Thames Water boss says turnaround to take 10 years

Thames Water will "take at least a decade to turn around", its boss has said, as the struggling company posted huge annual losses.

Thames reported a loss of £1.65bn for the year to March, in which its debt pile climbed to £16.8bn.

The UK's largest water and waste company claimed "significant rainfall and high groundwater levels" led to pollution incidents increasing by more than a third, but said it had tried to address "many of the underlying causes of our poor performance".

The results come as bosses are set to be quizzed by MPs later, with the company's future still uncertain since fears it could collapse first emerged two years ago.

Thames serves about a quarter of the UK's population, mostly across London and parts of southern England, and employs 8,000 people.

Chris Weston, chief executive of Thames Water, said the company had made "good progress" on its performance, "despite the ongoing challenging financial situation".

But the firm continues to face heavy criticism over its performance in recent years, following a series of sewage discharges and leaks.

In May it was handed a a £122.7m fine, the biggest ever issued by the water industry regulator Ofwat, for breaching rules on sewage spills and shareholder payouts.

Thames said the number of pollution incidents increased to 470 from 350 in the last calendar year.

Mr Weston said "prolonged wet weather meant further rain had nowhere to go other than to inundate our ageing and fragile sewer network".

"Reducing pollutions and discharges is something we're really focused on, and we plan to invest record amounts in our waste network during the next five years," he added.

On Monday, Thames became the latest supplier to announce a hosepipe ban, which will begin next Tuesday for customers in Oxfordshire, Gloucestershire, most of Wiltshire and some parts of Berkshire.

The dire state of the company's finances emerged in June 2023, but Thames managed to secure a £3bn rescue loan earlier this year to stave off collapse.

However, the company suffered a major blow in its bid to secure its future in June when US private equity firm KKR pulled out of a further £4bn rescue deal.

The setback has increased the possibility that the company could collapse into a government-supervised administration.

Mr Weston said Thames recognised that its current gearing, which indicates how much a company depends on debt to fund its operations, was "too high".

"To address this, we are progressing with our senior creditors' plan to recapitalise the business which will see us return to a more stable financial foundation," he added.

"This will come with a requirement to re-set the regulatory landscape and acknowledge it will take at least a decade to turn Thames around."

Regardless of what happens to Thames or who owns the company, its water services will continue as normal.