Thames Water warns of a funding gap, but profits are on stream despite slump
UTILITY Thames Water said yesterday it was facing a potential gap in funding as the downturn threw up a series of “significant challenges” for the industry.
Soaring bad debt and the increasing cost of financing “will make it more difficult to fund the essential investment in the network that is required,” it said yesterday, as it put out its interim results.
Thames, the biggest water group in the UK, had been planning on putting £5.5bn into the water network between 2010 and 2015. It had intended to fund the move with a 17 per cent rise in bills before inflation, but the plans were scuppered by industry regulator Ofwat’s ruling last week, which said it could only increase bills by three per cent.
The company’s pre-tax profits grew by 15 per cent to £225.5m in the six months to September, despite the downturn, while revenues went up by four per cent to £805.6m on the back of price hikes.
Thames said it had met its leakage targets for the third year in a row, in spite of a severe winter, which caused a big hike in the number of burst pipes.
The group’s chief executive David Owens also said he was stepping down, “having reached the important milestone of receiving Ofwat’s Final Determination” price setting.
Owens has been in the position since December 2006.