Thames Water has said it has sufficient funding to survive until the end of the year but warned of “material uncertainty” over its future as it scrambles to recapitalise to avoid nationalisation.
The UK’s largest water company, which serves 16 million customers in London and the south of England, said it continued to work with creditors, regulators and the government on a recapitalisation plan.
The utility said in its annual report, published on Wednesday, that it was “reasonable to assume” that the company had “adequate resources” to keep going for another 12 months.
Thames, which has been held up as a symbol of the privatised sector’s failures, has been blamed for polluting rivers and waterways with sewage leaks and has struggled under a ballooning debt pile.
In its annual results for the year to 31 March, Thames reported that its net debt had risen to £18.5bn, up from £16.8bn a year earlier.
However, the company said its performance was improving as it reported underlying profit after tax of £204m compared with £13m a year earlier.
It said it had achieved an 18% reduction in pollution in the 12 months to the end of March compared with the same period a year earlier.
Despite this, Thames said it had only met 55% (11 out of 20) of Ofwat’s common performance commitment targets, although this was an improvement on the 38% it achieved a year earlier.
The company also said customer billing complaints rose by 101% over the past 12 months, with complaints about bills accounting for more than three-quarters (78%) of total complaints.
In recent weeks the environment secretary, Emma Reynolds, has objected to a £10bn rescue proposal for the company put forward by 100 institutional investors to the water regulator for England and Wales, Ofwat, saying it would place an “undue burden” on consumers.
This intervention pushed Britain’s biggest water company closer to a form of temporary nationalisation called a special administration regime.
Andy Burnham, who is set to become the next prime minister within days, has called for “greater public control” over Thames and told the Guardian this could mean nationalisation.
Commenting on the annual results, Thames Water’s chief executive, Chris Weston, said: “While we have a lot more to achieve, the progress we have made in turning the company around has meant we are now performing better and are in a strong position to accelerate the delivery of the biggest upgrade of our infrastructure in 150 years.
“This upgrade will, over time, address asset resilience issues and translate into sustained improvements in the services we provide for our customers and impact on the environment.”
Thames Water paid Weston £1.16m over the 12 months to March, including £99,000 in variable pay, marking a slight increase on a year earlier.
The restructuring specialist AlixPartners was paid £2.18m for the role of Julian Gething, one of its managing directors, who serves as Thames Water’s chief restructuring officer.
Thames disclosed that it paid £4.085m in bonuses over the year to “key management personnel”, which includes members of the board and the executive, related to its performance-related pay plan and management retention plan.
Reynolds said: “It’s outrageous that one of the worst-performing water companies is handing out bonuses and inflation-busting pay rises to its executives. It flies in the face of basic fairness, and the British public are right to be furious.”
