Representatives from Thames Water will return to give evidence before the Environment, Food and Rural Affairs Committee next week, to answer MPs’ questions on Thames Water’s financial arrangements, in light of recent news reports surrounding the firm’s finances.
Representatives from Thames Water will return to give evidence before the Environment, Food and Rural Affairs Committee next week, to answer MPs’ questions on Thames Water’s financial arrangements, in light of recent news reports surrounding the firm’s finances.
The cross-party Committee will seek clarification on evidence submitted by witnesses in a hearing in July, in which MPs were told that the company’s shareholders had provided £500 million of equity.
While the joint interim CEOs and the Chair of Thames Water have written to the EFRA Committee Chair on the matter, the Committee said it is keen to interrogate the full nature of this financing. MPs will also attempt to shed light on the future financial viability of Thames Water.
The Committee has also invited Ofwat to next week’s session with the aim of investigating the rigour of Ofwat’s regulatory oversight.
The Committee intends the session to take place on the afternoon of Tuesday 12 December.
The recall follows further speculation in the media in the last week about the state of the water company’s finances.
On Friday an article in the Financial Times warned that Thames Water debts have risen to over £18 billion as result of parent company loans. The report in the FT entitled "Thames Water owners pile group with debt" says that Thames Water's debts have risen to over £18 billion – up from just over £15 billion from 31 March 2022.
According to the FT, the company’s accounts show that the recapitalisation involved the water company’s owners providing a £515 million convertible loan to Thames Water’s parent company, Kemble Water which has no income apart from dividends from Thames.
On Friday evening the EFRA Committee released a statement commenting on the coverage in the FT and other media outlets. Chair of the Environment, Food and Rural Affairs Committee, Sir Robert Goodwill, said:
“The news on Thames Water's financial arrangements today leads us to question the accuracy of evidence provided to our Committee by Thames Water in July. These recent revelations of Thames Water's financial situation raise further concerns about the stability of the company's finances and the actual ability of the company to invest the sums of money required to implement its turnaround plan.
“Thames Water customers need the company to solve the problems of unacceptable sewage discharge into water courses and water shortages during dry periods. Along with concerns over the implementation of the plans to remedy these problems, there are questions over the possibility that Thames Water customers will see a large rise in their bills associated with these plans.
“Our Committee will consider whether we need to call Thames Water back before us to explain how the evidence we heard stacks up against the recently reported revelations.”
A report in The Times newspaper on Monday said that Cathryn Ross and Alastair Cochran, interim co-chief executives at Thames Water, had rejected the EFRA Committee’s comments about its current financial situation.
According to the report, a letter seen by The Times sent to the Committee by the co-chiefs said the suggestion that a payment of £500 million by shareholders to Thames Water via Kemble Water Holdings had increased the water company’s £14 billion debt mountain was “incorrect and misleading”. The Times article also quotes the co-CEOS as saying Thames had received £500 million in cash from its existing external shareholders “with no obligation to repay this money” and that the funding would be “well understood” by investors in the water company and that it was “extremely unlikely that they would have concerns”.
In Thames Water’s Interim results for the six months to 30 September 2023 released yesterday, the co- CEOs are warning that “turning around Thames will take time. We simply cannot do everything that our customers and stakeholders wish to see at a pace and for a price that everyone would like... It is clear that immediate and radical action is required.”
Commenting in Kemble Water Finance Ltd’s Annual report and consolidated financial statements for the year ended 31 March 2023, the company’s auditor PricewaterhouseCoopers refers to “the existence of a material uncertainty which may cast significant doubt about the group’s and the company's ability to continue as a going concern.“
Sign In
