Good morning, ladies and gentlemen, and welcome to United Utilities' half-year results presentation for 2022-23. The U.K's seen very significant political and economic turbulence this year. However, we've not allowed this to deflect us from delivering value for customers, the environment, and shareholders through operational excellence and sound financial management. In so many ways, we reflect calm confidence in the storm. Over the last decade, we've had a clear strategy to ensure United Utilities is continuously improving and delivering better outcomes for all our stakeholders year after year. We've made significant targeted investment over that period to improve our operational performance, to provide a better service for customers, to become a sector leader on the environment, and to build a business with a strong, resilient balance sheet. This strategy has delivered real benefits and created value for all our stakeholders. Plans for AMP8 are also coming together, and the need is becoming clear for very significant increases in capital investment for the sector over the next and subsequent AMPs to meet new and demanding environmental regulation. Whilst there's still a lot to be done before we know what this will look like, we're supportive of the drive to go further for the benefit of all of our stakeholders, and I'll talk more on this later. Here are the performance highlights at the half- year. This is a tough time for customers, and we're helping more than ever before with payment assistance schemes. Our focus on operational excellence, leveraging our systems thinking investment, has again delivered year-on-year improvement in performance. Spring and summer has been particularly dry across the U.K., but with effective management, supported by the investment we've made in our water network, we're able to avoid the need to apply the restrictions seen elsewhere across the country. Our improving environmental performance has again been recognized with a top four-star rating by the Environment Agency. River health and spills into the environment are huge areas of focus for us, and we're making good progress against Better North West plan. As a result of our efficient performance and targeted investment, we're one of the top performing companies on ODI rewards and continue to target a net AMP7 ODI reward of GBP 200 million, some five times higher than our AMP6 reward. The government's new Environment Act sets out an ambitious agenda for environmental improvement, with the water sector required to make a major contribution. Achievement of the government's targets will require a very significant uplift in capital investment for the sector in AMP8 and beyond. Through what has been a difficult macroeconomic environment, our financial position has been resilient. The North West is home to some of the biggest cities in the U.K., and the current economic climate will make life more challenging for customers. We work extremely hard to understand our customers' situation and find ways to help, and we're supporting more customers than ever before, over 200,000 households, and have committed a significant package of affordability support worth around GBP 280 million for this AMP, the largest in the sector. Measured against a broad spectrum of companies in the U.K., we have a class-leading set of tools and techniques to help customers with our mission. With a customer's consent, we can use open banking technology to access a customer's bank account and verified income. This allows us to complete all the necessary checks we need to get support in place for customers in minutes instead of days. Proof in hand that the service costs less. We've long had a strong focus on supporting customers with affordability challenges. However, we recognize there's always more that can be done, why we're strong supporters of the proposal put forward by the Consumer Council for Water to level up affordability support across the country. This would provide much-needed help to families during these difficult times. I mentioned earlier that our determined application of systems thinking through integrated process and technology is paying, improving, and stable operational performance. Over successive years of customer satisfaction, environmental and operational performance all create a share value. Water sector environmental performance is very diverse. I've said that the Environment Agency awarded us for our environmental performance last year and for five of the last seven years. Step drop of a continuously evolving and tougher assessment methodology, and we're consistently one of the top performing companies in the sector. Adding some color, we're the sector's frontier performer on pollution performance. The investment I've told you about previously in Dynamic Network Management is helping deliver our lowest ever levels of sewer flooding, improving our ODI performance for this metric. Our investment in river health is helping to reduce spills from storm overflows, and I'll talk in more detail about this shortly. We're on track to meet our leakage target for this AMP, using latest detection techniques to find and stop leakage. In addition, we're successfully re-reducing voids, finding properties using water but not being billed. I've mentioned previously that we've made additional investment in mains pipe cleaning to improve water quality through reducing discoloration at customers' taps. Once again, this is paying off with our lowest levels of discoloration contacts from customers, turning what was an ODI penalty last year into an expected ODI reward for the year. We continue to perform well on customer satisfaction with our combined C-MeX score for the H1 of the year, positioning us in the upper quartile of water and wastewater companies, and the top performing listed company. company. All of the above and more is serving to support our target of GBP 200 million total net ODIs for AMP7, and we're on track to achieve a GBP 30 million net ODI reward this year. The dry weather this summer brought water supply resilience into sharp focus, particularly in the southern half of the U.K. In July and August, some areas of our region received less than half of the rainfall typically expected during these months. Effective management of our real-time water production planning system enabled us to optimize abstraction to keep reservoirs as full as possible. In addition, we're benefiting from the investment we've previously made in our integrated regional system. Some of you saw firsthand the work to enhance resilience of our water system in Cumbria during our capital markets day earlier this year. This supports the movement of large volumes of water around our network to balance customer demand and optimize use of resources. Alongside optimizing water availability, we worked hard to deliver significant customer campaigns around water efficiency, leveraging the link to energy for water heating. As a result, we've seen an 11% reduction in per capita consumption when we compare the H1 of this year to the same period last year. This helps to improve regional water resource resilience and ODI performance, as well as helping customers to keep their bills down. As a result of these actions, we've not had to introduce any customer restrictions this summer. However, we're not complacent. We know that there's more to do in this area to help us become stronger and even more resilient. I spoke to you in May about our Better Rivers program to improve river health in our region. River health and spills into the environment is a key issue for all our stakeholders, and it's a huge area of focus for us too. Our original AMP7 plan provided GBP 230 million of investment in environmental improvements, and I previously told you that we'd enhanced this with a further GBP 250 million to get a head start on requirements emerging for AMP8. This allows us to responsibly accelerate improvements, which is absolutely the right thing to do. Combined storm overflows or CSOs are very much in the headlines, with the government setting ambitious targets to reduce spill frequency across the country. We're fully engaged with this ambition and have already made great progress, delivering a 29% reduction in the number of reported spills last year compared with our 2020 baseline. We had targeted a 33% reduction between 2020 and 2025, but our great progress so far suggests that we'll beat this ambition. This targeted action and investment is enhancing our environmental performance and delivering sustainable performance of our wastewater networks against a backdrop of increasing regulatory standards. In addition, last week we hosted the region's first Future Rivers Forum, bringing together several organizations to collaborate to improve the quality of our rivers. These activities are helping us deliver on our four-step plan to improve river health. The government's Environment Act 2021 sets out an ambitious program of environmental improvements. The most high-profile component, which has received much of the public attention, is the ambition to reduce spill frequency from storm overflows. These are sewer system pressure relief valves, and we have over 2,000 of them across our network. Estimates prepared for Government point to around 60% of the sector investment necessary to meet their targets needing to be made in the North. This is a reflection of the nature of the long industrial legacy and higher rainfall in the region. This is only part of the story. Another driver is the desire to further reduce phosphate released into the environment from wastewater treatment works by 80% across the country by deploying the best technology currently available. In addition, there's several areas across the country where further development is prohibited unless nutrient imbalance can be corrected, in which the water sector can play a part in the solution. There are other less significant drivers that combine to produce a patchwork of statutory requirements we're required to satisfy. Our Better Rivers program was our first step in making an early start on these requirements. The government has asked us to go faster, and we've responded by identifying additional investment that could be accelerated as transitional investment from AMP8 into AMP7. We're still early in the process of scoping and costing the environmental program for AMP8, but early indications are that we may need to invest significantly more than the average over the last two AMP periods. This is only AMP8, but it's clear that AMP9 and beyond could present similar opportunities. Affordability and deliverability of a program of this size are important considerations, and we're therefore in discussion with regulators on the pace of the investment. We're unlikely to know the actual size of the program until much later in the AMP8 process, but early indications are that we are facing a period of significant growth in capital investment, and with that, much higher RCV growth. I'll now hand you over to Phil to take you through the financials. Thanks, Steve, and good morning, everyone. This year's seen both a continuation of a challenging macroeconomic environment, but also the realization of significant inflation alongside higher interest rates. While both of these factors have a material impact on our reported and underlying results, the economic performance of the business, reflecting the regulatory model, remains robust, with the company on track to deliver an improved rate of return on RoRE this year. In today's presentation, I will focus on how we're managing our cost base, our strong balance sheet, and our resilient pensions position. To finish, I'll provide some updated guidance for the full year to March 2023. Here are the key financial highlights for the half year. Revenue is down 1% at GBP 919 million as a result of consumption being lower than expected. Household bad debt has remained stable at 1.8% of regulated revenue. Underlying operating profit of GBP 259 million has been impacted primarily by inflationary increases on core costs. As a result of higher inflation, and in particular, its impact on finance expense, we have a small underlying net loss for the H1 of the year and an EPS of -1.8 pence per share. In contrast, our reported EPS is 51.8 pence per share, reflecting the significant fair value gains arising from higher interest rates. The interim dividend per share is 15.17 pence in line with our policy. Inflation on core costs is being actively managed, and we're well-positioned with a current pay deal agreed at 4.75%. Virtually all our capital program on contract and 96% of power costs are fixed for the year. We continue to have one of the strongest balance sheets in the sector with RCV gearing of 60% and a pension scheme which is fully funded on a low dependency basis and which has been resilient to the recent market challenges. Finally, we have a strong liquidity position, having raised debt early in the AMP at attractive rates. I'll now consider these points in further detail. Let's look first at our household cash collection and bad debt performance. We're driving continual growth in customers on Direct Debit. This provides us with a strong starting position for our collections activity, which has continued to be robust in the H1 of the year. At 81%, we have one of the highest proportions of customers on Direct Debit or other payment plans within the sector, providing a high level of collection certainty for a significant portion of our revenue. We're very conscious of the difficult times that customers may face over this winter and are utilizing data and technology efficiently, allowing us to act early and swiftly to support customers. Good examples of this are our nudge activity if customer behavior changes, and Open banking, which helps customers to efficiently access support tariffs and reduces our cost to serve for these customers. This all supports our lowest ever level of household bad debt at 1.8% of regulated revenue. Underlying operating profit of GBP 259 million is down GBP 74 million. This principally reflects the decrease in revenue, inflationary increases in our core costs, investments in driving ODI performance, and costs associated with incidents resulting from dry weather over the summer. Revenue is GBP 13 million lower than the H1 of last year. Our over-recovery in the prior half year broadly offsets the allowed inflationary increases in the current half year. The remaining reduction in revenue is driven by lower consumption as we focus on reducing per capita consumption, which supports our water resilience position and benefits our BCC ODI. The GBP 19 million impact of lower consumption in the H1 of the year will be recovered in revenue in the financial year ending March 2025. We're not immune to the global inflationary pressures. As a result, we've experienced inflationary pressures on input costs with the largest impact to power and chemical costs, resulting in a GBP 36 million increase in the H1 of the year. We've invested an additional GBP 9 million in infrastructure renewals expenditure associated with Dynamic Network Management and water quality. Which is targeted at improving ODI performance. During the exceptionally dry summer, we experienced three atypical large bursts in our water network, resulting in around GBP 8 million of cost associated with network repairs, customer support, and compensation. As these were core operational incidents, they have not been excluded as adjusted items in our underlying measure of performance. As we noted at the full year, the accounting change towards the end of last year in respect of Software as a service now results in costs of GBP 3 million being treated as OpEx rather than CapEx. We're very focused on the action we can take to mitigate the impact of higher inflation. While we're not immune to the macroeconomic challenges we all face, we are well-positioned. Let's first look at how we're managing the near-term impact of inflation. We agreed our pay deal for the current year at 4.75%. Our decision to accelerate AMP7 investment means our base capital program is already 98% let under target pricing arrangements, providing confidence of supply chain resource in a challenging environment and incentivizing efficient and effective cost management. We have already delivered around 65% of the program only halfway through the AMP, giving an increased level of certainty on costs. On power, we're in a strong position, having increased our hedge to 96% for the current year. As we look forward, we continue to focus on tightly controlling our cost base, although it's also important to understand how the regulatory mechanisms mitigate this impact. We expect a higher non-cash indexation charge on our inflation-linked debt this year. Inflation-linked debt equates to around 30% of our RCV, with the full RCV benefit therefore being around three times the non-cash indexation charge. As you know, the RCV benefit is not reflected in the income statement. The regulatory contract also allows for inflation indexation of a Totex allowance, providing mitigation to inflation on core costs. Each 1% increase in CPIH over the AMP will result in around GBP 600 million increase to the RCV and around GBP 150 million increase in the totex allowance. At our full year results in May, I gave a lot of detail on our power position and hedging policy. We came into the year in a strong position and now have 96% of our consumption This has helped us control power costs that average to GBP 85 per megawatt hour, which compares favorably to the energy price cap of GBP 211 per megawatt hour through the H2 of the year. Our hedging policy has created significant value as we have the benefit of the hedge, probably GBP 35 million higher for full year. As a result of our hedging strategy, we're also focused on driving energy efficiency across the organization, maximizing benefits from time of usage. We continue to benefit from 25% of our power needs being sourced from self-generation and long-term power purchase agreements. The sale of our energy business, which completed in September, has unlocked capital, we will recycle back into projects to support our journey towards net zero. At the same time, we've locked in the price of the energy from those assets sold through long-term power purchase agreements or PPAs. Lastly, our long-term power hedging policy is demonstrating its effectiveness. We're in a strong position for the rest of the AMP and have locked in a large proportion of our energy needs at favorable prices. Let's now focus on finance expense. Our underlying net finance expense for the H1 of the year is GBP 267 million. This is a GBP 132 million increase from the prior half year, largely reflecting a significantly higher inflation applied to the non-cash indexation of our index-linked debt. Our reported net finance income includes a significant fair value gain of GBP 403 million. This reflects the benefit we will receive in our underlying cash interest expense in future periods from having fixed rates on our nominal debt. Turning to our forecasts for FY 2023, we now expect underlying net finance expense to be around GBP 165 million higher than the previous year. This increase relates to the non-cash indexation on our index-linked debt due to the higher inflation. Importantly, our cash interest for FY 2023 is expected to be broadly the same as FY 2022. We have provided our current forecast, along with the main components of our finance expense for FY 2022 and the H1 of FY 2023 in the appendix to this presentation. Let's now look at how well we're positioned on financing. First, we're ahead of where we need to be, having raised a significant financing in the H1 of the AMP. We have a strong liquidity position with over GBP 1 billion of liquidity, enough to take us through to almost the end of the AMP7 period. This means we have flexibility to choose when and how we issue to maximize the best value. Second, we have a strong track record of outperforming the debt index for new debt, typically by between 50 and 100 basis points, as illustrated on the chart in the appendix. This, together with the acceleration of our financing, means we benefit from the debt indexation mechanism in a rising interest rate environment. We're also benefiting from having issued debt early in the AMP, which locked in historically low long-term yields. All of which puts us in a robust position from which to navigate the H2 of the AMP. Turning to our strong balance sheet. To the left of this slide, we have a bridge of our net debt position from March 2022 to September 2022. Net debt of GBP 7.8 billion has increased by GBP 259 million since March 2022, with the usual underlying movements shown in the bridge. High levels of inflation have impacted both net debt and our RCV, and therefore RCV gearing has reduced slightly to 60%. At the full year, I provided a view of how the investments we're making in AMP7, together with the expectations of inflation, were expected to drive higher RCV growth through this five-year period. To the right of this slide, I've provided an update to this, reflecting our current expectations of inflation. Our nominal RCV growth over the five-year period is now anticipated to be 27.5%. This means we expect to exit AMP7 with an RCV of GBP 15.1 billion and gearing trending towards the lower end of our 55%-65% target range, which comfortably supports a stable A3 credit rating with Moody's. Now to touch on pensions, as it's been a challenging time for many pension schemes over the last few months. As at September 2022, we had an IFRS pension surplus of GBP 824 million and remain fully funded on a low dependency basis, with no ongoing pension scheme deficit contributions payable. Our clear and effective risk management policies enabled our schemes to successfully navigate the recent challenging market conditions. As I mentioned at the full year, we're now exploring with our trustees further de-risking options, and this process remains ongoing. This slide sets out our update for the outlook for the year to March 2023. We expect revenue to be around 1% lower year-on-year with the consumption trend we've seen in the H1 of the year expected to continue into the H2. The GBP 34 million expected impact from lower consumption will be recovered through increased revenue in FY 2025. Underlying operating costs are expected to increase by around GBP 130 million. Around GBP 80 million reflects inflationary pressures on operating costs, principally power, chemicals, Labour, and other contract costs. Around GBP 30 million reflects the increased scope, and includes the FY 2023 element of incremental infrastructure renewals expenditure in relation to the investment we previously announced. The remaining GBP 20 million reflects atypical costs, including the dry weather costs incurred in the H1. As already mentioned, higher inflation materially impacts our index-linked debt. As a consequence, we expect our underlying finance expense to be around GBP 165 million higher. Further details of the assumptions are set out in the appendix to this presentation. We expect an underlying tax charge of between GBP 5 million and GBP 10 million for the full year as we continue to optimize capital allowance Super-deduction and efficiently manage the group's tax position. CapEx for the year is expected to be in the range of GBP 660 million-GBP 715 million, a small increase on the guidance given in May as a result of ice phasing. This includes the FY 2023 element of incremental CapEx in relation to the additional GBP 705 million investment we previously announced. We're targeting a customer ODI reward of around GBP 30 million, consistent with our investment plans and our AMP7 guidance on ODIs. With higher expected financing performance alongside our improved ODI performance this year, ROA is expected to be higher than the 7.9% reported last year. Finally, our dividend policy remains unchanged, and we expect dividends in FY 2023 to be in line with our AMP7 dividend policy of growth year on year by CPIH. To conclude, we're in a robust financial position. We're actively managing the near-term impacts of inflation driven by wider macroeconomic challenges, and we benefit from higher TotEx allowances and RCV growth. Despite the cost of living challenges, our focus on supporting customers and our approach to debt management means that we means that household cash collection has remained robust, with our bad debt stay-position stable at 1.8%. Finally, we have a strong balance sheet with a sustainable level of gearing and a leading pension position, enabling us to capture the opportunities for future investment. Thank you, and I'll now hand back to Steve. Thanks very much, Phil. To summarize, we see the huge challenges that many of our customers are facing as a result of cost of living increases and are supporting more customers than ever through our sector leading package of support. Our investment in systems thinking is delivering sustainable improvements in operational performance and is helping us to deliver one of the best ODI positions in the sector and continue to target an ODI reward for AMP7 of around GBP 200 million. Effective management, supported by previous investment, has helped us deliver a reliable and resilient water supply throughout the dry spring and summer. We're improving river health and reducing spills into the environment through our Better Rivers and Better North West plan. Our focus on tight cost control is helping us to navigate the current macroeconomic challenges. With a robust regulatory model, we're in a strong economic position. Looking to the future, the government's Environment Act creates significant drivers for increased investment in AMP8 and beyond. We're supportive of the drive to go further to deliver better environmental outcomes for the benefit of all of our stakeholders. Thanks very much for listening, and we'll now take questions. The first question we've got is from Mark Freshney at Credit Suisse. Mark, can you hear? Mark, you're on mute. No? Nothing else for later. Okay. We're struggling to hook up with Mark. Shall we try James who's also there? See if we can get James, and we'll come back to Mark if we can connect. James? Can't hear you. Yeah, try James. Somehow Zoom is not hooked in. That's Mark Freshney. That was Mark Freshney we had there. We'll go back. You have Mark. Yeah, no, we'll go back to Mark. If you excuse us for a second, Mark. James, we can hear you now, yeah? Okay, great. Fine. Look, two questions, one for Steve, one for Phil. For Steve, you mentioned in the environmental rules driving kind of stronger ramp growth. Is there any more detail you can give on that? What kind of projects do you think you might be doing in the next regulatory period, big projects that will be driving CapEx? Is there any kind of quantum you can share with us for what that might look like, either in terms of millions of GBP CapEx spend a year or ramp growth coming through? The second question for Phil, the fixed rate debt decline, declining kind of balance hedging. Firstly, could you confirm that's roughly linear as we go through the next 10 years? That would imply that you've hedged more than half of your fixed rate debt for the first year of the next regulatory period, which I think would be quite reassuring. Thank you very much. Okay. I'll pick up the first question, James. Thanks. Yeah, as I mentioned before, there are a number of drivers. One is the overall driver to reduce essentially the number of times that CSOs operate. That essentially will require either a significant reconfiguration of our systems, which might be, for example, construction of storage so that we can hold more stormwater, most of which is surface water at the time that we get storms. It may look at natural solutions as to whether we can convert what are those pressure relief valves into more natural solutions, you know, reed beds and others where stuff is being released before it gets into rivers. I mentioned also that with an 80% phosphate reduction, there's quite a lot of work on our wastewater treatment works to effectively implement the latest technology that does that. I think at the moment we're seeing, if you look for a strict interpretation of the current requirements, we're seeing a huge program for AMP8, which is several multiples of what we would spend, literally, high single digit multiples of what we would spend in conventionally in an AMP period. I think there are two components to that. One is the issue of affordability, what that would do to customer bills at a time that's difficult. The other is, when you are working on your system so extensively, you know, how do you maintain current levels of performance whilst you're actually taking stuff out? The government has essentially asked for us to put forward a fairly straightforward Exposé of all of that in terms of what that means. I think we'll be getting into a conversation about pace as to at what rate should we be meeting those requirements. Think, just to sort of put a little bit of color on it, I mentioned that in the North, the requirements are particularly large for northern companies and principally us and Yorkshire. I think there's also something of a high driver in Wessex Water's area. Just between us and the North, we account for something over 60% of the total investment needed just in CSOs alone. Therefore, you know, the challenge for the rest of the country in terms of size of program is relatively small once you've divided that up amongst all the other companies. I think the issue there for us and the conversation with government to arrive at what that final program size would be, will be very much driven by, A., what do we want to see on customer bills during the period? Then just generally, how much can you do over a five-year period? We're looking at resources. We're understanding how we deliver a large program. I think whatever you do, it would require government to essentially adjust the pace of delivery in order for the bill impact and the total amount of work to reduce during AMP8. There's a conversation to be had there, and I think our business plan will reflect whatever that conversation arise. Whichever way you look at this, it's a very significant increase on the capital expenditure. Obviously from the opportunity for us is huge interventions to improve our wastewater system or performance, but also RCV growth that would go with it. Yeah, more to say on this as we go through those conversations. We'll probably have an update when we get to full year as to where those conversations have taken us. Phil? Okay. Morning, James. The short answer is you're quite correct. Sort of building on that a little bit further, I think there's probably four key points I'll pull out. Firstly, our hedging policies are very clearly and transparently set out in our annual reporting accounts. There's a very clear sort of position articulated there. Sort of secondly, I think, you know, in the context of nominal debt, we have that 10-year reducing balance approach to hedging. Effectively, we do hedge out into the next AMP period. And the reason we do that and the approach we take is very much mirrored towards trying to best reflect the economic model that the regulator follows in terms of the cost of debt allowances. That's what we're trying to sort of always manage and match off the cost of debt towards. I think our position is very, very favorably. Finally, to the sort of fourth point, I guess some of the impact of that you've seen in the reported results today, because effectively, the reported results had that large fair value gain on some of the interest rate derivatives for the hedging, the forward interest rate cost. As I said in the presentation, you know, that will unwind through the underlying interest position over future years, and that's how that benefit will support the operating result going forward. Thanks, Phil. Okay. Thanks, James. Thanks. Can we move to Mark now, please? I think we've got you now, Mark. Yeah. Perfect. Can you hear me okay? Yeah, we can. Thank you. Perfect. Thank you. Steve, you mentioned bringing some spend from AMP8 into AMP7. Can you talk about the regulatory mechanism? Because the government may want you to do the work, but you're kind of stuck between, you know, government and people who stipulate what the CapEx should be and regulators. Can you talk about how that would come through, you know, an extra allowance rather than TotEx sharing? If you could also talk about, you know, these large numbers. I think the point that you didn't mention was local supply chain, mobilizing labor to do some of these works. It's a massive process. Could you also talk about ramping up the supply chain for this? Phil, inflation, can you let us know what RPI assumptions you're running for December to get to the guidance and also to get to the GBP 15.1 billion RAB? Could you also talk about the, I think it's GBP 4.2 billion of inflation-linked bonds or RPI-linked bonds? I believe that hardly any of them have clauses in preventing, you know, the principal going down in a period of deflation, which is a very real risk here given what's happening to natural gas in Europe. If you could talk about those things, that would be great. Thank you. Okay. Thanks, Mark. I'll pick up the first couple of questions. Yeah, I mentioned that the government is quite keen that we don't wait until AMP8 to start the delivery of their ambition on the environmental improvements. What they've done is they've come out to industry with a regulator engagement and support to say, "What would you do in the last couple of years of the AMP that essentially would give us an early start?" Now, bear in mind, I mentioned we've got GBP 250 million of work that we're already doing on Better Rivers. We've gone back with a program of a total program, which is around GBP 300 million as a number of work that if it was approved, we could effectively deliver during that period. Whether we get all of that, Mark, I suspect we may not, and therefore, you know, it's not something to bake into numbers at the moment. Essentially, that's the work what we've done. The mechanism is what we call transition investment. A number of years ago, we talked to the regulator to say that, you know, doing work in five-year chunks is not necessarily an efficient way of doing things. Be great if we could essentially start work on the next AMP at the end of the current one, but that would essentially be AMP considered AMP8 expenditure. It's what we're looking at now is this as an extension of that principle for transition investment. Rather than simply being applicable for the last year of the AMP, it would now be applicable from approval of that investment. Let's say, over the last two years of the AMP. The way that that would effectively operate, or certainly what we've proposed, is that it would be an AMP8 expenditure, but it may well be essentially logged up as a midnight adjustment at the end of AMP7, so, and mostly go to RCV. Essentially, that is the proposal. We've had quite a lot of dialogue, as have others with the regulators and with government about company proposals. We think that we might know something by the time we get to Christmas in terms of what is likely to be approved. A fairly significant package of work. We may not have everything approved as you saw in Green Recovery. There were choices exercised about what we do, but essentially that's the mechanism. I think in terms of labor mobilization, it's quite true that because our program is very significant potentially in the Environment Act requirements, and as I said, you know, we in the North, between us and Yorkshire, are sort of over 60% just of the CSO program. We are now working to look at supply chain arrangements, both how one would mobilize additional supply chain resources to be able to deliver a more intense program, but also our own resources in terms of program managing that. Quite advanced in those, in that thinking and those conversations. You're absolutely right. We would normally be delivering a program of what? GBP 600 million- 700 million over the period in environmental improvement. You know, we're now talking of potentially multiples of that, and that will require us to enhance the supply chain. One of the issues to consider here is of course, at the moment, infrastructure investment is really quite heated. You know, we have the advantage of, as Phil said, of having about 90%-98% of our capital program committed. That doesn't just bring pricing advantage, but it also brings resource availability because we've locked in those programs with our suppliers. It's very difficult at the moment if you haven't got work committed, to get it committed, and to get it committed at a price that's acceptable. I think as we start to move into AMP8, you know, the macroeconomic impact will be resources will become available because we are seeing, certainly in terms of areas of private investment, that that's being held back at the moment. I think, I think we may well see resource picture improve as we roll into AMP8. There's certainly a lot of planning on our part as to how we deliver a much larger program. Phil? Okay. Morning, Mark. Two questions, inflation and then the inflation-linked bonds. In terms of the forecast in the appendix to the presentation, there is a sort of detailed slide that has the assumptions on for the inflation numbers for January, which is what will drive the inflation-linked debts indexation charge for the full year. In some respects, really helpful guidance for analysts because, you know, if you have your own views of what inflation is gonna be, you'll be able to substitute that and update guidance real-time effectively as we go through the next few months, recognizing that the inflation environment remains very volatile. Then your second question was on the sort of GBP 4.2 billion of index-linked debt and so what happens if inflation goes negative. Clearly the position there is very, very, very much set out in the trust deed, so that's a matter of public record. I would encourage people to go and have a look if they really wanted to rely on the answer. My understanding, Mark, is that effectively if inflation goes negative, I think we will see the benefits of that for our index-linked debt position as well. That's always been one of the big benefits of our index-linked hedging policy, is a reflection of, you know, we're not trying to call the market, we're not trying to call what the future views of inflation will be. The debt is there to sort of provide mitigation for sort of downside inflation sort of as well. A very valuable point to be aware of going forward, I suppose. Okay. Thanks very much, Phil. Thanks for that, Mark. We've now got Martin Young, Investec. Morning, Martin. Yep. Good morning to everybody. Hope you're well. A couple of questions if I can, please. Getting back to the cost of- With the CSO investment and how this is skewed to the north of the country, any conversations going on about some kind of smearing of the cost across the whole of the country? I'm conscious that there are mechanisms that provide help to water customers in the southwest of England, and there are mechanisms that provide help to customers in electricity in the north of Scotland. There are some precedents where this kind of sharing does go on. You know, the second question that comes off the back of everything you're saying about potential significant uplifts in spend in AMP8. I would say in the past that the stance taken by the regulator is to have squeezed on TOTEX and arguably squeezed on returns. Maybe you could just share some thoughts as to where you feel the regulatory mindset is changing to be one of allowing more investment and arguably allowing a fair return on that investment. Then if I can squeeze one very small one, and I missed the number that you were giving, in respect of transition expenditure that you were hoping to get approved in AMP7. If you could just, refresh my, knowledge of that one, please. Okay. Right. Thank you. I think certainly when it comes to the CSO investment, the concept of smearing, I think when this was first considered by government and they conducted their own review of what the potential cost of this program might be, when you looked at it as an average across the country, it was actually relatively small. By memory, it was, you know, mid 60 GBP on customer bills. I think at that point, you know, when that program was being considered, I don't think we'd had, you know, the localized implications of some of the changes fully understood. I mean, that is effectively now emerging. I think it would be difficult to see a smearing, as you called it, of the investment across all customer bills. I think, you know, that might well be seen as being unfair for those customers where, for example, they don't have the same levels of combined sewers. We have in the North West something like 50, 57%, something like that, 56%, 57% of our sewer system is combined, which basically means you're getting surface water and foul water mixed in the sewer systems. That's how they were constructed. You know, it's a legacy of the Industrial Revolution. It's a legacy of urbanization. It's a design choice that was made well, well before privatization. The average across the country is below 30%. It's sort of 26%, 27%, something like that. I think we, whether, whether from a regulatory standpoint and just the context of fairness, you'd, you'd see that spreading. I think that it is more likely that we would see, the program being spread over time. I mean, on CSOs, the objective is to get to 10 spills by 2050. As I said earlier, we have a patchwork of requirements that drives very early investment in AMP8 and AMP9 to meet the current targets. That's an area to be discussed as to whether we need to go quite as fast. I think there are areas... You're absolutely right. If you're thinking there are precedents in the water sector, South West Water, I think still receives a assistance or South West Water customers receive a GBP 50 contribution to their bill from government, which I believe comes straight from Treasury, to recognize the burden that South West customers have from their systems getting strained by tourism, et cetera, very rural community. I think there are some precedents there. Again, you know, one of the future options is that something that we should be considering for northern customers. Excuse me. I think the other element that we see as really important is the national social tariff conversation. At the moment, the social tariff that customers get around the country is something of a postcode lottery. If you live in a reasonably affluent area, customers are prepared to contribute more to help their neighbors than you find, say, in our area. The degree of that tariff, which is actually then needed and used to help customers, you know, you have choices over whether all that money actually is needed. I think what the Consumer Council for Water are doing is saying, "Well, actually, we ought to take away this postcode lottery, and we ought to make sure that essentially we collect that money, and then we distribute according to need, so that you... it's not where you live and how wealthy your neighbors are that determines whether you get any help or not." We see that as a huge opportunity to level up, particularly for those parts of the country where customers don't get as much help as others. That also in itself will help particularly in the north on higher bills. I think, you know, as you pointed, you've highlighted, there's one lever there. There's another lever that we're discussing which could help. I do think that there are opportunities here to both look at the pace of investment. To look at, as you say, whether there are subsidies that can be provided to help. Also we've got our own self-help that we can do through National Social Tariff, and I'm very much hoping that that's approved. I think on the regulatory attitude, certainly, you know, our regulators have been deeply involved in all of the issues that we've discussed this morning. I do think that we're seeing a recognition that climate change is a very significant issue. You know, there's huge focus, a very engaged conversation with regulators around what we do nationally, around water resources. I think you know we have a scheme that we've combined with Severn Trent and Thames to come up with what we call the Severn Thames Transfer Scheme. Where that is being worked as an option for the opportunity to get water from the North to the South, principally the Southeast and London. That's quite advanced, this thinking and development. I like that scheme because it means that the North becomes much more relevant to the South. You know, we will need to be more resilient to ensure that we can help the South. You know, there's very much mutual benefit in that scheme. We are seeing, you know, considerations of reservoir development, other transfers, et cetera. I do think that, you know, the mindset is saying we've got real challenges with climate change, we've got real challenges with water resources. There is active collaboration between regulators and industry. I think the whole issue of investment in things like mains renewal. You know, for many years the industry has complained about the rate of renewal of its asset base, and that the average age of assets is increasing. I think that's an area where I think there is some recognition. We'll see what happens in AMP8 as we go through. Yeah, I do think that there is a broad recognition amongst us that we have to invest for future challenge. Of course, much of that will drive OpEx. A lot of the solutions that we'll have to drive to meet the new environmental schemes will drive OpEx. They'll drive more chemicals, more energy. All of that will need to then be supported and maintained. Yeah, I think the challenges are out there. We've got to really work our way through how fast we address them, and how we best address them, how we most efficiently address them. Okay. I think with that all for yours, Martin? I think I covered the points. Pavan, JP Morgan. Good morning. Hi, guys. Good morning. Thank you for the presentation and for taking my questions. Firstly, on my end, I just wanted to know how your discussions with the regulator have been when thinking of the impact of inflation, and I ask that in the context of Ofgem potentially looking into the impact of inflation on returns. Whether they should be sharing with customers or, you know, any other sort of mechanisms? Have you been having these discussions? My other question is on, you mentioned field gearing gliding down to 55% by the end of AMP7, which is in line with the notional gearing that at least the regulator seems to be minded to do based on the draft determination. My question is: If that's the notional gearing level set by the regulator, is it your intention to stay in line with that level for AMP8? Thank you. Okay, thanks. Thanks, Pavan. Just before I answer that, Martin did ask the question, which was, you know, what have we submitted to the regulator as the transition investment? I said it's around GBP 300 million. We're in discussion as to whether all of that would be funded, so I don't think you should presume that that will be what gets approved. Be great if it does. Experience says it doesn't always get approved. It wouldn't be accelerated. Martin, sorry, I didn't actually close with the answer to that question. Pavan, picking up on your points, thanks. I think, yeah, certainly it's been our attitude to this is that, and we've seen that over a number of years, is that where we are seeing outperformance, we have reinvested that outperformance for the benefit of the business and the consequences that then delivers in terms of better performance for customers, better performance for the environment. Better sustainable performance, which then reflects through into ODIs, and we're seeing that here. You'll be aware that we've made significant additional investment over and above our determination FD allowance, through the GBP 765 million, in order to drive a number of features of both customer and environmental performance. We believe that we are acting responsibly in an environment where we're seeing the benefits of outperformance, both operationally but also financially, through financing. In that sense, we believe we are responding, and we're responding ahead of any call from regulators. It's fair to say across the sector, outperformance is very, very mixed. I mean, we're one of the two or three companies that are actually making positive ODI returns. Obviously, not all companies will be benefiting from financing outperformance. To that extent, you know, it's a very mixed picture in the sector, but we are certainly doing what we think is the right thing, the responsible thing to do in terms of reinvestment. On pricing, I think you're right, Pavan. Next year, as we start to see the regulatory mechanism roll in for pricing, and price rises as we go into 2023, 2024, it is something that we and the regulator, Ofwat, is alert to. Companies are in conversation with regulators about next year. We're in a situation where we think we are going to be looking at below inflation increases through the way that the regulatory mechanism works, with the CPIH adjustment, with ODI impact, with the revenue recovery mechanism. When you put all that together, we think we'll be below inflation impact, price rise next year. I think, you know, which is a positive. It's a good place to be in the current environment. I think in that sense, that's the key points from us. Notes from gearing? Yeah, on the gearing point, I mean, you're right to sort of, you know, our target range for gearing is 55%-65%. As I said, through this AMP, we see that trending down towards the 55% level from where we are today at 60. I think it's probably fair to say that, you know, that is the board's policy on gearing and capital structure. Clearly, as we head into AMP8, there's still quite a lot of uncertainties at this point in terms of scale and size of the investment program, et cetera. I think having a gearing position at that level really sort of positions us well to be able to respond to that investment challenge. you know, we'll have to weigh up what all that means in terms of gearing for AMP8 when we get there. Okay. Thanks very much, Pavan. Ahmed Farman, Jefferies, good morning. Morning. Thank you for taking my questions. A few from my side. Just firstly, I was, you know, you've given us some very helpful granularity on the financial outlook for this year, and quite specific comments of tax, on tax. I was just hoping to get some commentary on how do you think about that tax expense normalizing over the coming years. A very sort of quick follow-up to the comments you just made about, I think you said something that you expect bill increases or tariff increases to be below inflation. I just wanted to confirm you're sort of referring to the November CPI H inflation there. Finally, just a sort of a broader question. You know, you've outlined, you know, quite interesting opportunities ahead for the sector in terms of big investment stands, in AMP8. There's all the sort of inflation of the RCV that's needs to be recovered as well. I just wonder how when you sort of looked at through these scenarios, what does that mean for the bill profile of the end customer? Because it seems to me that a number of these things could potentially be quite expensive, and how this translates into the bill profile, amidst an affordability crisis, amid media, some media scrutiny of the sector is going to be critical for the overall sort of ability of the regulatory framework. Any comments that you have there would be very helpful. Thank you. Okay. Do you want to deal with tax, and I'll pick up the other? We've provided some quite clear guidance for this year, clearly looking to sort of maximize the sort of tax position as we step into next year with a 25% sort of corporation tax rate. I think it's quite hard at this stage to sort of call guidance for next year. I'll be giving an update on that in May. One thing to bear in mind is clearly the high sort of inflation index cost on our index linked debt actually flows through into our tax position. That inflation volatility will play quite a part in terms of driving what the tax forecast is for FY 2024. As I say, I'll update on that in May. Okay. All right. I think, picking up on price increases. Yes, Ahmed, you're right that, essentially, the price is struck from the November CPIH as we roll forward. That effectively provides the baseline inflation level. I think, as I've said, as we look at all of the adjustments that you then apply to that, we think we're gonna be, you know, below inflation, by one perhaps 1.5% in terms of where we think. That's sort of current, where the current direction is taking us. We do think that we'll be below inflation, but it will be against whatever the number is in November. I think in terms of bill impact, it's clearly, I think for all companies, but particularly when you're, you know, serving the community that we do, we're very, very conscious of bill impact. That's one of the reasons why we wanna get into conversation with regulators about how this can be best be managed. Clearly, we've got, you know, very strong environmental ambition coming through from government. We share that. We're talking mostly about capital investment. Therefore, you know, it's a pretty slow bleed when it comes to impact on pricing, 'cause you're looking at depreciation impact over a very long period, you know. I think in that sense, it's not an immediate impact on bills, but we're in an environment where, you know, bill increases are difficult, unpopular. I think we're all very alert to that. The regulators, government are very alert to it, and that's really part of the conversation. I think as companies are now putting in numbers to define how big this program is nationally, then we'll start looking at what do we do about it. You know, how do we manage the ambition both on pace? You know, are there ideas that can help as far as customers are concerned? What could are other things that we can do? For example, you know, we've had tremendous progress this year in reducing per capita consumption. Not only is that reducing customer bills 'cause they're using less water, you know, it actually helps us in the sense that it costs us less to produce. I think the more we can do to effectively drive efficiency, but also understand those areas where we can help customers, and then we can look to mitigate some of this. Yeah, it will raise bills. Doing this environmental ambition will increase bills, and we need to understand how we best manage that. Okay. Dominic. Dominic Nash, Barclays. Morning, Dominic. What a lovely smile on this morning. Yeah. It's a good teeth. A couple of questions for me, please. Firstly, on the dreaded RoRE number, you've obviously given us guidance that RoRE this year is gonna be higher than last year, and that's 7.9% real. You have quite a lot of movements in your Totex numbers with headline Totex including your stuff you're bringing forward from the other half, the green, the improvement spend, the green bond, et cetera, et cetera, et cetera. Does that 7.9%, is that a headline Totex number after all Totex underperforms, or are you gonna be stripping out your Totex underperforms against that to give us sort of like an underlying number? Secondly, I think Jonson Cox was on record recently saying that he would like to see water company licenses being the potential to remove those being reduced from 25 years down to five years to sort of keep legitimacy, whatever that word, legitimacy in the industry alive, and keep you participants honest. What are your thoughts about that, and where do you think the legitimacy of the industry debate is going? Thank you. Thanks, Dominic. Phil, do you wanna pick up the RoRE? Yeah. The 7.9% reported last year, Dominic, was including the impact of all the extra Totex investments, so it wasn't flattered by sort of stripping those amounts out. I think we are relatively clear about the sort of the extra investment spend that's been had, so we can split that out going forward. As I say, it's a reported number at 7.9 that actually takes into account the cost of those extra investments. Okay. Thanks, Phil. Yeah, Dominic, I heard about Johnson talking about licenses at a recent conference. Interestingly, Johnson said it wasn't his idea, but he said that, you know, people have mentioned it to him. Therefore, he felt that, you know, he wanted to talk about what people had said. I think it's interesting. I mean, the government actually changed the license position back in the early, I think it was 2000s, principally because they wanted to give investors confidence in investing, you know, particularly debt investors in investing in the sector and having the confidence of returns. I think we had somebody in the audience who sort of picked up with Jonson this, and there was a bit of a conversation about it. I think, you know, reducing the license period back to, and Jonson was saying, you know, should it be five, should it be 10 years? I think reducing that period would obviously have an impact there and sort of be reversing back out of that position. I think it's interesting actually. I mean, we've recently had exposure to the labor, the Shadow Cabinet, their view of the sector and going forward. You know, obviously, we're heading into a general election. What we're actually seeing there is that this concept that we had a few years ago of renationalizing the sector, or, you know, introducing, you know, very different terms for the sector is something that, you know, they're not wedded to. I think it's something where they've looked at policy and actually felt that there is so much investment needed in the water sector, as we go forward, that actually, continuing to access private markets for that, for that funding is the right thing to do. I think as you know, Johnson was obviously flying that particular kite. We've no evidence elsewhere that that's a sentiment that either government is considering or regulators are considering at this point in time. For the very reasons that they put the licenses to 25 years to ensure that they could continue to attract investors. Certainly government sentiment at the moment, and you know we, and we sort of tested the thing with HM Treasury as well. Government sentiment is the moment, is they're gonna need to keep that investment interest in the sector. Yeah. I think just, if I could just add perhaps, Steve, just to build on that. I think in the context of sort of resilience of the sector, you know, clear the 25-year licenses is really important to the financial resilience longer term, as Steve said, that was the reason it was extended to that position in the first place. I think, you know, understanding that point, probably sort of, you know, Jonson Cox's been a big proponent of the sector putting itself into a stronger, resilient position going forward. I think understanding that's probably quite key. Okay. Thank you. Sorry, can I just quickly follow up on the RoRE number, though? If we sort of plug in what the drag on your Totex of everything you're putting through is in the order of about 1.5%-2%, does that sort of sound about right? Uh- No? Sounds a reasonable guesstimate, sort of Dominic, yes. Okay. Thank you. All right. Mark, have we got you back with more questions? Mark Fraser. Unfortunately, yes, you have me back. Following from Dominic's question, like top level, the debates or the focus of regulators over the last five or six years has been on value for money. I don't want to use the word nickel and dime, but they've really driven your returns and cost allowances down to low levels. The RoRE is very low, and there's been a huge focus on customer bills. Going the other way, I mean, you guys deliver a lot of stuff. You use mostly domestic content in regions away from the Southeast and, with a huge multiplier on the local economy. It seems that, you know, you With a very good record on delivery, unlike, you know, things like civil nuclear, for instance, you guys have a very strong track record of delivering. You have your assets in areas, you have some red wall seats in your area, some swing seats, should we say? Against that backdrop, when you speak to politicians, the EA, Cabinet Office, do they get it that actually going forward, you know, giving you a little bit of extra money, aiming up, for instance, and a big TotEx allowance would actually be a positive thing for the country? When you enter that debate with them, do they actually get it? I think the, it, there are different components to that, Mark. Sorry, I was trying to structure my thoughts in a way that would give you a thoughtful response to that. I do think there'll always be an obligation on regulators to ensure that whatever's done is done efficiently. I think we've seen over the years a continual pressure on operating costs to drive levels of efficiency. I have to say, you know, I've been in the sector 12 years. You know, I came into the sector and was quite surprised at what I found in the context of how companies operated, use of technology, you know, better situational awareness. You've seen us drive a program of operational improvement. I think, you know, we're one of the few companies in the sector that's gone from being, you know, one of the worst performers to one of the best over the last 10 years through that determined application of operational improvement. I think in some ways, the regulator is right in saying that you could be more efficient than you are. I think that's one element. Of course, in any commercial market, you're constantly searching for more efficiency, for improving margins. I think that is something that the regulator is right to keep the pressure on. You know, we need to use as much innovation, as much of the new technologies and opportunities available to us, because at the end of the day, you know, we've got customers out there that are paying the bill, and they don't have a choice. I think I do feel that that duty is exercised, whether you think it's exercised overzealously or not. I mean, you know, you'll get different views across the sector. I do, though, believe that there is a recognition, and it really has to start in government because government has to give regulators strategic direction. I do think there is a growing recognition in government. This summer has been a great example because I think for a long time, we haven't had major water restrictions in the South of England, but we've seen it across so many parts of England and Wales, where we've seen water restrictions as a consequence of a year of or summer, spring, summer of bad weather. That causes people to say, "What have we got to do to make sure that this doesn't happen frequently?" Of course, during climate change, it will. You know, we seem in to havePerhaps said, and this is coming out of COP27, that is 1.5 gonna be achievable or are we actually now talking 2.5? In those sorts of environment, water resilience in the U.K. is a huge issue, and I think it's, it's recognized, and that's why we've got a thing called RAPID, which the regulators have formed to work with industry on more of a national scheme. I think the area that probably is beginning to be recognized, and certainly if you talk to the chair of Ofwat, you'll hear this, but I think you'll also hear it when you talk to other regulators, is the whole issue of the state of our asset base, the average age of our asset base, and are we replacing sufficiently at a rate per AMP for five-year cycle, which essentially maintains the levels of performance that we need to achieve. That, I think, as we go into AMP8. I think that's gonna be a test for all of us as to whether we really do recognize that and go forward. Yeah, I think we are seeing a recognition. I don't think we'll ever see, Mark, the foot coming off the gas pedal on efficiency. It's the regulator's duty. It's what they should do. It's what we should all do because, you know, our customers don't have a choice, and we have an obligation, a moral obligation to do the best we can for them. I do think we're. Climate change, the whole question of environment is recognizably driving both government and regulator ambition, and that will come through, I believe, in the determinations that we see in AMP8, and I think beyond that. Okay. Thanks, Mark. Thanks for that question. Bit philosophical at the end there. I think as we finish, we've got no more questions coming through. I just wanted to say that this is my last results presentation. The next one will be done by the new team of Lou Beardmore and Phil. I just wanted to say thanks to everybody for the support that we've had over the years, for the questions, for the interest in the business. I'm sure I'm gonna miss it. I do know that I'm handing the baton to a fantastic team. I couldn't be more delighted that Louise is taking over from me. I've worked with her for many years. She's an absolute force of nature. When people told me when I first joined United Utilities, they said, "UU is a sleeping giant." You know, it's a big company, one of the biggest in the sector. It's got great people, and it has, but it's asleep, and it's happy to be mediocre or worse in the sector. Well, I think, you know, 12 years later, that giant is standing tall amongst its peer group and one of the great performers. We've got some huge opportunities coming forward, and we're well-positioned to take them. Phil has puts us in a great position. You know, looking at the next half of this AMP, with where we are on the capital program, so much of it let, on terms and with resources, we're in a situation where, we've raised sufficient finance that we don't actually need to do any more this AMP if we don't have to. We will, but we'll do it on the terms that are attractive to us at the times that those terms become available. Operationally, we're as good as any in terms of how we perform. A great baseline, and I know that Lou and Phil will take this business forward, and will deliver even more because, I just understand the energy that comes with that new team. I'll be sat there with you, as a customer and a shareholder, and I want to observe their success. Thanks so much for the interest and support we've had, and I wish you all the best, for the future. Thank you.