Ancala revenues lift as Havant Thicket progresses

Ancala, owner of Portsmouth Water, has announced a 12% increase in average annual revenues for 2024, generated from its portfolio of assets (split 52% across Europe, 27% in Asia Pacific, and 21% in North America).

In July 2024, Ancala successfully attracted £551m of capital in order to establish the Ancala Essential Growth Infrastructure Fund. From this, £120m of funding was set aside for Portsmouth Water’s new Havant Thicket reservoir.

Portsmouth Water has confirmed that it has secured planning permission and now started construction of the reservoir. Construction risk from this asset will remain elevated in terms of financial resilience, Ofwat has noted, but Portsmouth Water has been allowed to raise bills by 37% to underpin the investment, a much higher level than its water-only peers (with 22% on average).

Ofwat’s cost of debt allowance for Havant Thicket was 29 basis points lower than Portsmouth’s request of 4.29%. The gap was explained by lower allowances than requested for cost of embedded debt and liquidity costs, which Portsmouth will have to manage effectively. As a whole though, Portsmouth received a final determination for PR24 that was actually higher than the company requested; mainly because its forecasts for energy costs and business rates were lower than Ofwat’s assumptions. The company is also among the most efficient water companies, so put forward lower cost proposals compared to its peers.

However, in addition to constructing a new reservoir, Portsmouth Water also has to deliver a 15% reduction in leakage and reduce household water usage by 7% compared to its 2024-25 target. Ancala stated that its expertise and cross-sector network has helped Portsmouth Water to secure the necessary planning approvals for Havant Thicket, along with the debt financing.