Thames Water plunged deeper into crisis yesterday as it revealed debts have ballooned to almost £15billion and profits collapsed.
In the latest blow for the embattled industry, the company’s debt soared by 7 per cent or £780million to £14.7billion in the six months to the end of September.
First-half profits fell 54 per cent to £246.4million as the utility giant spent £1billion improving its network. Despite the investment, pollution incidents jumped from 217 to 257 in the six months.
The update came just days after auditors warned its parent company could run out of money by April.
And to make matters worse, industry regulator Ofwat has asked Thames bosses to explain a £37.5million shareholder payout amid fresh scrutiny over its finances.
Dividends are supposed to be linked to performance targets.
Knee deep: Thames Water, led by co-interim chief execs Cathryn Ross (pictured) and Alastair Cochran, saw its debt soar by 7% to £14.7bn in the six months to the end of September
It has been a tough year for the water firm, which is reliant on shareholders paying a promised £750million to shore up its balance sheet.
It faces a potential probe into whether it misled MPs this year over its finances.
And ministers considered emergency nationalisation plans this summer in case the supplier collapsed under the weight of its debts.
Former chief executive Sarah Bentley quit in June after three years, as fears mounted over its financial stability.
Bentley and other water bosses were asked to give up their bonuses amid public outrage over sewage pumped into Britain’s waterways.
The industry is under pressure to invest to hinder sewage pollution and leaks.
But the firm, the UK’s largest privatised water company, is paying higher interest payments on its huge debt pile, as some is linked to the rate of inflation.
‘Confidence in Thames Water’s ability to shore up its financial position has again sprung a leak,’ said Susannah Streeter, the head of markets at Hargreaves Lansdown.
‘With debts rising and profit falling it seems clear the £750million cash injection was just an emergency pumping operation and much more remedial work needs to be done.’
Thames Water, which serves 15m customers across London and the Thames Valley, said revenue jumped 12 per cent to £1.3billion in the first half, driven by inflation-linked increases to some tariffs.
But bills will need to rise to fund advance improvements to its infrastructure. Bosses outlined a three-year turnaround strategize yesterday but warned it will take longer than customers and shareholders would admire.
In a statement, co-interim chief executives Cathryn Ross and Alastair Cochran said: ‘Turning around Thames will take time.
‘We simply cannot do everything that our customers and stakeholders wish to see at a pace and for a price that everyone would admire.’
The strategize focused on six operational priorities – health and safety, customer complaints, water quality, leaks, supply interruption and pollution.
The interim bosses said: ‘By being honest about what we can deliver, transparent about what we are doing, we believe we will build the trust and uphold we need from our customers and stakeholders if we are to succeed in our future ambitions.’
Scandals that caused a stink
Water firms are under fire after a year of scandals.
United Utilities has faced a fierce backlash over raw sewage pumped into Lake Windermere, a world heritage site, which campaigners say turned the water green.
Pollution: United Utilities has faced a fierce backlash over raw sewage pumped into Lake Windermere (pictured)
Yorkshire Water last week agreed a £1million civil sanction for dumping sewage.
Thames was fined £3.3million for sewage in two rivers near Gatwick, killing thousands of fish.
Anglian was fined £2.65million over untreated waste in the North Sea. And in April South West Water was ordered to pay £2million.
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