South East Water: Firm says it needs extra cash from investors

South East Water says it needs more cash from investors to stay afloat ahead of a ruling on its future spending plans by water regulator, Ofwat.

The water firm, which supplies about 2.3 million customers in Kent, Sussex, Surrey, Hampshire and Berkshire, said it was in discussions with lenders and shareholders in a results statement published on Wednesday.

It is already on watchdog Ofwat’s watch-list for financially-at-risk companies, alongside Thames Water.

“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,” the results statement said.

It says that talks are at an “advanced” stage, while directors “expect to raise sufficient additional liquidity”.

But a deal has not yet been struck on the investment.

The statement said: “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”.

On Thursday, Ofwat is set to deliver a draft verdict on water companies’ proposed five-year spending plans and bill increases.

A final decision will be made in December, following a negotiation period between the regulator and water companies.

South East Water has put forward plans that would see spending increase to £1.9bn, including through raising customer bills by 22%, to maintain and update its infrastructure.

The firm’s pre-tax loss fell to £36m for the year to 31 March, down from £74m the year before.

It is also under investigation by the watchdog after failing to deliver water to thousands of customers in Kent and Sussex for more than a week.

South East Water said it had “entered into a constructive and transparent dialogue” with Ofwat since the investigation was launched.

“We’d like to apologise to customers who experienced supply interruptions,” the company said.