Portsmouth makes good progress, Havant Thicket now the focus

(by Verity Mitchell)

Portsmouth Water has reported full-year results. Revenues increased by 21% to £60.1m, due to the inflationary and regulatory increases across both household and non-household customers. EBITDA was £20.7m compared to £13.6m, up 52%. Profit before tax was £4m, up 137%.

Debt/Regulatory Capital Value was 47.8% reflecting shareholders’ capital injections and loans in 2023 and 2024. Cash dividends were £3m vs £2.8m, up 5.2%. Investments were £33m for the regulated company and £81m to progress the Havant Thicket Reservoir (HTR).

A critical focus of the reservoir project is the progression of a second Cost Adjustment Mechanism (CAM2) with Ofwat to update the agreed costs of delivering the scheme. This follows adjustments to mitigate unforeseeable ground conditions and alignment with Southern Water’s proposed recycling scheme. Following structured engagement with Ofwat, Portsmouth submitted a CAM2 submission in May, to secure an appropriate adjustment to regulatory allowances. Ofwat’s decision is planned for later in 2026.

Portsmouth met or exceeded ten of its 15 performance commitments. In 2025-26, it renewed 10.4km of mains, beating the regulatory target of 7.8km. It installed more than 15,000 smart water meters, significantly above the regulatory target of 3,200. Based on the results of an independent survey of customers for overall customer satisfaction, it was ranked second out of 17 companies. Management forecast Portsmouth will therefore earn a reward of £0.38m (2024-25: £0.1m). In 2025-26, it received rewards and incurred penalties with overall a net penalty of £0.5m. This is an improvement on the level of penalty it incurred in 2024-25 (£1m). RORE was 5.42%, up from 4.15% in the prior year. Portsmouth received rewards for five performance commitments: water supply interruptions; unplanned outages; C-MeX (it has improved its ranking to second place this year now its new billing system is operational); D-MeX and BR-MeX. It incurred penalties for a further five measures: leakage; per capita consumption; business demand; water quality contacts; and greenhouse gas emissions.

Ofwat continues to highlight the risks associated with the Havant Thicket Reservoir, largely due to the scale and complexity of the project and the size of the investment required compared to the size of the company itself. Ofwat has also highlighted the current relatively low level of regulatory gearing, but expects this will rise over the period of full construction of the reservoir. 

The company has begun discussions with its shareholders and banks regarding the extension and expansion of the equity and debt funding available to complete the capital expenditure and operational plans set out in its 2025-30 business plan, including a large part of the remaining construction of HTR. It is anticipated these discussions will continue and agreed additional funding for the business will be secured later in 2026.