BA18 Thames Wuf 6.5%

TIDMBA18

RNS Number : 4766F

Thames Water Utilities Finance PLC

10 July 2023

10 July 2023

Thames Water

Shareholder Funding Update

Shareholders agree to provide a further GBP750 million of equity funding in AMP7, with the acknowledgement that significant additional funding will be required during AMP8 (2025-2030), to further improve operational performance and financial resilience (as summarised in this announcement)

In accordance with the commitment made by shareholders in June 2022, Thames Water drew down GBP500 million of new equity funds on 30 March 2023. This June 2022 commitment was made by shareholders to support the delivery of Thames Water's business plan for the current AMP7 regulatory period ending 31 March 2025 to improve performance and outcomes for customers, reduce leakage, improve river health, and accelerate delivery of Thames Water's turnaround. This equity funding provided by shareholders has helped reduce gearing to its lowest level in a decade.

Since the June 2022 commitment, shareholders have continued to work with the Thames Water Board and Executive on plans to provide additional equity funding to drive Thames Water's turnaround over the remainder of the current regulatory period (AMP7) and to establish a solid foundation for its long-term growth.

Accordingly, Thames Water's shareholders have agreed to provide a further GBP750 million in new equity funding across AMP7. This further funding is subject to satisfaction of certain conditions, including the preparation of a business plan that underpins a more focused turnaround that delivers targeted performance improvements for customers, the environment and other stakeholders over the next three years and is supported by appropriate regulatory arrangements.

Shareholders have also acknowledged that delivery of the Turnaround Plan will require the provision of further equity support in AMP8, significantly in excess of the current AMP7 commitment. Indicatively, the AMP8 equity support is expected to be in the region of GBP2.5 billion, but the nature and level of such medium-term support will depend on the finalisation of the business plan and the regulatory framework that will apply to the AMP8 period.

Thames Water will carefully monitor progress towards satisfying the conditions for the additional shareholder funding and will keep under review pathways to ensure Thames Water's continued financial resilience. In the meantime, Thames Water remains focused on delivering a safe and reliable service to its customers and the environment while work continues on implementing and accelerating the turnaround.

Thames Water continues to maintain a strong liquidity position, including GBP4.4 billion of cash and committed funding, as at 31 March 2023.

Cathryn Ross and Alastair Cochran, Interim Co-CEOs of Thames Water said:

"This announcement is a major milestone for Thames and all our stakeholders. Since June 2022, we have engaged constructively with shareholders, working towards a common goal of developing a long term, comprehensive, financeable and enduring business plan for the Company to improve operational performance and financial resilience for the benefit of our customers and the environment. The substantial equity support package announced today will underpin the delivery of a more focused turnaround plan that builds on the foundations that have been put in place over the last two years and focuses expenditure on a smaller number of initiatives, which will deliver material and sustainable improvements in key performance metrics over the next three years."

Ian Marchant, Chairman of Thames Water said:

"Our shareholders have consistently been very supportive of Thames Water by approving investment in the business over and above regulatory allowances, foregoing any income since 2017 and investing GBP500 million of new equity funding in March 2023. The additional investment announced today is the largest equity support package ever seen in the UK water sector and underscores our shareholders' commitment to delivering Thames' turnaround and life's essential service for the benefit of our customers, communities, and the environment."

For media enquiries please contact

Sarah Long - Head of Media Relations

Sarah.long2@thameswater.co.uk

Hannah Law - Media Relations Manager

Hannah.law@thameswater.co.uk

For investor enquiries please contact

Sarah Davies - Head of Investor Relations

Sarah.davies@thameswater.co.uk

Information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 as amended and as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018 ("UK MAR") until the release of this announcement. For the purpose of UK MAR and Article 2 of Commission Implementing Regulating (EU) 2016/1055 as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018, this announcement is made by David Gregg (Director) at Thames Water Utilities Finance plc.

LEI: 213800ESMPQ4RQ7G8351

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July 10, 2023 02:04 ET (06:04 GMT)

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