South East Water has warned there is \u201cmaterial uncertainty\u201d over its survival, after a disastrous year in which the lossmaking company paid millions of pounds in fines and its chief executive was forced out.<\/p>\n
The water supplier to 2.4 million customers said it had sufficient funds to make it through to July 2027. However, \u201cshortly after\u201d the utility will need \u201cnew loan facilities in order to continue as a going concern\u201d, it said in its annual report published on Friday.<\/p>\n
South East Water, which serves customers across Kent, Sussex, Surrey, Hampshire and Berkshire, added that \u201cdiscussions with lenders to provide funds are at an advanced stage and are expected to conclude over summer 2026\u201d but were not legally committed.<\/p>\n
The company has gone through one of its worst years since privatisation in 1989, with a series of outages that infuriated customers and politicians<\/a>.<\/p>\n Its chair, Chris Train was forced to resign<\/a>, while chief executive, David Hinton, has also promised to step down<\/a> after months of heavy criticism over the company\u2019s response to major supply failures in Kent and Sussex between November and January.<\/p>\n Ofwat, the regulator for water companies in England and Wales, this week said South East would pay a \u00a330.5m redress package<\/a> related to those and other outages \u2013 putting further pressure on its finances. South East was also forced to introduce a hosepipe ban in Kent last month<\/a>, which it blamed on high temperatures caused by global heating.<\/p>\n \u201cWe are experiencing more severe and more frequent extreme weather events fuelled by climate change, which appears to be accelerating faster than previously observed,\u201d the company said.<\/p>\n Its struggles underline the challenge the water industry poses for Andy Burnham, with the incoming prime minister considering putting Thames Water into special administration<\/a>, a form of temporary nationalisation.<\/p>\n South East\u2019s directors said that because new funds from shareholders are not yet legally committed they had concluded that \u201cthe risk that the funding will not be received constituted a material uncertainty\u201d.<\/p>\n Its annual report revealed losses had widened to \u00a333m, up from \u00a314m last year. That came despite revenues soaring from \u00a3285m to \u00a3352m after Ofwat allowed it to increase bills by 7%.<\/p>\n The company is already struggling with \u00a380m a year in finance costs, which could rise if lenders demand higher interest rates on new loans. It raised the prospect of borrowing from \u201cnon-traditional credit markets and high-yield alternative credit providers\u201d \u2013 hedge funds and private debt investors \u2013 if it could not persuade banks and other mainstream lenders to provide funding.<\/p>\n South East said it had \u00a390m in cash drawn from a revolving credit facility at the end of June, enough to cover 14 months.<\/p>\n Despite that performance, the annual report showed that Hinton\u2019s pay increased compared with the previous year. He received \u00a3488,000 in total pay, even after forgoing his bonus under pressure from MPs \u2013 up from \u00a3458,000 the previous year.<\/p>\n Hinton\u2019s planned resignation means he will not be paid a heavily criticised \u00a3400,000 \u201cservice award\u201d<\/a> he would have received had he made it to July 2030. Hinton will be replaced by John Halsall, who previously worked at South West Water, Network Rail and Thames Water.<\/p>\n