Thames Water has revealed a three-year turnaround plan as Britain’s biggest water utility struggles under a £14.7billlion debt pile.
The group, which is a supplier of water to 15 million customers, saw pre-tax profits sink 54 per cent to £246.4million in the six months to September as it spend a record £1billion on network improvements.
This offset a 12 per cent jump in revenues to £1.3billion as its debts swelled by 7 per cent over the period.
Thames Water warned its turnaround efforts will ‘take time’ but it claimed to have strong liquidity as it laid out plans to ease concerns about its financial stability.
Britain’s biggest water utility reported that it will proceed with a new three-year turnaround plan to improve service
Britain’s water industry has faced a turbulent environment in recent times, as the sector’s debts continue to pile higher, and it faces criticism over its handling of pollution and leakages from consumers, regulators and politicians.
The industry has laid out plans to mend Britain’s crumbling water infrastructure, but it has also handed bumper payouts to investors as consumers’ bills are hiked.
Fears that Thames Water could buckle under the weight of its of debt prompted the government to ready a rescue plan earlier this year, before the company’s financial investors agreed to invest additional equity in July.
In July, It reported that it had secured £750million of shareholder investment for the next two years.
The water provider said the cash injection, which follows a £500million investment in March, was the largest equity support package ever seen in the UK water sector.
But a Financial Times report on Saturday claimed the cash injection is actually a loan charging Thames Water 8 per cent per annum.
But Thames Water, which services more than a fifth of Britain’s population, said it has total liquidity of £3.5billion ($4.42billion), as well as further funding resources.
The group said its turnaround plan will focus on six ‘key operational priorities’ – health and safety, customer complaints, water quality, leakage, supply interruptions, and pollutions.
It added: ‘Looking further ahead, we are fully committed to deliver a step change in investment and performance.
‘This is why, between 2025 and 2030, our PR24 business plan proposes to invest a record £4.7billion in our network and other assets to improve water security for our customers in London and the Thames Valley and deliver environmental improvements.
‘This investment is critical to building greater resilience in the face of an ageing asset base, climate change and population growth.’
In a statement, the firm’s interim co-chief executives Cathryn Ross and Alastair Cochran said ‘turning around Thames will take time’.
They added: ‘We simply cannot do everything that our customers and stakeholders wish to see at a pace and for a price that everyone would like.
‘We will continue to make the tough choices required to deliver what matters most to our customers and the environment.
‘By being honest about what we can deliver and transparent about what we are doing, we believe we will build the trust and support we need from our customers and stakeholders if we are to succeed in our ambitious plans.’
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