Thames Water has suspended its dividend as it works to clean up its image

 
Courtney Goldsmith
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Thames Water is putting money towards reducing bills for customers (Source: Getty)

Thames Water, the UK's largest water utility, is working to clean up its image with a package of new measures following criticism from by the regulator.

The company today said it would suspended its dividend to external shareholders for 2017/18. The money will instead be used to focus on improvements in operational performance.

Thames Water, which was slapped with a record £20m fine for polluting the River Thames earlier this year, also said it would return £40m of performance-related penalties to customers earlier than required to reduce the rising cost of bills below inflation.

In its half-year report, Thames also said it had improved its Ofwat customer satisfaction rating to beat the industry average for the first time.

However, the firm's poor record on leakages means its leakage target would not be on track until at least 2020.

Debt has continued to balloon, however. Since Germany's RWE sold Thames Water in 2006, the company's net debt has risen from £3.2bn to £11.1bn at the end of September.

Last week, Thames announced Ian Marchant, former chief exec of SSE, would be its new chairman and would conduct a review of governance and transparency at the company, including closing its Cayman Islands subsidiaries.

Steve Robertson, chief executive of Thames Water said: "Our fundamental purpose is to serve our customers and I am pleased that we've made progress in 2017 that will benefit them now and over future generations.

"Both our new and existing shareholders fully support the refreshed management team, and are aligned with our vision. They will not be paid a dividend this financial year, while we all focus on making the right long-term investment decisions for our customers."

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