South East Water has reported a pre-tax loss of nearly £75m, which it blamed in part on the cost of dealing with last year’s “extreme weather events” including the record-breaking heatwave.
The water firm, which supplies 2.2 million customers in Kent, Sussex, Hampshire, Berkshire and Surrey, said the weather events cost it £17m.
As well as last July’s heatwave, during which recorded temperatures passed 40C in the UK for the first time, South East Water said it had also had to manage the driest conditions in Kent since records began in 1836, the lowest rainfall in Sussex since 1911 and all-time-high demand for water even as reservoirs were low.
A couple of months later it had to deal with the consequences of “incessant rainfall, flooding and power cuts” and then a “major freeze-thaw” in December when temperatures rose from -7C to +13C within 24 hours.
The company said the immediate response to the weather cost £6.6m; it then spent a further £4.9m repairing leaks and burst pipes and £5.5m on compensation for customers.
The adverse weather contributed to the company recording a loss before tax of £74.2m in the financial year to the end of March, compared with a £17m profit a year earlier. Revenues at the company increased to £257.5m, up from £251.3m the previous year.
Its profits were also hit by soaring operating costs, which jumped from £184m the previous year to £228m in the latest results.
Its annual report said shareholders were paid dividends of £9m for the last financial year, the same amount as the year before. That contrasts with the 2020-21 financial year, when such payouts totalled £147m, including a special restructuring dividend of £136m.
The company said it had been unable to achieve its annual leakage targets for the first time in more than a decade, but added that it had implemented a recovery plan to “make up the ground”.
South East Water said: “Whilst we acknowledge that the climate is changing, we have seen an exceptional combination of extreme weather events this year that has significantly impacted on our business operations and financial performance.”
Last month, the firm imposed the first UK hosepipe ban of the summer, blaming the move on more people working from home during the warmest June on record.
Its chief executive, David Hinton, said people staying at home rather than going into the office post-pandemic had “increased drinking water demand” and was a key factor prompting the ban.
The company’s troubling financial results will further fuel criticism of the beleaguered water industry, which has come under fire for a lack of infrastructure investment, sewage spills and generous dividend payouts.
Last week, Thames Water managed to secure a further £750m of emergency funds to help prevent nationalisation and continue to run until March 2025. The company still requires an additional £2.5bn to cover the five years to 2030 and has a £14.7bn debt pile.
