South West Water's parent company Pennon Group PLC (LSE:PNN, OTC:PEGRY) has navigated widely publicised water offences in Brixham, Devon with a multimillion-pound dividend reduction.
In March 2023, regulator Ofwat announced new powers to stop water companies from declaring dividends if they would risk the company’s financial resilience.
“In the context of the wider group performance, we have carefully considered Ofwat's new dividend guidance for water businesses,” said Pennon in today's full-year earnings report.
The group announced a £2.4 million reduction in the final dividend to reflect the £2.1 million fine it received for a series of environmental offences across Devon and Cornwall spanning a period of four years.
Despite the £2.4 million cut, the company recommended a total dividend per share of 44.37p for the year, up 3.8% from the previous year.
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.”
As for Pennon’s wider financial performance, statutory revenues increased 14% to £907.8 million and operating profit surged over 28% to £140.4 million
The contentious acquisition of SES Water in January 2024 contributed £35.7 million of revenue and a £2.5 million loss before tax.
Shares flopped 5.3% in opening exchanges.