Thames Water Utilities Finance PLC Company Announcement (7235Q)

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RNS Number : 7235Q

Thames Water Utilities Finance PLC

30 June 2022

Thames Water Utilities Limited

Shareholders approve Thames Water's plan for an additional GBP2 billion of expenditure [1] aimed at improving performance and outcomes for customers, leakage and river health and to accelerate delivery of Thames Water's turnaround

The Board and shareholders of Thames Water have approved a GBP11.5 billion business plan for the current regulatory period ending 31 March 2025, developed by Thames Water's Executive team to improve performance and outcomes for customers, leakage and river health and to accelerate delivery of Thames Water's turnaround. The revised business plan represents a GBP2 billion increase in expenditure, compared to the GBP9.6 billion agreed in the water company's final determination for 1 April 2020 to 31 March 2025.

The UK's largest provider of essential water and wastewater services, serving almost 25% of the UK's population, Thames Water launched its turnaround plan in March 2021. That plan is designed to significantly improve Thames Water's operational performance, deliver on its regulatory obligations, increase resilience and deliver better outcomes for its customers, communities and the environment.

An initial GBP500 million of new equity will be subscribed by shareholders this financial year. The Executive team is working with shareholders on plans to provide a further GBP1.0 billion of equity funding, which will be subject to certain conditions, to drive Thames Water's turnaround over the remainder of the current regulatory period, and establish a solid foundation for Thames Water's long term growth.

The Executive team will continue to reflect the ongoing turnaround in its next business plan to be prepared for the five-year regulatory period starting in 2025. A focus of that business plan will be to maximise the likelihood that Thames Water receives a regulatory determination that supports the turnaround. Thames Water shareholders acknowledge that further shareholder support may be required to improve financial resilience.

Sarah Bentley, Thames Water's Chief Executive said: "Since joining in September 2020 I have engaged in understanding the challenges that led to Thames Water's long-term underperformance. In March last year, I launched our turnaround plan, to tackle the issues directly, transform performance and build a better Thames Water for all of our stakeholders. I brought on board an almost entirely new Executive team and moved the business closer to customers by establishing separate operational teams in London and the Thames Valley. One year into the turnaround, we have made good progress in fixing the basics and tackling the structural challenges in our business as well as laying the foundations for our long-term recovery.

However, everyone at Thames is aware that we're only at the start of our journey and there remains a huge amount to be done and delivered. We're also aware that none of the programme can be delivered without significant capital investment. With this new, substantial equity investment programme our shareholders are both underpinning the investment vital for our improvement and also expressing their confidence in the long-term outlook for Thames Water. We warmly welcome their continued support.

This equity investment programme is a major milestone in our recovery plan. It gives the capital to invest, that will match the passion and commitment that exists throughout Thames, to improve our operations, improve outcomes for our customers and enhance our environment. I look forward to working closely with the Board, our shareholders and Team Thames as we work together to deliver the turnaround plan and develop our plans for PR24, which will be the next step on our journey."

Ian Marchant, Thames Water's independent Chairman added: "Our shareholders have consistently supported Thames Water by approving substantial investment in the business over and above regulatory allowances, whilst taking no dividends out of it. This additional investment in our networks and assets is being underpinned by one of the largest commitments of new equity in the UK water sector, underscoring shareholders' commitment to our customers, communities and the environment. We are extremely fortunate to have such supportive shareholders and their unwavering commitment to delivering Thames' turnaround and life's essential service."

Perry Noble, Chairman of Kemble Holdings said, "Over the last 18 months we have seen a step change in Thames Water's approach and unanimously support the turnaround plan developed by the new Executive team. Thames Water's services are essential and the updated business plan includes additional investment in its networks and assets, which we believe is critical to delivering the performance improvements we all want to see for the benefit of customers, the environment and communities."

-Ends -

   [1]     Above FD of GBP9.6 billion 

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June 30, 2022 02:00 ET (06:00 GMT)