South West Water

Parent Company:         Pennon Plc

Regulated utility:         South West Water Ltd

Ownership:                   Public Limited Company

Although one of the smallest water companies by area and population, it has the longest coastline. At the time of privatisation it had almost no coastal sewage treatment and as a consequence has a relatively high capital investment programme. Now investment in improved treatment of sewerage from the major coastal towns is virtually complete. Instead the focus is on water mains replacement, smaller sewage treatment works and combined sewage overflows. South West Water's customers have the highest bills in the UK despite the South West being relatively poor. Although in AMP5 bills will remain flat, this is still a big political issue.

South West Water is unusual in that the regulated water company makes up less than 50% of turnover. Viridor its waste management and renewable energy business has become a leading player in the sector with turnover of £626m and operating profit of £73m (up by 15%) this last financial year. Viridor has achieved impressive PBITA compound growth of 22% since 2002. On the back of Viridor's strong performance and robust outlook (they are preferred bidder on two major waste contracts in Oxfordshire and Exeter) Pennon's management are committed to real annual dividend growth of 4% from 2010/11 until at least 2014/15.