SES Water Chief Executive Officer Ian Cain has issued a strong rebuttal in response to Ofwat's description of the utility as one of three water companies having “lower levels of financial resilience” compared to other companies and as one of five water companies “lagging behind” on meeting targets for customers.

The SES CEO was commenting in an open letter published in response to Ofwat’s recent assessment of water companies’ financial resilience and performance against Ofwat’s commitments to customers for the financial year up to 31 March 2021.

SES Water Chief Executive Officer Ian Cain 

Ian Cain said:

“While we respect Ofwat’s opinions, there are times when we strongly disagree. This is one of those occasions.”

“The Board of SES Water is absolutely confident that the company’s financial standing remains strong and it has recently taken positive steps to further improve the strength of our finances, particularly in light of the COVID-19 pandemic.”

Referring to the company's half year results published at the end on November, steps taken highlighted in the letter include:

• extending SES’ credit facilities so it can borrow money as and when required to manage financial shocks arising from the pandemic;
• removing certain requirements associated with main bond ahead of when it starts repaying it in 2027 – thereby improving SES’ finances and its ability to access further funding if necessary;
• started the process to fund its capital programme activity through to 2025 with strong support from its banking partners and shareholders

He goes on to point out that one of the key measures used to assess individual water companies’ financial standing is their credit rating and that SES’ credit rating has improved since March 2021.

“The rating agency Moody's upgraded us from a “Baa2 negative” rating to “Baa2 stable” in October 2021, which is a good rating. Ofwat do not appear to have reflected this in their conclusion,” the letter says.

The letter continues:

“We have responsible shareholders who put the interests of our customers and the environment first. Like any investors they expect a return on the equity they put in and over time they have taken a fair level of dividend.

“Dividend levels are agreed each year by the Board and take into account how well we are performing against a range of targets, both financial and the commitments we have made to our customers.”

According to the SES Chief, the global pandemic is continuing to test the company - which can be seen in its performance against some of its targets.

“However, we are proud of our achievements since March 2021,” he said.

The letter concludes:

“Both myself and Jeremy Pelczer, the chair of our Board, will discuss these matters with Ofwat directly and clarify our position with them.

“I want to re-assure all our customers, employees and supply chain partners that we remain confident in both our financial standing and performance.”