Thames Water, the UK's largest water supplier serving approximately 16 million customers in London and the South East, has announced a swing to annual profit while its debt burden surged to nearly £20 billion. The company reported pre-tax profits of £226.4 million for the year ending March 31, a significant recovery from the £1.65 billion loss recorded in the previous year.
Debt Swells to £19.77 Billion
Despite the profit turnaround, Thames Water's net debt increased to £19.77 billion, up from £17.73 billion the year prior. The utility attributed the rise to continued borrowing to fund capital investment in infrastructure upgrades.
Rescue Deal Under Pressure
Creditors are racing to finalize a rescue package for the debt-laden company after Environment Secretary Emma Reynolds expressed concerns that the proposed plan does not adequately protect customers or the environment. The warning dealt a setback to hopes of a deal that would avoid temporary renationalization.
Industry regulator Ofwat was reportedly close to accepting an offer from the bidding consortium London & Valley Water, which proposed injecting £10 billion into Thames Water. In return, the consortium sought a four-year waiver on any new fines related to sewage leaks. Thames Water has stated it has sufficient funding to operate until September.
CEO Highlights Turnaround Progress
Chief executive Chris Weston said, “Thames Water today is a very different business from what it was two years ago. While we have a lot more to achieve, the progress we have made in turning the company around has meant we are now performing better and are in a strong position to accelerate the delivery of the biggest upgrade of our infrastructure in 150 years.”
He added, “While operationally the business is improving, we are also working with our creditors, regulators and Government to complete our recapitalisation.”
