There were fears in the city today that Thames Water will publish its annual accounts later than usual, as concern grew over the state of the heavily indebted group’s finances.
The 15-millon customer utility is grappling with a £14 billion debt burden as interest rates soar, stoking concern about its viability. Its £1.6 million-a-year CEO, Sarah Bentley, left suddenly this week.
Thames usually publishes its financial report in the first week of July. Sources close to the company said today its next set of accounts will come out before July 15, the deadline for them to be released.
That could be after a July 12 grilling for water industry executives from the MPs, announced today. It looms amid a public storm over sewage outflows into rivers and leaking water mains, as accusations of decades of under-investment rains down on the industry.
Last year on July 6, Thames reported annual revenue of £2.2 billion, up 3%, and earnings of £1.1 billion, unchanged year-on-year.
Joanna Ford, restructuring and insolvency partner at City law firm Cripps, said any delay to the usual publication time of Thames’ accounts “will raise a few eyebrows given everything else that has been going on.” She added:
“It would be a risky move given the public scrutiny it is under at the moment, and would add to current speculation that it is teetering on the brink of collapse.”
The Westminster hearing will include industry regulators from Ofwat, which.said this week that “Thames Water has significant issues to address”. MPs are expected to raise the issue of dividend payouts for shareholders and high executive salaries, seen by hard-pressed bill-payers as the industry’s main priority since it was privatised from the late 1980s as part of Margret Thatchers’ reforms when she was prime minister.
Thames Water is scrambling to raise funds from its existing investors. They include Ontario Municipal Employees Retirement System, one of Canada’s biggest pension plans, which owns about 30% of the firm and a subsidiary of Abu Dhabi’s sovereign wealth fund.
It appointed City veteran Sir Adrian Montague as its new chairman this week. The 75-year-old fixer has long experience turning around problem-hit privatised firms. He helped set up Network Rail, which took over from privatised infrastructure firm Railtrack when it collapsed in 2001 and was involved in the rescue of British Energy.
There were moves afoot in the wider industry to fend off calls for it to be re-nationalised, with the sector-wide debt burden estimates at £53 billion.
Liv Garfield, the £4-million-a-year boss of Severn Trent, the midlands water utility, sent an email to fellow executives at other companies calling for them to come together in an “off-the record roundtable” to discuss the future of the industry.
Meanwhile, the boss of British Gas owner Centrica warned customers today that energy bills could stay high, with wholesale gas prices stuck above their long-term averages even after they eased back from peaks touched after Russia’s invasion of Ukraine.
He told the BBC that “the first act of the crisis was over,” but that prices where still “ more than double” where they were before the invasion.
Londoners remain caught in the cost-of-living crisis sparked by high utility bills and expect scrutiny on energy and water companies to increase, as rising interest rates not only hit corporate finances in the sector, but also the spending power of consumers in a flatlining economy.
