Southern Water responds to 'inaccurate claims' about plans to hand out £275m in dividends

The Telegraph reported on October 7 that Southern Water was proposing to pay out £275m in dividends over the next five years ‘while raising nearly £4bn of fresh debt’.

The article stated the water company – which serves 4.7m customers in Kent, Sussex and Hampshire – was ‘planning to reward shareholders while increasing its net debt pile from £6bn to £8bn by 2030’.

In response, a Southern Water statement read: “Inaccurate claims have appeared in this week’s media stating that we plan to pay dividends amounting to a total of £275 million during the period 2025-30. This is not true.

"Our August 2024 response to the draft determination assumes no dividends in the 2025-30 regulatory cycle. Southern Water has not paid a dividend to its shareholders since 2017, whilst over £1.6 billion of equity has been injected into the Southern Water group by funds managed by Macquarie Asset Management since 2021.

“In addition to this significant equity injection, we also envisage raising additional debt financing to build new infrastructure and improve our services. This is normal business practice, ensuring that our customers do not pay now for a project which may take decades to come into effect and no longer benefit them should they move, or their circumstances change.

“This is a crucial year for the UK water sector as we plan for the next five years and a further step-change in investment. We are committed to working with Ofwat, other regulators and the UK government to secure an investible and sustainable resolution, so we can deliver the improvements to our network that our customers expect.”

Southern Water’s plan for future improvements had been categorised as inadequate by the water services regulation authority – and the company faced the prospect of a £54 million penalty.

Ofwat – the body responsible for economic regulation of the privatised water and sewerage industry in England – published its draft determination on Thursday, July 11 – nine months after Southern Water submitted its original proposals for future improvements.

The now-updated Telegraph article reads: “Southern Water no longer plans to hand out £275m in dividends after claiming the payments are not ‘appropriate’.

“The company had previously informed regulator Ofwat that it was planning to reward shareholders while increasing its net debt pile from £6bn to £8bn by 2030.

“However, bosses have since confirmed that no dividends will be paid over the next five years.

“The reversal comes after Southern Water’s initial business plan, which is still available on its website, listed annual dividend payments between 2025 and 2030.” Click here to read the article in full.