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Thames Water has confirmed it paid two new dividends worth £158.3m in March as the highly indebted company said it is unlikely to raise fresh funds before December.
The water company, which is mired in debt of more than 15 billion pounds, said it paid the dividends to help fund two of its parent companies, Kemble Eurobond and Thames Water Limited, which are in financial trouble.
Ofwat has already said it is “prepared” to take action against Thames Water for a lower dividend payment of £37.5m in October 2023.
Under new rules introduced last year, water companies with poor financial and environmental records cannot pay dividends.
Thames Water has been the subject of much criticism over levels of sewage leaking into waterways. Warnings about levels of E. coli in the water were issued at events such as this year's boat race and Henley Royal Regatta.
Last year it paid out a total of £196m in dividends.
The company said it is still seeking fresh funding needed to maintain and upgrade its infrastructure, after investors withdrew £500m of emergency cash earlier this year.
It said it has £1.8bn of liquidity, enough to fund its operations until the end of May next year, but needs further investment.
Thames Water said profits rose to £75.4m for the year ended March 31, from a loss of £30m the previous year.
Revenue rose 11% to £2.5bn.
Pollution incidents rose to 350 from 331 last year, blamed on a wetter-than-expected year.
The number of “serious contaminations” fell by 18%, Thames Water said.
It said it spent £2bn maintaining and upgrading its infrastructure last year.
The financial update will be followed on Thursday by a draft verdict from Ofwat on water companies' five-year spending plans and bill increases up to 2030.
This will kick off six months of negotiations with Ofwat, before a final decision is made in December.
The process of raising new money is not expected to be completed until after Ofwat's final decision.
Chief executive Chris Weston said Thames had conducted “informal soundings which have shown there is interest in the market”.
