Anglian half-year results: balance sheet still under pressure

(by Verity Mitchell)

Anglian Water’s half-year revenue increased by 20.8%, reflecting regulatory price changes and higher household demand. Operating profit increased by 37.8% to £376.1m. Capital expenditure was up 3.6% to £547.3m — a smaller increase than the double digit increases of some of its peers.

The company has made progress in key areas such as water recycling, tackling internal and external flooding, and reducing blockages. In Ofwat’s 2024/25 Water Company Performance Report, Anglian moved from “lagging” to “average” performance after two years in the lower tier. The Environment Agency also maintained its two-star rating in its annual Environmental Performance Assessment.

In July, management agreed a £62.8m enforcement package with Ofwat which is being paid by Anglian Water and its shareholders, not customers, in response to failures in its wastewater systems.

The Competition and Markets Authority proposed a provisional redetermination featuring a 1.2% increase in allowed revenue, reflecting a higher weighted average cost of capital of 4.29%, partly offset by a 0.8% reduction in allowed totex. It also included adjustments to certain performance commitments and Outcome Delivery Incentives. Anglian has responded by challenging the approach to base cost modelling and seeking further consideration of the cost of capital, asset health funding and performance stretch.

Anglian’s shareholders committed £500m of new equity to the group, with £300m received in September. The remaining £200m is due in June 2026. However, On 5 November 2025, Ofwat published its Monitoring Financial Resilience Report 2024-25, which moved Anglian Water from ‘standard’ to ‘enhanced’ monitoring, which reflected factors such as the increase in AWS gearing from 68.9% to 71.8% year-on-year, and the credit rating actions taken by Moody’s (A3 to Baa1) and S&P (A- to BBB flat) in February 2025. Management has set out a plan to reduce gearing to approximately 65% by March 2030.