Interim results

In the first six months of the year, we continued to demonstrate strong performance to meet our 2023‐24 regulatory targets and performance indicators.


Customers rightly have high expectations of the water services they receive and the way we protect the environment around us.

In the first half of this financial year, we have finalised our business plan for 2025‐2030. We submit these business plans to our economic regulator, Ofwat, every five years. This sets out what we need to do to maintain our existing assets, to build new ones and to meet the requirements of customers, new development and our various quality regulators.

This plan represents a major change – we are proposing to double our current level of investment to £3.5bn and to deliver a massively ambitious set of outcomes. The plan will not only reduce pollution, storm overflow operation and leakage, but at the same time leave more water in the environment to cater for all our needs over the long term.

We've listened closely to our customers and as a result our plan invests in the areas they care about. It will be challenging for us all – shareholders will have to provide more investment and, regretfully, customers will have to pay higher bills. But we will always protect our hardest hit customers – we will make sure bills are affordable for all. If we all collaborate and pull together, we can strike a balance and achieve the very best outcomes for all.

In a dynamic environment marked by shifting regulatory landscapes and global uncertainties, our commitment to sustainable water management, efficient delivery, and operational excellence serves as the bedrock of our activities. We are consistently seen by our independent regulators as leaders across the industry.

Ensuring the health, safety and wellbeing of all our colleagues will always be one of our highest priorities. Investigations continue after the tragic incident at Avonmouth in December 2020. The Board focuses its health and safety activity through a dedicated sub‐committee, supported by an advisory board of leading health and safety and process safety specialists.

Providing resilient services

This is reflected in our performance for the last six months, which has been stable or improving across all our key targets. However, climate change continues to drive real changes in weather patterns – we have seen the hottest June in the UK since records began in 1884, significant flooding events, and more frequent, more intense rainfall.

These events all have significant impacts on our operations, but we have continued to provide resilient services to our customers throughout. This is something we are immensely proud of but cannot take for granted.

Significant investment is required to ensure we maintain these levels of service in increasingly unstable and extreme weather events. We are also committed to playing our part in solving the climate emergency.

Traditional approaches across industry involve infrastructure built of concrete and steel, which is carbon and often chemical heavy. Such an approach would be at odds with our drive to support nature recovery and to reach net zero 10 years earlier than the wider economy.

Instead, we are pursuing alternative approaches wherever these are allowed by policy and regulation, are cost effective and in line with customer preferences. We use innovation to enhance our work, from harnessing advances in technology, design and data insight on one hand, to new ways of working, new partnerships, and new mindsets on the other.

Improving environmental performance

In the first six months of the year, we continued to demonstrate strong performance to meet our 2023‐24 regulatory targets and performance indicators, against the ongoing challenges of volatile weather patterns and tighter regulatory standards.

We are currently the leading water and sewerage company for customer service and for drinking water quality. We have also made substantive improvements against the Environment Agency’s assessment of environmental performance and, for the 2023 calendar year, are currently rated in the leading category, 4 star with one month to go.

We are further through a major programme of investment to monitor all parts of our sewerage network so that we can predict changes that may lead to pollution incidents, and we continue to support calls for government to ban wet wipes, which cause the majority of blockages that result in pollutions.

We have also made great progress on a number of significant engineering schemes across our region, including places such as Bath and Bradford‐on‐Avon, to reduce the frequency of storm overflow spills.

Leading customer service

Our regulator, Ofwat, has just published customer experience scores for the first half of the year and confirmed that we remain top of the leader board for water and sewerage companies. We have also been revealed as the top performing water and sewerage company in CCW’s latest household complaint‐handling report published in October.

Each year, CCW compares the performance of water companies on the number of complaints they receive per 10,000 connections and assesses how well complaints have been handled. We were one of just two water and sewage companies to achieve good performance in total complaints and better than average performance in complaint handling. The report also acknowledges our track record for consistently holding a sustained lead in this area.

It has also been a tough year for many of our customers, with extremely high energy prices and food bills fuelled by continuing high inflation. With budgets squeezed, affordability has become increasingly difficult for many, particularly for those in vulnerable circumstances.

We have always devoted a lot of attention to our range of support packages, which are collectively called our tailored assistance programme (tap), to help our customers afford their bills through very difficult times. It is now quicker and easier than ever to access these packages and we are committed to eradicating water poverty in our area.

Delivering financial stability

We are acutely aware of the media and public concern around the financial stability of a small number of water companies. However, our financial position remains very stable, and our investors are committed to maintaining simple financial structures and robust credit metrics.

Results for the half year show operating profit increased by £10.8m from £67.2m to £78.0m, whilst the position after taxation eroded from a profit of £3.8m in 2022 to a loss after taxation of £8.0m. Total revenues increased by £20.2m from £266.8m to £287.0m. Regulated tariff revenue increased by £17.5m, mainly due to price rises allowed by Ofwat. Operating costs increased by £9.4m from £199.6m to £209.0m.

There were significant upward pressures on costs due to continuing high energy market prices, general high inflation within the economy and new obligations such as phosphorus removal, partially offset by on‐going efficiency programmes.

Net financing expenses increased by £29.8m from £61.3m to £91.1m. Financial expenses increased by £35.0m as a result of high inflation impacting on our index linked bond portfolio against which there was a £0.2m reduction in the interest costs relating to IAS 19 pension accounting.

Financial income rose by £5.0m as a result of higher interest rates on short and medium term deposits. Net capital investment for the six months was £161.9m, a significant increase on £100.7m last year and remains consistent with the timing of the construction programme for the current regulatory period.

The increased level of spend meant Regulatory gearing eroded by 0.4%. The regulatory capital value increased by £406.1m to £4,184.3m primarily as a result of the high levels of inflation applied as part of the calculation. Since privatisation the regulatory capital value has continued to reflect the growth of the size of the business and the investment programme.

Total taxation, including deferred tax, reduced from a charge of £2.1m last year to a credit of £5.1m this year. There was no tax paid in either period due to the availability of the super deduction for capital expenditure.

Dividends declared for the six months to 30 September 2023 were £37.0m, a reduction from £41.1m for the same period last year. Cash and cash equivalents ended the period at £27.2m, reducing by £137.3m from an opening cash reserve of £164.5m. The net cash inflow from operating activities was £87.2m less cash outflows from investment activities of £27.0m less net cash outflows from financing of £197.5m.