Monitoring financial resilience

Having information that is easy to understand and navigate allows customers, and other stakeholders to challenge companies’ performance – and encourages them to deliver better services. This helps everyone build trust and confidence in water.

All monopoly water-only and water and wastewater companies in England and Wales report their performance each year in an annual performance report. This is part of our approach to monitoring and assuring delivery.

The regulatory ring-fence conditions in companies’ licences provide an important protection for companies and their customers. Their purpose is to ensure that a regulated company maintains sufficient financial and management resources to enable it to carry out its functions in a sustainable manner. An important part of the regulatory ring-fencing licence conditions is the requirement for companies to maintain an Issuer Credit Rating which is an Investment Grade Rating. We have written to each of the companies that have this licence condition to confirm which credit ratings we are monitoring for licence compliance purposes.

We have set out new proposals to improve financial resilience in the sector. As part of these proposals, companies will be required to transparently demonstrate how dividends take account of service delivery for customers and the environment, investment needs, and the company’s own financial resilience.

The consultation closes on 29 September 2022.

2022-23 performance

Water companies provide an essential public service. To ensure they can carry out their statutory functions and efficiently finance the delivery of their obligations to customers now and in the long term, it is important that they remain financially resilient.

We require all water companies to publish information relevant to their financial performance and financial position in their Annual Performance Reports (APRs). Companies are responsible for the accurate reporting in their APRs; this report captures and presents financial data reported by companies for the year ending 31 March 2023 (2022-23).

The MFR report for 2022-23 includes our key messages and observations on financial resilience across the sector and sets out our categorisation for our approach to monitoring and engagement of the regulated companies. We also provide an overview of our assessment of companies’ dividend policies ​and long-term viability statements against our expectations.

All information in this report uses data submitted by companies, together with other publicly available information, including from statutory accounts and reports from the credit rating agencies.

Companies performance on key components of outcome delivery and expenditure is considered in our Water Company Performance Report 2022-23.

2021-22 performance

Companies performance on key components of outcome delivery and expenditure is considered in our Water Company Performance Report 2021-22.

2020-21 performance

Companies performance on key components of outcome delivery and expenditure is considered in our service delivery report.

2019-20 performance

2018-19 performance

2017-18 performance

This report includes information on a new metric – ‘financial flows’. This is the first time that this information has been included and was run on a pilot basis for this year. The financial flows metric looks at the returns that a company’s equity holders achieve, in comparison to the assumed level in price limits that were set in 2014.

2016-17 performance

2015 – 2016 performance