Thames Water pays £100m divi despite big fines

Thames Water’s shareholders took £100 million out of the business as the company was facing record fines for pollution and failing to hit leak targets, it emerged today.

Results from the UK’s biggest water company showed its international roster of investors decided to pay themselves a dividend shortly before it was fined a record £20 million for polluting the Thames with 1.4 billion litres of raw sewage in March and just months before the former owner, Macquarie, sold out to new investors.

Thames repeatedly allowed untreated effluent to enter the river in Oxfordshire and Buckinghamshire in 2013 and 2014, making people ill and killing thousands of fish.

Sewage could be seen along nine miles of the river, blighting regattas and other events.

Today Ofwat said it would also hit the UK’s biggest water company with an £8.6 million fine, the maximum penalty it can impose, because the privately owned business failed to control leaks of clean water from its pipes. Customers will see lower annual bills in 2020.

Thames Water admits it missed the target by 47 million litres a day.

It has been owned by a group of pension funds and other investors led by Australian infrastructure bank Macquarie, since 2007.

Macquarie agreed to sell its remaining 26% stake in March to investors including Borealis Infrastructure, part of Omers, a Canadian pension fund, and the Kuwait Investment Authority.

Macquarie will have received about a quarter of the £100 million payout, with other investors, who remain shareholders, splitting the balance.

A spokesman for Thames Water said it missed its intentionally tough targets despite spending an extra £16 million on the problem. “The fact that the target was missed despite significant additional expenditure clearly points to the need to improve both our planning and delivery.”

New chief executive Steve Robertson, who joined last September on a package worth up to £2.1 million, says Thames will spend an additional £150 million to get leakage under control. “We fully accept our responsibility,” he said.

Robertson said the company would spend £20 million a week, one of the highest amounts in the sector, to meet its targets on water quality, leakage and other measures.

But Ofwat’s chief Cathryn Ross called the leaks “unacceptable” and has warned it is looking into whether it can take further action against the company, so significant is its failing. Ofwat could force it to spend more on controlling leaks.