Anglian Water is on track for completion of largest ever programme of capital investment in 2021/22, according to its half-yearly results for the six months ended 30 September 2021.

During the period the company completed its financial restructuring which saw £1,165 million invested in the business net of its March 2021 final dividend of £96.3m. Shareholders made a net capital injection of £1,068.7 million into Anglian Water, reducing gearing to 68 per cent (31 March 2021: 82 per cent).

The company was rated by Ofwat as ‘sector-leading’ in the regulator’s recently published 2020/21 Service and Delivery Report; Anglian secured top three status on Outcome Delivery Incentive (ODI) performance rewards in water and water recycling in 2020/21 and is on track for net reward in 2021/22 based on delivery of customer outcomes

Operating profit increased to £8.9 million (4.3 per cent) as a result of strong EBITDA, offset in part by higher depreciation. EBITDA was up £13.2 million (3.5 per cent) with revenue up as a result of higher developer activity following last year’s lockdowns. In addition, while household revenue is down on last year it is still higher than pre-Covid-19 levels, while the opposite is true for non-household revenue.

Revenue movements have been offset in part by the impact of inflation on costs, increased power consumption at our water recycling sites and tankering due to winter 2020 wet weather and our work to drive leakage reduction performance

Adjusted Profit Before Tax was down £64.7 million (75.9 per cent), primarily driven through higher interest costs on inflation-linked debt due to higher inflation year on year. Statutory loss after tax has increased by £382.2 million, primarily due to the tax charge in the period and higher interest due to higher inflation.

Peter Simpson: "results demonstrate again that Anglian Water is a business with solid finances"

Commenting on Anglian Water’s results for the half year to 30 September 2021, Chief Executive Peter Simpson said:

“These results demonstrate again that Anglian Water is a business with solid finances, which is delivering for customers, communities and the environment in the East of England.

“We are providing long-term solutions to the impact of climate change, population growth and the need to protect and enhance the environment. We’re particularly proud to have led the UK water sector’s presence at COP26, championing effective climate adaptation as co-lead of the Water theme in the first ever COP Resilience Hub and sharing best practice through our industry-leading 2030 net zero route map.

“As we look forward to the second half of the year, we continue with our largest ever capital investment programme with its strong focus on environmental programmes. We remain confident of being able to deliver again successfully for all our stakeholders.”

Anglian Water’s capital investment programme for 2021/22 – its biggest ever for a single year – is underway and on track for completion by year end. Total capital investment in the region for the first half of the year was £230 million.

Programme highlights for the full year include:

£59 million for the Strategic Pipeline Alliance, the biggest water infrastructure project for a generation. The ambitious project will see it install up to 500km of large diameter pipeline by 2025 to enable water to be moved around the water-scarce region, from areas where supplies are more abundant to areas with a shortfall. The first 8.5km of pipeline will be complete by mid-December, with a total of 14km complete by the end of March 2022. The entire scheme is supported by a digital twin which will mirror the physical infrastructure, giving Anglian real-time data to monitor the network and insights that will help us optimise the delivery of service to customers.

£30 million on the roll out of smart water meters across the region helping reduce demand for water by giving customers access to daily updates on their usage and enabling us to pinpoint and address leaks. Anglian had installed a total of 240,672 meters (as at end September 2021), taking the total of reporting smart meters to 261,000 (with c.20,000 meters having been installed in early trials in AMP6). The company said that despite current supply chain issues, it is on track to deliver 1.1 million meters by 2025 as the programme ramps up post-lockdown.

£19 million to drive down leakage using the latest innovative techniques including using satellite imagery and fibre-optic technology to find and fix leaks. The utility has created 200 additional leakage roles since the start of the year and are on track to meet its stretching performance commitment at year end.

On track for net outcome delivery incentive (ODI) rewards. Ofwat’s assessment of 2020/21 outcomes in its Service and Delivery Report places Anglian in the top two performers among water and water recycling companies. A strong performance in the first half of 2021/22 on areas including customer service, flooding and environmental investments through the Water Industry National Environment Programme, indicates a net reward position at year end

Cambridge Waste Water Treatment Plant relocation phase 2 consultation complete. Plans are ongoing for the proposed relocation of Cambridge’s Waste Water Treatment Plant. The water company has consulted residents and stakeholders and environmental surveys are underway ahead of phase 3 consultation beginning in February 2022.

Progression of new reservoirs proposed for the East of England. Anglian has secured Gateway funding through RAPID (the Regulators’ Alliance for Progressing Infrastructure Delivery) to progress ambitious plans for the proposed South Lincolnshire Reservoir and Fens Reservoir, addressing long-term water resilience for the region’s growing population. The two new multi-sector reservoirs are set to supply 250 million litres of water a day by the mid to late 2030s, serving at least 750,000 people and meeting the needs of homes, businesses and agriculture.

Supporting customers in vulnerable circumstances. Providing targeted support to a record number of customers (237,000) through the Priority Services Register.

Safeguarding and enhancing the environment

Water recycling compliance. Anglian is confident proactive investigations in AMP6 have ensured sufficient investment where necessary for AMP7. Investment will continue into AMP8, guided by the company’s Strategic Direction Statement (published in 2017) that identified working with others to achieve significant improvement in ecological quality across its catchments as one of four long-term ambitions.

Investment in environmental programmes. Anglian has already accelerated the £800 million of AMP7 Water Industry National Environment Programme (WINEP) investment planned, such that the majority of the schemes will be completed earlier than scheduled. This is the largest WINEP of any water company for 2020–2025. £300 million of investment has been fast-tracked through the government’s Green Recovery plan, with no additional cost to customers.

In 2021/22 alone the water company is investing £133 million to protect and enhance the natural environment by removing chemicals such as phosphates and ammonia from used water, and restoring rivers.

Commitment to increased monitoring of combined sewer overflows (CSOs). Anglian said it is continuing to invest in infrastructure and will increase the rate of installation of Event Duration Monitors (EDMs) to achieve 100 per cent coverage of CSOs by December 2023. This investment builds on the recent hydraulic modelling risk assessment for all CSOs and the installation of 794 EDMs to date.

Tackling pollution. A continuous programme of investment and strategic delivery has seen the number of category 1-3 pollutions in the region reduced by more than half in 10 years, with the ongoing Pollution Incident Reduction Plan supporting this downward trajectory. However, performance this calendar year has been impacted by exceptional rainfall and subsequent flooding in the first three months of 2021. Pollutions remain a very significant area of focus for Anglian.

Catchment management. The company’s successful metaldehyde reduction campaign Slug it Out will come to a close in March 2022 after seven years when the ban on the pesticide comes into force. By working with more than 225 farmers, the catchment management team have eliminated the operational risk posed by metaldehyde in the natural catchments of every Anglian Water reservoir.

Biodiversity and habitat restoration. 99 per cent of the sites of special scientific interest managed by Anglian Water are in favourable condition (compared with a national average of 38.9 per cent).

Pushing boundaries on innovation

Anglian secured more than £11 million of innovation funding through Ofwat’s Water Breakthrough Challenge in September, with two winning bids, securing close to a third of the total amount awarded (£36 million).

The Safe Smart Systems project, awarded £7.5 million, is focused on achieving autonomous control in water systems across the UK. Triple Carbon Reduction (awarded £3.8 million), will use novel technologies to target a step change reduction in greenhouse gas emissions and electricity use in used water treatment and provide a new renewable energy source through green hydrogen production.

CReDo Climate Resilience Demonstrator launched. A ground-breaking resilience initiative with the National Digital Twin Programme and the Centre for Digital Built Britain, with funding from the Department for Business, Energy and Industrial Strategy. The digital twin project involves unprecedented collaboration between Anglian Water, telecoms provider BT and energy company UK Power Networks, sharing data to identify interdependencies in the event of severe weather scenarios.

Ground-breaking leakage technology deployed. Anglian is the first water company in the UK to deploy leakage technology in live water mains, enabling it to identify leaks without interrupting customers’ supply. The technology uses multi-sensor, low voltage conductivity and acoustic technology, as well as high-resolution closed-circuit television (CCTV), to listen for and find leaks from inside the water pipes.

Click here to download the interim report