Crisis-hit Thames Water has reported a £1.65bn annual loss, rising debts, and warned that it will take “at least a decade” to turn around its fortunes if it swerves the threat of nationalisation.
The UK’s largest water provider, which is still scrambling to secure a restructuring of its debts and injection of new funds to avert a possible collapse, suffered a series of hits to its bottom line in the year to the end of March.
Within its loss for the period, compared with a £157m profit over the previous 12 months, Thames recorded a £1.27bn provision against a loan from its parent company not deemed recoverable.
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There were also hits from £198m in restructuring plan fees and £151m of restructuring costs.
Included too was a £122m fine from the industry regulator related to poor wastewater performance and dividend payouts.
It admitted that sewage spills were up by a third on the 2023/24 financial year – a fact it blamed on higher than average rainfall.
Net debt rose from £15.3bn to £16.8bn.
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Thames Water fine explained
The company is trying to win approval for a rescue plan funded by its senior creditors after the investment giant lined up to rescue Thames Water pulled out of the proposed deal.
KKR had been given preferred bidder status in March before its exit from the process was revealed in June.
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Thames Water dealt fresh rescue blow
Commenting on the company’s performance, chief executive Chris Weston said: “We recognise that our current gearing is too high and, to address this, we are progressing with our Senior Creditors’ plan to recapitalise the business which will see us return to a more stable financial foundation.
“This will come with a requirement to re-set the regulatory landscape and acknowledge it will take at least a decade to turn Thames around.”
The last remark amounts to a warning shot that Thames needs to be shielded from the prospect of further fines for poor performance and handed an improved five-year bill settlement.
It had appealed Ofwat’s determination for the period covering 2025-30 which allowed for a 35% hike to bills to help fund vital infrastructure improvements.
That appeal, to the Competition and Markets Authority, is currently on hold.
Mr Weston, along with other senior directors, is due to give evidence to a committee of MPs later on Tuesday.
They were recalled to the Environment, Food, and Rural Affairs committee following a bruising session held in May.
Questions are likely to be focused on the risk of a rescue deal by creditors failing to materialise – a move that would likely force the company into a special administration process to ensure continuation of services.
The company, which serves almost 16 million customers across southeast England, is also likely to be asked about its drought readiness having announced on Monday that households across four counties were facing usage restrictions.
