The financial outcomes of the utility company were revealed just a few days following the news that Thames Water’s parent entity had been cautioned by its auditors of a potential cash shortage by next April unless its shareholders contribute additional equity into the utility operation.
Thames Water executives acknowledged that revitalizing the company is a gradual process, following the announcement of reduced earnings amidst financial stability concerns.
The company’s pre-tax profits plunged 54% to £246.4 million, despite record spending of £1 billion in the first half-year ending in September for network enhancements.
During this period, revenue rose by 12% to £1.2 billion, while the net debt escalated by 7% to £14.7 billion.
This news comes shortly after revelations that Thames Water’s holding company had been alerted by its auditors about a potential cash shortfall by the upcoming April unless more capital is infused by shareholders.
PricewaterhouseCoopers (PWC), the group’s auditors, expressed significant doubts about the company’s future, citing the lack of concrete plans to refinance a £190 million loan in one of its subsidiary firms.
Interim Co-CEOs Cathryn Ross and Alastair Cochran emphasized the urgent need for “immediate and radical” changes to improve the company’s performance.
They stated, “Transforming Thames will be a lengthy process. We can’t meet all the desires of our customers and stakeholders as quickly or affordably as they might prefer.
“We are committed to making difficult decisions to prioritize what is most important for our customers and the environment.”
Earlier in the year, Thames Water’s investors promised to support the firm, with a written commitment to inject an additional £750 million in equity. However, PWC pointed out that “this pledge isn’t legally binding, and there are no other definite agreements to refinance the £190 million loan.”
