Cash-strapped Thames Water has revealed a further rise in its debt pile while recording a return to profit on the back of inflation-busting hikes to bills.
The UK’s largest supplier said the 31% rise to customer bills since April had allowed it to increase capital investment by 22% to £1.3bn amid demands it improve performance in preventing sewage spills and stopping leaks.
Thames Water said it recorded a 20% drop in pollution incidents over the six months to the end of September, and leakage performance was holding steady despite the “extremely dry summer”.
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While waste complaints dipped by 11%, according to the company, there was a 42% surge in the number of customers complaining about the hike to bills.
Thames Water revenue rose 42% on the same period last year to £1.9bn, helping a return to profit after tax of £328m on the back of a £190m loss during April-September 2024.
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The company said profitability was damaged by higher debt serving costs.
Its debt pile was recorded at £17.6bn – a rise of 5%.
The results were released against the backdrop of continuing talks involving the government and regulators over a proposed rescue deal by major Thames Water creditors.
Their consortium is known as London & Valley Water.
It effectively already owns Thames Water under the terms of a financial restructuring agreed early in the summer but regulator Ofwat is yet to give its verdict on whether the consortium can run the company, averting the prospect of it being placed in a special administration regime.
Without a deal the consortium, which includes investment heavyweights Elliott Management and BlackRock, would be wiped out.
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Ofwat, which is to be scrapped under a shake-up of industry oversight, has been leading scrutiny of London & Valley’s operational plan and proposed capital structure.
The prospective deal would write off billions of pounds of the company’s debt and inject billions in fresh equity, in return for an adjustment in the regulator’s approach to future financial penalties.
Thames sees the creditors’ proposal as the only viable solution.
Despite huge hikes to household bills – allowed across England and Wales to bolster aging infrastructure including storm overflows – the company says its financial turnaround has been hampered by record fines for things like sewage leaks and bonuses to retain key staff.
Sky News revealed on Tuesday that its remuneration committee will meet next week to decide whether to proceed with nearly £2.5m in retention payments to 21 senior managers.
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Thames Water chief executive Chris Weston said the company had made good progress on its operational and transformation targets.
“This progress has all been achieved as we also manage the recapitalisation of the business. We continue to work closely with stakeholders to secure a market-led solution that we believe is in the best interests of our customers and the environment.
“This in turn will allow the transformation of Thames to continue, a programme that will take at least a decade to complete and will restore the infrastructure and operations of the company.”
