Thames Water: CEO Cathryn Ross warns 'radical action' needed as firm's debt pile rises by 7% to £14.7bn
Thames Water bosses have warned that turning around the company will take time as it revealed its debt pile has increased by seven per cent to £14.7bn. Interim bosses said “immediate and radical action” is needed to improve its environmental and financial performance with a new three-year turnaround plan being pursued.
The UK’s biggest water supplier reported a 54 per cent drop in pre-tax profits to £246.4m in the six months to September 30. Revenues rose 12 per cent to £1.3bn but it spent a record £1bn on improving its network.
Bosses added that the firm will “continue to make the tough choices required to deliver what matters most to our customers and the environment.” It comes after the firm’s auditors recently warned that the water company could run out of money by next April if its shareholders do not invest more money. The group’s auditors, PricewaterhouseCoopers (PWC), said there is “material uncertainty” about its future because there are no firm arrangements in place to refinance a £190m loan held by one of the company’s subsidiary businesses.
Parliament’s Environment, Food and Rural Affairs Committee said on Friday (2 December) that “recent revelations of Thames Water’s financial situation” is raising “further concerns about the stability of the company’s finances.” The committee is considering calling the firm’s executives in to explain whether they misled MPs about the company’s financial situation when they gave evidence in the summer.
At the end of June, the government reportedly drew up contingency plans to temporarily bring Thames Water back into public hands as its debt pile reached £14 billion. Ministers were said to be in talks about the possibility of emergency nationalisation of the water company under a so-called special administration regime (SAR).
However, in July Thames Water investors agreed to provide £750m in funds over the next 18 months. Despite this the PWC has said that “the letter is not legally binding and there are no other firm commitments to refinance the £190m loan”.