SES shareholders commit to £22m equity boost

SES Water’s shareholders have committed to inject £22m of equity before 31 March 2024, with 75% expected by 1 December 2023. The company said this would enable it to deliver its capital investment programme for the next 12 months and meet its liquidity and financial covenant requirements.

The shareholders also committed support to cover further funds if needed for additional operating or refinancing costs, and said if the ongoing strategic review of the group results in a sale within 12 months, “the board expect that a new owner would be required as part of taking on our water supply licence to confirm appropriate ongoing funding arrangements”.

The news came as SES Water reported its results for the year ended 31 March 2023 last week. Operating profit fell by 58% to £4.3m on revenue up 7% to £67.4m. Operating expenses increased by 11% to £62.8m, driven by cost increases in particular for chemicals, though the company said energy costs were efficiently hedged.

Meanwhile, financing costs soared by 92% from £15.9m to £30.6m due to the impact of high inflation on its index-linked bond. Gearing rose from 72% to 77%. The company said a significant increase in RPI inflation had a material impact on gearing due to the indexation charge on its long-term bond.

SES reported that its operational performance was strong. It met 76% of its Performance Commitments for 2022/23, up from 60% in 2021/22. This included meeting its leakage, supply interruptions and greenhouse gas reduction targets, and maintaining high performance on drinking water quality.

The board determined not to declare a final appointed dividend payable in respect of the year ended 31 March 2023, “having reflected on the financial results for the year, the pressures on gearing and financial resilience in the high-inflation environment and the increased levels of uncertainty in the context of the shareholders’ strategic review”.