South East Water pays £9m dividend – despite imposing a hosepipe ban and falling to a £74.2m loss

The water company responsible for the first hosepipe ban of the summer has showered shareholders with a multi-million pound dividend – despite reporting a big loss.

South East Water, whose boss David Hinton has blamed working from home for water shortages, will distribute £9million to its owners. 

Hinton, meanwhile, received a £105,000 bonus – less than half of last year’s but still leaving him with a total pay package of £417,000.

The company serves 2.3m customers across Hampshire, Berkshire, Surrey, Sussex and Kent.

South East Water slumped to a £74.2million loss for the year to the end of March as the cost of servicing its £1.3billion debt pile ballooned by £49.9million to £117.5million.

That was because much of its debt is index-linked, which means the cost of repaying the debt goes up when inflation rises. 

The company said high inflation and rising interest rates had ‘substantially increased the challenges that we are facing and will face in the next few years’.

Its losses were also partly blamed on ‘extreme weather events’ costing £17million – including an ‘unprecedented’ heatwave, incessant rainfall causing flooding and power cuts as well as a ‘freeze-thaw’ event in December.

South East Water said the immediate response to the weather, such as sourcing new water, cost it £6.6million.

The group incurred costs of another £4.9million repairing leaks and burst pipes, and on top of that it paid customers £5.5million in compensation. 

The business said it has been dealing with the driest conditions in Kent since records began in 1836, and the lowest rainfall in Sussex since 1911. 

On top of that, water demand was at an all-time high during the hotter weeks.

An £8.4million surge in energy prices also took its toll on earnings.

Meanwhile, the company admitted failing to meet annual leakage targets. It lost a staggering 94.5m litres of water a day on a rolling three-year average against a target of 93.2m litres.

South East Water – which is owned by a consortium of Australian, French and UK investors – imposed a hosepipe ban for customers in Kent and Sussex last month.

Hinton said in a letter to customers that working from home was a ‘key factor’ behind shortages experienced in the region as it had ‘increased drinking water demand’.

The company also left thousands of customers in Tunbridge Wells and surrounding villages without running water for days-long spells in the run-up to last Christmas.

Tunbridge Wells MP Greg Clark said in Parliament that many were left to endure ‘conditions of stress and, frankly, squalor’ and blamed a ‘catalogue of failures that exposed a network lacking in the resilience needed to do the job or supplying water reliably’.

The results come amid intensifying scrutiny of Britain’s water companies.

Thames Water, the country’s biggest supplier, has been in crisis talks with the Government as it battles to secure funding after its debt ballooned to £14billion.