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South East Water says needs cash injection to stay afloat
South East Water said it needs a cash injection from investors to stay afloat, as it gears up for a key ruling from the water regulator on its future spending plans tomorrow.
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 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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Closing summary
South East Water has said it needs a cash injection from investors to stay in business as it gears up for a major Ofwat ruling on its future spending plans.
The struggling water company – which serves 2.3 million people across Kent, Sussex, Surrey, Hampshire and Berkshire – 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.
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”.
The UK’s new environment secretary, Steve Reed, has summoned the bosses of Britain’s water companies for urgent alks tomorrow, amid signs that Labour will take a tougher approach to the industry than the previous Tory government.
Reed will host talks with executives from all 16 water suppliers in England and Wales, including Thames Water, Yorkshire Water and Severn Trent.
The meeting comes as Ofwat, the water industry watchdog, is due to publish draft determinations on companies’ spending plans for the next five years tomorrow morning.
Our other main stories today:
Thank you for reading. We’ll be back tomorrow. Take care – JK
The Bank of England’s chief economist Huw Pill said that while UK services inflation remains strong, there are signs that “inflationary pressures have now been contained”.
In a speech at Asia House in London, he said:
At annual rates still not far from 6%, annual services price inflation and wage growth continue to point to an uncomfortable strength in those underlying inflation dynamics.
But the latest data also remains consistent with the view that these inflationary pressures have now been contained, and may be starting to revert towards levels that are more consistent with the achievement of the inflation target.
Markets are expecting the central bank to start cutting interest rates in August or September.
Here is my full story on today’s housebuilding news from Barratt, Crest Nicholson and Travis Perkins:
Blackwall and Silvertown tunnels will cost up to £4 at peak times, says TfL
Drivers will be charged up to £4 at peak times for a one-way trip through either the Blackwall tunnel or the new Silvertown tunnel after the latter opens in 2025, Transport for London has announced.
However, TfL is proposing to halve these charges for low-income local residents in east London to use either of the road tunnels under the Thames, as well as exempting buses, black taxis and zero-emission cabs.
Standard off-peak journeys will cost £1.50 for car drivers paying automatically, TfL said, as an eight-week consultation over the proposals opened on Wednesday.
The Blackwall tunnel has been free to use since opening more than a century ago, but TfL has argued since first developing plans for the new Silvertown crossing back in 2012 that both routes under the Thames should incur a charge.
Royal Mail to stop using its own freight trains after almost 200 years
Royal Mail is to stop using its own trains to transport post after almost 200 years.
The company has confirmed it will decommission its remaining freight trains by 10 October, with a plan to increase the amount of post it moves by road.
The move comes as Royal Mail’s parent company, International Distributions Services (IDS), is the subject of a £3.6bn takeover bid from Czech billionaire Daniel Křetínský.
Royal Mail began running trains to transport post in 1830, with the service reaching its peak in the lead up to the second world war when more than 130 trains were used on the network. It now runs just six, which are almost 30 years old and considered at the end of their operational lives.
Sandra Laville
Thames Water has failed to complete more than 100 upgrades to ageing sewage treatment works to meet legal pollution limits, the Guardian can reveal.
The schemes costing £1.1bn were supposed to cut pollution into rivers by increasing the capacity at sewage works, adding phosphorus removal to the treatment process, and installing new storm tanks. The upgrades, which were promised in 2018, are being paid for by customers as part of a five-year spending round to 2025 but will not be delivered within that timeframe.
Meanwhile, Thames Water awaits a crucial decision on Thursday from the regulator Ofwat on the company’s new five-year business plan. Thames wants to increase customer bills 59% by 2030 to pay for record investment of £19.8bn to tackle sewage pollution, leaks and water shortages after decades in which the company has sweated assets and underinvested.
The company is asking the regulator to allow the late projects to be rolled over into the new spending round, known as PR24.
Ash Smith, the founder of the campaign group Windrush Against Sewage Pollution, said customers had already paid for the projects to upgrade ageing sewage treatment works, and were being asked to pay again.
“Thames Water failed to deliver around 108 schemes that were funded in the last spending cycle and we question whether that a deliberate act to keep it financially afloat. A proper investigation into this company is long, long overdue.”
Smith added: “It has broken our sewerage infrastructure while extracting cash, right under the noses of regulators and the government.”
A Wessex Water TV advert about its plans to tackle storm overflows has been banned as misleading because it omitted key information about its record on sewage pollution.
The ad said Wessex was investing £3m a month to tackle storm overflows and featured a voiceover that claimed it was “building more storm tanks to increase storage” and “separating rainwater from sewage”, adding that “a better way, for our waterways, is already under way”.
The ASA said it had upheld a complaint that the advert, which aired in February, was misleading because it omitted significant information about Wessex Water’s environmental impact. It said the advert should not appear again in the same form, concluding “that the ad omitted material information and therefore was likely to mislead”.
How privatisation changed the water industry
There was a time when privatised British water companies were as unpopular as they are now, writes our financial editor Nils Pratley.
During the hot summer of 1995, the managing director of Yorkshire Water, Trevor Newton, achieved notoriety when he urged customers to use less of his company’s product by issuing a motivational message: “I personally have not had a bath or shower for three months.”
After a round of jokes about “the filthy rich” – because megabucks pay for water company bosses was also in the headlines in those days – Newton invited the press to watch him washing with a flannel and bowl. It later emerged he had been popping out of Yorkshire for a soak at his parents’ and in-laws’ homes.
The serious aspect of the farce was that, just as now, the public was outraged by the mismatch between rewards for investors and the standard of service being provided by a privatised utility. Yorkshire had just paid a £50m dividend to shareholders and yet the city of Bradford was at risk of running dry. A new grid was behind schedule and the company was reduced to transporting water by tanker through the Dales. “Public anger exploded,” recalled Sir Ian Byatt, the first head of the Office of Water Services, or Ofwat, the regulatory body created at privatisation in 1989, in his account of his career.
The saga also underlined the rotten state of the water infrastructure, the reason given for privatisation in the first place. The UK was regarded as the “dirty man of Europe” on account of pollution on beaches and in rivers. Spending by the industry on overhauling its pipes and sewage-treatment works had been falling from the mid-1970s to the mid-1980s and now the UK had to meet new European Community standards on pollution.
South East Water’s parent company, HDF Holdings, is owned by NatWest’s pension fund, an Australian infrastructure investor and a Canadian pension fund.
The company is already on regulator Ofwat’s watchlist for financially at-risk companies, alongside Thames Water and other regional monopolies.
The company’s financial update will be followed on Thursday by a draft verdict from Ofwat on water companies’ five-year spending plans and bill increases to 2030.
That will kick off six months of negotiations with Ofwat, ahead of its final decision in December.
South East Water has put forward plans that would see spending rise to £1.9bn to maintain and update its infrastructure. However, that would also involve increasing customer bills by 22%.
The search for funding comes after South East Water’s owners provided a £150m loan to a unit in the utility group earlier this year.
South East Water’s pre-tax loss narrowed to £36m for the year to 31 March, down from £74m the year before. Turnover rose 9% to £281m.
South East Water says needs cash injection to stay afloat
South East Water said it needs a cash injection from investors to stay afloat, as it gears up for a key ruling from the water regulator on its future spending plans tomorrow.
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 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”.
Wetherspoon’s boss Tim Martin praises economic ‘pedigree’ of Rachel Reeves
Tim Martin, the politically outspoken boss of the JD Wetherspoon pub chain, has praised the new Labour chancellor’s economic “pedigree”, as he called for tax changes to help the struggling hospitality sector.
Martin regularly publishes economic and political commentary alongside his company’s results and has previously voiced support for Brexit and Boris Johnson.
However, today he made overtures to Rachel Reeves, as he blamed the previous government for failing to relieve the tax burden on the struggling hospitality sector. Martin said:
The last government failed to implement tax equality between pubs and supermarkets, leading to pub closures and underinvestment.
Wetherspoon hopes that the current chancellor, with a Bank of England pedigree, will understand how many beans make five, and rectify this inequality.
