Thames Water, the UK’s largest water and wastewater services provider, has released its half-year financial results for 2024, showcasing progress in its turnaround efforts under new Chief Executive Officer Chris Weston. While the company highlighted improvements in operational and financial performance, it also acknowledged challenges stemming from rising debt levels and environmental pressures caused by record rainfall.
CEO Chris Weston stated, “In the last six months, we’ve made solid progress on the transformation and turnaround of Thames Water. Leakage is at an all-time low, and we’ve maintained high levels of investment. However, unprecedented rainfall has led to increased pollution incidents, which we are addressing through intensified pipe relining and cleaning efforts. The Thames Tideway Tunnel, now in its testing phase, is already helping to reduce overflows into the Tidal River Thames.”
Financial highlights and debt concerns
Revenue for the period grew by 10% to £1.3 billion, driven by inflation-linked adjustments to water and wastewater charges. Underlying EBITDA rose by 14% to £715 million, while underlying profit after tax increased by £46 million to £187 million. These gains were supported by disciplined cost management and robust infrastructure investments totaling £1 billion.
Despite these positive indicators, Thames Water reported a statutory loss of £190 million due to exceptional costs and income related to Bazalgette Tunnel Limited. The company also revealed that its debt pile had swelled to £15.8 billion, up from £14.7 billion the previous year. To address its financial challenges, Thames Water has launched a £3 billion emergency financing plan to maintain solvency until October 2025.
Key steps in bolstering financial resilience include a liquidity extension proposal for up to £3 billion in new super senior facilities, with £1.5 billion backstopped by creditors, and a two-year extension of £3.2 billion in debt maturities. By the end of September 2024, Thames Water reported committed liquidity of £1.5 billion. Additionally, the company advanced its equity raise process and appointed Julian Gething as Chief Restructuring Officer to lead its financial transformation.
Weston underscored the importance of an “investable” Final Determination from the regulator, Ofwat, on December 19. “The next critical step is receiving an investable Final Determination, which is fundamental to our future,” he stated.
Operational and environmental performance
Thames Water achieved a 4% reduction in leakage, reaching an annual average of 536.5 million liters per day. Customer complaints decreased by 19%, reflecting enhanced service delivery, while safety metrics improved with a 23% reduction in lost-time injuries.
However, the company faced environmental challenges, with pollution incidents increasing by 40% to 359, driven by record rainfall and elevated groundwater levels. Weston acknowledged the issue and emphasized the company's response through enhanced maintenance and the ongoing rollout of the Thames Tideway Tunnel.
The Tideway Tunnel, along with the Lee Tunnel, collectively captured 589 million liters of sewage in a single day during testing. These projects represent significant strides in improving environmental performance and mitigating overflows into the River Thames.
Last week, Thames Water received a bid from Covalis Capital that involves partnering with France’s Suez to manage a significant restructuring and prepare the company for a public stock market listing.
