Thames Water trickles to a loss on financing costs
Thames Water said today it had swung to a loss in the first-half of the year, blaming increased financing costs.
The company announced a loss before tax of £23.2m for the six months ended 30 September, which it said was driven by a “revaluation of hedging instruments to current market prices”.
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Revenue grew to £1.1bn from £1bn at the same time last year.
Operating profit increased to £332m from £248m in September 2018.
The company booked net financing expenses of £194m and losses on financial instruments of £161m.
It paid a £28m dividend to its parent company which it said was to service third party debt obligations.
Thames Water did not pay a dividend to external shareholders which it said was part of a commitment not to pay dividends to external shareholders for the three years to 2019-20.
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Interim executive chairman Ian Marchant said: “As we near the end of a challenging price review process, our long-term investors continue to support the prioritisation of historically high investment levels over the taking of dividends.
“We remain resolutely focused on maximising the benefit of every pound to create value for our customers, communities and the natural environment, amid the challenges of climate change and population growth.”
An initial review by regulator Ofwat earlier this year slammed Thames Water’s five-year plan, saying it fell “significantly short” of the regulator’s view of cost-efficiency.
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Ofwat is due to publish its final ruling on the 2020-25 business plans of water suppliers in December.
Earlier this year Thames Water announced plans to invest £1bn over six year in new technology for its water and waste operations in a bid to boost efficiency by 20 per cent.
The move comes after the company was hit with a £65m fine by Ofwat last year after an investigation found the firm had failed to adequately control leaks.
Thames Water has been looking for a new chief executive since May, when it ousted Steve Robertson after less than three years in the job.
Earlier this month Sky News tipped Basil Scarsella, the chief executive of electricity distributor UK Power Networks, as the frontrunner for the job.
The Labour Party has promised to nationalise the UK water industry if it wins power in next month’s General Election.