Debt-laden Thames Water has said it has enough cash to fund its operations until May next year but that efforts to raise new money are continuing.

The UK’s largest water company reported an increase in annual profits for the year to March but its debts also climbed to £15.2bn.

Thames Water, which has faced fierce criticism over the number of sewage discharges and leaks, is facing questions over whether it can survive.

Later this week, the water regulator Ofwat is due to publish its draft ruling on how much water companies can charge their customers for the next five years.

There has been speculation Thames Water might have to be taken over by the government if it runs out of money.

The company says it has funding of £1.8bn, which is enough to fund its operations until May next year.

Thames reported an increase in annual profits to £157.3m, but boss Chris Weston said the company was facing a “difficult time” with strengthening its financial position “a critical priority”.

Thames wants Ofwat to let it raise consumer bills by up to 44% between 2025 and 2030, with extra money promised for investment in environmental measures.

On Thursday, the regulator will release its initial ruling on how much water companies can raise bills. There will then be several months of negotiations before a final ruling in December.

Thames said it would be talking to potential investors and lenders following Ofwat’s draft ruling, but it added this was not expected to be concluded until after the regulator’s final decision.

An earlier plan put forward by the company was rejected by the regulator, which led to questions over the firm’s future as shareholders at Thames’ parent firm, Kemble Water, withdrew a proposed cash injection into the water company.

In March this year, Mr Weston said it was “eventually possible” that the company could be nationalised, although he said that was “quite a long way off”.

If Thames does come under government control, there is speculation it would be put into a Special Administration Regime, which would see financial consultants run the company on the government’s behalf.

A precedent for this was set in 2021 when energy company Bulb went bust and was placed under special administration.

Regardless of what happens to Thames, water suppliers to its customers will continue as normal.