Thames: No dividends coming this decade

Shareholders in Thames Water are unlikely to see a dividend payment before 2030, interim co-chief executive Cathryn Ross has said.

The former Ofwat boss told a Moody’s investor conference that after six years without paying dividends, there would “probably not” be a return paid in the next asset management period (AMP8) as the company ploughs on with its turnaround plan.

Thames submitted its business plan for 2025-30 earlier this month, including £4.7 billion to renew and replace aging infrastructure, with a further c£15 billion required in subsequent AMPs. Ross said Thames needs to recalibrate its assets as standards and resilience through planned preventative maintenance will inevitably look very different in the face of climate change.

She highlighted that the sector as a whole may need up to £100 billion of new equity to carry out its plans, however two-thirds of companies are not paying dividends to the shareholders currently expected to foot that bill.

Ross described the current regulatory regime as “backwards looking and risk averse” to the detriment of water companies being able to innovate. “We desperately need to do things differently so we desperately need innovation in the regulatory regime to allow the sector to deliver.”

Ross called for more joined up thinking across government and regulators to bring clarity for water companies, citing differing attitudes between Ofwat and the Environment Agency towards water companies using nature-based solutions.

Looking ahead, she pointed to a need for more alignment on future goals with a shared vision of what must be achieved, and when, to unlock innovation.

As the interim co-chair of the country’s biggest water company, with plans to spend £18.7 billion in 2025-30, Ross expressed confidence in deliverability.

“Everything we have achieved in the past gives me confidence for the future,” she said.

This includes ramping up spending during the current AMP to £800 million a year and cutting customer service complaints by 23% last year. Ross attributed this progress to the “will, force and passion” of those working at Thames.

As part of a panel discussion, Martin Woolhead, deputy director of water at the Department for environment, food and rural affairs (Defra) reflected on the much speculated threat of a special administration regime (SAR) when Thames’ chief executive stepped down as “not being in anyone’s interest”.