Thames Water sees sewage spills spike

(Sharecast News) - Crisis-hit Thames Water reported a spike in sewage spills and higher debts on Tuesday, but insisted it was moving closer to being on a more stable financial footing. Posting results for the six months to 30 September, Thames Water - which supplies 16m customers across London and the home counties - said record rainfall was responsible for the jump in category one to three pollutions, to 359 from 257.

Spills surged to 17,564 between January and September, compared to 12,428 a year previously. Leaks, however, were down, by 4%.

Thames Water also confirmed that statutory net debt now stands at £16bn, up 7% year-on-year.

But chief executive Chris Weston insisted the ailing utility was making "solid progress".

In particular, he said the business had hit "key milestones in establishing a more stable financial platform", including securing a £3bn lifeline from creditors. The loan, which was agreed last month, is expected to be approved by the courts next week.

The firm is also seeking another £3bn of equity from investors and wants to significantly hike customer bills.

Ofwat is currently deciding by how much. Thames Water is seeking a jump of well over 50%, but the regulator is not in favour.

Thames Water said Ofwat's decision - due in the coming weeks - was "fundamental" to its future, allowing it to "significantly" increase infrastructure investment.

Thames Water's performance record has long been dire, including multiple leaks and sewage discharges.

It has also faced stinging criticism for paying high dividends and building up massive debts while failing to invest in its aging infrastructure.

The current crisis started in March, when its owners - pension funds Omers and USS, as well as a number of sovereign wealth funds - refused to put extra equity into the struggling business, calling it "uninvestable".

Interim revenues rose 10% to £1.3bn, on the back of higher charges for water and sewage services. Underlying earnings before interest, tax, depreciation and amortisation rose 14% to £715m.

Weston said: "We have continued to improve operational and underlying financial performance, with leakage at an all-time low and investment remaining at high levels.

"The next critical step is receiving an investable final determination, which is fundamental to our future."