) (39.7) +46.1%

Capital Expenditure(2) 262.2 292.4 (10.3%)

EBITDA BY ACTIVITY(1)

25

VIRIDOR FINANCIAL PERFORMANCE

(£M) 2014/15 2013/14 CHANGE

ERF 33.7 3.1 +987.1%

Landfill 15.4 25.3 (39.1%)

Recycling 11.5 23.2 (50.4%)

Collections 10.3 11.4 (9.6%)

Contracts and other 27.2 28.0 (2.9%)

Landfill gas power generation 35.8 37.3 (4.0%)

Indirect costs (2) (53.5) (52.0) (2.9%)

EBITDA 80.4 76.3 +5.4%

Share of JV EBITDA(3) 41.4 41.1 +0.7%

IFRIC 12 interest 13.5 8.5 +58.8%

Underlying EBITDA 135.3 125.9 +7.5% (1) Before exceptional items (2) Including pensions, insurance, bid costs,

environmental management and overheads (3) Joint ventures’ (Lakeside, Viridor Laing Greater

Manchester (VLGM) and TPSCo) share of EBITDA. For VLGM, this is the share of IFRS EBITDA plus service concession interest receivable

AN ILLUSTRATIVE, LARGE ERF (C.300KT) WILL CONTRIBUTE C.£28M TO VIRIDOR EBITDA

IAS 16 IFRIC 12 JVs

• Oxford (Ardley) • Cardiff

(Trident Park) • Runcorn II • Dunbar • South London

(Beddington) • Bolton • *Avonmouth (not committed)

• Exeter • Glasgow • Peterborough(2)

• Lakeside • Runcorn 1

26

VIRIDOR ERF ACCOUNTING

ILLUSTRATIVE ERF(1)

IAS 16 IFRIC 12 JVs

EBITDA £28m £12m --

IFRIC 12 Interest

Income

-- £16m --

Share of JV

EBITDA (50%)

-- -- £14m

Underlying

EBITDA

£28m £28m £14m

(1) From first full year of operation (2) Local authority funding, interest income will be negligible

PROGRESS ON ERF PIPELINE

27

VIRIDOR ERFS (INCLUDING JOINT VENTURES)

ERF BUILD-OUT NEARING COMPLETION

(1) Capital cost excludes capitalised interest and for projects for which the EPC contract has not yet been executed, capital cost may vary in accordance with the Euro exchange rate

(2) Operational period post construction. This is usually the minimum guaranteed plant life

(3) Joint ventures economic interest (Lakeside 50%; Runcorn I 37.5%)

(4) Project is not yet committed (5) Plus heat 51MWth (6) Plus heat 17MWth

SITE

CAPITAL

COST (1) GROSS CAPACITY STATUS

BASE LOAD

MUNICIPAL

CONTRACT

ACTUAL/EXPECTED

COMMISSIONING

OPERATIONS

END (2)

Tonnes

(000)

Electricity

MWe

Lakeside(3) 150 410 38 Fully Operational Merchant Commissioned 2033

Bolton N/A 120 9 Fully Operational Greater

Manchester Commissioned 2034

Exeter 47 60 3 Operational Exeter Commissioned 30 years

Oxford

(Ardley) 210 300 24

Initial Operation

Ramp-up Oxfordshire Commissioned 25 years

Cardiff

(Trident Park) 223 350 28

Initial Operation

Ramp-up Gwyrdd

(SE Wales) Commissioned 25 years

Runcorn I(3) 236 375 28(5) Initial Operation

Ramp-up Greater

Manchester Commissioned 25 years

Runcorn II 216 375 41 Initial Operation

Ramp-up Merchant Commissioned 25 years

Glasgow 155 200 15 Construction in

progress Glasgow H1 2016/17 25 years

Peterborough 72 80 7 80% complete Peterborough H2 2015/16 30 years

Dunbar 177 300 23(6) Construction in

progress Merchant H2 2017/18 25 years

South London

(Beddington) 199 275 26 Construction in

progress S London H1 2018/19 25 years

Sub Total 2,845 242

Avonmouth(4) 233 350 28

Planning

permission

achieved

TBA TBA 25 years

Grand Total 3,195 270