Anglian Water has announced its biggest ever single year of capital expenditure with the investment £577.7 million in the second year of AMP7 with the publication of its annual results for the full year to 31 March 2022.

Programme highlights for the full year include:

• £109 million of investment in river water quality
• £68.1 million of investments in abstraction reduction and climate resilience
• £63.5 million of investments to address population growth
• Overall, £269.3 million investment in capital maintenance and £308.4 million in capital enhancement

The water company’s largest ever single year programme of capital investment was completed on schedule. Anglian invested £577.7 million in the East of England in 2021/22 (31 March 2021: £447.0 million), including £109 million in abstraction reduction to protect chalk streams and rivers, £68.1 million for climate resilience schemes and £63.1 million to address population growth.

An accelerated £800 million environmental programme was delivered well ahead of schedule, with a cumulative total of 1,184 schemes delivered since 2020, including investment in storm tanks, event duration monitors and bathing water quality.

As part of the programme the water company is today separately announcing the UK’s largest ever programme of new wetlands. More than 25 new natural treatment wetlands modelled on award-winning the Ingoldisthorpe blueprint will curb the impact of phosphates and nitrates and further improve biodiversity across the region; the creation of the first three planned to begin early 2023.

Anglian Water provided £32 million of tailored support in 2021/22 to customers facing affordability challenges - 324,750 people were supported during the year and an unprecedented £65 million package of support has been set aside for customers in 2022/23 as the cost of living crisis bites. water poverty.

Operational performance

Commenting on operational performance, Anglian Water has either met or surpassed its regulatory targets across key measures including leakage, Water Industry National Environment Programme (WINEP) delivery, risk of severe restrictions in a drought, abstraction, mains repairs, properties at risk of low pressure, operational and capital carbon reduction, support for customers in vulnerable circumstances and management of void properties.

Operational performance highlights include:

• World-class levels of leakage reduction delivered, surpassing the utility's most stretching target ever, achieving a 6.1 per cent reduction in leakage against performance which was already best-in-class.
• On track to deliver smart meter rollout: 310,321 smart meters installed towards 2025 target of 1.1 million meters, despite supply chain challenges causing temporary pause in programme
• Rated ‘sector-leading’ in Ofwat Service Delivery Report in November 2021; regulator called out emerging evidence of cost efficiency
• First sections of pipeline complete in Anglian Water’s biggest ever infrastructure programme: creating hundreds of kilometres of large-diameter pipelines to enable water to be moved from areas where supplies are more abundant to areas which already face a shortfall
• On track to deliver 2030 net zero carbon goal following publication of detailed routemap in July 2021 and ahead-of-target reductions in operational and capital carbon; company named by Financial Times/Statista as a 2022 European Climate Leader and rated in top 5.5% of companies globally for its response to climate change by CDP.
• Ahead of regulatory target on abstraction reduction (376 million litres vs 87 million litre target) following £68.1 million of capital investments in 2021/22,
• Seven successful applications to Defra’s £150 million Flood and Coastal Resilience Innovation Programme plus £1.7 million invested in flood alleviation and SuDS retrofit schemes with partners across the region.

However, the company has reported a challenging year for performance against some regulatory commitments resulting in a net ODI penalty.

Although the majority are either on track or ahead of target, including environmental programme delivery, leakage and mains repairs, some targets were not met for some key measures including pollutions, flooding and mains bursts, leading to an overall forecast net penalty for 2021/22 of circa £8 million.

Despite this, Anglian Water remains in a net positive position across the AMP to date and anticipates returning to net reward in 2022/23.

With regard to the industry-wide investigations launched by Ofwat and the Environment Agency in 2021 into compliance with conditions of environmental permits, the water company said that while the final outcome of the investigations isn’t yet known, it had provided comprehensive information to both regulators and continues to engage positively with them.

Financial highlights - gearing down from 82% to 65% 

Financial highlights during the year included the completion of the company’s financial restructuring shareholder injection of more than £1 billion into Anglian Water, reducing gearing to 65 per cent (31 March 2021: 82 per cent).

The net capital injection of £1,068.7 million from shareholders reflected the completion of the restructure which saw £1,165 million invested in the business net of March 2021 final dividend of £96.3 million.

Revenue was up £48.0 million (3.6 per cent) as a result of higher developer activity following last year’s lockdowns. Income has been ring-fenced to fund the company’s LITE tariff, which has supported customers through Covid-19 and is being retained to provide additional support through the cost of living crisis.

However, while revenue movements in combination with strong cash collection and the release of some of the Covid-19 provision, reduced bad debt charge, these have been offset in part by the impact of inflation on costs, tankering due to winter 2020/21 wet weather and work to drive leakage reduction performance. Anglian has also changed the way in which it delivers boundary box and external meter chamber replacement, result of the change in delivery, the costs are now being treated as capital expenditure rather than operational.

Adjusted loss before tax of £17.5 million was down from profit of £138.7 million (112.6 per cent), primarily driven through higher interest costs on inflation-linked debt due to higher inflation year on year.

This June the company will return to paying a dividend to the shareholders of Anglian Water Group for the first time since 2017.

“Over that period they have reinvested returns, stood by us when times were tough, and wholeheartedly endorsed the changes we made to enshrine environmental and social purpose. We are pleased now to be in a position to repay their faith in us by sharing our financial returns with them” the results state.

Upcoming work in the third year of AMP7 will see Anglian Water leading five projects and partnering on 11 more under Ofwat’s £17.3 million Innovation Fund – the company was awarded 25 per cent of the total pot, the most awarded to any water company,

Anglian has also secured Gateway funding through RAPID (the Regulators’ Alliance for Progressing Infrastructure Delivery) to progress ambitious plans for two new multi-sector reservoirs to supply 250 million litres of water a day by the mid to late 2030s.

Planning for a new operationally net zero water recycling centre for Cambridge is continuing with a third phase of community consultation completed in April 2022. Relocation from the existing site will free up space for 5,600 new homes - the new centre is scheduled to open 2028 pending planning consent.

Peter Simpson – “amid the successes, it’s been a year of very real challenges .. decisive steps to correct our course”

Commenting on Anglian Water’s results for the full year to 31 March 2022, Chief Executive Peter Simpson said:

“These results demonstrate a company committed to delivering in the public interest, driving long-term environmental prosperity and rooted in the communities we serve.

“We’ve seen success in many key areas – delivering Anglian Water’s best-ever performance on our world-class leakage reduction programme, accelerating our £800 million environmental programme right across our region by delivering a cumulative 1,184 schemes since 2020, surpassing our carbon targets and providing £32 million of targeted affordability support for customers facing the cost of living crisis. With almost 325,000 customers helped this year alone, we’ve ringfenced £65 million for 2022/23 and a total of £232 million of affordability support for 2020-2025.

“In our biggest ever single year of capital expenditure, we’ve invested £577.7 million into programmes that will increase our resilience to drought and flood, and support growth, while safeguarding and enhancing the environment. The schemes we are delivering, including the most ambitious smart metering programme in the industry, the creation of a cutting-edge smart water network, and a multitude of abstraction reduction programmes, have enabled us to make sector-leading reductions in the amount of water we take from the environment, protecting precious chalk streams and rivers.

“As part of that investment, we are well underway with delivery of our ground-breaking strategic pipeline - our biggest ever infrastructure programme – to move water around our region to where it’s needed most.

“Amid the successes, it’s been a year of very real challenges. Some of these were universal, including supply chain issues and the ongoing pandemic, but the most notable for us were the knock-on impacts of prolonged flooding in the East of England over the first three months of 2021. Prioritising our customers’ vital services and redeploying resources during that period held back some elements of operational performance in the year that followed. We’ve taken decisive steps to correct our course, which are already delivering positive results.

“As we head into the third year of AMP7 (2020-2025) I remain confident that our long-term trajectory is a positive one.”