The parent company of South West Water has announced a 3.8% increase in its total dividend to 47.37p per share, just a week on from telling thousands of households they would need to boil their drinking water following a parasite outbreak.

Owner of the water company, Pennon Group, also reported an 8.6% rise in its underlying operating profit, to £166.3m.

This comes despite South West Water currently paying out £215 per customer in compensation to those affected by the outbreak. Should all eligible customers claim this compensation, the cost to Pennon would amount to around £3.4m.

Pennon’s CEO, Susan Davy, said the group was “100% focused on returning a safe water supply” to those affected in the Brixham area in Devon, and confirmed that a normal service had returned for 85% of South West Water’s customers.

“At a time when media, public and regulatory scrutiny is high, it is important we do what is right for all,” Davy added. “In the context of the wider group performance, we have carefully considered Ofwat’s new dividend guidance for water businesses.”

However, the Conservative MP for Totnes, Anthony Mangnall, whose constituency covers Brixham, said it was “completely unacceptable” that the group was paying out dividends to shareholders.

“I suggest that they either suspend the dividend offering or the CEO Susan Davy steps down,” Mangnall said.

In its latest trading statement, which covered the full year to 31 March, Pennon also saw its underlying revenue climb by 10.0% to £907.8m.

Equity analyst at Hargreaves Lansdown, Aarin Chiekrie, commented that Pennon’s revenue last year was “buoyed” by inflation-linked tariff increases, helping the company to surpass market expectations.

“This helped profits move in the right direction as the group kept costs under control,” Chiekrie added.

“Looking to the new financial year, Pennon’s revenue looks set to keep benefitting from inflation-linked increases, as well as a full year’s contribution from recently acquired SES Water. The group also made the largest investment in its infrastructure, looking to reduce its use of storm overflows. But this investment doesn’t come cheap and the group plans to raise around £500m by issuing new debt by March 2025.”

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