CASE STUDY

Pennon Group

With the introduction of IAS 39, Pennon was

concerned with the potential impact on their

P and L, if the swaps they had in place were

not perfectly hedged. The company has circa

2 billion GBP of debt, the majority at a floating

rate. The Group´s policy is to have at least half

of its net debt fixed and, hence, has put interest

rate swaps in place to fix the debt.

Pennon´s treasury transformation journey began

with the new IAS 39 standard. As the business

grew, so did its requirements. With Reval as

its strategic partner, the company moved

further down the transformation path, turning

its focus to more comprehensive risk and cash

management. Pennon needed an integrated

solution that could give it visibility into its

financial exposures and cash positions across its

entire treasury function, allowing it to make more

strategic investment decisions. Once again,

Pennon turned to Reval and is in the process of

implementing the full suite of its Software-as-

a-Service (SaaS) Treasury and Risk Management

(TRM) solution.

CASE STUDY Pennon Group

About Pennon Group

Pennon Group Plc is a FTSE 250 company which owns South West Water Limited and Viridor Limited. The Group has assets of around 4.3 billion GBP and a workforce

of over 4,500 people. Pennon’s strategy is to promote the success of the Group for the benefit of its shareholders, customers and other stakeholders through its focus

on water and sewerage services, recycling, renewable energy and waste management.

“Reval has been a true partner to Pennon over our eight year relationship.”

“Reval’s SaaS delivery will enable everyone here at Pennon to be on the same version of the software, which gets upgraded seamlessly without

impacting our productivity.”

[ ]Treasury Transformation through the

Years at Pennon Group

Challenge

Initially, Pennon used spreadsheets to manage its exposures, which made it a challenge to comply with the complex methodologies and principles associated with the new accounting standard, IAS 39. It was at this time, when Pennon started looking for a solution provider that could not only provide a system, but also the associated expertise of IAS 39. Pennon then began using Reval’s Project Hedge Accounting module to manage their hedges related to the building of Energy from waste plants.

With risk management and hedge accounting as finely tuned process, Pennon decided to improve visibility in cash and cash management workflows. Choosing Reval again, enables Pennon to update its system landscape and introduce a uniform Treasury Management System (TMS) dealing with the majority of the treasury function´s requirements.

Solution

Pennon selected Reval, an award winning treasury and risk management provider, as its technology partner so that they had a fully integrated TMS. Three key factors influenced its decision:

• Reval was already a tried and tested system. • The system was recognised by its auditors. • Reval’s in-house derivative risk management and hedge accounting expertise

would provide assistance as required.

Pennon initially used Reval to manage its interest rate and foreign exchange risk and comply with hedge accounting, but as the treasury department’s knowledge of IAS 39 grew and its requirements became more complex, Reval was able to deliver the necessary tools to facilitate this growth.

Pennon began using Reval’s Project Hedge Accounting module which allowed it to simplify the time-consuming tasks of managing hedging activities that are directly associated with complex, multi-year projects. Pennon was able to create and manage projects (start and end dates, percentage complete, etc.) and all hedges associated with the project from one place.

Content with the risk management and hedge accounting capabilities, Pennon has decided to streamline cash management processes. Using Reval´s cash and liquidity management capabilities, Pennon will be able to centralise bank account administration and bank account activity. Reval´s SaaS TRM solution will also automate bank statements collection and provides analytical tools, which will enable Pennon to gain a picture of cash positions to support strategic funding and investment decisions. In a nutshell, Reval will help Pennon to increase treasury productivity, efficiency and control for cash assets by centralising and automating processes in order to reduce manual intervention.

CASE STUDY Pennon Group

“We can focus on treasury without worrying about the technology.”

“The integrated market data and secure flow of information will allow us to confidently and accurately manage our exposures.”

About RevalReval is a leading, global Software-as-a-Service (SaaS) provider of comprehensive and integrated Treasury and Risk Management (TRM) solutions. Our cloud-based software and related offerings enable enterprises to better manage cash, liquidity and financial risk, and includes specialized capabilities to account for and report on complex financial instruments and hedging activities. The scope and timeliness of the data and analytics we provide allow chief financial officers, treasurers and finance managers to operate more confidently in an increasingly complex and volatile global business environment. Using Reval, companies can optimize treasury and risk management activities across the enterprise for greater operational efficiency, security, control and compliance. Founded in 1999, Reval is headquartered in New York with regional centers across North America, EMEA and Asia Pacific.

For more information, visit www.reval.com or email info@reval.com.

“The client service and support we are receiving throughout our treasury transformation really does put the ‘Service’ in SaaS.”

CASE STUDY Pennon Group

Results

Pennon will have the ability to have visibility of its total debt, both hedged and un-hedged, its exposures and controls of its cash positions in one system, and has the added ability of automating reports.

“Reval has been a true partner to Pennon over our eight year relationship,” says Tony Hooper, Group Treasurer at Pennon. “Reval’s SaaS delivery will enable everyone here at Pennon to be on the same version of the software, which gets upgraded seamlessly without impacting our productivity. Reval’s SaaS also allows us to leverage industry best practices as it promotes best practices. We will not only be more efficient, but also more focused on our core competency. We can focus on treasury without worrying about the technology.”

Carolyn Maloney, Group Treasury Manager at Pennon adds: “The integrated market data and secure flow of information will allow us to confidently and accurately manage our exposures. The client service and support we are receiving throughout our treasury transformation really does put the ‘Service’ in SaaS.”