Portsmouth: good AMP8 progress and more capital needed for Havant Thicket

(by Verity Mitchell)

Portsmouth Water reported half-year results in late December. Turnover was up 19%, driven by allowed price increases and bulk water sales to Southern Water. Operating profit, post the pension non-cash accounting charge, was up 37.5% to £5.5m. No interim dividend for the current year has been declared.

Total capital spending in the six-month period was £63.3m, compared to £37.4m in the prior period, up 69%. Capital expenditure on the Havant Thicket (HT) reservoir construction was £41.6m, bringing the total cumulative spend on the project at 30 September 2025 to £177m. Portsmouth’s wider capital programme investment at the half year was £21.7m. Management expected the pace of investment to increase further over the second half year as new projects are initiated.

HT construction:

2025-2026 is first year of full construction of the reservoir at HT. Management reported that significant progress had been made with construction of permanent works, ground improvement earthworks, and drainage. Portsmouth Water continues to make changes to the design of the reservoir in response to ground conditions and to cater for the recycled water scheme planned by Southern Water.

The wider Portsmouth Water group, including its UK parent companies, raised £495m of financing over the previous regulatory period from 2020-2025, primarily to support the construction of the HT reservoir and other capital enhancement projects. Management said it expects to raise further equity and debt facilities in 2026 to accommodate the increase in costs associated with the changes in the HT project design.

AMP8 arrangements:

Like some of its peers, Portsmouth Water has established new working structures and partnerships to deliver the increased investment and performance needed for AMP8. This has included a new directorate under a new chief asset officer, which is focusing on long-term planning and asset management. Portsmouth Water is on track to deliver its investment plan commitments and has ‘on boarded’ a new supply chain partner to deliver the capital programme. A single infrastructure framework has been established, which includes smart metering roll out, two new non-infrastructure frameworks signed and, for the first time, a professional service framework to improve the technical specification and efficiency of the capital schemes. It has developed a new asset strategy and capital programme assurance scheme for AMP8.

Portsmouth Water has a top ranking in C-MeX for customer service and satisfaction which management attributes partly to its decision to migrate to the Kraken billing system. More generally, it has achieved nine of its 15 performance commitments but missed leakage, water quality contacts, business and household demand targets — and might also miss its mains repairs target because of the dry summer. It also reported that it is on track with seven out of nine Price Control Deliverables, with further progress needed on lead pipe replacement and climate change resilience.