Anglian Water hails strong and "rewarding" year as mission to improve transparency continues
PUBLISHED: 12:31 06 June 2018 | UPDATED: 14:26 06 June 2018
The East of England's biggest water company has reported a strong financial performance in preliminary results despite "operational challenges".
Anglian Water says revenue for the year ending March 31 2018 was up 1.8% to £1.25bn. Operating profit was down 4.6% to £384.5m, but the group attributed this to an “increase in operational activity and expenditure”.
Its annual report celebrated efforts made to improve transparency and trust, such as becoming the first water company to offload its subsidiary in the Cayman Islands from its financial structure and changing its board structure to having a majority of independent non-executive directors.
But the group has warned that regulatory changes could see customers’ bills increase in the coming years.
Peter Simpson, chief executive of Anglian Water, said the year had been both successful and “rewarding”, following its induction into the invitation-only Leading Utilities of the World group.
But he said the company had also “welcomed increased scrutiny” of the water industry, which was opened up to the retail market in England in 2017.
“The third year of the AMP (asset management plan) has seen us deliver another strong set of results, while continuing to keep customers’ bills lower than they were five years ago,” he said.
“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.”
Looking forward to its next five-year plan, covering 2020 to 2025, Mr Simpson said he felt the company’s commitments would be “very well matched” to customer priorities, following extensive consultation.
“This has never been more important as we week to balance the ongoing challenges of affordability and vulnerability with the need to invest for a resilient future,” he said.
The roll-out of a smart water meter network in Norwich and the construction of a £44m strategic pipeline are already under way, with further investments planned for Norfolk and Suffolk including more than £10m to reduce flood risk and funds to address groundwater pollution from agricultural activities.
Mr Simpson was involved in a debacle over his pay this week after the GMB union took umbrage at his £1.5bn pay packet for 2017.
The company is planning to “substantially reduce” dividends as it looks to diminish its debt and keep customer price rises at bay.
What will happen to bills?
Anglian Water’s next five-year plan, covering 2020 to 2025, includes ambitious targets for leakage reduction and extra funding for environmental programmes.
But while some funding will be recouped from dividends, the plans could come at an extra cost to consumers.
Chief executive Peter Simpson said the government’s recent introduction of an industry requirement for much greater investment in natural environment programmes had reduced the company’s “manoeuvrability” on investment levels and customer bills.
“Where previously we were aiming to reduce bills, in order to support the government’s plans and meet these legal obligations we must now explore increasing average bills to allow for this investment,” he said.
According to consultation documents from Anglian Water, average household bills could go up by as much as £21 a year, depending on the scale and timing of activities.