South West Water: higher earnings amid Brixham, Devon cryptosporidium parasite contamination problems - news

The owner of South West Water (SWW) has announced it has seen increased annual earnings and a higher dividend for investors, even as it works to restore a safe water supply following a parasite outbreak in Devon.

Pennon said it is distributing approximately £3.5 million in compensation to customers after over 16,000 households and businesses in the Brixham area were instructed to boil their drinking water since 15 May due to the presence of cryptosporidium in the supply.

Cryptosporidium is a waterborne parasite that can cause symptoms like diarrhea and vomiting. The outbreak, likely caused by animal faeces entering a damaged pipe, has resulted in two hospitalisations and hundreds of illnesses, according to SWW.

Pennon has increased customer compensation to £215 for those affected, adding that normal service has now been restored for 85% of customers.

Read more: SWW apologises and admits 'traces' of Cryptosporidium found in samples

But in results out on Tuesday (21 May), the group courted further controversy after revealing it has increased its full-year dividend payout to investors, despite reducing it by £2.4 million after it was handed a record fine for sewage spills.

The figures also showed underlying operating profits lifted 8.6% to £166.3 million in the year to 31 March.

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Group chief executive Susan Davy said: “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.

“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 firm said the move to reduce the total dividend payout to investors by 0.84p a share to 44.37p showed “we are listening, clearing the way for long-term shareholder value”. However, the payout was still 3.8% higher than the previous year.

SWW was fined £2.2 million in April last year for illegal sewage spills across Devon and Cornwall spanning four years. “At a time when media, public and regulatory scrutiny is high, it is important we do what is right for all,” said Davy.

SWW and owner Pennon have likewise come under fire over their handling of the Devon parasite outbreak, with calls mounting for the company to offer more for affected households and businesses.

Conservative MP Anthony Mangnall, whose Totnes constituency covers Brixham, has said customers should get a level of compensation they “deserve” following the outbreak.

Pennon’s figures showed on a statutory basis, pre-tax losses widened to £9.1 million for the year to 31 March, against losses of £8.5 million the previous year, as it faced a jump in debt costs.

The group – which also owns Bristol Water and recently bought SES Water – saw its debt pile swell to £3.5 billion as of the end of March, up from £3 billion a year earlier.