Good morning, and welcome to the Pennon Spotlight Presentation Q&A. My name is Katie, and I'll be coordinating your call today. If you would like to ask a question, you may do so by pressing star one on your telephone keypad. I'll now hand over to your host, Susan Davy, Group Chief Executive, to begin. Susan, please go ahead. Thanks, Katie, and good morning, everyone, and thank you for joining Paul and me this morning. I hope you have had an opportunity to look at our trading statement, and listen to the webcast, that spotlights our progress, on the twin track strategy, that covers, an update on the Bristol integration, now that we've got CMA clearance, and definitely how we're delivering a step change for, the environment in our region with our WaterFit plan. Just very briefly in summary, Pennon remains on track to deliver resilient financial and operational performance across the group in line with managing expectations. With continued South West Water RORE outperformance from rates. Following the CMA clearance of Bristol, for the merger with South West Water, integration process is underway. We've identified synergies, and we'll be targeting a GBP 20 million per annum efficiency benefit across the group by 2024-2025, with GBP 50 million delivered cumulatively to that 2025 date. We're also on with our largest environmental investment program in 15 years of GBP 1.4 billion across the broader group. That's well underway. We are targeting expenditure of around GBP 330 million in the three years that we now have to 2025, which is focused on achieving benefits for seas and rivers in the Southwest region. We are accelerating spend of around GBP 150 million, funded by reinvestment of our RII outperformance that's been announced to date. That's all underpinned, very importantly, by a strong and robust balance sheet and making sure that our strategy of driving efficiency enables us to be fleet of foot. Our strategy is focused on delivering benefits to all, and we want to see that step change in river and coastal water quality. We're also going to be accelerating our WaterShare+ scheme second edition for Bristol and South West Water customers. This is the scheme that gives customers the opportunity for a stake and a say in the business, and/or an amount off their bill, which will come at a really good time for customers, as we continue to support them with driving bills as low as they efficiently can be. We have a bill for South West Water customers for 2022-2023, and the bills are lower than they were ten years ago for those customers. With that, I'll open to questions. Thank you. Thank you. We take our first question from Mark Freshney from Credit Suisse. Please go ahead, Mark. Hi. Yeah. Thanks for taking my question. Firstly, on, you know, the bit where you talk about inflation, and the impact, just on the Totex inflation element that you talk about, I mean, is your Totex inflation running at or below the CPIH allowance which it's linked to? Secondly, just on the debt portfolio, I mean, I think there's still some Artesian financing within Bournemouth, which you've already done the first stage of getting that ready for financing and presumably do the same in Bristol. Can you talk about how you're structuring and thinking about proceeding with the debt financing? Thank you. Yeah. Thanks, Mark. Paul, do you want to pick those up? Yeah, of course. Taking the first point there on inflation. Obviously, inflation affects a water business in many ways, as we've probably discussed in the past, coming through in a positive way into RCV growth for the long term and also into in-period revenue increases. They're very much a value driver for inflation. But in the near term, we will see increases to our cost base, most notably for all utilities with a big debt book and index-linked debt. We'll see some increased financing costs, but we will also see some operating costs increase as well as some of the capital costs. It is worth noting. If we think of those for a moment, that's where your question was focused. Clearly, power is an area where we're gonna see higher costs in coming years. I think that's a clear expectation now from where the markets are. That's not just in the next year, but potentially for a number of years, depending on where forward curves settle. At the moment, they remain elevated. Further to that, on the capital side, we will see higher costs coming through on certain component parts, such as cement and metals, which are used in the construction side of the business. We will see on those types of spend lines we probably will see costs going ahead, if you like, of the run rate CPIH rate. We will see those higher costs coming through. As I say, the overall benefit position from revenue and RCV, we expect to offset that. Moving on to your second question on the debt portfolio. You're quite right in saying that, when we acquired Bournemouth Water, that came with quite a significant amount of Artesian debt. And on acquisition of Bristol Water, that similarly has Artesian debt within it. And we deployed our approach to the integration Of Bournemouth Water, which meant that our Artesian debt, if you like, was modified to some extent, which allowed it to come within the group's facilities. We would look to have the same approach to Bristol Water's financings over time and make sure that they also can be reflective of the group's position and the group's approach to financing its debt. Then into the longer term, we expect to be able to refinance those debts, either at maturity or before, depending on where we get to with any net present value benefits that we can see. But if not before, then certainly on maturity. On doing that, we'd look to deploy our proven financing strategy, where we can obviously issue through our Sustainable Financing Framework and look to get best market rates and our gilt debt position set. Okay. Thank you, Paul. Thank you, Mark. We take our next question from Martin Young from Investec. Please go ahead. Yes. Good morning to everybody. A couple of questions if I may. Hopefully, one's just of clarification. When you talk about the GBP 150 million, if we put to one side WaterShare, and we put to one side the fact that obviously the Green Recovery Initiative has already been announced, are you effectively just announcing a GBP 45 million step-up in the Totex program this morning? And how does that sort of land across the various years that are left of AMP7? And then the second one is around the PR24 process, where you've indicated you will be submitting a combined business plan off the back of an expectation there will be a combined license for Bristol Water and South West Water. Yet you talk about two separate price controls. Should I be thinking about that business plan effectively having two sets of financial, for want of a better expression? Okay. Morning, Martin. Nice to hear from you this morning. I'll take those questions. The 150 million, in terms of the 45 million within that, is that an announcement for extra Totex? I think what we're saying is we have been delivering Totex efficiently against our SD allowance. At the half year last year, we reported some ninety four million pounds worth of Totex efficiency, and we are reinvesting 45 million of that. It's not Totex program above the SD allowance. It's reinvestment of efficiency. Around PR24, with the combined business plan for what will be the water group with South West Water and Bristol in it, a bit like it has now, Martin, if you look at the business plans and the price controls that come out, South West Water already has a number of price controls within the one business plan, so it has different price controls for water, for waste, and splits within that. This will just be another split within that one business plan for Bristol against South West Water on the water side. We're already used to having different price controls within a business plan. This will just be another price control. One balance sheet, one business plan in that sense. I hope that answers your question. Okay, thank you. Thanks. The next question comes from Chris Sherwood from Morgan Stanley. Please go ahead, Chris. Good morning, everyone. Thank you for taking my questions. I had one question on WaterFit. I guess you've got this initial investment of GBP 45 million. Do you see this run rate accelerating into K8? I guess a broader question, I mean, how much investment do you think would be required to eliminate spills from storm water overflows entirely in your region? Or even for the U.K. as a whole, if that's an easier question to answer, or England. But some sense for the total size of the investment that might be required if that's what consumers want. And then on procurement, I'm just wondering whether you could talk through the strategy from here. Near term, how are you going to address layering in hedges? Is that something that you're doing piecemeal, or are you sort of following a wait and see approach? I guess just if you could outline your approach to this AMP. Then into next, strategically, are you considering investments to reduce your exposure to this risk? And if so, what might they be? And could you consider using that GBP 200 million pot that you've allocated for the buyback for something like renewables, for example? Thank you. Okay. Great, Chris. A few questions in there. Hopefully, we've got them all down. So take the first one around WaterFit. You're absolutely right. The investment that we're talking about for this three-year period, the GBP 230 million and GBP 45 million of that for reinvestment and efficiency, that is making sure that we make a change in terms of performance. And make a change in terms of the number of those committed spills that we have, reducing those down. So in the notes that have come out about WaterFit, you will see that there is a change in those. Now, the government's consulting at the moment on targets that will run between now and sort of March 2050 in terms of, you know, what customers, communities and regions will want to see in terms of the reduction and impact to the environment and a reduction in spills. That will, as you say, come at quite a cost, quite a price tag. We're all very interested to see, you know, what customers will feed back. We're undertaking as part of this WaterFit launch, a 12-week consultation and review with customers to understand their position as well and see how fast we need to go. I think importantly, what we're doing is making that investment in these next three years because we can understand the situation, understand the issue, undertake not just investigations, but actually, intervening in the asset base. There's about 200-odd assets where we will be intervening to see what difference that can make and make that change now. That will give us information about what will need to be done to either reduce substantially or eliminate flows in future. I mean, publicly, we've seen lots of numbers bandied around for this. I think you honestly don't know until you know what's specific for a catchment or for an area, what needs to be done, whether it's more storm storage, whether it's sewer separation, whether it's some catchment management work to alleviate flow into the asset. It really is quite catchment specific. I think it's quite hard to put an exact number on it, but there are plenty of numbers that have been out there. Chris, I mean, some of them, you know, ranging from, you know, GBP 400 billion-GBP 600 billion in future. I'm not sure, you know, there really is the robust work that's gone in behind those predictions. That is part of the analysis and work that we need to do at [Sevco], but importantly as well we need to do in our region. Getting to understand what that will cost will be part of the work that we'll be doing, and we'll feed into that next price review. I think that's a bit on the kind of water question. Paul, do you wanna pick up on the customer piece? Of course. Yeah. Obviously, you're focusing there particularly on power, I think. In terms of our approach, we obviously have a structured process in place where we look to de-risk over time, which means we'll be putting in hedges, you know, live now and into the future. We'll continue to put those in place, and we'll look to de-risk further as we go forward. That approach obviously looks to hedge mainly the summer and the winter seasons, but we will also hedge more tactically in terms of quarters and months as well, just to make sure we de-risk that position further. We don't like to have very much on day ahead power as you might imagine. It's a very structured approach, focused on the seasons, that then morphs into quarters and months just to further de-risk the position before we get to any day ahead volatility. That's the overarching approach that we have in place. Now that approach does de-risk things, but as I said before, in this elevated environment, it still means to some extent you're seeing higher prices coming through. The higher prices are there in every period as you look along that forward curve. It is difficult to get away from that fact, from a hedging policy approach. Over time, we'll look to de-risk, but that will still mean there are higher prices out there. I think that brings us on to the next point of your question, really, in terms of what we can do about that more fundamentally. That's all about the power that we consume as a business. We're looking at that as part of our Net Zero strategy that Will talked about at the Capital Markets Day. As you'll remember, that's got three pillars involved in that Net Zero strategy. The first element of that, very much focusing on our own operations, looking to make sure we consume only the amount that we need and be more efficient, whether that's in terms of our pumping or whether that's in terms of the actual amount of water we put into distribution. Obviously, the more we can do to minimize our own use, the better. That's obviously also the environment as well as laying in the cost of the power. That's the first thing that we can do. Obviously, we're doing what we can on that, and we're focused on that through the coming years. As you can imagine, it's right up there in terms of priority. The second element of the approach there is all about increasing our own renewable generation. That's something that we're very keen to do, and the Net Zero plan that we have talks about us getting to 50% self generation by 2030. As you can imagine, we're keen to do that as fast as we possibly can, particularly in this financial environment for power prices. We have underway our first phase of rollout of solar PV, which will increase our own generation, and we're looking to increase and accelerate the pace of that wherever we can. That's something that we're actively pursuing at the moment. I agree that we will certainly be looking to increase the investments that we put in place, and it's just a case of finding the opportunity and then accelerating them. We obviously, when we are talking about renewables, particularly in the current environment with power prices, the economics of that are quite compelling and therefore, commercially it all makes sense to do. We'll be looking to do more as soon as we can. Okay, thank you, Paul. Thanks, Chris. Our next question comes from James Brand from Deutsche Bank. Please go ahead. Well, hello. Good morning, and thank you for the opportunity to ask some questions on this call because there are a few moving parts in the update. I had two questions. The first one is on the, well, Totex and the overall RORE guidance, and you've reiterated the guidance for a doubling of the kind of base RORE with more of that coming from financing. If I kind of work through your what we might see in terms of inflation over the next couple of years, you can kind of get most of the way to a doubling just from financing. I was wondering whether you could just maybe give a bit more color on what you might be looking to achieve from Totex and ODIs over the next few years because, as I say, I like to take your guidance very explicitly, which is probably not how it should be taken, but very explicitly implies not a huge amount from Totex and ODIs over the next few years. And then the second question, just to follow up on the comments just made on self-generation, which seems like it would definitely make sense in the current environment. Could you just remind us where you are at the moment? And you mentioned the 2030 target, maybe where you're hoping to get to by 2025. Thank you very much. Yes, of course. Morning to you. In terms of that, first question you have around Totex and RORE. I think in the presentation, we've set out probably within some of the detail there a sort of average inflation rate for CPIH of around about 3% over this regulatory period. That's taking you know just normal market forecasts for CPIH which I expect obviously increase currently and through the rest of this year, but it's thought reverting towards 2% for the remaining couple of years of the AMP. Also noting that it was fairly low in the first year of the regulatory period. We were looking at a sort of average of 3%. I appreciate other people may have different views and obviously, you know, that will change over time. In terms of where we were in terms of thinking about that's the sort of figure that was in our mind. We've always been, as Will has said before, very keen to achieve outperformance in all areas. That's very key to our strategy, whether it's in ODIs, whether it's in Totex, or whether it's in financing. We certainly believe that's something we can deliver over the period, and that remains the focus. I think what we're trying to signal at the moment is that skewing, as we say in there, and that impact that inflation is having an impact on many different line items of the business as I talk about in terms of revenue costs and inflation. It does mean, given our financing position, which is obviously one of the best in the sector, it does mean that we will see good financing performance coming through in this type of high inflationary environment. But conversely, of course, we will see higher costs as I set out earlier in terms of certain capital costs around concrete and metal in particular and around power costs. That will to some extent eat into Totex outperformance, but we will still see Totex outperformance coming through. Obviously to date for the half year, we talked about achieving GBP 94 million already. I think the general message is that we still intend to outperform on all those three elements, but we can foresee a skewing into financing given the inflationary environment. Although obviously that's got to play out and who knows quite in this volatile world where that will play out. That's the guidance. Hopefully that helps, but it will depend to some extent on your own assumptions around inflation and costs. Yeah, that helps. Yeah. In terms of your next question around power. I think it's also worth just reflecting and pausing. If you think of where Pennon has come from, three to fout years ago, obviously the group looked very different, and we were a net exporter of power. We had a natural internal hedge with South West Water and Viridor. We're in a very different position. We've gone from that to where we are now, where now we're a consumer of power. Previously the group's focus when it was in terms of energy generation, it was obviously best value was in Viridor. Now it gives us the opportunity to focus on South West Water. South West Water's self-generation is a number probably that's currently lower than 10%. There is a lot of scope to go at there. We are expecting to, as I said, we've got a first phase of delivery that's in place for the current financial year, so financial year 2022-2023, that effectively will double that to somewhere just above 10%. Then that will put us in a better place. But obviously there's a lot more to do, a lot more delivery that we want to do, and we've got a lot of plans in place that we can hopefully look at in terms of solar, wind and hydro. We are looking at all those aspects. I think as obviously the world is reacting to the geopolitical situation that we have, I think there's probably gonna be a larger call for renewable energy more generally to where in the past maybe some wind schemes would have been not quite palatable from a planning position. I wonder if that will change and we may be able to capitalize on that in a not too distant future. I see, you know, acceleration in renewables is certainly something that could well happen over the next two, three years. Okay. Thank you very much. Thanks, James. We have our next question from Alexander Wheeler from RBC Capital Markets. Please go ahead. Morning. Thanks for the presentation. Just tagging on to James' point slightly. Just when you talk about doubling the base return at Bristol Water, can you give us a broad idea of, you know, the expected mix between Totex, ODIs, and financing? And I guess what, you know, what you expect the incremental gains to be in, you know, ODIs, for example. And also I guess as well, when we think about financing outperformance being realized over a longer horizon to get, you know, at what point you would expect that to be coming through. And then my second question is around how you're thinking about the synergy numbers stepping up towards the GBP 20 million in FY 2025, in the context of the overall GBP 50 million guidance. Thank you. Okay. Thanks, Alex. There was a bit of a line at our end, but I think we got most of that. It's been hard to hear the questions, but I think we got the gist of it. In terms of the synergies that we're talking about this morning with the statement, the GBP 20 million or ramping up to GBP 20 million by 2024, 2025, just to be clear, that is Totex. That's not ODIs or financing. That is Totex outperformance. And that will be achieved across the group, so it's not all focused on Bristol Water itself. It is how we will integrate and merge the operations across the group, obviously starting with us, as you might imagine, you know, with those corporate and shared service aspects. Moving in parallel the operations and customer service side as well. That's how it will work out as a integration blueprint. That's what we're focused on, and ramping up will happen over the coming months to achieve that run rate of GBP 20 million by 2024-2025. That's what that's focused on. Do you want me to just touch on the financing, Alex, as well? Yeah. In terms of that, as I sort of said earlier to a different question, we'll certainly be looking to approach it in the same way we have at Bournemouth Water in terms of the Artesian. It's also worth noting there are other elements of their financing portfolio, and there are different timelines with debt maturing. The average, I think I said in the presentation, was 14 years, but obviously some matures a lot earlier. I think they have debt maturing, you know, in the coming year, and then obviously there's some much later. Where we do have that debt maturing, that gives us the opportunity to look at putting in place a debt that's slightly more akin to how Pennon would look to finance, you know, South West Water historically. I think there is opportunity there, but it will take time for the bulk of the debt to come up for refinancing, which means it is, you know, predominantly in later regulatory periods. As we spend more and we need more debt to cover that investment and we refinance debt that's coming up, that gives us the opportunity to do it through Pennon's Financing Framework, which should give us advantages to where Bristol's been historically. Okay. Thanks, Paul. Thanks, Alex. Our next question comes from Dominic Nash from Barclays. Please go ahead, Dominic. Good morning, everyone, and thank you for your presentation. A couple of questions from me, please. Firstly, I'm sort of intrigued on sort of like the sort of top level outlook of the water sector here in that we've got cost of living crisis turning up. We've got inflation that's obviously looking extremely high. We've got articles regularly coming to the press that the water industry has underinvested for a number of years and needs to increase investment. Of course, we've got bills. The question I've got for you on this area is how are you and Ofwat gonna be looking at the balancing of these conflicting sort of aims and ambitions through the end of AMP7 and into PR24? Do you think that the right strategy is to spend your Totex outperformance on improving your quality of your assets and customer experience rather than necessarily sort of cutting bills? The second question is the... You've raised your CPIH up to, I think, 3.1% for the average over the five years. Please confirm whether or not that will mean you'll restate the 2021 RORE from your return on equity, and whether that means that the WaterShare numbers will be restated from last year. Just one quick, very quick one here. On your energy costs, are there any caps to energy costs and whether you can claw back any of this from consumers through some sort of regulatory framework? Sorry, that's probably three questions. Apologies. Okay. No, that's fine. Thank you for those, Dominic, and morning. I'll take the first one around the outlook question that you had. Cost of living quite big. Inflation running high. Has the water sector underinvested, and is it the right strategy to think about spending Totex outperformance on the quality of the assets? Well, I suppose just stepping back from that pace that you pictured, that picture that you painted, Dominic, and you know, thinking about that outlook. The important thing is with our plans, and that's what we've always tried to do, is make sure we get the balance right, but also make sure that we are focused on driving benefits for customers and keeping the bills as low as they can be, efficiencies based, whether that's through the financing outperformance that we as the only company, I think, that are doing this, sharing some of those benefits with customers, hence the WaterShare. Hence last year, you know, customers got GBP 20 off their bill, or the shares in the group, depending on which option they took, which helps them. Again, with our second issuance, that will be again another amount off the bill for customers, and or a share in the business. We're doing our bit to make sure that we're keeping those bills as efficient and as low as possible by driving those efficiencies. Now, OpEx efficiencies, you know, do give customers the lower bill and the lower bill profile, and that's what happened with South West customers after the efficiencies that were delivered in the last regulation period. I think it's right to try to achieve those efficiencies. That's what the regulatory framework incentivizes us to do, but also it's the right thing to do to keep bills as low as possible. Again, that's one of the reasons that we've got our customer bills going down in 2022, 2023. And again, a welcome respite for them when other bills are increasing. Important that we focus on that. Now, having said all of that, us driving efficiency, and this is why the strategy is right, driving the efficiency gives you that optionality. It gives you the optionality of either giving the customers the money off the bill or, as we're doing today, announcing reinvestment of those efficiencies in areas that again maximize customers, and also will help us, pilot and prove the case for what might come next for customers, in terms of the cost of improvements in the future. I think it's the right strategy, and I think you can see that with what we're doing with WaterShare, and the fact that customers benefit from that, on the financing side and like other companies. On the OpEx side, they have obviously benefited from that in the past and will continue to drive those efficiencies, giving us that optionality. I think it's the right strategy, and it has to be part and parcel of that. Moving to the other part of the question, which is around the CPI, 3%, and are we going to be restating our RORE rate? I mean, I think, Dominic, we always have published our RORE rate on a cumulative basis. If that will be part of, well, that will be part of that reconciliation when we get to that point. I think the important thing is, as per we have done in the past, we think it's right to average, you know, that inflation expected over the five-year period, we'd rather have that RORE rate coming around for me this year. It's important to focus on, you know, what we think the base delivery is, so hence why we average it. Yes, the cumulative position will reflect that. Then in terms of your last question, which is there any potential for, I think you're talking about a reopener, given where costs are going. I mean, I think it's a pretty high hurdle for a reopener, and with, you know, what we call the 20% shipwreck clause, and I don't think we're anywhere near that. You know, that is a reopener if things got to that level. As we know, the regulatory model with revenues that increase with inflation, then there's a certain amount of that goes into revenues, and therefore, in periods you get recompense through that. It's a very high hurdle for a reopener. I don't think we're in that territory, Dominic. Thank you very much. Our next question comes from Jenny Ping from Citi. Please go ahead when you're ready. Hi. Hi, morning. Thanks very much. Two questions, one for each of you. Firstly on strategy, Susan. Just you obviously talked about in the past looking at water sector consolidation, and then clearly Bristol Water is now done and in the bag. Is the strategy going forward now very much focused on integration of the businesses that you do have today? Or is there still a thirst for more consolidation in the sector, just to sort of run that bigger picture scale point of view? That's the first question. Second one for Paul, just going back to Chris's question earlier about the GBP 200 million and the use of that for reinvestment within renewables. I take the answer to his question was yes, we will potentially or we could potentially use some of that GBP 200 for reinvestment in renewables. Is that fair? Thanks. All right. Good morning, Jenny. Thanks for joining us this morning, and thanks for the questions. In terms of strategy, our strategy has not changed. We've always said that we believe consolidation in the sector is valuable to customers, and that it should go ahead. We can see from what was announced today with Bristol Water that there are indeed benefits to be had from consolidation and integration. You can see that in the 20 million efficiencies that we anticipate by 2025. You know, we very much stand by that strategy, and we'll continue to look for opportunities. We're not on a time clock in that sense, as I just said before, and we've done it before with Bournemouth. If we see an attractive opportunity that we think makes sense, then, you know, we would seek investor support for that. No change in the strategy there, Jenny. Yeah. Hi, Jenny. Just picking up on your GBP 200 million point. I suppose in terms of clarification then, that GBP 200 million buyback that we've set out to commence the phases on, you know, before September 2022 this year, that's unless we see other growth opportunities in the U.K. water sector. Principally, when we've been talking about that has been along the lines of the discussion Susan's just had there in terms of regulatory opportunities, and obviously, Bristol is our most recent example of something we've done in that space. I probably would more align it with that, and believe we've probably got, you know, the capacity to look at these renewable options, you know, as a standalone basis because they, you know, they are very compelling. You know, those investments just make sense to do, you know, whether it's within the regulated business. I think in the Capital Markets Day, they went into a little bit of detail in terms of how we could potentially fund that. Some could be funded within the regulatory allowances that South West Water has. We could look to fund it corporately with Pennon. We could also look to an element of Totex reinvestment as well, is something we mentioned at the Capital Markets Day. I think they were the funding streams, if you like, more associated with Net Zero, as opposed to the GBP 200 million buyback that's left to do. Okay. Very clear. Thank you. Jenny Ping. We have a question from Verity Mitchell from HSBC. Please go ahead. Morning, everybody. Thank you for the presentation. Just a couple of small questions. If you just set out the reasons why Bristol is underperforming its base RORE, is it related to finance or what other elements are there from their trading statement? Just on the GBP 45 million and the pumping stations and storm overflows, is this mostly increasing capacity through, I mean, concrete, and are you expecting to share this part of the regulatory construct? Is it as easy as just increasing capacity through building additional storage? Thanks. Okay. Morning, Jenny. Oh, sorry, Verity. Sorry, Verity. Morning, Verity. Right. Names changed. I thought Jenny had called. Sorry. Apologies. Had a little cold. Morning, Verity. In terms of those questions, perhaps if I tackle the question that you had around the storm storage and you know, what we're doing to alleviate those discharges. You're absolutely right. The investments that will be going on across our asset base will include a variety of interventions. Some of it will be greater storm storage, which we talked about in the publications that we put out today. We will be building more of that. We will also be looking at some sewer separation, and we'll be also looking at some catchment management schemes, which again will help us look at how we work with others in the catchment to alleviate flows that cause these discharges to trigger. There will be a variety of investments going on, and I think the really important part of this is us investigating what works best and then using that for a basis for another step change in the period to come. That's why we're doing what we're doing. We know we can, we've almost got, you know, dare I say it, you know, on the shelf ready to go activities and investments that we're accelerating to deploy and see what works best. It is gonna be a real mix. Every catchment is different, Verity. Every catchment we have to assess, understand, and that's what we've been doing over the last 12 months. We've had over 650 investigations in our catchments ongoing for the last 12 months. Now we've got some really good information to help us accelerate and make a difference now. It will be a mix going forward. You're absolutely right. In terms of Bristol, you asked about Bristol and its performance and why those returns are lower than the regulatory allowance. Yes, financing obviously is a key part of that. In terms of their ODI position, yeah, I think they are, you know, pretty much net neutral in terms of any either outperformance or underperformance. You know, pretty much consistent with our business plan. The topic, I mean, we've just talked about this morning, haven't we? We will be deriving efficiencies across the group and post the integration, which will help towards the RORE for them. You're absolutely right. Pretty much, financing is the area that pulls the Bristol ROE, RORE down. I hope that answers your question, Verity. Thank you. As a reminder, to ask a question, please press star followed by one on your telephone keypad. Our next question is from Ahmed Farman from Jefferies. Please go ahead. Good morning. Thank you for taking my questions. My first question is actually on sort of the operating costs, and you highlighted today, you know, sort of the power costs and give some details around your open exposure. I was hoping if you could share some details on the rest of the mix of the operating cost base. You know, labor, staff costs, any sort of raw materials that form part of your end customers. What trend are you seeing there? You know, any details on how much you hedged, how much is your open exposure? That would be quite helpful. My second question is just hoping to get an update from you on where we are in the process, regarding Ofwat and EA investigation into those sewer street works. You know, what's been the engagement so far? What are sort of the next milestones? Anything you can share there would be very helpful. Thank you. Yes, morning, Ahmed, and thank you very much for your question. Paul, do you wanna take the cost one? Yeah. Yes, morning, Ahmed. In terms of costs, I think you were focused particularly on operating costs. I mean, water companies, you know, do have high energy usage, energy consumption. You know, water is a heavy commodity to move around the network. Obviously, we use gravity as much as we can, but there are times given geographies that we do need to do pumping, and therefore there is high intensity in some of that operation. You know, power cost is a significant element, and I think we've talked about power cost being roughly 20% of our operating costs. The wholesale element of those power costs is roughly half. You could say the wholesale power cost is roughly 10% of, you know, past years' operating costs. That is a big aspect. Employment costs are obviously another big aspect across the group. South West Water, for example, will have sort of GBP 50 million-GBP 60 million of employment costs every year out of its OpEx base. Obviously, that's a very significant number. As you can imagine, we have annual pay discussions with our staff, so they'll be ongoing. They obviously, you know, will to some extent be featuring the backdrop of the inflationary environment as you can imagine. In terms of other costs, for example, you know, chemicals is something that often gets talked about. In that arena, we do obviously have contracts in place, as you can imagine, and they do give us a certain amount of price protection. Where there are exceptional price increases, then obviously they will come through. As things get renewed, they will come through. I mean, I think that's one of the things that is quite clear when you look at, say, the power curve. I've said on this call a number of times, you know, there's no escaping. At some point, power will increase. If you're well hedged now, then when that comes to an end, you're gonna naturally pick up higher power costs. Hedging is only a temporary delay, if you like, on the higher costs that the world has out there right now for us all. I think those costs are there, but we obviously manage them the best we can, and we have contracts in place that give us some degree of protection. As you would expect, they'll come to renew. As they do, we will inevitably pick up the market costs that are present at that time. Okay. Thanks, Paul. Then, Ahmed, the question you had around the Ofwat and EA investigation, I mean, you're quite right. It's still ongoing. I'm sure it will take some weeks, if not months, you know, before you know, we see well, some way through that process. I know there was an announcement from Ofwat a few weeks ago around certain companies that they were asking for further information from. We were not one of those, but nevertheless, the investigation from both Ofwat and the EA is ongoing. So there's nothing to update here this morning on that front. Okay, thanks. Thank you. We take a follow-up question from Dominic Nash from Barclays. Please go ahead. Hi there. Yes, thank you for this. Couple of ones. Firstly, you say this, the synergies from Bristol are broadly similar to that you found on Bournemouth. From memory, I think Bournemouth, you got a GBP 7 million run rate synergies by the end of year six in that case. Were there further or could you quantify what the further improvements were on whether ODI sort of best practice transfer or further synergies beyond the end of AMP6 that Bournemouth that we could read across to Bristol? The second one I've got is that you piqued my interest a bit when you said you've got a blueprint for future acquisitions agreed with Ofwat. Could you give us some sort of color as to what this blueprint for future acquisitions sort of actually is, please? Thank you. Yeah. Paul, do you wanna take the first of the two? Yeah, of course. You're right in terms of the Bournemouth Water comparison through integration. The run rate achieved there was GBP 7 million that you've referenced. Now, I think in terms of the bigger picture and how that's then played into further value. I think a very good example are the treatment plants that we're currently building out in Bournemouth right now, Alderney and Knapp Mill, where we're investing in 2 state-of-the-art water treatment works, very much like the Mayflower Works that I know some of you had the opportunity to visit recently at our Capital Markets Day. That investment obviously drives the RCV growth even further and is something that we don't think Bournemouth Water could have achieved as a standalone business. They're very much a further benefit, if you like, beyond just the top six benefits that were in place. In terms of ODIs, we very much, in terms of the Bournemouth acquisition, look at it as one business going forward. We don't have delineation of ODIs, you know, into this current regulatory period. They have been combined in that sense. Slightly different positions of where we're going to get to with Bristol. In terms of Bournemouth, they were absorbed into the South West Water ODIs. I think that further value, yes, it's coming. Continued performance through Totex, through ODIs, but also that more significant ability to build out and deploy the two water treatment works, I think is something to focus on. Okay, thanks, Paul. In terms of this blueprint for future acquisitions or for similar work too with Bristol, I think it's really important to make sure that we could demonstrate the benefits to Bristol customers on an enduring, ongoing basis. Hence why, unlike the Bournemouth acquisition, we've ended up with separate price controls, and yet we get the benefit of the broader balance sheet for the larger water company by merging those balance sheets and operations. You kind of get the best of both. You get the operational financing synergies, but then you get the ability to be regulated in separate price controls. The customers can very clearly see the delineated Bristol within that. From a regulatory perspective, regulator can, you know, hold us to account for Bristol delivery as well as South West delivery. In a way, the best of both worlds. That blueprint is obviously a good place for us to then roll out if there were to be future opportunities and acquisitions. A lot of work went into making sure that that was fit for the future. Okay. Thanks very much. Thank you. We have no further questions, so I'll hand it back to Susan and Paul for any closing remarks. All right. Thank you very much, Katie, and thank you to everybody for joining this morning. As I said, a really robust trading statement that we put out this morning and some great plans that will see us focused on that step change in river and coastal water quality, and also making sure we're delivering benefits for all by accelerating our WaterShare+ scheme issuance, second issuance, and making sure that we're keeping bills as low as possible for customers. With that, we'll close the session, and thank you everybody for joining. Thank you all. This now concludes today's call. Thank you for joining. Please disconnect your lines.