Mid Kent Water Profits And Hosepipe Ban

Mid Kent Water posted a strong increase in first-half (2006) profits despite imposing a hosepipe ban and severe water restrictions on its customers during the summer drought of that year. Pre-tax profits rose by 14% to £5.5m for the six months to the end of September. The company just happens to be in the midst of a merger with neighbouring South East Water and is to be sold to Hastings, the Australian fund manager. Last month (November) it agreed to buy South East Water for £665m from its fellow Australian bank, Macquarie. Hastings Diversified Utilities Fund (HDUF) Hastings Funds Management Limited There seems to be some implied amazement that any profit is peculiar even though it is necessary to impose these restrictions. Water users pay their yearly account bills whether any ban is imposed or not. It seems more likely that profits should go up (by 14%?) since there is less outgoing, but an unchanged income. Spin?