Thames Water gets £750m cash injection but more money still needed
The struggling water company has secured an additional £750m from shareholders and has ruled out nationalisation.
Thames Water has published its full year result for the year ending on 31 March 2023.
The statement confirmed that shareholders have agreed to provide a further £750m of equity funding.
However, this further funding is subject to certain conditions, including the production of a new business plan that will underpin “a more focused turnaround that delivers targeted performance improvements”. The company also said it would be looking for an extra £2.5bn for the period from 2025 to 2030.
The £750m cash input, which took the funding round total to £1.25bn, falls short of the £1.5bn sum that Ofwat had said Thames was seeking last week.
Government ministers have been increasingly concerned about Thames Water’s financial position and, at the end of June, arranged contingency plans should it go bust or need to be taken into public ownership.
Thames Water’s annual accounts said that the company’s financial performance had been impacted by high inflation and investment in leakage, while its operational performance had been impacted by extreme weather and ageing assets.
‘An extremely challenging year for Thames Water’
Cathryn Ross and Alastair Cochran, interim Co-CEOs of Thames Water, said: “It was an extremely challenging year for Thames Water and the water industry. Our network came under unprecedented pressure from record temperatures, a drought and a freeze / thaw event. At the same time, economic factors also impacted our financial results with high inflation driven by a surge in energy and chemical prices. In short, our performance was not as we – or our customers – wanted it to be.
“Despite this, we are in a robust financial position. We had £4.4bn liquidity as at 31 March 2023 and are extremely fortunate to have such supportive shareholders. Their commitment to delivering Thames’ turnaround and life’s essential service is reflected in the largest equity support package ever seen in the UK water sector, whilst taking no dividends out.”
The statement said that the company would be transitioning to a more focused “turnaround plan” which will be a targeted approach focused on expenditure on a smaller number of initiatives “that will deliver substantial and sustainable improvements in key performance metrics over the next three years”.
Ways to save as bills set to rise
Thames Water also said it had brought back customer-facing teams back into its region and insourced the repair and maintenance of its water network.
The statement added: “We’re fixing more leaks and customer complaints have continued to fall significantly. We have also increased investment in our networks and assets to record levels as we undertake a detailed review of our ageing Victorian asset infrastructure to determine what needs to be done to improve operational resilience and performance over the long-term.
“Our balance sheet remains robust and, while change will not happen overnight, we are confident we have the right strategy, team and support in place to deliver for our customers, communities and the environment in London and the Thames Valley.”