Ofwat has confirmed it is looking into the payment by Thames Water of a £37.5 million dividend payment to shareholders – the payment was set out in Thames Water Utilities Ltd Interim results for the six months period to 30 September 2023 published yesterday.
Ofwat said it asked for the information this month and that it will need to thoroughly review the information provided by the company before determining the appropriate action to take.
In October 2023, following the period end, Thames Water Utilities Ltd (TWUL) paid dividends of £37.5 million to Thames Water Utilities Holdings Ltd. These proceeds were subsequently distributed by TWUL to Thames Water Ltd and then through to Kemble Water Finance Ltd which retained the proceeds to service its and its subsidiary Thames Water (Kemble) Finance plc’s - external debt obligations.
No distributions were made to external shareholders of the group, who own shares in Thames ultimate parent company, Kemble Water Holdings Ltd.
An Ofwat spokesperson said:
"Following notification that Thames Water has paid a dividend to shareholders, Ofwat is investigating whether this payment meets its licence requirements.
"Ofwat has requested Thames Water provide more information to demonstrate how, specifically, the dividend payment meets the licence requirement to take account of service delivery for customers and the environment, as well as investment needs and financial resilience.
"We will review any additional information the company provides and decide whether there is a case for further action."
In May 2023, Ofwat introduced a new licence condition that requires companies to maintain dividend policies and to only declare or pay dividends under those policies that take account of service delivery for customers and the environment over time, current and future investment needs and financial resilience over the long term.
The regulator wrote to the company on 1st December to provide details of its decision, which Ofwat will use to assess its compliance with the new licence condition which is designed to protect the interests of customers and the environment.
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