Northumbrian Water Group has reported a pre-tax profit for the first time in four years, coinciding with an increase in dividends to its overseas owners.
In the fiscal year ending March, Northumbrian Water Group’s revenue increased to £952.4m, a rise from the previous year’s £899.9m. Newly filed accounts indicate pre-tax profits of £6.1m for the period, a significant improvement from the £49.7m pre-tax loss reported in 2023, ending a series of losses since 2021. Dividends paid to the group’s Hong Kong-based owners and New York private equity firm climbed to £108m for the year, up from £105m the previous year. An additional £37.4m final dividend was also proposed.
CEO Heidi Mottram described the company’s performance as strong, meeting numerous targets and earning rewards under regulator Ofwat’s ‘outcomes regime.’ She emphasised the group’s commitment to affordability and aiding vulnerable customers, noting a 25% rise in customers receiving bill support due to cost-of-living pressures.
Performance measurements included in the accounts reveal mixed results. Water supply interruptions decreased across Northumbrian Water Limited (NWL), although a significant main issue in Suffolk led to a missed annual target, affecting approximately 8,000 properties. The company reported progress in long-term efforts to improve drinking water quality; however, a target was missed, resulting in a £2.7m penalty. Pollution and discharge targets were also unmet, with pollution incidents reaching their highest level in eight years. Power outages and failures at three sewage treatment works were identified as key issues, leading to £3.85m in penalties.
Leakages were reduced in the group’s regions, with targets surpassed in Suffolk and Essex but narrowly missed in the North East. Despite high rainfall, three of four sewer flooding targets were met. Public concern over storm overflows was acknowledged, with the group attributing an increase in storm overflow spills to 2023’s very wet weather. The company plans to invest £1bn between 2025-2030 to prevent such spills. Ofwat’s draft determination for the same period permits Northumbrian Water Group to raise bills from £415 to £460, excluding inflation, and invest £5.7bn. However, company officials deemed this level insufficient due to inflation, indicating an additional £200m investment from shareholders.
The group estimated that its North East investment over the five-year period would boost the regional economy by approximately £5.7bn, affirming its commitment to maximizing local spending impacts. Nevertheless, it was noted that some projects could not be completed by local contractors.
Northumbrian Water Group’s recent financial results highlight a significant return to profitability and a subsequent increase in dividends. While the company has made notable progress in various performance metrics, several targets remain unmet, resulting in penalties. The group’s upcoming investment plans are expected to address these issues and contribute substantially to the regional economy.