Annual Report and Financial Statements for the year ended 31 March 2023
We are a 'Water Only' company. That means we supply clean water to our customers, but we do not manage or process waste water or sewage.
In fact,
we are the largest Water Only company. We own and manage the water assets and network in an area of approximately 4,500km2 across three supply regions in the South East of England. We have been supplying water to the local community for
more than 170 years.
948Ml/d
Daily amount of drinking
water supplied
3.89m
Customers served
1.49m
Household properties connected
£323.3m
Revenue
16900km
Lengths of mains network
1460
Number of employees (excluding directors)
91
Number of water treatments works
£14.0m
Operating Profit
1.71bn
Our Regulatory Capital Value (RCV)
1.44bn
Planned AMP7 investment
-£22.9m
Cash flow
£100.9m
Net loss (after tax)
We're taking care of your water now and for the future.
We supply high quality drinking water and take care of our environment, for our communities now and in the future.
Our vision is to be the UK's leading community-focused water company.
Each person at Affinity Water is guided by our principles - doing the right things for customers and delivering against our commitments and promises.
Be proactive
Make it easy
Show we understand
Show we care
Do what we say we will
Our purpose is to provide high-quality drinking water and take care of the environment for our communities now and in the future. Sustainability is embedded in our strategic thinking as a business and integrated in our daily activities.
1
ESG performance is essential to how we deliver our purpose and operate in a responsible and sustainable manner. It is part of the way we embed sustainability within our business, we use the environmental, social and governance (ESG) themes to understand both risk and the opportunity to add value.
2
Our capitals are the resources and relationships available to us. They are the inputs to our business that we transform through our decision-making process and operating activities into our strategic outcomes. We are starting to use the concept of capitals to guide our decision-making, for example, when considering land use and weighing the interests and benefits of recreation and biodiversity enhancements.
3
We engage with thousands of customers and stakeholders to help shape both our long-term water resource plans and shorter-term five-year business plans. Our long-term plans act as a roadmap for our shorter-term plans, which outline the investments we need to make and the price we can charge for water
Our plans address the challenges posed by climate change, population growth and the demand for water enabling us to continue to provide a sustainable, reliable supply of high-quality water and to take care of the environment.
4
Our customers and regulators expect us to act in the face of climate change. That means being a responsible steward of our local environment, reducing our own carbon emissions, and making sure we're prepared to operate within the context of a changing climate.
5
We have set ourselves the challenging target of achieving net zero for operational GHG emissions by 2030.
In the long term, we have an ambition to become fully net zero by 2045, ahead of the UK target of 2050.
6
At Affinity Water, we are driven by our purpose of providing high-quality water and taking care of our communities environment now and for the future
We are privileged to provide an essential public service and the opportunities that brings, to create value for the areas we supply, to help improve the environment, support the local economy, invest in our communities and adapt to the challenges that climate change is bringing to our region.
EU Taxonomy
EU Taxonomy is a classification system, establishing a list of environmentally sustainable economic activities.
It is a tool to help financial institutions and large companies in the EU navigate the transition of their assets to low carbon, scale up sustainable investment and implement the European Green Deal objectives, including the 2050 climate-neutrality target.
The system provides companies, investors and policymakers with appropriate definitions for which economic activities can be considered environmentally sustainable
Our review by an independent third party established that 100% of Affinity Water activities are eligible under the EU Taxonomy guidelines, and 88% of those activities can be considered as environmentally sustainable1.
1 Our review was completed in January 2023, based on 2021/22 performance and independently verified by Anthesis, a specialist ESG reporting consultancy who undertook an audit of Affinity Water activities. Our next review will be completed by end of calendar year 2023.
Principles of responsible investment
Our owners, DIF, HICL Infrastructure Company Limited (advised by InfraRed Capital Partners Limited) and Allianz Capital Partners on behalf of the Allianz Group, all follow the Principles of Responsible Investment ('PRI') the world's leading proponent of responsible investment. We align to these principles and report annually on our ESG performance.
The PRI works:
The six Principles for Responsible Investment offer a menu of possible actions for incorporating ESG issues into investment practice.
Principle 1:
We will incorporate ESG issues
into investment analysis and
decision-making processes.
Principle 2:
We will be active owners and
incorporate ESG issues into
our ownership policies and
practices.
Principle 3:
We will seek appropriate
disclosure on ESG issues by the
entities in which we invest.
Principle 4:
We will promote acceptance
and implementation of
the Principles within the
investment industry
Principle 5:
We will work together to
enhance our effectiveness in
implementing the Principles.
Principle 6:
We will each report on our
activities and progress towards
implementing the Principles.
TCFD
We are committed to the recommendations of the Task Force on Climate-related Financial Disclosures ('TCFD') providing our stakeholders with transparent information on climate-related risks and opportunities that are relevant to our business.
UNSDG
The United Nations SDGs ('UNSDGs') are a blueprint for achieving a better and more sustainable future for all. The 17 related goals address the global challenges we face, including those related to poverty, inequality, climate, environmental degradation, innovation and responsible consumption. However, there are nine UNSDGs where we believe our contribution is particularly aligned, and these influence our thinking. We have set these out throughout our Strategic Report to highlight where we feel we are contributing towards the goals.
Third year of our 2020-25 business plan
Every five years, water companies produce business plans that set out the performance commitments they will make over a five-year period. These plans are shaped by customers and other stakeholders based on what they want their water company to achieve.
Our performance in 2022-23
Link to KPI
Water quality
Our performance in 2022-23
Link to KPI
Leakage
PCC
Our performance in 2022-23
Link to KPI
D-MeX
C-MeX
Our performance in 2022-23
Link to KPI
D-MeX
Mains repairs (due to bursts)
Water supply interruptions >3 hours
Unplanned interruptions to supply over 12 hours
Revenue £m
Operating profit £m
Profit/[loss] for the year £m
Net Debt £m
Regulatory Capital Value (RCV) £m
Gearing %
Cash flow £m
Capital investment £m
Dividends paid £m
The £100.9m loss for 2022/23 is primarily made up of:
14.0m
Operating profit
£(150.2)m
Net Finance Costs
£23.5m
Net Fair value gain on derivatives
£11.8m
Taxation credit
Finance costs have been impacted by the high levels of inflation, as a number of our bonds are index-linked.
We beat our leakage target this year, a milestone we should celebrate. Affinity Water has one of the toughest leakage-reduction targets in the water industry and I would like to thank everyone for their hard work.
Ian Tyler
Chairman
I would like to thank all our teams at Affinity Water who have worked incredibly hard to deliver on our challenging performance commitments and work through record breaking summer temperatures, drought and a freeze/thaw event in the winter.
Keith Haslett
CEO
The systems that Affinity Water will work within:
The people that Affinity Water will work with:
Aims:1
Leave the environment in a sustainable and measurably improved state.
We will work with our customers and communities to restore the environment into a sustainable state where it can regenerate itself so that it can continue to provide its assets and services to support current and future generations who will enjoy its natural wealth.
Objectives:
Link to UNSDG
Aims:2
Be prepared for change, and resilient to shocks and stresses.
We will invest with our stakeholders to create a more resilient community able to cope with and respond to an increasingly uncertain future.
Objectives:
Link to UNSDG
Aims:3
Work with our communities to create value for the local economy and society.
Create a collaborative relationship with all our communities, allowing us to act together with common purpose to deliver a society and environment that are mutually sustainable, based on:
Objectives:
Link to UNSDG
Aims:4
Deliver what our customers need, ensuring affordability for all.
We will develop a constructive, collaborative relationship with our customers which enables us to work together to deliver for the future.
Objectives:
Link to UNSDG