South West Water: Surge in profits for parent company of utility responsible for fixing contaminated supply in Devon
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The parent company of South West Water has insisted it is focused on returning safe water supply to Brixham in Devon as it announced an 8.6% increase in underlying operating profits to £166.3m.
Around 17,000 households in the Brixham area have been told to boil their drinking water since last week following an outbreak of cryptosporidiosis which left hundreds of people ill.
The condition, which can lead to vomiting and diarrhoea, is caused by a water-born parasite, and South West Water has said it was most likely triggered by animal faeces entering a damaged pipe.
Pennon Group, the listed company which owns South West Water, Bournemouth Water and Bristol Water, said normal service had been returned to 85% of customers as it announced its annual financial results.
“Whilst the results we are announcing today are based on our performance for the last financial year, we are 100% focused on returning a safe water supply to the people and businesses in and around Brixham,” said Susan Davy, the group chief executive.
“Normal service has returned for 85% of customers, but we won’t stop until the local drinking water is returned to the quality all our customers expect and deserve. Our absolute priority continues to be the health and safety of our customers and our operational teams are working tirelessly around the clock to deliver this.”
The company also revealed it is paying out about £3.5m in compensation to customers affected by the parasite outbreak in Devon.
Read more:
People still scared to drink tap water after disease outbreak
‘Robust’ results – but firm defends money for shareholders
Describing financial results which include a 10% increase in revenues to more than £907m as “robust”, Ms Davy said dividend payments to shareholders, increasing by 3.8% to 44.37 pence per share, had been reduced to cover the cost of a £2.4m fine for multiple pollution incidents.
“At a time when media, public and regulatory scrutiny is high, it is important we do what is right for all. In the context of the wider group performance, we have carefully considered Ofwat’s new dividend guidance for water businesses. We have… adjusted the final dividend quantum by £2.4m, equivalent to the South West Water Court fine in 2023/24, signalling we are listening, clearing the way for long-term shareholder value.”
Pennon Group’s net debt rose by 10% to £5.18bn, a debt ratio of more than 63%, and capital expenditure rose by almost 80% to £642.4m.
Water companies are currently negotiating with regulator Ofwat over their spending and revenue plans for the next five years, and South West Water has proposed a 20% increase in customer bills.
