Depressing that you can uncover a business scam like this and you know nothing will be done about it. So much regulation around business, not just water companies, needs to be improved.
Right? A year down the line and I can safely say that no one would've gone to jail, and the executives responsible for this would be sipping martinis in the Bahamas
I might be wrong but I suspect this is related to derivative hedges which are now "in the money", and which the company would indeed be paid to exit. Either way it is awful reporting as I'm none the wiser after reading the article.
No I agree entirely. I'm guessing at a plausible excuse. The Financial engineering at these companies has gotten out of control since noone can give a plain English explanation.
Trying to analyse group structures is a nightmare. Some of the worst I saw were Parmalat, Enron and more recently Evergrande. It’s an immediate red flag for me if I can’t navigate the structure chart.
Lads, read the article. It’s got jack all to do with complex financial instruments and their valuations.
It is acct’g BS to support value extraction but not what’s being said here.
If that's the situation then the hedge contract has to be stated at fair value on the balance sheet under current UK GAAP regs? They're complex regs, and it looks like a complex holdings structure though so I can't be sure without more detail.
Severn Trent haven't cooked their books so they can give shareholders bumper pay offs.
7 Trentsaid..
"Panorama has made misleading representations of our accounting system which are completely inaccurate. The fake money was to fool banks. Not to give to shareholders".
...so if the Board has been using inflated accounts for years as justification for paying shareholders, the company has progressively been hollowed out..how can the product be fit for purpose if maintenance compromised? Also did they do this to attract investment by making it appear lucrative>
>to potential shareholders? Which Directors have benefitted from fabricating market capitalisation and thus dividends...before selling shares over £1m shares Oct-24? What's the point of 'audited accounts' if such practices can lay dormant for years...just a lucrative job?
I’d love to know what Labour’s plan to deal with privatised predatory monopoly utilities is.
They don’t seem to have one, but it should be to renationalise them with no compensation.
Doesn't seem credible that an audited, regulated utility would be able to do this. How much did Sev Trent pay to 'acquire' 49% of this entity? No bank would lend to Sev Trent on the basis of a part ownership of a shell subsid. Lots of gaps in the reporting
Disagree here - the RCV included debt in the initial calculation so did not inflate the allowed rate of return which is the overwhelming driver of dividend policy. Water companies do need to keep improving but I thought the panorama was misguided
Comments
https://www.bbc.co.uk/news/articles/cd75nqwdpj7o.amp
Absolutely ZERO reason for a water company to create such hedging unless they had malicious reasons
They are an EFFING WATER COMPANY, not cross border energy traders
So much will come out, but no one will go to jail
It is acct’g BS to support value extraction but not what’s being said here.
Directors: "Whatever amount we tell you. Just sign the accounts and send us an invoice"
This is all intercompany, so will net out in the consolidated accounts, won't it?
So independent auditors have scrutinized these accounts and given them a seal of approval...
So one, or more of
a) the accountants
b)the company board
Or
c) the journalists and BBC editorial board
Need to be sacked .
🤔
Severn Trent haven't cooked their books so they can give shareholders bumper pay offs.
7 Trentsaid..
"Panorama has made misleading representations of our accounting system which are completely inaccurate. The fake money was to fool banks. Not to give to shareholders".
They don’t seem to have one, but it should be to renationalise them with no compensation.
All Trent Water needs to do now is become president and no one can touch them.