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Registered number: 12457091
ANCALA WATER SERVICES TOPCO 1 LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
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ANCALA WATER SERVICES TOPCO 1 LIMITED
COMPANY INFORMATION
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ANCALA WATER SERVICES TOPCO 1 LIMITED
CONTENTS
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Independent auditors' report
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Statement of comprehensive income
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Statement of changes in equity
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Notes to the financial statements
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ANCALA WATER SERVICES TOPCO 1 LIMITED
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 11 February 2020 and the principal activity is that of a holding company to the below companies.
Holding Companies:
Ancala Water Services Topco Limited
Ancala Water Services Midco1 Limited
Ancala Water Services Midco2 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
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Company profit before tax was £5,681k (2025 - £3,000k). Net assets at the conclusion of the financial year were £17,735k (2025 - £15,997k).
During the year, a special resolution cancelled the share premium account. Consequently, the balance was transferred to retained earnings and became available as distributable reserves.
Key performance indicators
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The Company is an intermediate holding company and therefore does not have any key performance indicators.
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ANCALA WATER SERVICES TOPCO 1 LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2026
Principal risks and uncertainties
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The Group faces the following risks during the normal course of operations.
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.
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
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The Company’s non-derivative financial instruments consist of other creditors. The main purpose of these instruments is to reflect the share based payment liability.
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ANCALA WATER SERVICES TOPCO 1 LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2026
Directors' statement of compliance with duty to promote the success of the Company
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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 Company 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 Company 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.
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A P R Hough
Director
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ANCALA WATER SERVICES TOPCO 1 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
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The Directors are responsible for preparing the 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 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 of the profit or loss of the Company for that period.
In preparing these financial statements, the Directors are required to:
∙select suitable accounting policies for the Company's financial statements 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 Company 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 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 hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The profit for the year, after taxation, amounted to £5,681k (2025 - £3,000k).
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, the Directors have a reasonable expectation that the Company has 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.
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ANCALA WATER SERVICES TOPCO 1 LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2026
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.
The Directors who served during the year were:
Important adjusting events after the financial period
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There have been no significant events affecting the Company 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.
Disclosure of information to auditors
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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'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'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.
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A P R Hough
Director
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ANCALA WATER SERVICES TOPCO 1 LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ANCALA WATER SERVICES TOPCO 1 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 Company’s affairs as at 31 March 2026 and of its profit for the year then ended;
∙have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
∙have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Ancala Water Services Topco1 Limited (“the Company”) for the year ended 31 March 2026 which comprise of the following:
Statement of comprehensive income
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Statement of changes in equity
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Notes to the financial statements
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A summary of significant accounting policies
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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 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 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 Company's ability to continue as a going concern.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
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ANCALA WATER SERVICES TOPCO 1 LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ANCALA WATER SERVICES TOPCO 1 LIMITED
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 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, or returns adequate for our audit have not been received from branches not visited by us; or
∙the 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 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 Company or to cease operations, or have no realistic alternative but to do so.
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ANCALA WATER SERVICES TOPCO 1 LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ANCALA WATER SERVICES TOPCO 1 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 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 Company and the industry in which it operates;
∙Discussion with management and those charged with governance; and
∙Obtaining an understanding of the Company’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 Company 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 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 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; and
∙Review of legal expenditure accounts to understand the nature of expenditure incurred.
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 Company’s policies and procedures relating to:
°Detecting and responding to the risks of fraud; and
°Internal controls established to mitigate risks related to fraud.
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ANCALA WATER SERVICES TOPCO 1 LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ANCALA WATER SERVICES TOPCO 1 LIMITED
∙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; and
∙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.
Our procedures in respect of the above included:
∙Testing a sample of journal entries throughout the year, which met defined risk criteria, by agreeing to supporting documentation; and
∙Assessing significant judgements and estimates made by management for bias such as the valuation of share based payments.
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 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 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 Company and the 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
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
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ANCALA WATER SERVICES TOPCO 1 LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2026
Dividends from shares in subsidiaries
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Amounts written off investments
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Profit for the financial year
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There was no other comprehensive income for 2026 (2025:£NIL).
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The notes on pages 13 to 23 form part of these financial statements.
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ANCALA WATER SERVICES TOPCO 1 LIMITED
REGISTERED NUMBER: 12457091
BALANCE SHEET
AS AT 31 MARCH 2026
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Net current assets/(liabilities)
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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The financial statements were approved and authorised for issue by the board and were signed on its behalf on 7 August 2026.
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A P R Hough
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The notes on pages 13 to 23 form part of these financial statements.
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ANCALA WATER SERVICES TOPCO 1 LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2026
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Comprehensive income for the year
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Total comprehensive income for the year
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Contributions by and distributions to owners
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Settlement of share based payment liability
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Total transactions with owners
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The notes on pages 13 to 23 form part of these financial statements.
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STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2025
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Comprehensive income for the year
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Total comprehensive income for the year
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Contributions by and distributions to owners
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Total transactions with owners
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The notes on pages 13 to 23 form part of these financial statements.
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ANCALA WATER SERVICES TOPCO 1 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
1.Accounting policies
Ancala Water Services Topco 1 Limited is a private company, limited by shares, incorporated in England and Wales, company number 12457091. The registered office is at 20 Gracechurch Street, London, EC3V 0AF.
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Summary of significant accounting policies and key accounting estimates
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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.
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Basis of preparation of financial statements
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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 management to exercise judgement in applying the Company's accounting policies (see note 2).
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Financial Reporting Standard 102 - reduced disclosure exemptions
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The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
∙the requirements of Section 7 Statement of Cash Flows;
∙the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
∙the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
∙the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A;
∙the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the consolidated financial statements of Ancala Water Services Investco Limited as at 31 March 2026 and these financial statements may be obtained from Companies House.
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Exemption from preparing consolidated financial statements
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The Company is a parent company that is also a subsidiary included in the consolidated financial statements of a larger group by a parent undertaking established under the law of any part of the United Kingdom and is therefore exempt from the requirement to prepare consolidated financial statements under section 400 of the Companies Act 2006.
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ANCALA WATER SERVICES TOPCO 1 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, the Directors have a reasonable expectation that the Company has 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.
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Impairment of fixed assets and goodwill
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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.
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.
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.
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ANCALA WATER SERVICES TOPCO 1 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
1.Accounting policies (continued)
All borrowing costs are recognised in the Statement of Comprehensive Income in the year in which they are incurred.
Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.
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.
The Company operates a management incentive programme. 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 as the Company has the obligation to settle the award. An increase in investments is recognised over the vesting period to recognise the contribution the Company is making to its subsidiary in respect of the award. 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 Company 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 Company's Balance sheet when the Company 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 for impairment, unless the arrangement constitutes a financing transaction, where the transaction is
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ANCALA WATER SERVICES TOPCO 1 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
1.Accounting policies (continued)
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Financial instruments (continued)
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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 Company'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 Company after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other creditors, bank loans and other loans 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.
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ANCALA WATER SERVICES TOPCO 1 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
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Judgements in applying accounting policies and key sources of estimation uncertainty
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In preparing these financial statements, the Directors have made the following judgements:
• Investments (Note 6)
Determine whether there are indicators of impairment of the Company's investments. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of each investment.
• Share based payments
The movement in fair value and the 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.
Any difference between expectations and the actual future liability will be accounted for in the period when such determination is made.
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Auditor's remuneration of £5.5k (2025 - £5.0k) has been borne by other group companies for the period.
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The Company has taken advantage of the exemption not to disclose amounts paid for non-audit services as these are disclosed in the consolidated accounts of the parent Company.
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The Company has no employees other than the Directors, who did not receive any remuneration (2025 - £NIL).
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The Company's Directors are remunerated via their directorships of Ancala Water Services (Defence) Limited, it is not practicable to ascertain the proportion of the Directors' emoluments that relate to this company.
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ANCALA WATER SERVICES TOPCO 1 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
5.Taxation (continued)
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Factors affecting tax charge for the year
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The tax assessed for the year is lower than (2025 - lower than) the standard rate of corporation tax in the UK of 25% (2025 - 25%). The differences are explained below:
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Profit on ordinary activities before tax
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Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 25% (2025 - 25%)
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Expenses not deductible for tax purposes
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Total tax charge for the year
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Factors that may affect future tax charges
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There were no factors that may affect future tax charges.
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Investments in subsidiary companies
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Prior year adjustment is due to a recalculation of the Management Incentive Scheme liability. The impact on prior year opening equity, profit for the year and closing equity is £nil.
Movement in investments relates to the Management Incentive Scheme, which is cash settled by Ancala Water Services Topco1 Limited on behalf of employees of Ancala Water Services (Defence) Limited.
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ANCALA WATER SERVICES TOPCO 1 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
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The following were subsidiary undertakings of the Company:
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Ancala Water Services Topco Limited
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20 Gracechurch Street, London, EC3V 0AF
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Ancala Water Services Midco 1 Limited*
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20 Gracechurch Street, London, EC3V 0AF
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Ancala Water Services Midco 2 Limited*
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20 Gracechurch Street, London, EC3V 0AF
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Ancala Water Services Holdco Limited*
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20 Gracechurch Street, London, EC3V 0AF
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Ancala Water Services Bidco Limited*
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Unit 1b Redbrook Business Park, Wilthorpe Road, Barnsley, South Yorkshire, S75 1JN
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Ancala Water Services (Estates) Limited *
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Unit 1b Redbrook Business Park, Wilthorpe Road, Barnsley, South Yorkshire, S75 1JN
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Water and wastewater services
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Ancala Water Services (Defence) Limited *
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Unit 1b Redbrook Business Park, Wilthorpe Road, Barnsley, South Yorkshire, S75 1JN
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Water and wastewater services
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ANCALA WATER SERVICES TOPCO 1 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
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Amounts owed by group undertakings
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Amounts owed by group undertakings related to interest on intercompany loan notes which were payable immediately.
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Creditors: Amounts falling due within one year
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Amounts owed to group undertakings
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Share based payment liability
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Amounts owed to group undertakings related to unsecured intercompany loan notes payable to Ancala Water Services (Defence) Limited and were payable immediately.
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Creditors: Amounts falling due after more than one year
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Share based payment liability
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During the year it was identified that the share based payment liability had not been reduced in respect of a previous crystallisation event in the year ended 31 March 2024. The amount of the reduction was £455k and as this was settled by its parent entity resulted in a release to equity of this amount. Therefore the opening equity of the prior year has increased by £455k and consequently the closing equity of the prior year has increased also. There has been no impact on the profit of the prior year.
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ANCALA WATER SERVICES TOPCO 1 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
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Interim dividend of £2,500 (2025 - £1,500) per each Ordinary share
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Allotted, called up and fully paid
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2,000 (2025 - 2,000) Ordinary shares of £0.01 each
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660 (2025 - 660) Ordinary C shares of £0.01 each
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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.
Ordinary C shares have no entitlement to vote on company resolutions, share of distribution of profits by way of dividend and share of profits upon winding up. These carry C Share sale rights which are triggered at set crystallisation event dates.
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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 transferred to retained earnings and became available as distributable reserves.
Profit and loss account
This reserve represents the cumulative profits or losses, net of dividends and other adjustments.
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ANCALA WATER SERVICES TOPCO 1 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
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Scheme details and movements
The management incentive plan is treated as a cash settled scheme for these financial statements.
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.
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Outstanding at the beginning of the year
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Exercised during the year
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Outstanding at the end of the year
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Weighted average share price (pence)
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The Company has provided a fixed and floating charge over its assets to the subsidiary company’s bankers AIB (UK) Plc (as security agent) in relation to the subsidiary company'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 subsidiary company bank loan.
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Related party transactions
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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 £1,331k (2025 - £535k).
The Company has taken advantage of the FRS 102 exemption in relation to balances with other group companies.
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ANCALA WATER SERVICES TOPCO 1 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2026
The Company's immediate parent is Ancala Water Services Investco Limited, registered in England and Wales. This company prepares consolidated accounts which include the Company and are available from Companies House.
Whilst Ancala Water Services Investco Limited has no single ultimate controlling party, funds managed by Ancala Partners LLP collectively control the entity.
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