Major water company uses accounting trick to inflate balance sheet by £1.68bn

Published On Dec 9, 2024, 12:00 PM

Severn Trent Water has reportedly inflated its financial statements by valuing a non-existent asset at £1.68 billion, misleading investors about its financial health. This accounting method involves a shell company and an IOU, which appears to bolster the company's balance sheet, allowing it to pay substantial dividends despite lower actual profits. Critics are concerned this misrepresentation may impact investments in necessary infrastructure improvements, while Severn Trent maintains that the structure is legitimate and its financials are accurate.