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Pennon Group PLC (PNN)

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Monday 15 May, 2006

Pennon Group PLC

Acquisition

Pennon Group PLC
15 May 2006

15 MAY 2006


PENNON GROUP PLC


PENNON GROUP EXPANDS ITS WASTE MANAGEMENT BUSINESS


Pennon Group Plc announces that its subsidiary, Viridor Waste Management
Limited, has acquired Wyvern Waste Services Limited, the landfill, power
generation and recycling business, from Somerset County Council for £25 million.
Viridor has also entered into long-term waste management contracts with the
County as a Public Private Partnership (PPP).  The acquisition is in line with
Pennon Group's stated strategy of expanding its waste management activities,
particularly in the areas of landfill, power generation and PFI/PPP contracts.


Wyvern Waste is headquartered in Taunton and comprises:  strategically located
landfill sites in Somerset with approximately 5.1 million cubic metres consented
capacity; landfill gas power generation schemes totalling 7.1 Megawatts (MW)
capacity; and associated transfer stations, recycling and collection activities.
As a result of the acquisition, Viridor Waste's consented landfill capacity
increases to approximately 92 million cubic metres and its power generation to
68MW.  The acquisition will be integrated into Viridor Waste's south west region
and is expected to be earnings enhancing before amortisation of intangibles in
its first full year.


Commenting on the acquisition, Colin Drummond, Chief Executive of Viridor Waste,
said, 'This acquisition fits very well with Viridor Waste's strategy of
expanding its landfill, power generation and long term integrated municipal
contract businesses in key regions of the UK'.


For further information please contact:

Colin Drummond, Chief Executive, Viridor Waste Limited, on 01823 721431
Jo Finely, Investor Relations Manager, Pennon Group Plc, on 01392 443401
Mark Harris, Finsbury, on 0207 2513801



Additional information:


Viridor Waste Management is a leading provider of essential waste and recycling
services in the UK.  It has core competencies in waste disposal by landfill, the
generation of electricity from landfill gas and the operation of materials
recycling facilities.  It also operates waste transfer stations, civic amenity
sites and composting facilities in a number of regions of the UK and has a waste
collection fleet of 365 vehicles, a liquid waste treatment plant, and a clinical
waste incinerator.  Its 25 year waste management PFI with West Sussex County
Council has been operating since April 2004 and the current Somerset PPP is its
second such long term contract.  Through its joint venture with Grundon Waste
Management it is building a 400kt/32MW energy from waste facility at Colnbrook
west of London.


Viridor's stated strategy is to:


  • capitalise on its leading position in waste disposal by landfill;
  • exploit opportunities in renewable energy generation;  and
  • pursue profitable opportunities arising from the UK Government's
    developing waste strategy, including PFI/PPP contracts.


Following this acquisition, the company has total consented landfill capacity of
approximately 92m cubic metres.  This capacity is located particularly across
the South, North West and East of England, and the Central Belt of Scotland.


Gas produced from landfill sites (landfill gas) is increasingly used to generate
electricity.  It is a form of renewable energy and now represents around 30
percent of the UK's total renewable energy generation.  The UK Government's
strategy is to increase the percentage of electricity generated from renewable
sources from the current figure of around 4 percent to a target of 10 percent in
2010 and 15 percent in 2015, with an aspiration of 20 percent in 2020.  To meet
these targets, the UK Government has introduced premium pricing regimes, most
recently Renewable Obligation Certificates ('ROCs'), to encourage all eligible
forms of renewable energy including landfill gas.  Following the acquisition,
Viridor has approximately 68 MW of capacity of which around 46 percent is
eligible for ROCs.


15 May 2006


www.pennon-group.co.uk


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