Increased dividends have been paid to the overseas owners of Northumbrian Water Group, new accounts show.
The group responsible for water supply and sewage services to about 2.7m people in the North East, as well as water for 1.9m people in Sussex and Suffolk, saw revenue climb more than £72m to £899.9m in the year to the end of March. Dividends paid to its Hong Kong-based majority owner CK Hutchison Holdings and minority shareholder, New York private equity company KKR & Co, grew to £105m, up from £91.7m. In addition, there is a proposed final dividend of £54m.
In accounts filed at Companies House, the group said it was disappointed a key measure of its drinking water standards had deteriorated, as assessed by the Drinking Water Inspectorate. But in tests with customers it improved on appearance, smell and taste of the supplies.
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Record breaking summer heatwave conditions and freezing and thawing in December 2022 brought burst mains and infrastructure failures, meaning the group missed performance targets on interruptions to supply. Overall, the group said it had achieved 13 out of 17 targets, which also included top two customer service performances and favourable leakage scores.
Meanwhile, bosses said they were aware of investigations launched by the Environment Agency and Ofwat into "flow to full treatment" - referring to the amount of rain and wastewater the company must treat before it is allowed to discharge excess into the environment or storm tanks. It said there were plans in place to spend £1.7bn over the next few years to stop storm overflows into the environment.
The group said investment attached to its strategic plan for delivery of services between 2025-2030 could be as much as double the amount it will spend in the current 2020-2025 period, and potentially its largest amount to date, subject to support from Ofwat. The operator has committed to spending 60p in every £1 in the regions it serves.
Revenue and profits across the main part of the group - Northumbrian Water Limited - both rose. Separate accounts for the company show revenue of £849.9m, up from £780.1m and operating profits of £211.6m, up from £188.3m.
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And share of profit from the group's joint venture Wave - a retailer of water to businesses - was converted to £200,000 from 2022's £900,000 loss. Group operating costs jumped by more than £46m to £629.3m on the back of energy price hikes and the knock-on impact on chemicals prices.
CEO Heidi Mottram said: “We have completed three years of our current five-year price review period and have made significant progress towards the ambitious goals we set in Our Plan. We will continue to drive this forward over the coming years, building on our strong foundations in areas such as customer service and environmental performance. Equally we must improve our performance across water quality and leakage and continue to invest in the resilience of our assets, as well as preparing for the challenges of the next period.
“Our planning for the period 2025-30 is well advanced, ahead of submission in October of this year. Our business is inherently long term, and we are developing our plan in the context of our long-term strategy to 2050 and the areas where we will need to make new investment to ensure sustainable water supplies, protecting the local environment, deliver Net Zero and maintain resilience.
“We make sure our customers are at the heart of every decision we take and have consulted extensively to ensure we understand what is important to our customers and stakeholders. We know that will be undertaking a huge increase in capital investment, including to address storm overflows, which will need to be funded through a combination of borrowing, shareholder equity and increases in customer bills.
“Getting the right balance between investing in our services, environmental improvements and the affordability of customer bills is not easy, and it’s important to us that the views of our customers inform those decisions. We are proud of our achievements to date, but we are never complacent and will continue to invest in further improvements over the coming years.”