Thames Water half-year profit leaps to nearly £400m after it raises bills by third | Thames Water

Thames Water has reported a £386 million jump in half-year profits after bills rose by almost a third, although it warned it faces huge funding uncertainties that could result from a sharp decline in government control.

Britain’s biggest water company said on Wednesday it had swung into profit in the six months to September after suffering a loss of £230 million in the same period in 2024.

Revenue rose 40% to almost £2 billion in April after the company was allowed to increase customer bills by 31%.

Yet despite reporting a jump in profits, the company warned that there is “material uncertainty that could give rise to significant doubt” over its going concern status.

A fall under government control under a special administration arrangement (SAR) – a form of temporary nationalization – “could occur in the very near term” if it is unable to agree terms for a formal takeover by its controlling lenders.

Thames Water has been on the brink of collapse for more than a year as it grapples with a £17 billion net debt burden built up decades after privatisation.

The supplier, which serves 16 million customers in south-east England, has been troubled by poor environmental performance, with sewage leaks sparking public and political outrage and adding up to huge costs in the form of fines.

The company made a loss before tax of £1.6bn in the year to March due to a £1.3bn credit loss.

The utility came close to taking temporary government control earlier this year when it was forced to seek court approval for a £3 billion emergency funding plan, which also saw the value of some of its debt reduced to zero. It has since been working on a second deal to restructure its remaining debts and hand over formal ownership to its lenders.

Those bondholders are led by a group of hedge funds, including belligerent U.S. firms Elliott Investment Management and Silver Point Capital as well as more traditional investors like Aberdeen and Insight Investments. In proposals to the government, bondholders have asked for a 15-year leniency from the government to try to recover environmental fines.

However, negotiations dragged on for several months, with Thames gradually surviving by spending £3 billion of emergency funds.

The government has so far proven reluctant to provide any regulatory leniency, meaning investors will not be willing to commit. Yet ministers are desperate to avoid taking control under the SAR.