Interim results

Overview

Our customers rightly expect us to deliver high-quality services, protect the natural environment, and operate with transparency and integrity. These expectations come at a time of significant external pressures: climate volatility, economic uncertainty, and an industry-wide trust deficit.

So far this year, we are ahead or on track for the majority of our 23 Performance Commitments. Our performance also remains strong when benchmarked across the sector and, in Ofwat’s recently published performance report for 2024-25, we achieved 8 out of 12 green ratings, which, along with Northumbrian, was the most of any company.

Customer service remains a cornerstone of our approach. Despite wider industry challenges, our teams continue to deliver exceptional service. We maintained a high C-Mex score, Ofwat’s measure of customer experience, and our Trustpilot rating remains strong at 4.5. However, we recognise that trust must be earned, not assumed.

Our customers expect consistent delivery, responsible investment, and meaningful engagement. We are committed to meeting those expectations.

Improving our performance

Affordability remains a key concern, especially as cost-of-living pressures persist. We are expanding our support for customers in financial difficulty, with a clear ambition: by 2030, no household will spend more than 5% of its disposable income on water. Currently, 84,000 households have reduced charges through our Tailored Assistance Programme. We have recently reviewed our action plan to increase this further.

Improving environmental performance is also central to our mission. We are investing in technology and infrastructure to improve river health and reduce pollution. For example, we are scaling up our in-sewer monitoring from 3,000 to 10,000 units over AMP8, with 2,300 installed already this year and implementing a “solve at source” strategy to address wastewater challenges holistically. This includes customer-facing initiatives to manage rainwater, such as promoting rain gardens and water butts to reduce stormwater entering sewers, as well as a £300m sewerage investment plan to seal pipes and expand treatment capacity by 2030.

Water supply resilience is also under close scrutiny. Following a dry spring and summer, reservoir and aquifer levels are below average. The dry weather also causes ground movement, which in turn damages our pipes and increases leakage. While we do not foresee immediate supply issues, we are therefore intensifying efforts to reduce leakage and promote responsible water use. Over the past six months, we have also optimized abstraction, protected raw water sources and started our smart metering programme.

Investing more for the future

Six months into AMP8, we remain focused on delivering our ambitious 2025-30 business plan. The Competition and Markets Authority (CMA) has now published its provisional determination following our referral, and we are reviewing its findings carefully.

Subject to the CMA’s redetermination, we plan to invest over £2 billion more than in the previous period, targeting improvements in leakage, storm overflow management, and water supply resilience.

We will prioritise nature-based solutions, decarbonisation, and are collaborating on delivery with our supply chain and YTL Construction colleagues.

Following the Independent Water Commission’s report, we continue to advocate for catchment-based approaches, simplified regulation, and nature-positive solutions. We are proud to support the Sustainable Solutions for Water and Nature (SSWAN) coalition, which promotes integrated, low-carbon strategies across water, farming, planning, and development. A unified regulatory framework is essential to achieving better environmental, social, and economic outcomes.

Building on strong foundations

YTL continues to demonstrate ongoing support for the company, underpinned by the strength of its long-term commitment and its distinctive approach to ownership, which is rooted in stewardship in perpetuity. This philosophy ensures stability and alignment with our strategic objectives, enabling us to pursue sustainable growth.

YTL’s backing of our investment programme, including the proposal within the business plan to reinvest dividends, reflects a shared vision for reinvesting in the business and maintaining strong liquidity.

Our colleagues remain the foundation of our success. Their safety, wellbeing, and development are our top priorities, with the Health and Safety Committee continuing to guide our efforts.

Through the YTL Academy, we are nurturing future leaders - offering 60 places this year across apprenticeships and graduate programmes.

Safeguarding the environment

The first six months of 2025-26, and our 2025-30 delivery plan have seen continued work and investment to maintain and enhance services to both customers and the environment.

We are pleased to see performance generally being maintained or improving on last year, although we recognise the need for improvement in certain areas.

Of the key measures for customers and the environment, there are just two metrics reported, which show reduced performance from last year.

Leakage levels this year have significantly increased as a result of the prolonged dry and warm weather experienced. Our focus remains on leak detection and repair, and we would hope to reduce levels from the peaks experienced.

Discharge permit compliance has also reduced from last year, with three sites currently not meeting compliance. Two of these are at water treatment centres, and we are reviewing our wash-water treatment systems at all our water treatment sites to improve compliance.

Delivering financial stability

Results for the half year show operating profit increased by £48.2m from £97.7m to £145.9m, whilst the position after taxation improved from a profit of £19.6m last year to a profit after taxation of £50.1m this year.

Total revenues increased by £78.7m from £332.5m to £411.2m. Regulated tariff revenue increased by £73.6m, mainly due to price rises permitted under the regulatory mechanism.

Operating costs increased by £30.6m from £236.6m to £267.2m. Labour costs of £83.9m were £6.0m lower, partially reflecting the transfer of staff to YTL Construction, a group company set up in November 2024 with the purpose of delivering the Wessex Water capital programme. Against this, annual pay increases, which take effect from 1 April each year, increased costs by £2.8m period-on-period or 3.5%.

There were upward pressures on energy costs, Environment Agency charges and cloud-based technology with a combined increase of £5.3m. Expected credit losses grew by £4.9m as a result of a one-off charge relating to the new billing system and the effect of new tariff pricing, with underlying collectability remaining constant.

New obligations, such as phosphorus removal, added a further £2.9m of costs and capitalisation was reduced by £19.1m, reflecting the new arrangement for capital programme delivery.

Depreciation and amortisation increased by £4.3m from £62.8m to £67.1m primarily as a result of new asset construction.

Net financing expenses increased by £4.0m from £74.4m to £78.4m. Financial expenses increased by £7.0m as a result of increased levels of borrowing to fund capital investment, whilst financial income increased by £3.0m, reflecting the timing of new borrowing and holding funds in short and medium-term deposits.

Net capital investment for the six months was £207.7m, which represents an 82% increase when compared to the £114.2m spent during the same timeframe at the start of the previous regulatory period.

Current spend levels are consistent with the timing and doubling in size of the construction programme for the current regulatory period. The ongoing level of spend meant Regulatory gearing increased by 1.0%.

The regulatory capital value increased by £332.1m to £4,734.4m primarily as a result of the high levels of capital investment 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, increased from a charge of £3.7m last year to a charge of £17.4m this year, reflecting the increased levels of profitability. There was no tax paid in either period due to the availability of full expensing for capital expenditure.

Consistent with the position set out by the Board in the Company’s PR24 Business Plan, there were no dividends declared for the six months to 30 September 2025, a reduction of £37.0m for the same period last year.

Cash and cash equivalents ended the period at £67.0m, reducing by £491.5m from an opening cash reserve of £558.5m. The net cash inflow from operating activities was £116.5m, less cash outflows from investment activities of £204.2m, less net cash outflows from financing of £403.8m.