Several water companies failed to provide requested financial information to Ofwat or included data and calculation errors in their 2023 Annual performance report (APR) submissions.
This includes information relating to dividend payouts to company shareholders.
The regulator has written to all firms reminding them that “each company is responsible for the integrity and assurance of the data and information that is reported”.
Ofwat’s review of APR submissions found widespread “data errors including calculation errors, using incorrect signage, values not agreeing across APR tables, and non-submission of requested breakdowns”.
Helen Campbell, senior director for sector performance at Ofwat, noted that there had been overall improvements to the level of detail and transparency in the statements submitted.
However, she said only a few companies fully met Ofwat’s expectations for how dividends were calculated, how decisions were reached and how that was presented to customers.
Ofwat has been putting pressure on companies to improve transparency and make clear links between dividend payments and operational and environmental performance.
While Ofwat said there has been improvements year-on-year to how information was presented, it said work remains to be done.
Boards were asked to give greater clarity on how dividend decisions are assessed and for policy to include explanations of why payments are calculated.
South East, Thames and Yorkshire were warned that loan obligations of linked or parent companies were not a valid rationalisation for dividend decisions.
Where a dividend was paid based on outperformance, Ofwat said reporting should be more detailed to explain the performance and any factors the board took account of.
Campbell wrote that the regulator wants to see companies take its feedback into consideration when preparing future APRs. She said thorough checks should be carried out on all data and narrative to avoid errors in reporting.
She added: “We expect all companies to review all the information provided as part of their APR submission for accuracy and completeness in accordance with the latest Regulatory Accounting Guidelines (RAGs), and to explain their data in APR commentary where required and/ or useful to facilitate the reader’s understanding of the data submitted.”