South East Water: Second UK water company admits it needs more money to stay afloat as Ofwat announces hike to water bills

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South East Water has said it needs a cash injection from investors to stay afloat.

The struggling water firm, which serves 2.3 million people across Kent, Sussex and Surrey, said it is “in discussions with lenders and shareholders regarding additional liquidity”. The talks are at an “advanced” stage and bosses “expect” to raise the extra funding, but the company has not struck a deal on the investment.

“If it is not possible to raise the additional liquidity, the group and therefore company would not have sufficient liquidity for the going concern period,” it said in a results statement on Wednesday (10 July). It added that “the risk that the funding will not be received constitutes a material uncertainty that may cast significant doubt on the ability of the group and company to continue as a going concern”.

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South East Water is already on regulator Ofwat’s watch-list for financially at-risk companies, alongside Thames Water and other regional monopolies. This week Thames Water announced it will run out of money by next June if it doesn’t get fresh funding as its debt has swelled to more than £15 billion. The firm’s warning has been hit with criticism and anger from people up and down the country as it was also announced that Thames Water’s boss received a £195k bonus and it paid two fresh dividends worth £158.3 million in March.

South East Water has said it needs a cash injection from investors to stay afloat. (Photo: Press Association Images/Press Association Images)South East Water has said it needs a cash injection from investors to stay afloat. (Photo: Press Association Images/Press Association Images)
South East Water has said it needs a cash injection from investors to stay afloat. (Photo: Press Association Images/Press Association Images) | Press Association Images/Press Association Images

The two water companies warning of financial troubles comes as Ofwat today (Thursday 11 July) announced that water bills across England and Wales will rise by 21% over the next five years. It will make a final decision in December.

South East Water has put forward plans that would see spending rise to £1.9 billion to maintain and update its infrastructure. However, that would also involve increasing customer bills by 22%. It is also still under investigation by Ofwat for an incident in June 2023 when the company failed to deliver water to thousands of customers for more than a week.

The consequences could include a hefty fine from the regulator. South East Water said: “Since the investigation was launched, we have entered into a constructive and transparent dialogue with Ofwat.

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“Our colleagues, contractors, partners and stakeholders have all played a vital role in ensuring we kept the taps flowing for as many customers as possible, even during the extreme weather which impacted on our operations and overall performance in 2023/24. Despite all our efforts, there were still some issues during the year and we’d like to apologise to customers who experienced any supply interruptions.”

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