Affinity Water has achieved its stretching regulatory leakage target, reducing leakage by 7.9 megalitres per day during the second year of its AMP6 2015-2020 investment programme, according to its Annual Report and Financial Statements for the year ended 31 March 2017.

Revenue for 2016/17 was £308.7 million, a £6.1m (2.0%) increase on £302.6m in 2016:) – the rise was primarily due to inflationary price adjustments allowed by Ofwat, Profit before tax fell from £46 million in 2016 to £27 million.

There has been no change in the company’s dividend policy during the year, although year on year dividends increased by £10.5 million - attributed to a £2.0 million net premium from a bond exchange in August 2017, and £8.5 million directly from initial anticipated proceeds from the disposal of the company’s non-household retail business to Affinity for Business (Retail) Ltd.

During the year the utility installed 20,000 acoustic data loggers to help detect leaks on its network, which will be key in delivering the 14% leakage reduction in its current AMP6 Business Plan. Affinity has also been trialling satellite technologies to help find leaks.

Affinity’s Water Saving Programme for AMP6 had installed 85,000 water meters as at the end of March 2017, putting the company over a quarter of the way through its programme and a commitment to install 280,000 meters in its supply area by 2020.

The report says Affinity encountered an unusually high number of reservoir failures during the year. Although these were only out for a short period of time, as a result the firm had to import more water from Grafham, a reservoir outside its supply area, to make up for the outages.

Investment in production maintenance and pumps is continuing in line with expectations - however plans for a new metaldehyde treatment facility at North Mimms have been delayed while the results from a trial at Iver water treatment works are analysed.

Other operational highlights flagged up in the report include:

• Achieving stretching regulatory leakage target, reducing leakage by 7.9 megalitres per day
• Continued to provide high quality water for 2016, mean zonal compliance of 99.96%
• Completed mains flushing programme, one of the largest of its kind to be undertaken within the UK, with 958kms of mains pipework covered between October 2015 and March 2017
• Reduced the amount of water taken from the environment (abstraction) by 12.5 megalitres per day
• Significantly increased the number of meter installations and free Home Water Efficiency Checks during 2016/17 as part of the company’s Water Saving Programme
• Increased the number of lead pipes replaced and commenced a lead replacement programme in schools.

Customer complaints decrease by 23% compared to 2015/16

On customer service, the report says by continually increasing its focus on customers Affinity has been able to deliver improvements using social media channels in the following areas:

• customer satisfaction data gathered immediately rather than 24 hours later - response rates have increased significantly.
• increased its proactive focus with outbound SMS texts to keep customers informed of activity and works underway;
• the self-service section on the website is now optimised for mobile devices and tablets;
• social media activity continues to grow, with a positive trend seen in sentiment measures. Affinity will continue to grow non-telephony channels through 2017/18; and
• complaints have decreased by 23% compared to 2015/16.

In the retail market sector, the water company’s non-household operating unit was rebranded as Affinity for Business during the year and became a separate legal entity on 1 April 2017. From the company’s perspective, the new market is operating smoothly, with “only the minor issues that can be expected with new systems arising.“

Commenting on the results, Chief Executive Officer, Simon Cocks, said:

“It has been a year of continued progress at Affinity Water and I’m pleased to report that we have made significant headway towards our aim of delivering a strong and sustainable business for the customers we serve, the environment and our investors.”

 “We are committed to improving how we work, delivering a great service for our customers and our commitments are reflected in our financial and operational performance. We have strengthened our teams and invested in our assets for the benefit of our customers and communities. During the year we incurred additional costs preparing for the non-household retail market opening and on financing activities, designed to further strengthen our financial resilience and reduce long term costs of financing the business.”

In May last year investors Infracapital and Morgan Stanley Infrastructure sold their 100% interest in Affinity Water Acquisitions (Investments) Ltd, which indirectly owns 90% of Affinity Water,  to a consortium comprising Allianz Capital Partners on behalf of the Allianz Group, HICL Infrastructure Company Ltd and DIF, an independent and specialist fund management company.

As part of the transaction, the buyers also acquired Veolia Water UK Ltd’s 10% stake in Affinity Water.