|
Registered number: 11079841
ANCALA WATER SERVICES INVESTCO LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
COMPANY INFORMATION
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
CONTENTS
|
|
|
|
|
|
|
|
|
Independent auditors' report
|
|
Consolidated statement of comprehensive income
|
|
Consolidated balance sheet
|
|
|
|
|
Consolidated statement of changes in equity
|
|
Company statement of changes in equity
|
|
Consolidated statement of cash flows
|
|
Notes to the financial statements
|
|
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2026
The Directors present their strategic report and the audited financial statements for the year ended 31 March 2026.
The Company was incorporated on 23 November 2017 and the principal activity is that of a holding company to the below companies.
Holding Companies:
Ancala Water Services Topco 1 Limited
Ancala Water Services Topco Limited
Ancala Water Services Midco 1 Limited
Ancala Water Services Midco 2 Limited
Ancala Water Services Holdco Limited
Ancala Water Services Bidco Limited
Trading Companies:
Ancala Water Services (Estates) Limited
Ancala Water Services (Defence) Limited
Ancala Water Services (Estates) Limited and Ancala Water Services (Defence) Limited
Ancala Water Services (Estates) Limited (AWSE) operates a Public Private Partnership Concession Contract with the Ministry of Defence (MOD) for water and wastewater services covering the areas of Wales and the South West of England for a 25-year period which commenced on 1 December 2003.
Since commencement all operational activities required in delivering the contract as specified by the MOD on behalf of Ancala Water Services (Estates) Limited (AWSE) have been carried out under contract by Ancala Water Services (Defence) Limited (AWSD).
Financial performance and outlook
|
Turnover for the year was £75,445k (2025 - £73,057k). Operating profit was £8,003k (2025 - £13,861k). Net assets at the conclusion of the financial year were £21,910k (2025 - £21,741k). Profit for the year was £5,002k (2025 - £9,158k). Dividend payments were £5,000k (2025 - £3,000k).
The Group continued to invest in systems, equipment, technology and employee training, with a strong focus on improving operational efficiency to support our goal of delivering sustainable water and wastewater asset management. The Group remains well-positioned to achieve its vision of “delivering a sustainable future” and will continue to strengthen its partnership with the MOD to ensure effective and resilient service delivery.
During the year, a special resolution cancelled the share premium account of the Company. Consequently, the balance was transferred to retained earnings and became available as distributable reserves.
The health and safety of employees and contractors remains a top priority for the company, with regular board-level oversight of safety performance, risks, and practices. All statutory reporting requirements were met, with investment in training, simulated health and safety exercises, and comprehensive health surveillance and health insurance provided for all employees, reinforcing our commitment to wellbeing.
Environmental performance and water quality standards are closely monitored, enabling proactive risk management and compliance. No formal penalties or enforcement actions were issued by regulatory bodies during the year, reflecting strong environmental governance and operational discipline.
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2026
Key performance indicators
|
The Group measures overall performance by monitoring activities against four key strategic priorities:
∙Deliver our customer and regulatory commitments.
∙Develop and engage our people.
∙Improve performance, efficiency and effectiveness.
∙Deliver sustainable growth.
Deliver our customer and regulatory commitments
The Group has delivered strong operational performance, achieving 99.97% compliance with water and wastewater quality standards. The Group continues to focus on maintaining and investing in its assets through its targeted plan to achieve required asset condition standards. Leakage performance was 1.89 Mm3 during the period, broadly in line with prior year performance. The Group also demonstrated strong health and safety performance for the year, with an index score of 5.95 against an internal target of 6.0.
Develop and engage our people
The Group continues to invest in its people, processes, training and development, with employee wellbeing and engagement remaining a priority. The annual independent employee engagement survey, conducted by WorkBuzz, resulted in an engagement score of 83% compared with a target of 80%, this remained above the industry average. The Group also continues to offer a range of employee benefits, including life assurance, critical illness insurance, a cash plan, enhanced pension contributions, and enhanced statutory payments for permanent employees.
Improve performance, efficiency and effectiveness
Operating profit is a key indicator of performance throughout the year and was £8,003k (2025 - £13,861k).
The Group will continue to focus on improving operational performance and delivering efficiencies by making full use of investment in new systems and by continuing to invest in the development of its people. The Group will also continue to support local communities through charitable and community initiatives where appropriate.
Deliver sustainable growth
The Group will continue to work in partnership with its current customers and will actively seek opportunities to support sustainable growth across the business.
Principal risks and uncertainties
|
Strategic, financial, commercial, operational, social, environmental and ethical risks are all considered as part of the Group’s controls, which are designed to manage rather than eliminate the risk of failure to achieve business objectives. Therefore, they can only provide reasonable, not absolute, assurance against material misstatement or loss provided for in the contract. At present there are no immediate risks identified which are considered likely to have a significant impact on the short or long-term value of the Group.
The Group continues to monitor risks associated with inflation, global geopolitical tensions, interest rate pressures, potential political changes, and cybersecurity. Inflation has been a more prominent factor over the past 24 months, however, its impact has been limited due to contractual protections with primary customers, whereby charge-out tariffs are adjusted annually in line with inflation.
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2026
Ongoing global conflicts have not negatively impacted performance to date, and no material change is anticipated in the next 12 months. Any rise in interest rates is expected to have limited impact, as the Group successfully refinanced in September 2023 through to 2028, and all interest-bearing debt is fully hedged via interest rate swaps.
While cybersecurity remains a key risk, the Group has continued to enhance its systems and provides quarterly training and awareness updates to all employees alongside phishing simulations to keep all users aware.
The primary 25-year contract with MOD runs to 30 November 2028 and the strategic partnership and relationship with the customer, the Defence Infrastructure Organisation (DIO), remains positive.
During the 2025/26 financial year, the Defence Infrastructure Organisation (DIO) concluded its quinquennial review of asset condition grading. The outcome was less than £300k and was well within forecast, with Ancala Water Services continuing to meet its obligations under the Aquatrine contract.
Over the past three years, the Group has invested £18.3 million in Ministry of Defence (MOD) assets, demonstrating a sustained focus on asset quality and service delivery. A further £3.6 million of capital investment is planned for the coming year to continue supporting infrastructure improvements and contractual commitments.
Financial risk management
|
The Group’s non-derivative financial instruments comprise bank balances, intercompany balances, trade debtors and trade creditors. The main purpose of these instruments is to finance the Group’s operations. The liquidity risk of trade creditors is managed by ensuring sufficient funds are available to meet amounts due.
In respect of bank balances, the liquidity risk is managed by maintaining a balance between the continuity of funding and flexibility through the operation of intercompany cash management and forecasting.
Trade debtors are managed in respect of credit and cash flow risk by policies concerning the credit offered to customers and the regular monitoring of amounts outstanding for both time and credit limits. The amounts presented in the balance sheet are net of allowances for doubtful debtors.
The Group has in place a risk management programme that seeks to limit the adverse effects on the financial performance by monitoring levels of debt finance and the related finance costs.
Price risk
Due to the relatively small size of the Group’s operations and the nature of its contract with DIO, there is little exposure to commodity price risk. Given the rise in inflation, management has recognised this will need to be continually assessed, however, the costs of managing exposure to commodity price risk currently exceed any potential benefits. The directors will revisit the appropriateness of this policy should the Group’s operations change by monitoring levels of debt finance and the related finance costs in AWS Holdco.
The Group fully accounted for the PR24 price review by the water companies and subsequent CMA reviews, which are in part set off by the indexation mechanism in the principal contract on the income tariff. Management has undertaken a sensitivity analysis and assessment of the risk and impact of PR24 price review OFWAT determination which has been modelled and included in future financial plans through to the end of the principal contract.
Credit risk
The MOD is the primary customer of the Group, and therefore credit risk is assessed as very low.
Liquidity risk
The Group actively maintains a mixture of long-term and short-term debt finance in AWS Holdco, that is designed to ensure the Group has sufficient available funds for operations.
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2026
Interest rate cash flow risk
The Group uses a derivative financial instrument in the form of an interest rate swap to reduce its exposure to interest rate fluctuations on its floating rate bank loan. This is in line with the Group’s strategy to continue to reduce its exposure to interest rate fluctuations.
Directors' statement of compliance with duty to promote the success of the Group
|
The Board of Directors consider, both individually and together, that they have acted in the way they consider, in good faith, would be most likely to promote the success of the Group for the benefit of its members as a whole (having regard to the stakeholders and matters set out in s172(1) Companies Act 2006) in the decisions taken during the year ended 31 March 2026.
The Group is committed to being a responsible business. Our mission is to own and manage water and wastewater assets and optimise operations to create value for customers and shareholders. The core values that underpin the strategy and objectives are Integrity, Passion, Ambition and Inclusivity. This is demonstrated and actively encouraged in dealings with our employees, customers, suppliers and stakeholders in the wider community. Internal communications play a key part in keeping the Company's employees engaged and aligned to the overall strategy. The CEO provides regular updates to employees via the monthly business update to ensure that timely and consistent messages are provided to all employees.
As the Board of Directors, our intention is to behave responsibly and ensure that management operate the business in a responsible manner, operating within the high standards of business conduct and good governance expected for a business such as ours and in doing so, will contribute to the delivery of our plan. The intention is to nurture our reputation, through both the construction and delivery of our plan, that reflects our responsible behaviour.
Our governance structure through the Board, committees (for example: EMT, Ops Subgroup, H&S Groups, Employee Forum) and internal audit fosters a culture of openness, scrutiny and challenge. Good working relationships have been developed, with regular Board interactions and the opportunity for Board members to get involved in group-wide business.
As the Board of Directors, our intention is to behave responsibly toward our shareholders and treat them fairly and equally, so they too may benefit from the successful delivery of our plan.
These items are given as examples of the Directors’ application of the principles of s172 Companies Act across the year and are not an exhaustive list.
This report was approved by the board on 7 August 2026 and signed on its behalf.
................................................
A P R Hough
Director
|
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2026
The Directors present their report and the financial statements for the year ended 31 March 2026.
Directors' responsibilities statement
|
The Directors are responsible for preparing the Group strategic report, the Directors' report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the Group and Company financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the Directors are required to:
∙select suitable accounting policies and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Ancala Water Services (AWS) continue to measure Scope 1 and Scope 2 emissions in order to calculate the carbon footprint. This includes the following:
∙Office electricity
∙Electricity used for the operation of the asset base
∙Fuel for the asset generators
∙Fuel used by the ‘grey fleet’ (business miles)
∙Fuel used by the ‘silver fleet’ (operational team vehicles)
AWS use the government published conversion factors to convert energy units into tonnes of carbon dioxide equivalent (CO2e) which is a widely recognised indicator of an organisation’s performance.
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2026
FY2025/26 target was 1,924 tonnes CO2e which was achieved as follows (recorded at 6 May 2026, updates will be made when the final actual meter readings and invoices for the period ending 31 March 2026 are received):
During the year AWS engaged a consultant to complete the Scope 3 emissions calculations and AWS have generated a carbon reduction plan (CRP) as part of the commitment to continual improvement.
The Group's profit for the year, after taxation, amounted to £5,002k (2025 - £9,158k).
Interim dividends of £5,000k (2025 - £3,000k) were paid during the year. The Directors do not recommend the payment of a final dividend.
After due consideration of all relevant factors, including the current economic environment and the net current liability position of the Group, the Directors have a reasonable expectation that the Company & Group have adequate resources to continue in operational existence for the foreseeable future taking into account additional bank covenants that have arisen following the refinancing on 28 September 2023.
The Directors have prepared forecasts for at least 12 months from the date of approval of these financial statements, which takes into account their trading forecasts. The Directors have also taken into account the financing available to the Company & Group, including consideration of compliance with loan covenants. The Directors have performed sensitivity analysis and concluded that the level of decline in revenues to result in a covenant breach is not plausible due to the nature of the contract with the MOD. Accordingly, the Directors do not believe there are any material uncertainties which may cast significant doubt on the ability of the Company & Group to continue as a going concern, as such, they continue to adopt the going concern basis in preparing the annual report and accounts.
In making their assessment, the Directors have considered the finite nature of the Group’s principal Aquatrine contract with the Ministry of Defence, which runs to 30 November 2028, as described in the Strategic Report. The Director's forecasts cover the period to at least 12 months from the date of approval of these financial statements and have also considered expected cash flows, debt servicing and covenant compliance through the remaining period of the current contract. The Directors consider that the expiry profile of the contract does not give rise to a material uncertainty in respect of going concern.
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2026
The Directors who served during the year were:
Important adjusting events after the financial period
|
There have been no significant events affecting the Group since the year end.
As permitted by the Articles of Association, the Directors have the benefit of an indemnity which is a qualifying third-party indemnity provision as defined by Section 234 of the Companies Act 2006. The indemnity was in force throughout the last financial year and is currently in force.
The Group purchased and maintained Directors’ and Officers' liability insurance in respect of itself and its Directors throughout the financial year.
Disclosure of information to auditors
|
Each of the persons who are Directors at the time when this Directors' report is approved has confirmed that:
∙so far as the Director is aware, there is no relevant audit information of which the Company and the Group's auditors are unaware, and
∙the Director has taken all the steps that ought to have been taken as a Director in order to be aware of any relevant audit information and to establish that the Company and the Group's auditors are aware of that information.
The auditors, BDO LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board on 7 August 2026 and signed on its behalf.
................................................
A P R Hough
Director
|
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ANCALA WATER SERVICES INVESTCO LIMITED
Report on the audit of the financial statements
Opinion
In our opinion:
∙the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 March 2026 and of the Group’s profit and the Group’s cash flows for the year then ended;
∙the financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
∙the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Ancala Water Services Investco Limited (“the Parent Company”) and its subsidiaries (“the Group”) for the year ended 31 March 2026 which comprise of the following:
|
|
|
Consolidated statement of comprehensive income
|
|
Consolidated balance sheet
|
|
Consolidated statement of changes in equity
|
Company statement of changes in equity
|
Consolidated statement of cash flows
|
|
Notes to the financial statements
|
A summary of significant accounting policies
|
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group or Parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Group and the Parent Company's ability to continue as a going concern.
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ANCALA WATER SERVICES INVESTCO LIMITED
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
Other information
The Directors are responsible for the other information. The other information comprises the information included in the Strategic Report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Other Companies Act 2006 reporting
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Strategic report and the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic report or the Directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
∙adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
∙the Parent Company financial statements are not in agreement with the accounting records and returns; or
∙certain disclosures of Directors’ remuneration specified by law are not made; or
∙we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Directors' Report, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ANCALA WATER SERVICES INVESTCO LIMITED
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the Parent Company and management.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
Non-compliance with laws and regulations
Based on:
∙Our understanding of the Group and the industry in which it operates;
∙Discussion with management and those charged with governance; and
∙Obtaining an understanding of the Group’s policies and procedures regarding compliance with laws and regulations.
We considered the significant laws and regulations to be, including but not limited to, the applicable accounting framework, UK company law and UK tax legislation.
The Group is also subject to laws and regulations where the consequence of non-compliance could have a material effect on the amount or disclosures in the financial statements, for example through the imposition of fines or litigations. We identified such laws and regulations to include compliance with Environment Agency permits, health and safety regulations and GDPR regulations, among others.
Our procedures in respect of the above included:
∙Enquires of management whether there were any litigations and claims;
∙Enquires of the legal team of the Group and the Parent Company;
∙Review of minutes of meetings of those charged with governance for any instances of non-compliance with laws and regulations;
∙Review of correspondence with regulatory and tax authorities for any instances of non-compliance with laws and regulations;
∙Review of financial statement disclosures and agreeing to supporting documentation;
∙Review of legal expenditure accounts to understand the nature of expenditure incurred; and
∙Review correspondence with relevant parties including Environment Agency.
Fraud
We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk assessment procedures included:
∙Enquiry with management and those charged with governance regarding any known or suspected instances of fraud;
∙Obtaining an understanding of the Group’s policies and procedures relating to:
°Detecting and responding to the risks of fraud; and
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ANCALA WATER SERVICES INVESTCO LIMITED
°Internal controls established to mitigate risks related to fraud.
∙Review of minutes of meetings of those charged with governance for any known or suspected instances of fraud;
∙Discussion amongst the engagement team as to how and where fraud might occur in the financial statements;
∙Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
∙Considering remuneration incentive schemes and performance targets and the related financial statement areas impacted by these.
Based on our risk assessment, we considered the areas most susceptible to fraud to be override of controls through posting of inappropriate journals and bias in judgements and estimates. We also consider the fraud risk in revenue to arise in relation to the posting of inappropriate revenue journals.
Our procedures in respect of the above included:
∙Testing a sample of journal entries throughout the year, including revenue, which met defined risk criteria, by agreeing to supporting documentation; and
∙Assessing significant estimates made by management for bias, including those related to impairment, depreciation and the fair value calculation of the management incentive programme.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members who were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at:
https://www.frc.org.uk /auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Parent Company and the Parent Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Neil Ebdon (Senior statutory auditor)
for and on behalf of
BDO LLP, Statutory Auditor
Leeds, UK
7 August 2026
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ANCALA WATER SERVICES INVESTCO LIMITED
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest receivable and similar income
|
|
|
|
Interest payable and similar expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the financial year
|
|
|
|
|
|
|
|
|
Change in fair value of cashflow hedge
|
|
|
|
Tax on change in fair value of cashflow hedge
|
|
|
|
Other comprehensive income/ (loss) for the year
|
|
|
|
Total comprehensive income for the year
|
|
|
|
Profit for the year attributable to:
|
|
|
|
Owners of the parent Company
|
|
|
|
|
|
|
|
|
Total comprehensive income for the year attributable to:
|
|
|
|
Owners of the parent Company
|
|
|
|
|
|
|
|
|
There were no recognised gains and losses for 2026 or 2025 other than those included in the consolidated statement of comprehensive income.
|
The notes on pages 21 to 46 form part of these financial statements.
|
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
REGISTERED NUMBER: 11079841
CONSOLIDATED BALANCE SHEET
AS AT 31 MARCH 2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debtors: amounts falling due after more than one year
|
|
|
|
|
|
Debtors: amounts falling due within one year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Creditors: amounts falling due within one year
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets less current liabilities
|
|
|
|
|
|
Creditors: amounts falling due after more than one year
|
|
|
|
|
|
Provisions for liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets excluding pension asset
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity attributable to owners of the parent Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 7 August 2026.
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
REGISTERED NUMBER: 11079841
CONSOLIDATED BALANCE SHEET (CONTINUED)
AS AT 31 MARCH 2026
................................................
A P R Hough
|
|
|
The notes on pages 21 to 46 form part of these financial statements.
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
REGISTERED NUMBER: 11079841
COMPANY BALANCE SHEET
AS AT 31 MARCH 2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Creditors: amounts falling due within one year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 7 August 2026.
................................................
A P R Hough
|
|
|
The notes on pages 21 to 46 form part of these financial statements.
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income for the year
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
|
Total comprehensive income for the year
|
|
|
|
|
|
Contributions by and distributions to owners
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total transactions with owners
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The notes on pages 21 to 46 form part of these financial statements.
|
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income for the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss for the year
|
|
|
|
|
|
Total comprehensive (loss)/ income for the year
|
|
|
|
|
|
Contributions by and distributions to owners
|
|
|
|
|
|
|
|
|
|
|
|
|
Total transactions with owners
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The notes on pages 21 to 46 form part of these financial statements.
|
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income for the year
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the year
|
|
|
|
|
Contributions by and distributions to owners
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total transactions with owners
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The notes on pages 21 to 46 form part of these financial statements.
|
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income for the year
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the year
|
|
|
|
|
Contributions by and distributions to owners
|
|
|
|
|
|
|
|
|
|
|
Total transactions with owners
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The notes on pages 21 to 46 form part of these financial statements.
|
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2026
Cash flows from operating activities
|
|
|
Profit for the financial year
|
|
|
|
|
|
|
Amortisation of intangible assets
|
|
|
Depreciation of tangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease/(increase) in debtors
|
|
|
|
|
|
|
Share based payments charge
|
|
|
Share based payments scheme payments
|
|
|
|
|
|
|
|
|
|
|
Net cash generated from operating activities
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
Purchase of tangible fixed assets
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
Net (decrease) in cash and cash equivalents
|
|
|
Cash and cash equivalents at beginning of year
|
|
|
Cash and cash equivalents at the end of year
|
|
|
|
|
|
|
Cash and cash equivalents at the end of year comprise:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
1.Accounting policies
Ancala Water Services Investco Limited is a private company, limited by shares, incorporated in England and Wales, company number 11079841. The registered office is at 20 Gracechurch Street, London, EC3V 0AF.
|
|
|
Summary of significant accounting policies and key accounting estimates
|
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
|
|
|
Basis of preparation of financial statements
|
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgement in applying the Group's accounting policies (see note 2).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements.
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases.
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
1.Accounting policies (continued)
After due consideration of all relevant factors, including the current economic environment and the net current liability position of the Group, the Directors have a reasonable expectation that the Company & Group have adequate resources to continue in operational existence for the foreseeable future taking into account additional bank covenants that have arisen following the refinancing on 28 September 2023.
The Directors have prepared forecasts for at least 12 months from the date of approval of these financial statements, which takes into account their trading forecasts. The Directors have also taken into account the financing available to the Company & Group, including consideration of compliance with loan covenants. The Directors have performed sensitivity analysis and concluded that the level of decline in revenues to result in a covenant breach is not plausible due to the nature of the contract with the MOD. Accordingly, the Directors do not believe there are any material uncertainties which may cast significant doubt on the ability of the Company & Group to continue as a going concern, as such, they continue to adopt the going concern basis in preparing the annual report and accounts.
In making their assessment, the Directors have considered the finite nature of the Group’s principal Aquatrine contract with the Ministry of Defence, which runs to 30 November 2028, as described in the Strategic Report. The Director's forecasts cover the period to at least 12 months from the date of approval of these financial statements and have also considered expected cash flows, debt servicing and covenant compliance through the remaining period of the current contract. The Directors consider that the expiry profile of the contract does not give rise to a material uncertainty in respect of going concern.
Turnover for the Aquatrine contract is recognised in the period in which the services are provided. The Group maintains and upgrades the MOD infrastructure assets and provides operating services for water and wastewater. Both the maintenance and upgrade services, and the operating services are charged under a volumetric tariff, along with standing charges, which are adjusted with inflation as agreed in the contract.
Additional business development contract work is recognised in accordance with the stage of completion.
Turnover is only recognised when all of the following conditions are satisfied:
- The amount of turnover can be measured reliably,
- It is probable that the Group will receive the consideration due under the contract,
- The stage of completion of the contract at the end of the reporting period can be measured reliably,
and
- The costs incurred and the costs to complete the contract can be measured reliably.
The other operating income relates to pre commencement change assets income of £10m received in 2005. This is being released evenly over the remaining term of the contract.
Interest income is recognised in profit or loss using the effective interest method.
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
1.Accounting policies (continued)
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Assets under construction represent ongoing capital projects. On completion AUC projects are moved other fixed asset categories and depreciated in line with the depreciation policy.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Business combinations are accounted for using the purchase method. The consideration for each acquisition is measured at the aggregate of the fair values at acquisition date of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquired, plus any costs directly attributable to the business combination. When a business combination agreement provides for an adjustment to the cost of the combination contingent on future events, the Group includes the estimated amount of that adjustment in the cost of the combination at the acquisition date if the adjustment is probable and can be measured reliably.
|
|
|
Intangible contract value
|
The intangible contract value was consideration paid by the Group over and above the fair value of all assets and liabilities acquired for Kelda Water Services (Estates) Limited and Kelda Water Services (Defence) Limited. This was considered to relate to the fair value of the MOD contract acquired with the business and is being amortised over the remaining contract period.
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
1.Accounting policies (continued)
Costs incurred to obtain the right to undertake the Public Private Partnership Concession Contract with the Ministry of Defence for water and wastewater services covering the areas of Wales and the South West of England have been classified as an intangible asset on the Statement of Financial Position and will be amortised on a straight line basis over the period of the contract of 25 years. Such costs were only recognised when it was virtually certain that the contract had been awarded to the Company.
The carrying value of intangible assets is reviewed for impairment at the end of the first full year following acquisition and in other periods if events or changes in circumstances indicate the carrying value may not be recoverable.
The estimated useful lives range as follows:
|
|
|
Impairment of fixed assets and goodwill
|
Assets that are subject to depreciation or amortisation are assessed at each balance sheet date to determine whether there is any indication that the assets are impaired. Where there is any indication that an asset may be impaired, the carrying value of the asset (or cash-generating unit to which the asset has been allocated) is tested for impairment. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's (or CGU's) fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Non-financial assets that have been previously impaired are reviewed at each balance sheet date to assess whether there is any indication that the impairment losses recognised in prior periods may no longer exist or may have decreased.
Investments in subsidiaries are measured at cost less accumulated impairment.
|
|
|
Cash and cash equivalents
|
Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
In the Consolidated statement of cash flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Group's cash management.
Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
1.Accounting policies (continued)
Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
All borrowing costs are recognised in profit or loss in the year in which they are incurred.
|
|
|
Provisions for liabilities
|
Provisions are recognised when an event has taken place that gives rise to a legal or constructive obligation, a transfer of economic benefits is probable and a reliable estimate can be made.
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
Increases in provisions are generally charged as an expense to profit or loss.
|
|
|
Current and deferred taxation
|
The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company and the Group operate and generate income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits;
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and
∙Where they relate to timing differences in respect of interests in subsidiaries, associates, branches and joint ventures and the Group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
1.Accounting policies (continued)
Dividend distribution to the Company’s shareholders is recognised as a liability in the financial statements in the reporting period in which the dividends are declared.
Defined contribution pension plan
The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Balance sheet. The assets of the plan are held separately from the Group in independently administered funds.
The Group operates a management incentive programme through Ancala Water Services Topco1 Limited. This is a cash settled scheme which pays out at set crystallisation dates that is settled by the parent entity. Employees of the programme are employed by Ancala Water Services (Defence) Limited.
In accordance with FRS 102 the awards are treated as cash settled. An expense is recognised in the consolidated income statement over the vesting period, determined by reference to the fair value of the awards and the number of awards expected to be vested. A corresponding liability is recognised with the statement of financial position.
The fair value of the management incentive programme is calculated at inception of the awards, and at each reporting date, based on expected returns for the Group, using the Group business plan which are forecasted figures, for the purpose of treating it as an equity settled scheme. The calculation also takes into account the expected attrition rate of the scheme, this is based on expectations of management retention for the scheme period.
The Group has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the Group's Balance sheet when the Group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include trade and other debtors, cash and bank balances, are initially measured at their transaction price (adjusted for transaction costs except in the initial measurement of financial assets that are subsequently measured at fair value through profit and loss) and are subsequently carried at their amortised cost using the effective interest method, less any provision
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
1.Accounting policies (continued)
|
|
|
Financial instruments (continued)
|
for impairment, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other debtors due with the operating cycle fall into this category of financial instruments.
Impairment of financial assets
At the end of each reporting period financial assets measured at amortised cost are assessed for objective evidence of impairment. If an asset is impaired the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other creditors, bank loans, other loans and loans due to fellow group companies are initially measured at their transaction price (adjusting for transaction costs except in the initial measurement of financial liabilities that are subsequently measured at fair value through profit and loss). When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future payments discounted at a market rate of interest, discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade creditors are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade creditors are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade creditors are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Other financial instruments
The Group used a derivative financial instrument in the form of an interest rate swap to reduce its exposure to interest rate fluctuations on the Group's floating bank rate loan. The Group has determined that it's interest rate swap qualifies for hedge accounting under FRS 102. Accordingly the effective portion of the gain ot loss on the interest rate swap is recognised directly in other comprehensive income in the cash flow hedge reserve, with the effective portion recognised in profit
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
1.Accounting policies (continued)
|
|
|
Financial instruments (continued)
|
or loss. The hedging gain or loss accumulated in the cash flow hedge reserve is reclassified to the profit or loss when the hedged item is recognised in profit or loss or when the hedged future cash flows are no longer expected to occur.
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
1.Accounting policies (continued)
|
|
|
Financial instruments (continued)
|
Derivative financial instruments are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re measured at their fair value. Derivatives are carried as assets when the fair value is positive and liabilities when the fair value is negative. The fair value of interest rate swaps is determined by calculating the present value of the estimated future cashflows based on observable yield curves.
In accordance with FRS 102.22, financial instruments issued by the Group are treated as equity only to the extent that they meet the following two conditions;
(a) they include no contractual obligations upon the Group to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the company; and
(b) where the instrument will or may be settled In the Group's own equity instruments, it is either a non-derivative that includes no obligation to deliver a variable number of the Group's own equity instruments or is a derivative that will be settled by the Group's exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified takes the legal form of the Group's own shares, the amounts presented in these financial statements for called up share capital and share premium account exclude amounts in relation to those shares.
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
|
|
Judgements in applying accounting policies and key sources of estimation uncertainty
|
In preparing these financial statements, the directors have made the following judgements;
- Determine whether there are indicators of impairment of the Group's tangible and intangible assets, including intangible contract value. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset and where it is a component of a larger cash-generating unit, the viability and expected future performance of that unit.
- Tangible fixed assets are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal. Further, the Directors have concluded that it is appropriate to recognise fixed assets in relation to the infrastructure asset as tangible fixed assets.
- Accounting accruals in respect of statutory undertaker consumption are recognised using the best information available at the reporting date. Accruals include significant balances for Statutory Undertaker Consumption of water and wastewater primarily as a result of invoicing delays from Statutory Undertakers. Furthermore, the incumbent is only legally obliged to provide one actual meter read per year as a result best estimates are made based on historical usage.
Any difference between expectations and the actual future liability will be accounted for in the period when such determination is made.
- The movement in fair value and closing balance of the management incentive programme are calculated based on expected returns for the Group, using the Group business plan which are forecasted figures. The calculation also takes into account the expected attrition rate of the scheme, this is based on expectations of management retention for the scheme period.
- Determine whether there are indicators of impairment of the Company's investments. During the financial year, the Company carried out an assessment of its fixed asset investments. This was based upon the amounts expected to be recovered through future distributions.
Turnover, which is stated net of Value Added Tax, represents the value of services supplied to third parties. Turnover is attributable primarily to one continuing activity, the contract between AWSE and the MOD for the provision of water and wastewater services in the area covering Wales and the South West of England.
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
|
|
|
|
|
The operating profit is stated after charging:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating lease rentals
|
|
|
|
|
|
|
|
Staff costs, including Directors' remuneration, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of defined contribution scheme
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The average monthly number of employees employed by the group, including the directors, during the year was as follows:
|
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
|
|
|
|
|
|
|
Amounts receivable under long-term incentive schemes
|
|
|
|
|
Group contributions to defined contribution pension schemes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The highest paid Director received remuneration of £854k (2025 - £290k).
|
|
|
The value of the Group's contributions paid to a defined contribution pension scheme in respect of the highest paid Director amounted to £24k (2025 - £24k).
|
|
|
During the year NIL directors received shares under the long-term incentive schemes (2025 -NIL)
|
|
|
|
|
|
The fees payable to the Group's auditor and its associates for the audit of the Parent Company's annual financial statements amounted to £14k (2025 - £13k). The fees payable to the Group's auditor and it's associates for the audit of the Parent Company's subsidiaries amounted to £87k (2025 - £80k).
Fees payable to the auditors in relation to all other services amounted to £48k (2025 - £27k).
|
|
|
Interest payable and similar expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
|
|
|
|
|
|
|
Current tax on profits for the year
|
|
|
|
|
Adjustments in respect of previous periods
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Origination and reversal of timing differences
|
|
|
|
|
Adjustments in respect of previous periods
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the financial year
|
|
|
|
|
Factors affecting tax charge for the year
|
|
|
The tax assessed for the year is higher than (2025 - higher than) the standard rate of corporation tax in the UK of 25% (2025 - 25%). The differences are explained below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit on ordinary activities before tax
|
|
|
|
|
Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 25% (2025 - 25%)
|
|
|
|
|
|
|
|
|
|
Expenses not deductible for tax purposes
|
|
|
|
|
Adjustments to tax charge in respect of prior periods
|
|
|
|
|
Short-term timing difference leading to a decrease in taxation
|
|
|
|
|
|
|
|
|
|
Total tax charge for the year
|
|
|
|
|
Factors that may affect future tax charges
|
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
12.Taxation (continued)
There were no factors that may affect future tax charges.
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charged/ (credited) to profit or loss
|
|
|
|
Deferred tax charged to OCI
|
|
|
|
|
|
|
|
|
The deferred tax asset is made up as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short term timing differences
|
|
|
|
|
Fixed asset timing differences
|
|
|
|
|
|
|
|
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
|
|
|
Intangible contract value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge for the year on owned assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The contract costs, which have been capitalised as a cost of acquiring the right to undertake the contract, are being amortised on a straight line basis over the life of the contract from operational commencement on 1 December 2003.
The intangible contract value was consideration paid by the Group over and above the fair value of all assets and liabilities acquired for Kelda Water Services (Estates) Limited and Kelda Water Services (Defence) Limited. This was considered to relate to the fair value of the MOD contract acquired with the business and is being amortised over the remaining contract period.
The amortisation charge is recorded in administrative expenses in the profit and loss account.
The remaining period of amortisation for both contract costs and intangible contract value is 2.7 years.
|
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
|
|
|
|
Assets under construction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transfers between classes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge for the year on owned assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
|
|
|
|
|
The following were subsidiary undertakings of the Company:
|
|
|
|
|
|
|
|
|
|
Ancala Water Services Topco 1 Limited
|
20 Gracechurch Street, London, EC3V 0AF
|
|
|
|
|
|
Ancala Water Services Topco Limited*
|
20 Gracechurch Street, London, EC3V 0AF
|
|
|
|
|
|
Ancala Water Services Midco 1 Limited*
|
20 Gracechurch Street, London, EC3V 0AF
|
|
|
|
|
|
Ancala Water Services Midco 2 Limited*
|
20 Gracechurch Street, London, EC3V 0AF
|
|
|
|
|
|
Ancala Water Services Holdco Limited*
|
20 Gracechurch Street, London, EC3V 0AF
|
|
|
|
|
|
Ancala Water Services Bidco Limited*
|
Unit 1b Redbrook Business Park, Wilthorpe Road, Barnsley, South Yorkshire, S75 1JN
|
|
|
|
|
|
Ancala Water Services (Estates) Limited*
|
Unit 1b Redbrook Business Park, Wilthorpe Road, Barnsley, South Yorkshire, S75 1JN
|
Water and wastewater services
|
|
|
|
|
Ancala Water Services (Defence) Limited*
|
Unit 1b Redbrook Business Park, Wilthorpe Road, Barnsley, South Yorkshire, S75 1JN
|
Water and wastewater services
|
|
|
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
|
|
Due after more than one year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepayments and accrued income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
|
|
Creditors: Amounts falling due within one year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts owed to group undertakings
|
|
|
|
|
|
|
Share based payment liability
|
|
|
|
|
|
|
Other taxation and social security
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accruals and deferred income
|
|
|
|
|
|
|
Derivative financial instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts due to subsidiary undertakings are non-interest bearing and repayable on demand. During the year it was identified that there were shares acquired in the subsidiary undertaking for a cost £455k that had not been accounted. The acquisition of those shares occurred in the year ended 31 March 2024. As a result the prior year balance sheet of the company has been restated. There is no impact on the opening equity, profit or closing equity of the prior year. There has also been no impact on the consolidated financial statements.
|
|
|
Creditors: Amounts falling due after more than one year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share based payment liability
|
|
|
|
|
Accruals and deferred income
|
|
|
|
|
|
|
|
|
|
|
|
|
The deferred income relates to pre-commencement change assets income of £10m received in 2005, the amount is being released over the term remaining of the contract.
The bank loan is secured, by way of first fixed charge, over all of the assigned rights which the Group now has, its present and future interest in the securities and all other stocks, shares, debentures, bonds and other securities, all account monies, all benefits in respect of insurances, all book and other debts and other monies due, its present and future goodwill and its present and future uncalled capital. They are also secured by way of a floating charge over the whole of the charged assets being the whole of the property (including uncalled capital) which is or may be from time to time comprised in the property and undertaking of the charger
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
|
|
|
|
|
Analysis of the maturity of loans is given below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts falling due within one year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts falling due after one year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank borrowings relate to long term loan facilities granted by AIB and Santander.
On 28 September 2023 the Group entered into a new loan facility with AIB and Santander. The new loan facilities are for a total of £30m comprising £25m term loan facility and a £5m revolving facility. The balance of the revolving facility at the year end was £Nil.
The term loan is repayable in six-monthly instalments ending on 30 June 2028. Interest is charged on amounts drawn under the facilities based on SONIA. The Group has entered into an interest hedging agreement to be applied to the expected future borrowings under the facilities. The hedging agreements in respect of these loans fixed the interest rate at 4.916% until 30 June 2028 using a cash flow hedge.
|
The Group operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the Group to the scheme and amounted to £470k (2025 - £459k). Contributions totalling £72k (2025 - £69k) were payable to the fund at the reporting date and are included in creditors.
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
|
|
Commitments under operating leases
|
|
|
At 31 March 2026 the Group and the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Later than 1 year and not later than 5 years
|
|
|
|
|
|
|
|
|
|
The amount of non-cancellable operating lease payments recognised as an expense during the year was £545k (2025 - £580k).
|
|
|
Interim dividend of £2,500 per each Ordinary share, (£1,500 in 2025)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charged to profit or loss
|
|
|
|
|
|
|
|
|
|
The Group has recognised provisions in respect of contractual, regulatory and environmental obligations arising from its operating activities. These obligations include remediation activities and potential claims where the Group has a present obligation at the reporting date.
The amount recognised represents management’s best estimate of the expenditure required to settle the obligations at the reporting date, based on available correspondence, external estimates, contractual requirements and management’s assessment of the likely outcome. The timing and final amount of any settlement remains uncertain and may vary depending on the outcome of ongoing discussions with third parties, the scope and timing of remediation works and the resolution of related matters.
|
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
|
|
|
Allotted, called up and fully paid
|
|
|
|
|
|
|
|
|
|
|
|
2,000 (2025 - 2,000) Ordinary shares of £0.01 each
|
|
|
|
|
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.
|
Called up share capital
This reserve represents the nominal value of equity shares issued.
Share premium account
This reserve represented the premium on issue of equity shares, net of any issue costs. During the year, a special resolution cancelled the share premium account. Consequently, the balance was transfered to retained earnings and became available as distributable reserves.
Cash flow hedge reserve
This reserve comprises the effective portion of the cumulative net change in the fair value if cash flow hedging instruments related to the hedging transactions that have not yet occurred, stated net of tax.
Profit and loss account
This reserve represents the cumulative profits or losses, net of dividends and other adjustments.
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
|
|
Financial instrument - Swap arrangement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of cash flow hedge
|
|
|
|
|
|
|
|
|
|
Interest rate swaps are valued at the present value of future cash flows estimated and discounted based on the applicable yield curves derived from quoted interest rates. The interest rate swap settles on a bi-annual basis. The floating rate on the interest rate swap is SONIA. The Company will settle the difference between the fixed and floating interest rate on a net basis.
On 28 September 2023 the Group entered into a new loan facility with AIB and Santander. This included a new interest rate swap. The previous interest rate swap was settled with a gain of £435k in excess of the fair value of the hedging instrument over the change in the fair value of expected cash flows was recognised in profit or loss.
The fair value of the financial instrument at 31 March 2026 was a liability of £158k (2025 - £380k). Gains of £222k (2025 - £147k) were recognised in other comprehensive income for the year. Gains of £nil in excess of the fair value of the hedging instrument over the change in the fair value of expected cash flows were recognised in profit or loss and £nil was reclassified to profit or loss for the year.
|
The Group has provided a fixed and floating charge over its assets to the Group’s bankers AIB (UK) Plc (as security agent) in relation to the Group's term loan, with AIB Group (UK) Plc and Santander UK Plc.
The balance of the loan at the year end was £16.73m (2025 - £21.452m).
The Company has also provided a cross guarantee in relation to the above group bank loan.
|
|
|
|
|
|
|
Financial instruments measured at fair value through profit or loss
|
|
|
|
|
Financial instruments measured at fair value through profit or loss comprise interest swaps relating to a cashflow hedge liability.
|
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
|
|
|
|
|
Scheme details and movements
The management incentive plan is a cash settled scheme with crystallisation event as set out in the company articles of association, the first of these was 31 March 2023.
The liability is measured at fair value, the charge to profit and loss being spread across the life of the scheme, adjusting for expected attrition.
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at the beginning of the year
|
|
|
|
|
|
|
|
|
|
Outstanding at the end of the year
|
|
|
|
|
Weighted average fair value per award (pence)
|
|
|
|
|
Cash-settled share-based payment liability
|
|
|
|
|
|
|
|
|
|
Related party transactions
|
|
|
Key management personnel include all Directors across the Group who together have authority and responsibility for planning, directing and controlling the activities of the Group. The total compensation paid to Directors in the Group for services provided was £1,330k (2025 - £535k).
AWS Defence was supplied by Portsmouth Water Limited. Both companies are controlled by Ancala Partners LLP.
All transactions between AWS Defence and Portsmouth Water are conducted at arms length for the supply of water. The total spend with Portsmouth Water in the financial year was £509k (2025 - £262k).
At 31 March 2026 the balance owing from AWS Defence to Portsmouth Water was £Nil (2025 - £Nil).
The total spend with Ancala Partners LLP in the financial year was £21k (2025 - £10k).
At 31 March 2026 the balance owing from AWS Defence to Ancala Partners LLP was £Nil (2025 - £Nil).
|
|
|
ANCALA WATER SERVICES INVESTCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
Ancala Water Services Investco Limited has no single ultimate controlling party. Funds managed by Ancala Partners LLP collectively control the entity.
|
|
Other non-cash changes are the reclassification of debt from greater than one year to less than one year.
|
|