Chris Weston, Chief Executive Officer of Thames Water, says the company has made good progress in operational performance, despite the ongoing challenging financial situation, with the publication today of its annual results for the financial year to 31 March 2025.

However, the directors have expressed doubt about its ability to avoid temporary nationalisation – a statement issued by the company today says:

“Directors believe there exists a material uncertainty as to whether the Group and the Company will be able to deliver a recapitalisation transaction by way of a court approved restructuring process successfully, either within the Assessment Period or at all. If it fails to do so, the Company would need to consider all options available to it at the time, but a possible consequence would be a special administration of the Company under the Water Industry Act 1991.”

Thames Water is reporting a otal loss before tax of £1.647 billion, down from a £157 million profit before tax in 2023/24 (underlying loss before tax less exceptional costs totalling £1,776 million partially offset by a £135 million profit related to billing on behalf of Bazalgette Tunnel Limited).

The exceptional costs are broken down as follows:

• £1,271 million expected credit loss provision recognised against the intercompany loan receivable from TWUL's immediate parent company Thames Water Utilities Holdings Limited. This balance is now fully provided for as it is not deemed recoverable.
• £33 million on turnaround and transformation expenditure.
• £122 million of provisions raised for fines as a result of Ofwat investigations.
• £151 million of restructuring costs.
• £198 million of consent fees related to our restructuring plan.

With the exception of turnaround expenditure, which enables more efficient and improved services for customers, Thames said the exceptional costs will not be borne by customers

A £1.271 billion expected credit loss provision has been recognised against the intercompany loan receivable from Thames Water’s immediate parent company Thames Water Utilities Holdings Limited. The balance is now fully provided for as it is not deemed recoverable.

Separately, the company is reporting record capital investment of £2.225 billion. Underlying revenue increased by more than 8% to £2.60 billion and Underlying EBITDA increased by over 10% to £1.335 billion.

Commenting on the results, Chris Weston said:

"Thames Water has made good progress in operational performance, despite the ongoing challenging financial situation.

"The new organisation structure, focused on our infrastructure, brings clearer accountability and has helped our transformation continue to gain momentum. As a result, we have made sustained progress overall against our six critical operational priorities in 2024/25. However, that progress is not demonstrated in our disappointing pollutions outturn. We also delivered best in-AMP performance for seven of Ofwat's 12 key 'Water Company Performance Report' measures.

"Pollutions were adversely impacted by rainfall and high groundwater levels, but we have made progress in terms of addressing many of the underlying causes of our poor performance, including being more proactive in sewer cleaning. While it is disappointing this work was not reflected in performance improvement in the year, we are confident that it will translate into future environmental performance.

"Whilst the external environment is challenging for our colleagues, pleasingly colleague engagement improved, and I am grateful for their continued hard work and support.

"We invested a record £8.5 billion in infrastructure between 2020 and 2025. We enter the new regulatory period of 2025-2030 in a better place than we entered the 2020-25 period with leakage at its lowest ever level, down by 13.2% since 2020. A defining moment last year was the connection of the £4.5 billion Thames Tideway Tunnel to our London network supporting the reduction in sewage entering the tidal River Thames by 95%.

"We recognise that our current gearing is too high and, 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. 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."

Thsmes Water’s equity raise process is currently continuing. The directors have reiterated their view that Ofwat’s AMP8 Final Determination allowance of £20.5 billion does not “appropriately support the investment required nor the turnaround of the company.”