Thames Water is continuing to fight for survival as it searches for investment to help pay down its mountain of debt.
In its annual results for the year to 31 March 2024, the embattled water company confirmed that its liquidity at the end of June was £1.8bn, “sufficient to fund our operations for the next 11 months”.
For the year, the group reported underlying profit before tax of £140m, an “improvement” of £272m from the loss reported in the prior year.
Thames Water also reported underlying revenue of £2.4bn, which reflected an “inflation-linked increase in our charges for water and wastewater services.”
Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) rose 21 per cent to £1.2bn.
During the year, Thames Water said it had spent £2.1bn improving its infrastructure, up 18 per cent and a “record” for the group.
Although the company noted several times throughout the release its lack of liquidity has restricted its ability to pay dividends, it did record a total of £195.8m in dividends paid during the year.
These included: “Two interim dividends totalling £37.5m in October 2023, which enabled Kemble Water Finance Limited and its financing subsidiary to service external debt obligations through to 31 January 2024.”
The figure also included: “Two interim dividends totalling £158.3m in March 2024 to enable Kemble Water Eurobond plc and Thames Water Limited to settle amounts owing to the company for group relief surrendered, and Kemble Water Eurobond plc to make pension contribution payments to the Thames Water Pension Scheme and Thames Water Mirror Image Pension Scheme defined benefit schemes on behalf of the company.”
Thames Water also said: “For the seventh year in a row, no distributions were earned by our external shareholders, who own shares in our ultimate parent company, Kemble Water Holdings Limited.”
The firm said it will continue engaging with potential investors and creditors to seek new equity and extend its liquidity runway.
“Thames Water will continue to invest to meet its regulatory and environmental obligations and to improve the operations of the business as we execute our Turnaround Plan,” it confirmed.
Thames Water is saddled with a £18bn debt pile, which has become increasingly difficult to service amid higher interest rates.
The company was thrown into crisis earlier this year after shareholders pulled the plug on plans to invest £500m into the business.
Thames Water submitted a survival plan to Ofwat, the water regulator, back in May. Ofwat is reportedly considering reducing fines on water companies like Thames Water to free up money for investment.
Thames Water’s debt crisis is among the issues facing new business secretary, Jonathan Reynolds.
“The challenges we face are well documented, but our operational and financial performance for the last year show good progress, and these positive results provide the right foundations on which to build and improve,” Chris Weston, chief executive of Thames Water, said
“We’ve delivered year-on-year improvements in our key water metrics, with leakage at its lowest ever level, and we’re supporting more customers through our social tariffs,” he continued.
“Revenue, EBITDA and operating cash flow all grew strongly, supporting a record £2bn of investment in our infrastructure that will ultimately improve asset resilience, environmental performance, and customer service,” he added.
In April, it was reported that despite the company’s myriad of issues, Thames Water asked the regulator to let it pay up to £2bn in distributions to its investors over the next decade as part of its business plan.