Thames Water reports a sharp rise in half-year profits to £386m after implementing a near-one-third hike in customer bills, even as it cautions that substantial funding uncertainties could trigger a swift move into government control.
The UK’s largest water supplier said it returned to profitability for the six months ending in September, turning around a £230m loss recorded in the same period last year. Revenue surged 40% to just under £2bn following a 31% tariff increase approved in April.
Despite the solid profit rebound, the company warned of a “material uncertainty which may cast significant doubt” over its ability to continue as a going concern. A collapse into government stewardship under a special administration regime (SAR) could occur in the near term if a formal takeover by основ controlling lenders cannot be agreed.
Thames Water has hovered near collapse for more than a year, weighed down by roughly £17bn of net debt accumulated over decades since privatisation.
Serving about 16 million customers in south-east England, the company has faced persistent environmental performance issues, including sewage leaks that sparked public and political backlash and led to substantial penalties.
In the year ending March, the group recorded a pre-tax loss of £1.6bn, driven by a £1.3bn credit impairment.
Earlier this year, the utility narrowly avoided a government takeover after securing court approval for a £3bn emergency funding package that also marked a write-down of some debts to zero. Since then, efforts have focused on a broader debt restructuring plan that would transfer formal ownership to the lenders.
The lenders include hedge funds such as Elliott Management and Silver Point Capital, alongside traditional investors like Abrdn and Insight Investment. In their proposals to the government, bondholders have sought fifteen years of regulatory leniency from environmental fines to aid recovery.
Negotiations have stretched over many months, with Thames Water surviving largely on the £3bn emergency facility. The government, while reluctant to grant regulatory leniency, has avoided taking control under an SAR, complicating the investors’ willingness to commit. The situation remains fluid as talks continue.
