South East Water: Firm pays out £2.3m to shareholders - despite under investigation by Ofwat for 'failing' customers 'too often'

South East Water has paid out £2.3m in dividends to its shareholders despite the firm being under investigation by the regulator Ofwat over its service to customers and record in maintaining a water supply. The payout to shareholders also comes as the company is hit by widening losses and a £3m cost hit from summer heatwaves and supply interruptions. 

The firm announced a pre-tax loss of £18.1m for the six months to 30 September, against losses of £12.7m a year earlier. It revealed that costs surged over the half-year, pushed higher by a bill for a summer of water interruptions, with £3m forked out – including £1.5m in compensation and £700,000 for providing bottled water to households and customers. South East Water insisted its dividend was down on the £4.5m paid out a year earlier and was “lower than Ofwat’s view of what is a reasonable nominal dividend yield”. 

The company serves about 2.2m households and businesses in Surrey, Kent, Sussex, Hampshire and Berkshire. It faced a dire summer after it had to impose a hosepipe ban earlier this year, blaming exceptionally hot weather and more people working from home for ramping up demand and “testing” its infrastructure. 

According to Ofwat the firm is currently the worst performer for water supply interruptions in England and Wales. It launched a probe into the firm in November, saying that “too many customers have been failed too often” by the supplier. The regulator said from 2022 to 2023, there was an average of more than three hours of water supply lost per property, compared with its performance commitment level of about five minutes and 45 seconds.

David Black, Ofwat CEO, said: "Providing reliable water supplies is at the heart of a water company's responsibilities. Too many customers have been failed too often by South East Water.

“We are clear that water companies must do more to regain public trust and it must start with better service. Where this does not happen, we will use all of our powers to ensure the sector delivers better value for both customers and the environment."

The group’s bosses said on announcing its results: “Unprecedented extreme weather events were the cause of the majority of supply interruptions, but we appreciate that problems experienced by our customers will result in lower levels of customer satisfaction. We are deeply sorry to customers who have been affected by supply interruptions and continue to work tirelessly to recover. We have 52 teams actively repairing leaks, and 40 technicians proactively looking for them.”