Thames Water-Linked Firm Pays £14.5m Dividend Amid Financial Woes

Thames Water-linked firm Kennet Properties paid £14.5M dividend despite group's £18B debt, raising concerns over financial management and priorities as regulator scrutinizes bill hikes.

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Nitish Verma
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Thames Water-Linked Firm Pays £14.5m Dividend Amid Financial Woes

Thames Water-Linked Firm Pays £14.5m Dividend Amid Financial Woes

Kennet Properties, a firm linked to Thames Water, paid out a £14.5 million dividend on April 22, 2023, despite growing concerns over the water group's financial difficulties. The dividend payout comes as Kemble Water, Thames Water's owner, warned that it would not be able to pay a £190 million loan due to its staggering £18 billion debt burden.

Thames Water, one of the largest water and wastewater services companies in the United Kingdom, has been dealing with significant financial challenges. The company has proposed a plan to increase bills by 45% over the next five years to address leaks and sewage spills, but the plan is subject to approval by the regulator Ofwat. The regulator aims to protect customers from unnecessary bill increases and is expected to issue its draft decision in June 2023.

Kennet Properties, which sells off land no longer needed by Thames Water and develops it for housing or commercial use, reported a pre-tax profit of £1.15 million in the year to March 31, 2023, up from £374,000 in the previous year. The company's revenues rose to £1.6 million, comprising £735,000 from property sales and £858,000 from sewer network income. The £14.5 million dividend paid by Kennet Properties was ultimately paid to another group company, Trinzic Energy, a floating solar project developer.

Why this matters: The dividend payout by a Thames Water-linked firm amid the water group's financial woes raises questions about the company's priorities and financial management. As Thames Water struggles with a massive debt burden and faces the possibility of going into administration, the decision to pay out dividends has drawn criticism and heightened concerns about the company's ability to address its financial challenges while ensuring reliable water and wastewater services for its customers.

A former Thames Water executive stated that dividends were paid out because the company was thought to be delivering services efficiently. However, Ofwat has been unsympathetic to dividends for shareholders when setting prices. The dividend payout by Kennet Properties has further intensified the scrutiny on Thames Water's financial practices and the broader implications for the UK's water industry. As the company navigates its financial woes, the future will reveal how it will balance the need for infrastructure investments with the growing pressure to address its debt burden and ensure the long-term sustainability of its operations.

Key Takeaways

  • Kennet Properties, linked to Thames Water, paid £14.5M dividend despite group's financial woes.
  • Thames Water faces £18B debt burden, may raise bills by 45% to address leaks and spills.
  • Kennet Properties reported £1.15M pre-tax profit, with £14.5M dividend paid to Trinzic Energy.
  • Dividend payout raises questions about Thames Water's priorities and financial management.
  • Ofwat aims to protect customers, but Thames Water must balance debt, investments, and sustainability.