Thames Water turnaround will take 'at least a decade', boss warns

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.

Money latest: easyJet bereavement policy faces refund question 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.

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 a proposed deal. KKR had been given preferred bidder status in March before its exit from the process was revealed in June.

Thames said in its results there was a "material uncertainty" as to whether it could deliver the recapitalisation, leaving it at risk of a special administration process. 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, gave evidence to a committee of MPs shortly after the publication of its annual report.

They were recalled to the Environment, Food, and Rural Affairs committee following a bruising session held in May. Chairman Sir Adrian Montague apologised to the MPs after Thames was accused of a lack of transparency and "game-playing" in several key areas.

Committee chair Alistair Carmichael told Mr Weston, Sir Adrian and the other director present the company risked being found in contempt of Parliament unless Thames handed over board meeting documents requested by the committee related to the bidding process. The company, which serves almost 16 million customers across southeast England, is currently grappling its drought readiness, having announced on Monday that households across four counties were facing usage restrictions.

A leak has also meant parts of south-east and south-west London had low or no water pressure on Tuesday due to a broken pipe. It begged the question why so much rainfall had been lost through storm overflows, which overwhelmed the sewage system.

Mr Weston told the MPs: "Last winter before we came into the spring we had the second wettest winter on record - there was some months like last September when the rainfall on record was double the normal monthly rainfall and our system I'm afraid was never intended to deal with that. "We are taking huge steps to improve our position around pollutions,.

We are cleaning the network more than we ever had and we are investing more than we ever have in our sewage treatment works but it is going to take a while... to turnaround, transform this company is going to take between five and ten years, maybe a bit more.".