Thames Water misses leak targets as profits plummet 86% in challenging year
Thames Water's profits have crashed 86% after a year of "challenges" which saw it miss leak targets for the first time in 11 years and face a record fine for sewage pollution.
Britain's biggest water company saw pre-tax profits slump to £71.1 million for the year to March 31 from £511.2 million the previous year as it was hit by higher costs and losses on the value of its own debt.
On an underlying basis, operating profits also fell sharply - down 18% to £605 million.
Thames Water said it missed its target for cutting leaks by 47 million litres a day after a series of high-profile burst water pipes in London last year.
The group was also hit with a record £20 million fine in March for allowing 1.4 billion litres of raw sewage into the River Thames between 2012 to 2014.
Its annual report revealed that recently hired chief executive Steve Robertson picked up a £54,000 annual bonus in spite of the gloomy set of results.
But Thames Water said the potential bonus was trimmed as a result of the firm's performance.
His total pay stood at £460,000, including the bonus and a pro-rated £550,000 annual salary after taking on the top job in September last year.
Thames Water revealed that it caused 315 pollution incidents in 2016 - higher than last year, but below its 340 target.
The group added that it received an £8.6 million regulatory penalty for missed leak targets.
Mr Robertson said: "We fully accept our responsibility for our legacy issues and our focus now is to ensure resilience in our provision of essential services and delivering maximum value for our customers."
"Although we faced challenges during the year, the underlying performance of the business last year was sound," he added.
Australian group Macquarie sold its last remaining stake in Thames Water earlier this year , ending more than a decade of investment in the utility giant.
Macquarie offloaded its 26% shareholding to the Canadian pension fund investor Borealis Infrastructure and the infrastructure investing arm of the Kuwait Investment Authority.
Regulator Ofwat said the £8.6 million fine slapped on Thames Water for missing leak targets was the maximum allowed and "cannot be passed on to customers".
Cathryn Ross, chief executive of Ofwat, said: " The failure by Thames Water to meet the leakage commitments it has made to its customers is unacceptable.
"Our performance commitment regime imposes significant penalties for failure to deliver the levels of performance that customers have paid for and consequently, Thames Water will now face the maximum penalty."