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WESSEXWATERSERVICESFINANCEPLC

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AnnualReportandFinancialStatements

30June2022

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RegisteredinEnglandandWalesNo.03704265

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1

CONTENTS

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Page

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STRATEGICREPORT 2

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

DIRECTORS’REPORT 3

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STATEMENTOFDIRECTORS’RESPONSIBILITIESINRESPECTOFTHEFINANCIALSTATEMENTS 4



INDEPENDENTAUDITOR’SREPORTTOTHEMEMBERSOFWESSEXWATERSERVICES

FINANCEPLC

5

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INCOMESTATEMENTANDSTATEMENTOFOTHERCOMPREHENSIVEINCOME 12

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STATEMENTOFFINANCIALPOSITION 13

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STATEMENTOFCHANGESINEQUITY 14

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STATEMENTOFCASHFLOWS 15

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NOTESTOTHEFINANCIALSTATEMENTS 16

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2

STRATEGICREPORT

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Principalactivities

ThesoleactivityoftheCompanyistheraisingoflisteddebt,theproceedsofwhicharelenttotheimmediateparent

companyWessexWaterServicesLtd(WWSL).

ThebondsareadmittedtotheOfficialListoftheUKListingAuthorityandtotheLondonStockExchangeplc.

ThebondproceedsarelenttoWWSLonthesametermsasthebondsthemselves.WWSLguaranteesthebonds,hence

protectingtheCompanyfromanyrisk.

Themarketandfairvaluesofthebondsaredisclosedinnote10,alongwithadescriptionoftherisksassociatedwiththe

financialinstruments.



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Profitanddividend

Therewasnoprofitintheyear(2021‐£nil).

TheDirectorsdidnotrecommendthepaymentofadividendineitheryear.



Reviewofactivities

TheonlyactivityoftheCompanyistoissuelisteddebtonbehalfoftheparentcompanyWWSL.

Duringtheyear

thecompanyrepaida£300mfixedratebondatarateof4%withmaturityinSeptember2021.

TherearenoemployeesandnoexpensesapartfromfinancecostsincurredbytheCompany.

Note10(c)explainsthestrengthofWWSLintermsofitsLicencetooperate.Italsoexplainshow

therisksontheBonds

aremitigated.WWSLguaranteesthebonds,henceprotectingtheCompanyfromanyrisk.

TheDirectorsconcludethattheCompanydoesnotrunanymajorrisksandareconfidentaboutthefutureviabilityofthe

Company.

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Principalrisksanduncertainties

The Directors have identified the potential

 physical and transitional risks and opportunities presented by rising

temperaturesandclimatechangeforthebusinessandhavealsoconsideredthescaleofthisrisktotheCompany.Climate

changeisnotaprincipalriskforthisCompanyfortheyearended30June2022,butclimatetransitionhasbeen

identified

asanemergingriskduetoitsintensifyingimportancetoallstakeholders.

Despite the current environment of volatile inflation, the Directors do not consider this a principal risk due to the

regulatoryfundingarrangementtheparentcompanyoperateswithin.

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Futuredevelopments

TheDirectorsexpecttheactivitiesasdetailedabove

tocontinueintheforeseeablefuturewithoutmaterialchange.

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TheStrategicReportwasapprovedbytheBoardofDirectorson21September2022andsignedonitsbehalfby:



ColinSkellett

Director



3

DIRECTORS’REPORT

The Directors present their Directors’ Report and the financial statements for Wessex Water Services Finance PLC

(RegisteredinEnglandandWalesNo.03704265)fortheyearto30June2022.

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Internalcontrolandriskmanagement

The Company does not operate separately to WWSL and therefore its risks are governed by WWSL’s

 policies and

procedures.ThesepoliciesandproceduresarediscussedwithintheWWSLfinancialstatements.

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Charitableandpoliticaldonations

Therewerenocharitableorpoliticaldonationsineitheryear.

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GoingConcern

TheDirectorshaveconsideredthefinancialpositionoftheCompanyandhaveconcludedthattheywillbeableto

meet

theirliabilitiesastheyfalldue.Forthesepurposesthisistakentomeanaperiodof12monthsfromthedateofapproval

of these accounts to 30 September 2023. In coming to this conclusion, the directors have reviewed the financing

requirementsofthecompanyforthe12‐month

periodfromthedateoftheapprovaloftheseaccountsto30September

2023. In September 2021, the Directors repaid the 4% £300m bond and are currently reviewing future financing

requirements.

Therefore,theDirectorshavepreparedtheaccountsonagoingconcernbasis.



Directors

TheDirectorswhoheldofficeduring

theyearanduptothedateofsigningthefinancialstatementswereasfollows;

ColinSkellett

MarkWatts

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Directors’emolumentsinrespectofservicestogroupcompanieswillbedisclosedintheaccountsofWessexWaterLtd

(WWL)andYTLUtilities(UK)Ltd.Theservicesprovidedbythedirectors

totheCompanyarenegligiblein2022.

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Disclosureofinformationtoauditor

TheDirectorswhoheldofficeatthedateofapprovalofthisDirectors’Reportconfirmthat,sofarastheyareeachaware,

thereisnorelevantauditinformationofwhichtheCompany’sauditorsareunaware;andeach

Directorhastakenallthe

stepsthatoughttohavebeentakenasaDirectortomakethemselvesawareofanyrelevantauditinformationandto

establishthattheCompany’sauditorsareawareofthatinformation.

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CorporateGovernance

TheBoardareappointedbytheshareholdersandmeetregularlytoreview

thefinancialandoperationalperformanceof

theCompany.TheCompanydoesnotoperateseparatelytoWWSLandisspecificallyestablishedfortheraisingoflisted

debttoon‐lendtoWWSLasnotedinitsprincipalactivitiesintheStrategicreport.Theriskmanagementprocessincludes

clearaccountabilities,delegatedauthoritylimits

andwell‐definedpoliciesandprocedures.



Re‐appointmentofauditor

FollowingaresolutionoftheBoard,Ernst&YoungLLPwerere‐appointedastheauditoroftheCompanyforthecurrent

financialyear.



ByorderoftheBoard,



ColinSkellett,Director

21September2022



4

STATEMENTOFDIRECTORS’RESPONSIBILITIESINRESPECTOFTHEFINANCIALSTATEMENTS



TheDirectorsareresponsibleforpreparingtheannualreportandthefinancialstatementsinaccordancewithapplicable

UnitedKingdomlawandregulations.

Companylawrequiresthedirectorstopreparefinancialstatementsforeachfinancialyear.UnderthatlawtheDirectors

haveelectedtopreparetheCompany’sfinancialstatementsinaccordance

withUKadoptedInternationalAccounting

Standards.

Undercompanylawthedirectorsmustnotapprovethefinancialstatementsunlesstheyaresatisfiedthattheygivea

trueandfairviewofthestateofaffairsoftheCompanyandoftheprofitorlossforthatperiod.

Inpreparingthesefinancialstatements

theDirectorsarerequiredto:

 selectsuitableaccountingpoliciesinaccordancewith IAS8AccountingPolicies,ChangesinAccountingEstimates

andErrorsandthenapplythemconsistently;

 makejudgementsandaccountingestimatesthatarereasonableandprudent;

 present information, including accounting policies, in a manner that provides

relevant, reliable, comparable and

understandableinformation;

 provideadditionaldisclosureswhencompliancewiththespecificrequirementsinIFRSsisinsufficienttoenableusers

tounderstandtheimpactofparticulartransactions,othereventsandconditionsontheCompany’sfinancialposition

andfinancialperformance;

 inrespectofthecompany’sfinancialstatements,state

whetherUKadoptedInternationalAccountingStandardshave

beenfollowed,subjecttoanymaterialdeparturesdisclosedandexplainedinthefinancialstatements;and

 preparethefinancialstatementsonthegoingconcernbasisunlessitisappropriatetopresumethattheCompany

willnotcontinueinbusiness.



The Directors are responsible

 for keeping adequate accounting records that are sufficient to show and explain the

Company’stransactionsanddisclosewithreasonableaccuracyatanytimethefinancialpositionof theCompanyand

enable them to ensure that the Company financial statements comply with the Companies Act 2006. They are also

responsiblefor

safeguardingtheassetsoftheCompanyandhencefortakingreasonablestepsforthepreventionand

detectionoffraudandotherirregularities.

Underapplicablelawandregulations,thedirectorsarealsoresponsibleforpreparingastrategicreportandDirectors’

report,thatcomplywiththatlawandthoseregulations.TheDirectorsare

responsibleforthemaintenanceandintegrity

ofthecorporateandfinancialinformationincludedontheCompany’swebsite.

Directors’responsibilitystatement



TheDirectorsconfirm,tothebestoftheirknowledge:



 thatthefinancialstatements,preparedinaccordancewithUKadoptedInternationalAccountingStandardsgivea

trueandfairviewof

theassets,liabilities,financialpositionandprofitfortheCompany;and

 thattheannualreport,includingthestrategicreport,includesafairreviewofthedevelopmentandperformance

ofthebusinessandthepositionoftheCompanytogetherwithadescriptionoftheprincipalrisksanduncertainties

thatthey

face;and

 thattheyconsidertheannualreport,takenasawhole,isfair,balancedandunderstandableandprovidesthe

informationnecessaryforshareholderstoassesstheCompany’sposition,performance,businessmodeland

strategy.





5

INDEPENDENTAUDITOR’SREPORTTOTHEMEMBERSOFWESSEXWA TERSERVICESFINANCEPL C

Opinion

WehaveauditedthefinancialstatementsofWessexWaterServicesFinancePlcfortheyearended30June2022which

comprisetheIncomeStatementandStatementofOtherComprehensiveIncome,theStatementofFinancialPosition,

theStatementofChangesinEquity,theStatementofCashFlowsandtherelatednotes

1to15,includingasummaryof

significantaccountingpolicies.Thefinancialreportingframeworkthathasbeenappliedintheirpreparationis

applicablelawandUKadoptedInternationalAccountingStandards.

Inouropinion,thefinancialstatements:

 giveatrueandfairviewofthecompany’saffairsasat30

June2022andofitsresultfortheyearthenended;

 havebeenproperlypreparedinaccordancewithUKadoptedInternationalAccountingStandards;and

 havebeenpreparedinaccordancewiththerequirementsoftheCompaniesAct2006.

Basisforopinion

WeconductedourauditinaccordancewithInternat ionalStandards

onAuditing(UK)(ISAs(UK))andapplicablelaw.Our

responsibilitiesunderthosestandardsarefurtherdescribedintheAuditor’sresponsibilitiesfortheauditofthefinancial

statementssectionofourreport.Weareindependent ofthecompanyinaccordancewiththeethicalrequirementsthat

arerelevanttoourauditof

thefinancialstatementsintheUK,includingtheFRC ’sEthicalStandardasappliedtolisted

publicinterestentities,andwehavefulfilledourotherethicalresponsibilitiesinaccordancewiththeserequirements.

Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforouropinion.



Conclusionsrelatingtogoingconcern

Inauditingthefinancialstatements,wehaveconcludedthatthedirectors’useofthegoingconcernbasisofaccounting

inthepreparationofthefinancialstatementsisappropriate.Ourevaluationofthedirectors’assessmentofthe

company’sabilitytocontinuetoadoptthegoingconcern

basisofaccountingincludedthefollowingprocedure:

 Wegainedanunderstandingoftheprocessundertakenbymanagementtoperformthegoingconcern

assessment,includingdiscussionwithmanagementtoensureallkeyfactorsweretakenintoaccount.

 WeconsideredtheCompany’saccesstoavailablesourcesofliquidityandagreedavailablefacilitiesto

underlyingagreementsandtheextentofdrawingsthereundertoexternalconfirmations.

 Weconsideredtheresultsofotherauditproceduresandotherknowledgeobtainedintheauditandwhetherit

wasconsistentwithorcontradictedmanagement’sassumptions.

 Inquiredofmanagementastotheirknowledgeofeventsor

conditionsbeyondtheperiodoftheirassessment

thatmaycastsignificantdoubtontheentity’sabilitytocontinueasagoingconcern

 WeassessedtheappropriatenessofdisclosureswithintheAnnualReportandAccounts



6

INDEPENDENTAUDITOR’SREPORTTOTHEMEMBERSOFWESSEXWA TERSERVICESFINANCEPL C

(continued)



Ourkeyobservations



 InSeptember2021,theCompanyrepaidthe£300millionbondandissatisfiedthatithastheappropriate

financingrequirementstorepaythe£50millionindexlinkedbonddueinJuly2023.

 Basedontheworkwehaveperformed,wehavenotidentifiedanymaterial

uncertaintiesrelatingtoeventsor

conditionsthat,individuallyorcollectively,maycastsignificantdoubtonthecompany’sabilitytocontinueasa

goingconcernforaperiodof12monthsfromwhenthefinancialstatementsareauthorisedforissue.

 Ourresponsibilitiesandtheresponsibilitiesofthedirectorswithrespect

togoingconcernaredescribedinthe

relevantsectionsofthisreport.However,becausenotallfutureeventsorconditionscanbepredicted,this

statementisnotaguaranteeastothecompany’sabilitytocontinueasagoingconcern.

Overviewofourauditapproach

Keyaudit

matters

 Riskover

theincorrectvaluationofthelisteddebt,includingtheinterest

calculation,duetothecomplexityoftheaccountingtreatmentofthesefinancial

instruments.

Materiality

 Overallmaterialityof£9.8mwhichrepresents0.5%oftotalassets.



Anoverviewofthescopeofouraudit

Tailoringthescope

Ourassessmentofauditrisk,ourevaluationofmaterialityandourallocationofperformancematerialitydetermineour

auditscopeforthecompany.Thisenablesustoformanopiniononthefinancialstatements.Wetakeintoaccountsize,

risk

profile,theorganisationofthecompanyandeffectivenessofcontrols,includingcontrolsandchangesinthebusiness

environmentwhen assessing the level of work to be performed.All audit work was performed directlyby the audit

engagementteam.

Changesfromtheprioryear

Therearenoscopingchangesfromtheprior

year.



Climatechange

Therehasbeenincreasinginterestfromstakeholdersastohowclimatechangewillimpactallcompanies.TheCompany

hasdeterminedthattherearenosignificantfutureimpactsfromclimatechangeonitsoperations.Thisisexplainedon

page2intheprincipalrisksanduncertainties,whichform

partofthe“Otherinformation,”ratherthantheaudited

financialstatements.Ourproceduresonthesedisclosuresthereforeconsistedsolelyofconsideringwhethertheyare

materiallyinconsistentwiththefinancialstatementsorourknowledgeobtainedinthecourseoftheauditorotherwise

appeartobemat eriallymisstated.



Ourauditeffort

inconsideringclimatechangewasfocusedonevaluatingmanagement’sassessmentthatthereisno

significantimpactofclimatechangerisk,theadequacyoftheCompanydisclosuresinthefinancialstatementsandthe

conclusionthatnoissueswereidentifiedthatwouldimpactthecarryingvaluesofassetsonthefinancialstatements.

alsochallengedtheDirectors’considerationsofclimatechangeintheirassessmentofgoingconcernandviability

andassociateddisclosures.

 

7

INDEPENDENTAUDITOR’SREPORTTOTHEMEMBERSOFWESSEXWA TERSERVICESFINANCEPL C

(continued)

Keyauditmatters

Keyauditmattersarethosemattersthat,inourprofessionaljudgment,wereofmostsignificanceinourauditofthe

financialstatementsofthecurrentperiodandincludethemostsignificantassessedrisksofmaterialmisstatement

(whetherornotduetofraud)thatweidentified.Thesemattersincluded

thosewhichhadthegreatesteffecton:the

overallauditstrategy,theallocationofresourcesintheaudit;anddirectingtheeffortsoftheengagementteam.These

matterswereaddressedinthecontextofourauditofthefinancialstatementsasawhole,andinouropinionthereon,

andwe

donotprovideaseparateopiniononthesematters.



Risk Ourresponsetotherisk

Keyobservations

communicatedtotheBoard

Riskovertheincorrectvaluationofthe

listeddebt,includingtheinterest

calculation,duetothecomplexityofthe

accountingtreatmentofthesefinancial

instruments.

Accountingpolicies(pages16‐17);and

Note8ofthefinancialstatements(page

19)

ThesoleactivityoftheCompanyisto

issuebonds,theproceeds

ofwhichare

lenttotheimmediateholdingcompany

WessexWaterServicesLtd(WWSL).

ThebondsareadmittedtotheOfficialList

oftheUKListingAuthorityandtothe

LondonStockExchangeplc.

ThebondproceedsarelenttoWWSLon

thesametermsasthebondsthemselves.

WWSL

guaranteesthebonds.

Allbondsareeitherfixedrateorindex

linked.Duetothecomplexityofthe

accountingtreatmentoftheselisted

debts,wehaveconcludedthatthereisa

riskofincorrectvaluat iononthese

financialinstruments.

Wehaveperformedthebelow

proceduresinrelationtothe

identifiedrisk:



 Wehaveobtainedand

reviewedthekeytermsofthe

bondagreementforeachofthe

fixedinterestandindexlinked

bondsandhaveagreedtothe

clientpreparedschedules.



 Wehaveperformeda

recalculationofthecarrying

valueofthelistedbondsand

theinterestcharge

fortheyear

andcomparedittothecarrying

valueandtheinterestchargeas

calculatedbymanagement.



Basedontheprocedures

performed,wehavenotedno

issuewiththevaluationofthe

listeddebtandtheint erest

charge.

Weconcludedthatthedebt

valuationandthebondinterest

calculation

areinlinewiththe

bondarrangementsandthe

accountingtreatmentasdefined

forfinancialinstrumentsunder

IFRS9.



Ourapplicationofmateriality

Weapplytheconceptofmaterialityinplanningandperformingtheaudit,inevaluatingtheeffectofidentified

misstatementsontheauditandinformingourauditopinion.



8

INDEPENDENTAUDITOR’SREPORTTOTHEMEMBERSOFWESSEXWA TERSERVICESFINANCEPL C

(continued)



Materiality

Themagnitudeofanomissionormisstatementthat,individuallyorintheaggregate,couldreasonablybeexpectedto

influencetheeconomicdecisionsoftheusersofthefinancialstatements.Materialityprovidesabasisfordetermining

thenatureandextentofourauditprocedures.

Wedeterminedmaterialityforthecompany

tobe£9.8million(2021:£11.2million),whichis0.5%(2021:0.5%)oftotal

assets.Webelievethattotalassetsprovideuswithanappropriateandgenerallyacceptedbenchmarkformateriality

foracompanyholdinglisteddebt.

Performancemateriality

Theapplicationofmaterialityattheindividualaccountorbalancelevel.It

issetatanamounttoreducetoan

appropriatelylowleveltheprobabilitythattheaggregateofuncorrectedandundetectedmisstatementsexceeds

materiality.

Onthebasisofourriskassessments,togetherwithourassessmentofthecompany’soverallcontrolenvironment,our

judgementwasthatperformancematerialitywas75%(2021:

75%)ofourplanningmateriality,namely£7.4m(2021:

£8.4m).Wehavesetperformancematerialityatthispercentageduetoapasthistoryoffewmisstatementsindicatinga

lowerriskofmisstatementinthefinancialstatements.

Reportingthreshold

Anamountbelowwhichidentifiedmisstatementsareconsideredasbeingclearlytrivial.

Weagreed

withWWSL’sBoardthatwewouldreporttothemalluncorrectedauditdifferencesinexcessof£0.5m(2021:

£0.6m),whichissetat5%ofplanningmat eriality,aswellasdifferencesbelowthatthresholdthat,inourview,

warrantedreportingonqualitativegrounds.

Weevaluateanyuncorrectedmisstatementsagainstboth

thequantitativemeasuresofmaterialitydiscussedaboveand

inlightofotherrelevantqualitativeconsiderationsinformingouropinion.

Otherinformation

Theotherinformationcomprisestheinf ormationincludedintheannualreport,otherthanthefinancialstatementsand

ourauditor’sreportthereon.Thedirectorsareresponsiblefortheotherinformationcontained

withintheannual

report.

Ouropiniononthefinancialstatementsdoesnotcovertheotherinf ormationand,excepttotheextentotherwise

explicitlystatedinthisreport,wedonotexpressanyformofassuranceconclusionthereon.

Ourresponsibilityistoreadtheotherinformationand,indoingso,consider

whethertheotherinformationis

materiallyinconsistentwiththefinancialstatementsorourknowledgeobtainedinthecourseoftheauditorotherwise

appearstobemateriallymisstated.Ifweidentifysuchmaterialinconsistenciesorapparentmaterialmisstatements,we

arerequiredtodeterminewhetherthisgivesrisetoamaterialmisstatement

inthefinancialstatementsthemselves.If,

basedontheworkwehaveperformed,weconcludethatthereisamaterialmisstatementoftheotherinformation,we

arerequiredtoreportthatfact.



Wehavenothingtoreportinthisregard.



9

INDEPENDENTAUDITOR’SREPORTTOTHEMEMBERSOFWESSEXWA TERSERVICESFINANCEPL C

(continued)

OpinionsonothermattersprescribedbytheCompaniesAct2006

Inouropinion,basedontheworkundertakeninthecourseoftheaudit:

 theinformationgiveninthestrategicreportandthedirectors’reportforthefinancialyearforwhichthefinancial

statementsarepreparedisconsistentwiththe

financialstatements;and

 thestrategicreportanddirectors’reporthavebeenpreparedinaccordancewithapplicablelegalrequirements.

Mattersonwhichwearerequiredtoreportbyexception

Inthelightoftheknowledgeandunderstandingofthecompanyanditsenvironmentobtainedinthecourseofthe

audit,

wehavenotidentifiedmaterialmisstatementsinthestrategicreportordirectors’report.

WehavenothingtoreportinrespectofthefollowingmattersinrelationtowhichtheCompaniesAct2006requiresus

toreporttoyouif,inouropinion:

 adequateaccountingrecordshavenotbeenkept,or

returnsadequateforouraudithavenotbeenreceivedfrom

branchesnotvisitedbyus;or

 thefinancialstatementsarenotinagreementwiththeaccountingrecordsandreturns;or

 certaindisclosuresofdirectors’remunerationspecifiedbylawarenotmade;or

 wehavenotreceivedall

theinformationandexplanationswerequireforouraudit



Responsibilitiesofdirectors



Asexplainedmorefullyinthedirectors’responsibilitiesstatementsetoutonpage4,thedirectorsareresponsiblefor

thepreparationofthefinancialstatementsandforbeingsatisfiedthattheygiveatrueandfairview,and

forsuch

internalcontrolasthedirectorsdetermineisnecessarytoenablethepreparationoffinancialstatementsthatarefree

frommaterialmisstatement,whetherduetofraudorerror.

Inpreparingthefinancialstatements,thedirectorsareresponsibleforassessingthecompany’sabilitytocontinueasa

goingconcern,disclosing,

asapplicable,mattersrelatedtogoingconcernandusingthegoingconcernbasisof

accountingunlessthedirectorseitherintendtoliquidatethecompanyortoceaseoperations,orhavenorealistic

alternativebuttodoso.

Auditor’sresponsibilitiesfortheauditofthefinancialstatements

Ourobjectivesaretoobtain

reasonableassuranceaboutwhetherthefinancialstatementsasawholearefreefrom

materialmisstatemen t,whetherduetofraudorerror,andtoissueanauditor’sreportthatincludesouropinion.

Reasonableassuranceisahighlevelofassurance,butisnotaguaranteethatanauditconductedinaccordance

with

ISAs(UK)willalwaysdetectamaterialmiss tatementwhenitexists.Misstatementscanarisefromfraudorerrorandare

consideredmaterialif,individuallyorintheaggregate,theycouldreasonablybeexpectedtoinfluencetheeconomic

decisionsofuserstakenonthebasisofthesefinancialstatements.



10

INDEPENDENTAUDITOR’SREPORTTOTHEMEMBERSOFWESSEXWA TERSERVICESFINANCEPL C

(continued)



Explanationastowhatextenttheauditwasconsideredcapableofdetectingirregularities,includingfraud



Irregularities,includingfraud,areinstancesofnon‐compliancewithlawsandregulations.Wedesignproceduresinline

withourresponsibilities,outlinedabove,todetectirregularities,includingfraud.Theriskofnotdetectingamaterial

misstatement

duetofraudishigherthantheriskofnotdetectingoneresultingfromerror,asfraudmayinvolve

deliberateconcealmentby,forexample,forgeryorintentionalmisrepresentations,orthroughcollusion.Theextentto

whichourproceduresarecapableofdetecting irregularities,includingfraudisdetailedbelow.

However,theprimary

responsibilityforthepreventionanddetectionoffraudrestswithboththosechargedwith

governanceofthecompanyandmanagement.

Ourapproachwasasfollows:

 Weobtainedanunderstandingofthelegalandregulatoryframeworksthatareapplicabletothecompanyand

determinedthatthemostsignificantare:

o Companies

Act2006

o InternationalFinancialReportingStandards(IFRS)

o TaxLegislation(governedbyHMRevenueandCustoms)

o ListingrequirementsoftheLondonStockExchange

 WeunderstoodhowWessexWaterServicesFinancePlciscomplyingwiththoseframeworksbyreadinginternal

policiesandcodesofconductandassessingthe

entitylevelcontrolenvir o nment,includingthelevelofoversight

ofthosechargedwithgovernance.WemadeenquiriesoftheGroup’slegalcounselandinternalauditofknown

instancesofnon‐complianceorsuspectednon‐compliancewithlawsandregulationsoftheUKultimateparent

company and all its subsidiaries. We corroborated

 our enquiries through review of correspondence with

regulatorybodies.

 Wedesignedourauditprocedurestoidentifynon‐compliancewithsuchlawsandregulationsidentifiedinthe

paragraph above. As well as enquiry and attendance at meetings, our procedures involv ed a review of the

reportingtotheabovecommitteesand

areviewofboardmeetingsandothercommitteeminutestoidentifyany

non‐compliancewithlawsandregulations.Ourproceduresalsoinvolvedjournalentrytesting,withafocuson

journalsmeetingourdefinedriskcriteriabasedonourunderstandingofthebusiness.

 Weassessedthesusceptibilityofthecompany’sfinancial

statementstomaterialmisstatement,includinghow

fraud might occur by making enquiries of senior management. We planned our audit to identify risks of

management override, tested higher risk journal entries and performed audit procedures to address the

potentialformanagementbias,particularlyoverareasinv olvingsignificantestimationandjudgement.



Basedonthisunderstandingwedesignedourauditprocedurestoidentifynon‐compliancewithsuchlawsand

regulations.Our proceduresinvolved making enquiries of key managemen tand legalcounsel, reviewing key

policies,inspectinglegalregistersand correspondencewithregulatorsandreadingkeymanagement meeting

minutes.Wealsocompletedprocedurestoconclude

onthecomplianceofsignificantdisclosuresintheAnnual

ReportandFinancialStatementswiththerequirementsoftherelevantaccountingstandardsandUKlegislation.



Afurtherdescriptionofourresponsibilitiesfortheauditofthefinancialstatementsislocatedonthe

FinancialReportingCouncil’swebsiteathttps://www.frc.org.uk/auditorsresponsibilities.Thisdescriptionforms

partof

ourauditor’sreport.





11

INDEPENDENTAUDITOR’SREPORTTOTHEMEMBERSOFWESSEXWA TERSERVICESFINANCEPL C

(continued)

Othermatterswearerequiredtoaddress



 Wewereappointedbythecompanyon6March2018toauditthefinancialstatementsfortheyearending30June

2018andsubsequentfinancialperiods.

Theperiodoftotaluninterruptedengagemen tincludingpreviousrenewalsandreappointmentsis5years,

coveringthe

yearsending30June2018to30June2022.

 Thenon‐auditservicesprohibitedbytheFRC’sEthicalStandardwerenotprovidedtothecompanyandweremain

independentofthecompanyinconductingtheaudit.

 TheauditopinionisconsistentwiththeadditionalreporttotheBoard.

Useofourreport

Thisreportismadesolelytothecompany’smembers,asabody,inaccordancewithChapter3ofPart16ofthe

CompaniesAct2006.Ourauditworkhasbeenundertakensothatwemightstatetothecompany’smembersthose

matterswearerequiredtostate

totheminanauditor’sreportandfornootherpurpose.Tothefullestextent

permittedbylaw,wedonotacceptorassumeresponsibilitytoanyoneotherthanthecompanyandthecompany’s

membersasabody,forourauditwork,forthisreport,orfortheopinionswe

haveformed.



PaulMapleston(Seniorstatutoryauditor)

forandonbehalfofErnst&YoungLLP,StatutoryAuditor

Bristol

21September2022



12

INCOMESTATEMENTANDSTATEMENTOFOTHERCOMPREHENSIVEINCOME

Fortheyearended30June2022



Note 2022



2021



£000



£000



Revenue 3 86,738



78,707

   

Operatingcost 3 (86,738)



(78,707)

 

Profitbeforeandaftertax,andtotalcomprehensiveincome



‐



‐







Thenotesonpages16to24areanintegralpartofthesefinancialstatements.



13

STATEMENTOFFINANACIALPOSITION

At30June2022



Note 2022



2021



£000



£000

Non‐currentassets



Otherfinancialassets 4 1,939,588



1,909,292



1,939,588



1,909,292

Currentassets



Tradeandotherreceivables 5 27,215



36,163

Otherfinancialassets 4 ‐



300,089

Cashandcashequivalents 6 13



13



27,228



336,265

Totalassets  1,966,816



2,245,557

Currentliabilities



Tradeandotherpayables 7 (27,215)



(36,163)

Otherinterest‐bearingloansandborrowings

8 ‐



(300,089)



(27,215)



(336,252)

Non‐currentliabilities



Otherinterest‐bearingloansandborrowings 8 (1,939,588)



(1,909,292)



(1,939,588)



(1,909,292)

Totalliabilities



(1,966,803)



(2,245,544)









Netassets



13



13









Equity



Sharecapital 9 13



13

Retainedearnings  ‐



‐

Totalequity



13



13



Thenotesonpages16to24areanintegralpartofthesefinancialstatements.



ThefinancialstatementswereapprovedbytheBoardofDirectorson21September2022andsignedonitsbehalfby:



ColinSkellett

Director



14

STATEMENTOFCHANGESINEQUITY

Fortheyearended30June2022



Note

Share

capital



Retained

earnings



Total

equity



£000



£000



£000



Balanceat1July2020



13



‐



13



Totalcomprehensiveincomefortheyear



‐



‐



‐



Balanceat30June2021 9 13



‐



13















Balanceat1July2021



13



‐



13



Totalcomprehensiveincomefortheyear



‐



‐



‐



Balanceat30June2022 9 13



‐



13















15

STATEMENTOFCASHFLOWS

Fortheyearended30June2022

Note 2022



2021



£000



£000

Cashflowusedinoperatingactivities



Profitfortheyear



‐



‐

Adjustmentsfor:



Financeincome 3 (86,738)



(78,707)

Financeexpense 3 86,738



78,707



‐



‐



Decrease/(Increase)intradeandotherreceivables



8,948



(1,775)

(Decrease)/Increaseintradeandotherpayables



(8,948)



1,775

  

Interestpayments



(65,390)



(62,131)

Interestreceived



65,390



62,131

 

Issuanceofdebt‐  (294,873)

ProceedsfromissueofBonds‐  294,873

 

RepaymentofBonds(299,978) ‐

Proceedsfrom

repaymentofdebt299,978  ‐

  

Netcashflowusedinoperatingactivities



‐



‐

  

 

Netcashflowusedininvestingactivities



‐



‐

  

 

Netcashflowusedinfinancingactivities



‐



‐









Increase/(decrease)incashandcashequivalents

‐



‐

Cashandcashequivalentsat1July



13



13

Cashandcashequivalentsat30June 6 13



13











16

NOTESTOTHEFINANCIALSTATEMENTS

1. Accountingpolicies

1.1Basisofpreparation

Wessex Water Services Finance Plc (the “Company”) is a private company limited by shares which is incorporated,

domiciledandregisteredinEnglandintheUK.Theregisterednumberis03704265andtheregisteredaddressisWessex

WaterOperationsCentre,ClavertonDown,Bath,BA27WW.



Theaccountingpoliciessetoutbelowhave,unlessotherwisestated,beenappliedconsistentlytoallperiodspresented

inthesefinancialstatements.

JudgementsmadebytheDirectors,in theapplicationoftheseaccountingpolicies,that havesignificanteffectonthe

financialstatementsandestimateswithasignificantriskofmaterialadjustment

inthenextyeararediscussedinnote

15.

Inpreparingthefinancialstatements,theDirectorshaveconsideredthe impactofthephysicalandtransitionrisks of

climatechangeandhaveconcludedthatitdoesnothaveamaterialimpactontherecognitionandmeasurementofthe

assetsandliabilitiesin

thesefinancialstatementsasat30June2022.



1.2 Measurementconvention

Thefinancialstatementsarepreparedonacostbasisandpresentedinpoundssterlingwhichisthecompany’sfunctional

andpresentationalcurrency.



1.3 Goingconcern

TheDirectorshaveconsideredthefinancialpositionoftheCompanyandhaveconcludedthat

theywillbeabletomeet

theirliabilitiesastheyfalldue.Forthesepurposesthisistakentomeanaperiodof12monthsfromthedateofapproval

of these accounts to 30 September 2023. In coming to this conclusion, the directors have reviewed the financing

requirementsof

thecompanyforthe12‐monthperiodfromthedateoftheapprovaloftheseaccountsto30September

2023. In September 2021, the Directors repaid the 4% £300m bond and are currently reviewing future financing

requirements.

Therefore,theDirectorshavepreparedtheaccountsonagoingconcernbasis.



1.4

Financialinstruments

Cashandcashequivalents

Cashandcashequivalentscomprisecashbalancesandbankdeposits.

Financialassets

Initialrecognitionandmeasurement

Financialassetsareclassified,atinitialrecognition,assubsequentlymeasuredatamortisedcost,fairvaluethroughother

comprehensiveincome(OCI),andfairvaluethroughprofitorloss.

The

classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow

characteristicsandtheCompany’sbusinessmodelformanagingthem.TheCompanyinitiallymeasuresafinancialasset

atitsfairvalueplustransactioncosts.

Inorderforafinancialassettobeclassifiedandmeasuredatamortised

costorfairvaluethroughOCI,itneedstogive

risetocashflowsthatare‘solelypaymentsofprincipalandinterest(SPPI)’ontheprincipalamountoutstanding.This

assessmentisreferredtoastheSPPItestandisperformedataninstrumentlevel.

TheCompany’s businessmodel formanaging

financialassetsrefers tohowitmanages itsfinancialassetsin orderto

generatecashflows.Thebusinessmodeldetermineswhethercashflowswillresultfromcollectingcontractualcashflows,

sellingthefinancialassets,orboth.

TheCompany’sfinancialassetsincludetradeandotherreceivablesandintercompanyloans.

 

17

NOTESTOTHEFINANCIALSTATEMENTS(continued)



1.4 Financialinstruments(continued)

Subsequentmeasurement

Financialassetsatamortisedcost(debtinstruments)

ThiscategoryisthemostrelevanttotheCompany.TheCompanymeasuresfinancialassetsatamortisedcostifbothof

thefollowingconditionsaremet:

 Thefinancialassetisheldwithinabusinessmodelwiththe

objectivetoholdfinancialassetsinordertocollect

contractualcashflows;and

 Thecontractualtermsofthefinancialassetgiveriseonspecifieddatestocashflowsthataresolelypayments

ofprincipalandinterestontheprincipalamountoutstanding.

Financialassetsatamortisedcostaresubsequentlymeasuredusing

theeffectiveinterest(EIR)methodandaresubject

toimpairment.Gainsandlossesarerecognisedinprofitorlosswhentheassetisderecognised,modifiedorimpaired.

TheCompany’sfinancialassetsatamortisedcostincludesintercompanyloansrepayableinmorethan12months,and

interestreceivable.

Derecognition

Afinancialasset

(or,whereapplicable,apartofafinancialassetorpartofagroupofsimilarfinancialassets)isprimarily

derecognised(i.e.,removedfromtheCompany’sstatementoffinancialposition)when:

 Therightstoreceivecashflowsfromtheassethaveexpired;or

 TheCompanyhastransferreditsrights

toreceivecashflowsfromtheassetorhasassumedanobligationtopay

thereceivedcashflowsinfullwithoutmaterialdelaytoathirdpartyundera‘pass‐through’arrangement;and

either(a)theCompanyhastransferredsubstantiallyalltherisksandrewardsoftheasset,or(b)

theCompany

has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred

controloftheasset.

Impairmentoffinancialassets

TheCompanyrecognisesanallowanceforexpectedcreditlosses(ECLs)foralldebtinstrumentsnotheldatfairvalue

throughprofitorloss.ECLs

arebasedonthedifferencebetweenthecontractualcashflowsdueinaccordancewiththe

contractand all the cash flows that the Company expects to receive, discounted at an approximationof the original

effectiveinterestrate.

ECLsarerecognisedintwostages.Forcreditexposuresforwhichtherehas

notbeenasignificantincreaseincreditrisk

sinceinitialrecognition,ECLsareprovidedforcreditlossesthatresultfromdefaulteventsthatarepossiblewithinthe

next12‐months(a12‐monthECL).Forthosecreditexposuresforwhichtherehasbeenasignificantincreaseincreditrisk

sinceinitial

recognition,alossallowanceisrequiredforcreditlossesexpectedovertheremaininglifeoftheexposure,

irrespectiveofthetimingofthedefault(alifetimeECL).

TheCompanyhasbasedthecalculationofitsECLprovisiononitshistoricalcreditlossexperience,adjustedforforward‐

lookingfactorsspecificto

thedebtorsandtheeconomicenvironment.

Financialliabilities

Initialrecognitionandmeasurement

Financialliabilitiesareclassified,atinitialrecognition,asfinancialliabilitiesatfairvaluethroughprofitorlossorfinancial

liabilitiesatamortisedcost,asappropriate.

Allfinancialliabilitiesarerecognisedinitiallyatfairvalueand,inthecase

offinancialliabilitiesatamortisedcost,netof

directlyattributabletransactioncosts.

TheCompany’sfinancialliabilitiesincludetradeandotherpayablesandloansandborrowings.

18

NOTESTOTHEFINANCIALSTATEMENTS(continued)



1.4 Financialinstruments(continued)

Subsequentmeasurement–Financialliabilitiesatamortisedcost

ThisisthecategorymostrelevanttotheCompany.Afterinitialrecognition,interest‐bearingloansandborrowingsare

subsequentlymeasuredatamortisedcostusingtheEIRmethod.Gainsandlossesarerecognisedinprofitorlosswhen

the

liabilitiesarederecognisedaswellasthroughtheEIRamortisationprocess.

Amortisedcostiscalculatedbytakingintoaccountanydiscountorpremiumonacquisitionandfeesorcoststhatarean

integralpartoftheEIR.TheEIRamortisationisincludedasfinancecostsintheincomestatement.

Thiscategory

generallyappliestointerest‐bearingloansandborrowings.Formoreinformation,refertoNote10.

Derecognition

Afinancialliabilityisderecognisedwhentheobligationundertheliabilityisdischargedorcancelledorexpires.Whenan

existingfinancialliabilityisreplacedbyanotherfromthesamelenderonsubstantiallydifferentterms,

orthetermsofan

existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the

originalliabilityandtherecognitionofanewliability.Thedifferenceintherespectivecarryingamountsisrecognisedin

theincomestatement.



1.5 Revenue

Revenuerepresentsinterest income

onloans receivable from theimmediate Parent Company.Interest receivable is

calculatedusing theeffectiveinterestratemethod.Theeffective interest ratemethodis amethodofcalculating the

amortisedcostofafinancialassetorliabilityandofallocatingtheinterestincomeorexpenseovertherelevantperiod.

The effective

 interest rate is the rate that exactly discounts estimated future cash paymentsor receipts through the

expectedlifeofthefinancialassetorliabilityor,whereappropriate,ashorterperiod.



1.6 Taxation

Taxonthe profitor loss for theyear comprisescurrentand deferred tax. Taxisrecognised

in the income statement

excepttotheextentthatitrelatestoitemsrecogniseddirectlyinequity,inwhichcaseitisrecognisedinequity.

Currenttaxistheexpectedtaxpayableorreceivableonthetaxableincomeorlossfortheyear,usingtaxratesenacted

or substantively enacted at

 the balance sheet date, and any adjustment to tax payablein respect of previous years.

Currenttaxfor theyearhasbeennil(2021‐£nil).

Deferred tax is provided on tempor ary differences between the carrying amounts of assets and liabilities for financial

reporting purposes and theamounts usedfortaxation

purposes. The amount of deferred taxprovidedis based on the

expectedmannerof realisationorsettlementofthecarryingamountofassetsandliabilities,usingtaxratesenactedor

substantivelyenactedatthebalancesheetdate. Deferredtaxfortheyearhasbeennil(2021–£nil).



1.7 Dividends

DividendsareproposedbytheBoardandimmediatelyafterwardsareauthorisedbytheshareholderandaretherefore

recognised as a liability in the accounts until paid. The company has not paid dividends in 2022 as there were no

distributablereserves(2021‐£nil).



2.Operatingprofit

Therewerenoexpensesincurred

bythecompanyapartfromfinancecostsineitheryearastheywerebornebyother

groupcompanies.Auditfeeswere£nil,astheywerebornebyitsimmediateparentcompany,WessexWaterServices

Ltd(2021:£nil).

TheDirectorsdidnotreceiveanyremunerationfromtheCompanyduringtheyearended

30June2022(2021:£nil).The

Directorsdidnotreceiveanyremunerationfromtheimmediateholdingcompanyinrespectofthiscompany(2021:£nil).

Otherthanthedirectors,thecompanyhadnoemployees.

 

19

NOTESTOTHEFINANCIALSTATEMENTS(continued)



3.Revenueandexpense



2022



2021



£000



£000

Financeincome



Interestreceivablefromimmediateparentcompany 86,738



78,707

Totalfinanceincome 86,738



78,707

Financeexpense



Interestpayableonbonds (86,738)



(78,707)

Totalfinanceexpense (86,738)



(78,707)



Netinterestpayable ‐



‐



4.Otherfinancialassets



2022



2021



£000



£000

Current



Intercompanyloansrepayableinlessthan12months ‐



300,089



Non‐current



Intercompanyloansrepayableinmorethan12months 1,939,588



1,909,292



Intercompanyloansconsistofbondslenttotheimmediateparentcompanywiththesametermsasbondsissuedbythe

Company.None of the loans to the parent are past due, and no material expected credit loss provision has been

recognised.SeeNote8fordetailsofbondsissuedby

theCompany.



5.Tradeandotherreceivables



2022



2021



£000



£000



Interestreceivable 27,215



36,163



Amountsincludedininterestreceivableaboveareduefromtheimmediateparentcompanyandreflectthetermsofthe

externalborrowingsincludedinnote8.



6.Cashandcashequivalents



2022



2021



£000



£000

Cashatbank 13



13



20

NOTESTOTHEFINANCIALSTATEMENTS(continued)



7.Tradeandotherpayables

2022



2021



£000



£000

Current



Accruedexpenses



27,215



36,163



8.Otherinterest‐bearingloansandborrowings



2022



2021



£000



£000

Currentliabilities



Listedbonds



‐



300,089



Non‐currentliabilities



Listedbonds



1,939,588



1,909,292

Termsanddebtrepaymentschedule





Currency

Nominal

interest

rate

Yearof

maturity



Face

Value



Carrying

amount



Face

Value



Carrying

amount



2022



2022



2021



2021



£000



£000 £000



£000







FixedRateBond Sterling 5.375% 2028



200,000



199,085



200,000



198,947

FixedRateBond Sterling 5.750% 2033



350,000



346,901



350,000



346,694

FixedRateBond Sterling 4.000% 2021



‐



‐



300,000



300,089

FixedRateBond Sterling 1.500% 2029250,000  248,001  250,000  247,746

FixedRateBond Sterling 1.250% 2036300,000  295,179  300,000  294,873

IndexLinkedBond Sterling 3.520%

2023



50,000



87,030



50,000



84,113

IndexLinkedBond Sterling 2.186% 2039



50,000



75,650



50,000



69,386

IndexLinkedBond Sterling 1.750% 2046



75,000



117,058



75,000



113,136

IndexLinkedBond Sterling 1.750% 2051



75,000



117,058



75,000



113,136

IndexLinkedBond Sterling 1.369% 2057



75,000



117,058



75,000



113,136

IndexLinkedBond Sterling 1.374% 2057



75,000



117,058



75,000



113,136

IndexLinkedBond Sterling 1.489% 2058



50,000



73,170



50,000



71,663

IndexLinkedBond Sterling 1.495% 2058



50,000



73,170



50,000



71,663

IndexLinkedBond Sterling 1.499% 2058



50,000



73,170



50,000





71,663



1,650,000



1,939,588



1,950,000



2,209,381



TheIndex‐linkedbondsaccrueannuallyinlinewiththeRetailPricesIndexeachyearandarewhollyguaranteedbyWessex

WaterServicesLtd.

21

NOTESTOTHEFINANCIALSTATEMENTS(continued)



9.Sharecapital

Ordinaryshares



2022



2021



£



£



Authorisedshares



Ordinarysharesof£1each



50,000



50,000



Ordinarysharesissuedandfullypaid



 

At1July2021and30June2022–quantity



2



2

At1July2021and30June2022‐£1.00pershare

2  2



Ordinarysharesissuedandpartiallypaid





At1July2021and30June2022–quantity



49,998



49,998

At1

July2021and30June2022‐£0.26ppershare

12,999  12,999



10.FinancialInstruments

(a)Fairvaluesoffinancialinstruments

Fair value is the amount at which a financialinstrument could be exchanged in an arms‐lengthtransaction between

informedandwillingparties,otherthanaforcedorliquidation

sale.Thefairvalueofshorttermborrowingsapproximate

tobookvalue.Thefairvalueoflong‐termfixedrateborrowingshasbeencalculatedusingmarketvaluesbecausethey

arealllistedinrecognisedfinancialmarkets.

Thefairvaluesofintercompanyloansareclassifiedaslevel1intheIFRS

13fairvaluehierarchyandhaveacarryingvalue

of£1,939,588kandafairvalueof£2,080,833k.(2021–£2,209,381kand£2,651,334k).

Thefairvaluesoflistedbondsareclassifiedaslevel 1intheIFRS13fairvaluehierarchyandhaveacarryingvalueof

£1,939,588kandafairvalue

of£2,080,833k.(2021–£2,209,381kand£2,651,334k).

The IFRS 13 fair value hierarchy is a categorisation relating to the extent that the fair value can be determined by

referencetocomparablemarketvalues.Thehierarchyrangesfromlevel1whereinstrumentsarequotedonanactive

marketthroughtolevel

3wheretheassumptionsusedtoderivefairvaluedonothavecomparablemarketdata.



 

22

NOTESTOTHEFINANCIALSTATEMENTS(continued)



10.FinancialInstruments(continued)

(b)Cashflowhedges

TheCompanydoesnothaveanycashflowhedges(2021–£nil).



(c)Liquidityrisk

Financialriskmanagement

LiquidityriskistheriskthattheCompanywillnotbeabletomeetitsfinancialobligationsastheyfalldue.

Theimmediateparent

companyisaregulatedutilitywithafive‐yearsettlementwiththeindustryregulator,whichallows

ittoplantoacertaindegreeofaccuracythefinancialobligationsinthemediumterm.Thismeansthattheneedtoobtain

additionalfinancehasbeenspreadoverfutureyearsandisnot

consideredonerousinanyoneregulatoryperiod.

Thefollowingarethecontractualmaturitiesoffinancialliabilities,includingestimatedinterestpayments:

Carrying

amount



Contractual

cashflows



Year1



Years2

to5



Over5

years



2022



2022



2022



2022



2022



£000



£000



£000



£000



£000

Non‐derivativefinancialinstruments



Bonds



1,939,588



3,491,570



55,281



213,765



3,222,524

Tradeandotherpayables



27,215



27,215



27,215



‐



‐

Totalfinancialinstruments



1,966,803



3,518,785



82,496



213,765



3,222,524

Carrying

amount



Contractual

cashflows



Year1



Years2

to5



Over5

years



2021



2021



2021



2021



2021



£000



£000



£000



£000



£000

Non‐derivativefinancialinstruments



Bonds



2,209,381



3,851,508



365,325



293,817



3,192,366

Tradeandotherpayables





36,163



36,163



36,163



‐



‐

Totalfinancialinstruments



2,245,544



3,887,671



401,488



293,817



3,192,366

(d)Marketrisk

Thereisnoexposuretoequityorforeigncurrencyrisk,theinterestrateriskisshownbelow.

Interestraterisk

Attheyear

2022



2021



£000



£000



Fixedrateinstruments



1,089,166



1,388,349

Indexlinkedinstruments



850,422



821,032



1,939,588



2,209,381



TheCompanypolicyistokeepanappropriatemixoffixedrateandindexlinkedfinancialinstruments.

23

NOTESTOTHEFINANCIALSTATEMENTS(continued)



10.FinancialInstruments(continued)



Sensitivity

Therearenofloatingrateinstrumentswheretheinterestchargeissubjecttochangesintheinterestrate.

Interestratesensitivity

All bonds are either fixed rate or index linked so movements in generalinterest rates do not  have an effect on the

Company.



Inflation

sensitivity

Indexlinkedbondsaresensitivetomovementsintheinflationrate.At1%increaseintheinflationratewouldhavethe

followingeffects.



2022



2021



£000



£000



Interestexpense



(8,504)



(8,210)

Interestincome



8,504



8,210

Netassets



‐



‐



(e)CapitalManagement

For the purpose of the Company’s capital management, capital includes issued capital, share premium and all other

equity reserves attributable to the equity holders of the parent. The primary objective of the Company’s capital

managementistomaximisetheshareholdervalue.

TheCompanymanagesitscapitalstructure

andmakesadjustmentsinlightofchangesineconomicconditionsandthe

requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the

dividendpaymenttoshareholders,returncapitaltoshareholdersorissuenewshares.TheCompanymonitorscapital

usingagearingratiofor

theparentcompanyWessexWaterServicesLtd(WWSL),whichisnetdebtdividedRegulatory

Capital Value (RCV).WWSL’s policy is to keep the gearing ratio  below 70%. The Company includes within net debt,

interestbearingloansandborrowings,lesscashandshort‐termdeposits.



11. Contingencies

Therearenomaterialcontingentliabilitiesat30June2022forwhichprovision hasnotbeenmadeintheseaccounts

(2021:£nil).



12. Relatedparties



Significanttransactionswithrelatedparties



2022



2021



£000



£000

InterestIncome:



Immediateparentcompany



86,738



78,707



Year

‐endbalancesowingby:



Immediateparentcompany



1,966,803



2,245,544



24

NOTESTOTHEFINANCIALSTATEMENTS(continued)



12.Relatedparties(continued)



Termsandconditionsoftransactionswithrelatedparties

The interest income received from related parties is made on terms equivalent to those that prevail in arm’s length

transactions.Note10(c)explainsthestrengthofWWSLintermsofitsLicencetooperate.Italsoexplainshow

therisks

ontheBondsaremitigated.WWSLguaranteesthebonds,henceprotectingtheCompanyfromanyrisk.



13.Ultimateparentcompanyandparentcompanyoflargergroup

ThesmallestgroupintowhichthefinancialstatementsoftheCompanyareconsolidatedisthatheadedbyWessexWater

Ltd,acompany

incorporatedinEnglandwhoseregisteredaddressisWessexWaterOperationsCentre,ClavertonDown,

Bath,BA27WW.

Thepre‐penultimate,penultimateandultimateholdingcompaniesareYTLCorporationBerhad,YeohTiongLay&Sons

HoldingsSdnBhd(bothregisteredinMalaysia)andYeohTiongLay&SonsFamilyHoldingsLtdregisteredin

Jersey.

The largest group in which the results of the Company are consolidated is that headed by YTL Corporation Berhad

incorporatedinMalaysia.Theconsolidatedfinancialstatementsofthesegroupsareavailabletothepublicandcanbe

obtainedfromMenaraYTL,205JalanBukitBintang,55100KualaLumpur,Malaysia.



14.SubsequentEvents

Therewerenosubsequenteventsrequiringdisclosureinthesefinancialstatements.



15.Accountingestimatesandjudgements

Therewerenoaccountingestimatesandjudgementsmadeduringtheyearthatwouldhaveamaterialimpactonthe

financialstatements.

