Thames Water Utilities Ltd on Tuesday confirmed it paid two fresh dividends worth £158.3 million in March, as the heavily indebted company said it is unlikely to raise fresh funds before December.

The water and waste utility, which is creaking under a debt pile of more than £15 billion, said it paid the dividends to help fund two of its holding companies, Kemble Eurobond and Thames Water Ltd, which are in financial trouble.

The dividends come after UK water industry regulator Ofwat had already said it is ‘minded’ to take action against Thames Water for a smaller £37.5 million dividend payment in October 2023.

Under new rules introduced last year, water companies with poor financial and environmental records are not allowed to pay dividends.

Thames Water paid a total of £196 million in dividends last year.

The firm said it is still looking for fresh funding needed to maintain and update its infrastructure, after investors pulled the plug on £500 million of emergency cash earlier this year.

It said it has £1.8 billion of liquidity, enough to fund its operations until the end of May next year, but that it needs new investment.

Thames Water said profit after tax increased was £75.4 million for the financial year that ended March 31, swung from a £30.1 million loss the year before, as revenue increased 11% to £2.52 billion from £2.27 billion.

Pretax profit was £157.3 million, up from just £1.8 million the year before, while underlying earnings before interest, tax, depreciation and amortisation was £1.21 billion, up from £1.00 billion.

Pollution incidents increased to 350, up on 331 last year, which Thames Water blamed on a rainier-than-expected year.

The number of ‘serious pollutions’ decreased by 18%, Thames Water said.

It said it spent £2 billion on maintaining and updating its infrastructure last year.

The 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.

The process of securing new cash is ‘not expected to conclude’ until after Ofwat’s final decision.

Chief Executive Chris Weston said Thames had taken ‘informal soundings which have shown there is interest in the market’.

source: PA

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