Delivering for customers, shareholders and the environment:
an exceptional year of achievement and challenge for Anglian Water
Strong financial performance:
- Revenue for the year of £1,248.9 million, an increase of £21.9 million (1.8 per cent) on 2016/17
- Operating profit of £348.5 million, down 4.6 per cent (reflecting an increase in operational activity and expenditure, and higher depreciation)
- Good progress on a range of operational efficiencies offsets inflationary cost increases
- Cash generated from operations £644.0 million, up 1.9 per cent on last year with strong working capital management
- Issued the UK utility sector’s first ever Sterling Green Bond.
Public interest at the heart of a sustainable business:
- Number one position in customer service league table
- Rapid progress on corporate commitments to enhance transparency
- First water company to remove Cayman company from financial structure
- Board composition changes including commitment to have a majority of Independent Non-Exec Directors, and appointment of Natalie Ceeney as a new Independent Non-Exec Director
- Lowering of debt and gearing levels, and additional investment into the business to 2025, through shareholder commitment to reducing and reinvesting dividends.
Resilient communities, today and tomorrow:
- £65m additional investment by the shareholders to improve security of supply; extra £100 million of reinvestment already previously committed between 2015 and 2020 by the shareholders
- Significant totex efficiencies delivered thanks to focus on innovation and ground-breaking approach to capital delivery alliances
- 25-year plans published for water (Water Resources Management Plan), water recycling (to be published Summer 2018) and the wider business (Strategic Direction Statement)
- Preparations and immediate response by our people underpinned minimal customer impact during cold weather
- Once again leading the industry with record low levels of leakage
- Invited to join the Leading Utilities of the World, recognised as the gold standard of utility performance.
Commenting on the Company’s financial results and operational performance for the year ended 31 March 2018, Peter Simpson, Anglian Water Group’s Chief Executive, said:
“The third year of the AMP has seen us deliver another strong set of results, while continuing to keep customers’ bills lower than they were five years ago.
“It has also been one of our most rewarding. In July 2017, we became Business in the Community’s Responsible Business of the Year, following in the footsteps of major brands such as M&S, Fujitsu, Veolia and Jaguar Land Rover. And in Spring 2018 we were inducted into the Leading Utilities of the World, an elite, invitation-only group of companies representing the gold standard in innovation and performance.
“Alongside this success we welcomed increased scrutiny of the industry, as we believe public interest is already at the heart of everything we do. That is why we were the first water company to announce far reaching Board and shareholder commitments (see below) that will enhance transparency and increase investment. This builds on the delivery of the biggest reduction in average bills at the last price review in 2015, at twice the industry average.
“We already hold ourselves to the highest standards of accountability and transparency, but the speed at which we have been able to deliver these commitments, and the scale of our additional investment in the future, is the hallmark of this responsible business.
“This year has also proven to be highly changeable, with operational challenges driven by the exceptionally dry second half of 2017, which continued throughout winter. This was followed by widespread freezing temperatures in early 2018 as the ‘Beast from the East’ hit this region especially hard.
“Through long term preparation and a rapid response by our staff, regional customer impact was almost nonexistent, leading to Anglian Water being singled out for praise by the Water Minister, Therese Coffey MP. Leakage and interruption to supply performance has also remained unaffected, despite the significant challenges. Diligent preparation, significant past investment and the commitment of our employees made this possible.
“Our commitment to service has been recognised as we achieved the number one spot for customer service in 2017/18, based on Ofwat’s Service Incentive Mechanism. This is an exceptional achievement in an area where customer expectation continues to advance, as does the frontier in sector performance.
“Our commitment to delivering what customers tell us matters most to them has seen us go far beyond our leakage targets, setting new industry benchmarks that are unparalleled in the UK.
“Our track record on leakage is one of the primary reasons Anglian Water has been inducted into the Leading Utilities of the World at the Global Water Summit in Paris. Just 28 companies are members, and we are the only water company in England and Wales to have been invited to join.
“As we prepare to submit our business plan for 2020-2025, we have dug deeper than ever into the thoughts, views and priorities of our customers. Hundreds of thousands of customers have helped ensure our plan reflects their priorities. Our PR19 commitments will be very well matched to what customers tell us matters to them.
“This has never been more important as we seek to balance the ongoing challenges of affordability and vulnerability with the need to invest for a resilient future.
“We are operating in challenging times for both the sector and society. However, we are taking all appropriate steps to ready the business for a tough price determination, ensuring we deliver for customers, shareholders and the environment.
“In the face of these challenges we should not overlook the tremendous success of 2017/18. We have become Business in the Community’s Responsible Business of the Year, issued the first ever public utility sector Green Bond, spoke to hundreds of thousands of customers to focus their priorities in our plans for the business, topped the customer service league table, substantially improved on our ambitious leakage targets, and joined the Leading Utilities of the World, all while meeting the needs of the more than six million customers that it is our privilege to serve.”
An update on Anglian Water’s commitments to improve transparency and simplify reporting:
Anglian Water has become the first UK water company to complete the removal of its UK tax-resident Cayman Islands company from its financial structure.
The removal of the Cayman company is one of a range of commitments made by the company earlier this year, designed to enhance transparency, trust and customer confidence.
The company has also repaid a large inter-company loan to simplify the presentation of accounts and allow for greater clarity of financial reporting, in particular around actual dividends paid to shareholders.
The company is reporting how it has:
Enhanced transparency and clarity of its financial structures
- Its Cayman Islands company has been removed from its financial structure.
- It has removed an inter-company loan, with no cash leaving the company, and thereby simplifying the presentation of its accounts
Placed public interest at the heart of its business
- Anglian Water is already engaged in work with Ofwat on proposals on a common principles-based licence for companies to continue to put customers at the heart of everything they do, ensuring they act in the public interest.
- It is changing the composition of the Anglian Water Services Board so that Independent Non-Executive Directors are in the majority, and not just the largest group.
- A new Independent Non-Executive Director, Natalie Ceeney, has already been appointed.
Made an additional investment commitment to 2020
- An extra £65m of additional investment will be made in resilience, a significant proportion of which will be invested to improve the security of supply in south Lincolnshire by 2020 – a scheme not included in the company’s original plan. Work is already underway.
- This improves the region’s ability to deal with drought and flooding and will be paid for by the shareholders through a reduction in dividends.
Committed to reduce dividends and borrowings through to 2025
- Anglian Water will substantially reduce dividends through to 2025, resulting in a significant reduction in the company’s level of debt and gearing.
The measures build on the £5billion the company has already pledged to invest between 2015 and 2020 to support sustainable growth across the east of England – the region with the fastest population growth outside London, and the lowest rainfall in the UK. They are designed to underpin the company’s reputation as a sustainable and responsible business, as it prepares to submit its business plan to the Regulator for 2020-2025 later this year.
For the full report, visit: http://www.anglianwater.co.uk/about-us/annual-reports/