Affinity Water Finance (2004)
PLC
(the
"Company")
£250m of
5.875% Sterling Denominated Guaranteed Notes Due 2026
issued by
the Company and guaranteed by Affinity Water Limited ("Affinity
Water")
AFFINITY WATER ACCEPTS FINAL
DETERMINATION FROM OFWAT AND ANNOUNCES PLANNED EQUITY
INJECTION
17
February 2025
Affinity Water is pleased to
announce its acceptance of the Final Determination from the
industry regulator, Ofwat, for the investment period covering the
2025-2030. This plan sets out a comprehensive investment programme
of £2.3 billion, designed to ensure the long-term sustainability,
resilience, and affordability of our water services for the diverse
communities we serve.
In order to support the planned
investment, shareholders have entered into a legally binding and unconditional agreement to inject £150
million equity into Affinity Water Limited before 31st
March 2026.
Investment Focus Areas
The approved Business Plan
prioritizes significant investment in the following key
areas:
1. Enhancing
Water Quality: Further enhancing the provision of
high-quality drinking water for our customers through investment in
water treatment facilities and strategic distribution
network.
2. Leakage
Reduction: Delivering a significant reduction in leakage
across our network, utilizing advanced detection technologies and
innovative infrastructure solutions.
3. Water
Efficiency: Supporting customers to reduce water consumption
through tailored advice, education programmes, and smart metering
initiatives.
4. Resilience to
Climate Change: Strengthening our infrastructure to adapt to
the challenges posed by climate change, including enhanced flood
protection and drought preparedness measures.
5. Environmental
Improvements: Enhancing biodiversity and improving water
quality in rivers and catchments through targeted environmental
schemes and partnerships.
6. Customer
Experience: Continuing to innovate and improve our service
delivery to meet the expectations of our customers, including
faster response times, digital service enhancements, affordable
bills, and extending our social tariff.
7. Maintaining
Asset Health and Resilience: Ensuring the ongoing
reliability and efficiency of our infrastructure through proactive
maintenance and long-term investment in asset
resilience.
Commitment from Our Shareholders
We are delighted to confirm a
legally binding and unconditional commitment by our shareholders to
inject £150 million equity before
31st March 2026 to support the delivery of this
ambitious investment programme. This substantial financial
contribution underscores their confidence in Affinity Water's
long-term strategy and their dedication to ensuring the success of
our business. The equity injection will play a pivotal role in
strengthening our financial resilience and enabling the efficient
execution of our investment priorities.
Capital Structure and Gearing Commitment
The Board of Affinity Water reaffirm
their commitment to maintaining strong levels of financial
resilience throughout AMP8, which has been a cornerstone of the
Business Plan since inception.
The Board is committed to ensuring
that our covenant gearing level falls to around 70% by
31st March 2026 and sees this level of gearing as a
sustainable level for AMP8. Based on current rating agency
methodologies, we believe that this will underpin our current Class
A credit ratings of A3, BBB+, and BBB+ (Moody's, Fitch,
S&P).
This level of financial resilience
aligns with industry standards and ensures that Affinity Water
maintains a robust financial position while continuing to invest in
essential infrastructure improvements.
Dividend Policy and In-the-Round Assessment
Affinity Water remains focused on
a responsible and sustainable
dividend policy, ensuring that distributions to shareholders
take account of performance for customers and the environment,
investment needs, and financial resilience. The in-the-round
assessment of our financial position considers our projected cash
flows, investment requirements, and gearing strategy, reinforcing
our ability to deliver long-term value to all stakeholders. The
commitment to a prudent and
transparent approach ensures that investment priorities and
financial stability remain at the forefront of our
strategy.
Statement from the Chief Executive Officer, Keith
Haslett
"The Final Determination is substantially aligned to our
Business Plan; this is our reward for creating a high quality and
ambitious Business Plan, with a clear delivery strategy. Our £2.3bn
investment programme will deliver improvements for customers and
the environment throughout the 2025-2030 period and beyond. We have
an unwavering commitment to delivering high-quality, sustainable,
and affordable water services for our customers.
The legally binding and unconditional £150 million
equity commitment from our shareholders is a testament to their
belief in our strategy and their dedication to supporting the
ambitious investments required to meet the challenges ahead. This
investment will enable us to deliver long-term resilience while
ensuring we maintain a balanced and sustainable capital structure.
Our shareholders' commitment to maintaining gearing at around 70%
provides a strong financial foundation to support infrastructure
enhancements.
Furthermore, our approach to dividend policy remains
responsible and aligned with long-term sustainability. We are
committed to a balanced framework that supports new investment
while ensuring that returns to shareholders remain consistent with
our financial stability and obligations to our stakeholders. By
taking an in-the-round approach, we ensure that our strategic
priorities, financial resilience, and customer interests are fully
aligned as we implement our ambitious plans."
Statement from the Chair, Mike Brown
"The approval of our Business Plan marks an important
milestone for Affinity Water, reinforcing our commitment to being a
responsible and forward-thinking provider of essential water
services. The legally binding and unconditional £150 million equity
commitment from our shareholders underscores their confidence in
our vision and supports the execution of this critical investment
programme.
In
addition to this significant capital commitment, our commitment to
maintaining gearing at around 70%, ensures that we maintain a
robust financial structure that enables continued investment in
essential infrastructure. This approach not only safeguards our
financial resilience but also ensures that we can continue to
provide high-quality water services.
Our dividend policy remains firmly grounded in responsibility
and sustainability, striking the right balance between shareholder
returns and investment in the business. Our in-the-round assessment
on dividends will take account of
performance for customers and the environment, financial stability, and the
need to attract equity capital to support delivery for customers. I
would like to thank our employees, customers, and stakeholders for
their support in shaping this plan, which will secure a resilient
and sustainable water future for the communities we
serve."
Affinity Water remains committed to
delivering these priorities and will provide regular updates on
progress throughout the 2025-2030 regulatory period.
ENDS
For further
information, please visit our website or contact:
Company.secretary@affinitywater.co.uk
Please
direct any media queries to the publicaffairs@affinitywater.co.uk
Affinity
Water Limited
Tamblin
Way
Hatfield
Hertfordshire
AL10
9EZ
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