Last question is from Ajay Patel from Goldman Sachs. Please go ahead.
Just trying to see if you could give us any guidance for the full year and a sort of rough idea of where maybe our RCV lands, given the shadow adjustments and quite a bit of change on the CapEx side. That would be really helpful, and then I'm just thinking it's too early to maybe talk about the end outlook for capital structure and dividends and all the rest of it. We'll wait for that till next year, but I just wanted to understand what are the potential levers on the table. You have some non-core business. Could that be part and parcel of any package? Was a large proportion of what you look to achieve for the next review driven by operational performance and basically outperforming the tough targets you had set?
Okay. Well, welcome, everybody, this morning. And thank you, Ajay, for your questions. Just so everybody's clear, we've got myself and Laura here for the Q&A. As you can see, it's been a busy half year, but we're in good shape. So thank you for your questions, Ajay, and we'll get straight into those. So in terms of full-year guidance for our RCV, then it will be in our results presentation. We've given guidance that's just shy of GBP 6 billion in terms of RCV for the water groups that we now have. And that should be in the detail of the SES data. But happy to take you through that out with this Q&A session we've got this morning. In terms of, I think your next question was around balance sheet and positioning and just where we are.
I mean, I think if you look at the results, you can see in terms of our net debt gearing on a like-for-like basis, excluding SES, showing gearing is around about 64% this half year. It was 63.5% at the year-end. And with SES, it's around about 65%. But a few percentage points higher, about 3 percentage points higher than we assumed when we put our business plan for K8 into the regulator as a result of advanced investments and slightly lower revenues, which we talked about this morning. That said, we're in a relatively good position in terms of our gearing. We've got a solid funding position in place, which I'm sure Laura can talk to today. And we've got what was the recent performance report. We were recognized in the standard category for financial resilience, with SES positioning now improving.
So obviously, we've got the FD coming out in a few weeks' time, and that represents a key juncture of visibility for us for the next five-year outlook. And as you've alluded to, we've got a range of assets we will be considering, and we've got a range of funding tools available to us as well. And obviously, we will be looking through that. But I think the key point for today is we've got the liquidity in our EMTN program alongside other well-established groups. It means that we've got a few options to consider. Now, obviously, we are partly awaiting the FD, which comes on the 19th of December. We obviously have the plan rated as outstanding for South West Water and a good plan for SES. So we're in a really good place.
There are assets that we've represented on, which we went back to the regulator on, and we will await the outcome of that in due course. Laura, is there anything you want to add?
No, I think I would just emphasize our gearing is in a good position at 64%. We received two strong investment-grade credit ratings, and we are awaiting the final determination in a couple of weeks' time for businesses, which will give us the strong visibility ahead of the next period that allows us to ensure we can set ourselves up for that point.
Thank you very much.
Thank you. As a reminder, if you'd like to ask any questions, please press star followed by one on your telephone keypad. The next question is from Dominic Nash from Barclays. Your line is now open.
Good morning, and thank you for your presentation. Can I have a couple of questions from me, please? Firstly, on restructuring, you talk quite a bit about splitting the company or focusing on the four divisions and wastewater, water, and waste services and energy. Can you just explain to me, for some color on this, on a couple of sort of points here, which is, is this any different to sort of what goes on elsewhere in the water industry, or are you doing something that's a little bit more different? And how does the impact of having two licenses and SES in a separate license the rest of your business sort of impact to do that? And the second question that I've got is going to be going on to the ODIs. You talk about you're doing well on the common ODIs, and that's important going into K8.
With the ODI adjustment mechanism sort of being put into place, where are you relative to your peer group on your common ODIs currently? And secondly, I understand that you're going to be pulling back ODIs performances, or you're going to be claiming them in revenues. Is that still the case, and how will that work if you end up in a situation of a big adjustment at the end of the review period? Will that cause a big sort of revenue delta going forward? Thank you.
Okay. Morning, Dom. Thank you very much for all the questions, so the first question was around the restructuring and reshaping of the business. Now, we alluded to this at the year-end set of results and presentations that you were restructuring the business around four very clear, distinct business units within the group, so we've got our water services, our wastewater services, Pennon Power, and the retail services. And the reason we've done that, obviously, we have been different to our peers. We have been acquiring water-only businesses, and we think giving the focus with the geographical spread that we've got now is really important, and therefore, we want to make sure that we have that focus for us in the business, so that's going to be really important. Wastewater, well, we know lots of data variable on wastewater and the environmental aspects around pollution and storm overflows.
We've obviously got to make sure we deliver on, so having that clear, distinct two pillars within the group is really important to us, given our acquisition and organic strategy that we have. Pennon Power, obviously, we know that is something that we're setting up to hedge the risk on the energy side, but obviously, it's done well and it's been a feat going forward as well, and then retail, whether that's business retail or customer retail, making sure that we are delivering for our customers. If you look at the Trustpilot scores that we get for the business retailers, we're in a very strong position, and there's some work that we want to do to make sure that we are maximizing and benefiting. We have got good practice across our businesses.
The risk scores look very well on the retail side, and we're obviously learning lessons from that, bringing that into the rest of the group as well. So four clear business units that we've established. Now, in terms of the licenses, we do have two licenses within the group at the moment on the acquisition of SES Water. We have yet to go through a process of what to look at the options for those licenses going forward. But whatever we do, we'll make sure it fits with that clear delineation of the four clear business units that we've got within the group. I think that will serve us well going forward. So it is slightly different, Dom, because we have had acquisitions, and we have got the two licenses, and therefore, we've got some options and some optionality around that.
But whatever we're doing, we just want to make sure we've got that really clear focus on both water and waste services and on power and then retail. Now, in terms of the second question around ODIs, now, in terms of the common ODIs, we're a relatively good performer. We've got some information on that on the half-year presentation. And again, with the different businesses we've got in the group, there are good aspects of performance for a number of areas, whether that's the switch on Bristol and retail. And I just touched on SES Water. Sorry, incredibly well-placed for water quality and supply interruptions. And on the South West Water side, we've got water quality that has done particularly well over this period, as well as areas like internal flooding .
So we've got some really good performance aspects that we'll be taking forward into K8, and we're relatively well-positioned on that again in our peers.
In terms of the financials, Laura?
Yeah. I think you talked about the outcome adjustment mechanism as well. Clearly, that is proposed as a mechanism by Ofwat under consultation, which is what actually comes out for that in terms of the final determination. You're right, that's a period end as part of the price review process through a mechanism rather than through revenue in the period, which means any penalties would flow through in the period with an adjustment at the end of the period to true it up. However, we have responded, as we know others have also done on that mechanism and provided feedback on the consultation. And so we would anticipate that there may well be some changes in the final version of that that may come through in the determination. It is a little bit early yet to conclude on exactly how that will work.
I know one of the aspects, for example, that people are responding on is whether it's an annual true-up rather than a periodic true-up. So it remains to be seen how that actually comes in. And obviously, importantly, we've also flagged that we need to ensure that we're not overlaying mechanisms into the review process, rather ensuring that the underlying determinations are appropriate and reflective of performance relative to the sector. So we'll look forward to the 19th of December and what comes through on that.
Thank you.
Thank you. The next question is from Ahmed Farman from Jefferies. Your line is now open.
Yes, thank you. I actually have a couple of just clarification questions. Can I just check that the gearing that you are reporting this is 5%? I think that implies, if I'm right, that implies a sort of GBP 3.8 billion debt, and so that's different from the sort of the headline debt number I see in the PR. Could you talk us a little bit through the adjustments to get to sort of the onto this debt number that you're using for the gearing? And if I could, could you sort of give us a bit of guidance on a likewise basis where you expect this gearing to be for the full year? And then another question, I think you referenced earlier a range of funding tools.
I know we are still waiting for the final determinations, but anything you can say on what those tools could be or any order of preference would be very helpful. Thank you.
Okay. Great question. Thank you, Ahmed, and welcome this morning. So I'll let Laura talk through the gearing aspect. Obviously, you've just touched on funding and funding options. I mean, I did talk about we've got a range of funding levers, and obviously, we'll be looking at what we think needs to be in place for the K8 period and go through that. We obviously recently launched our EMTN program. Our inaugural issuance earlier this year, which went very well. It was oversubscribed. So we have got a range of options, but more of that to come in due course. Laura, do you want to talk about the gearing aspect?
Yeah, so we have shared a little bit of detail around the debt position, but we, at the group level, have net debt excluding acquisition-related fair value adjustments of GBP 4.1 billion, of which 3.8 relates to the water group, and the water group includes both South West Water and now SEF and the debt that we acquired related to that business, so GBP 3.8 billion versus the 5.9 of RCV. That RCV is based on a shadow gearing forecast for the end of the period, and we are expecting to see debt increase over the remainder of the period, consistent with the guidance that we've given and as we see ongoing investment, particularly with transitional expenditure as we move towards K8.
We will see gearing pick up a little as a result of expenditure in the water group, but you'll see in some of the information that we're sharing today a breakdown across the group of the different components of that.
Thank you.
Thank you. The next question is from James Brand from Deutsche Bank. Your line is now open.
Hi, good morning. I missed the first four minutes of the call, so hopefully, someone hasn't asked us already. But I was just wondering whether you could share any thoughts on what you thought, I know this is a million-dollar question, but what you thought a reasonable level of gearing is if we're thinking through across the next regulatory period. I think, certainly, in my mind, I had in mind that you've kind of previously indicated that something around kind of 65% for the water business and 70% for the group might be reasonable. Maybe I missed remembering that, but perhaps you could share any thoughts you had on that. And I just wanted to clarify. So you are, when you're presenting these gearing numbers, using an end-of-year RAB and a halfway-through-the-year net debt, just to clarify that seems to be what was written in the statement.
Just wanted to clarify that that's what you're doing. Thanks.
Yeah. Morning, James. Last question first. Yes, we've always done that. So yeah, end-of-year RAB as detailed in the stock exchange announcement calculation. And yeah, so the first question that we talked to this morning from the call was around the gearing levels and what that looks like going forward. So you can see from the results presentation that on a like-for-like basis, excluding SEF, we're at 64 for the half-year, being half-year end, and with SEF, it's 65. That is about 3% higher than the gearing we'd assumed or we submitted the business plan last year. Obviously, we've had some advanced investments come through, and there's been some lower revenue, which has impacted that. But we have got a solid funding position, which Laura can talk through. But your question was, so what does that look like going forward?
Look, we've got the FD coming up in a few weeks' time. We're obviously going to look at this in the round. We want to make sure that we make sure we've got a very solid funding position and a strong balance sheet going forward. We're in a relatively good position today. We're going to take all that in the round and look at it when we get that FD coming through. We had the inaugural issues with our EMTN program, so liquidity is good, and we've got access to funding. But we will look at our position once we receive that FD and think about our policy going forward. You're right in alluding to, historically, we've had gearing position for the group that has ranged between 60% and 65%, with a policy that has been 55%- 65%.
At a group level, that gearing historically has been in excess of 70% on occasion when we've had different investments going on at different levels, and all that, we will be looking at as part of the consideration when we receive the FD.
Thank you. That's really helpful. Thanks. Good luck with the final determinations.
Thank you.
Thank you. For any further questions, please press star followed by one on your telephone keypad. The next question is from Sarah Lester from Morgan Stanley. Your line is now open.
Thank you very much. Good morning. I also missed the first few minutes, so I do apologize if I'm repeating. I've got a two-part question, please. So we're obviously closing in on the end of the regulatory period now, so it'll be tied above on this current five-year period. I'm interested in what you see as the biggest lessons learned over these past five years. And then the second part of the question, what do you see as the greatest challenges looming in the next period, and how will those lessons from this period help you navigate those challenges? Sorry, that was actually three parts. Thank you.
Thank you. Thank you, Sarah. Well, maybe I'll start, and then Laura might have a few reflections as well. The biggest lessons learned, I think I would probably reflect on this five-year period. I mean, one thing we've been good at as a group is being agile and making sure that we're well-positioning our customers and thinking about those investments to improve the environment going forward.
So if you look at all the things that we've done over this regulatory period, whether it's financing aspects of the Green Recovery, whether it's looking at acceleration investments, whether it's getting ahead with WaterFit investments, all those things we have absolutely stepped up and wanted to deliver against, as well as introducing some new aspects for customers like our WaterShare scheme, which has given customers a stake and a say in the business, which no other company in the U.K., has got it, never mind in the water sector, where customers actually have become shareholders, and that is a growing feature of what we have. So those are things that we've seen over these last five years. I think a lesson learned is just how do we make sure that we get the regulatory mechanisms and frameworks that support that.
Now, I think Ofwat has done a pretty good job in supporting some of those advancements, but I think there is an aspect to this that says, "Look, we set a business plan. We submit it." Well, we submitted one that takes place in 2030 last year. There will be changes. There will be things that will need to shift and move, and we all need to think about that in a different way going forward to make sure that we've got the funding and all the recognition of those extra costs coming through. So I think you've seen the presentation today, Sarah. We've noted we get revenue true-up, and we get the RCV true-up going forward into the next regulatory period for all the things that we spent in this regulatory period that weren't in the original business plan.
I think it would be really helpful in encouraging investors and others to be able to see the financial impact of those coming through in a quicker way. So I think that's probably one of the lessons learned. It's just how do we make sure that the regulatory framework is kept up with what's going on in the sector and the focus that we have. That's probably one lesson learned. And then in terms of greatest challenge going into K8, I think it's we've got to make sure that we are bringing our customers and our communities along with us. One of the things I've really enjoyed most over this last couple of years is absolutely getting out and getting feedback from customers and communities about what we're doing, what we're doing well, where we need to be better.
For us, for Devon and Cornwall, there's a real focus on things like the bathing beaches and making sure that we're demonstrating the progress that we're making there on an ongoing basis. So there's a lot to deliver, but we have geared up to deliver it. So I think we're in a pretty good place for it. But I'm really excited about what's to come. Laura, your thoughts?
Yeah. I think we've been looking back at some of the numbers across the period. So if I look at it from a more, I guess, financial perspective, we've been reflecting on the fact that the RCV has grown by around 75% over the period, and we've gone through a group that was both waste and regulated water to focus on our U.K., water strategy. I think if you go back to PR19, the growth embedded in PR19 was a lot lower than that 75%. By both taking advantage, to Susan's point, of the agility that the business has had, we've been able to invest, bring forward spend, grow the RCV, as well as benefit from the acquisition of Bristol and SEF.
We're seeing the benefit, whether that's financially from a growth in the business or whether that's operationally by bringing in colleagues with different experiences, different knowledges, and different skills. That's been, I think, a real benefit and strength to the group. The draft determination gives us a score of a 30% growth rate as a starting point for the next round. I'm sure there'll be other opportunities as well. I think we need to continue to learn, as we have done for the past five years, of how we remain resilient, remain strong, but also remain agile to the opportunities that may come as we move into the next regulatory period.
Thank you.
Thank you. We have a follow-up question from Dominic Nash from Barclays. Your line is now open.
Hi there. Thank you for this. Just a couple of questions for me, please. First, just a clarification again on your net debt number. You sent round a company gathered consensus number, I think, for the net debt at the year end of, I think, GBP 4.4 billion. Could you just clarify whether that's inclusive of the fair value adjustment, the GBP 116 million or so, or do you think analysts have or haven't been including that in that number? What will be your—what could be the net debt at the end of the year in economic terms? Depending on the CMA, CMA referral potential, you've got a CMA on the 25th of February, which I think means that you can leave all options open and have a and at that point, you've got a yes or no decision.
As the draft currently stands and as your negotiations with Ofwat are going, if it was to change, if it doesn't change from here, how likely would it be that you would refer this to the CMA, or do you think it has to change considerably from the draft determination for you to accept it?
Okay. Great to have John for those questions. Laura, do you want to take the first one around the net debt number?
Yeah, so I believe that 4.4 from the consensus includes the fair value debt, so it would need to be extracted to get the economic value of the debt from.
So to just confirm that, that basically means that the analyst community is potentially 100 million too high a net debt number on our gearing calculations?
Yes.
Okay. Thank you.
I think that's helped out with that one. And then in terms of that CMA, look, all eyes are focused on the late in December when we received the FD. We're in a pretty good position relatively given the outstanding investments for the capital plan and a good investment for the SEF plan. We've had the opportunity to have some really good engagement, as many companies have, with Ofwat in the period post-DD going into the FD date. And you'll have seen that with some of the consultations that Ofwat's come out with, not least around the ODI mechanism.
So we did respond on a number of aspects, as you might imagine, very consistent with others across the sector when I looked at some of the other representations that were published, not least cost of capital and where that lands, not least the ODI framework and how that will work for K8 and how that will really flow through into that risk-reward balance. And then lastly, for us, making sure that we've got the balance right across our geographical areas, given the different communities that we serve and the different businesses and their focus areas. So we will obviously await that. And when that lands, we'll spend some time going through it. We've got the Capital Markets Day that we've set the date for the 25th of February, where we'll take everybody through our plans.
And the only question that you had around the business units would be able to take everybody through why that's a really good structure for us as a group and what that's going to deliver in the next five-year regulatory period. So we're in a good position. We'll wait and see what the FD gives us, and as ever, we'll take our time to consider the detail of that. And then we'll obviously tell everybody what we're going to do to deliver against it.
Yeah. Thank you very much.
Thank you. The next question on the line is from Mark Freshney from UBS. Your line is now open.
Thank you for taking my questions. Three questions. First, and apologies, of course, I've been asked before I've had connection issues. The first one is just on the GBP 50 million subsidy for a support from Westminster to the South West. Clearly, hugely disappointing. It looks like it's being removed. Clearly, the communication is hugely disappointing. Susan, what are your conversations with Treasury around what happened and why that happened? Second, Laura, just on balance sheet, I mean, I think it's clear that Pennon has historically run higher net debt. We can talk about group-level net debt and the operating company net debt and the 68% and the 65%, but it's clear we're in a high-interest rate environment. Group-level debt is not what the regulator wants to see. I think it's probably not what investors want to see, and clearly, you're some way ahead of that.
So why should we not focus on the 68%? And just thirdly, also a question for maybe Susan or Laura, just on the efficiency plan, how much of that will accrue to shareholders because you've got the baseline, you've then got Totex efficiencies, you've then got your additional sharing plan with consumers? I'm just trying to work out of that plan that you target for K8, how much of that can go to bolstering equity and working towards healthy RoRE targets? Thank you.
Okay. Good morning, Mark. Great questions from others. So we'll start with the first one around the government GBP 50 contribution that goes to households in the South West. Now, that is absolutely a government decision. It's a discretionary decision in terms of continuing that. The initial agreement that was put in place ran out in 2020, and every year since then there's been an annual consideration as to whether it would continue. Now, obviously, we've seen from the government as they've come in this year into power, they've been making some tough choices. We've seen it with the winter fuel allowance, and we've seen it with the GBP 50 that it accrues on customers in the South West region. So that is absolutely their decision. Nothing that we have a deciding factor or an input to, and likely so it's always been their contribution.
So what is it for our customers that we're there to do and that we're there to support with? I mean, one of the things I am really pleased about, and it has been a real focus for us, and I'll come on to that with the third point for your question to start, which is around efficiencies. One of the things I've always said is that we have to be efficient. We have to make sure we keep our cost base as efficient as it can be so that overall bills can be as low as they can be for customers. And indeed, in the half-year results presentation, we put a small graph and chart in there that talks about bill levels in the South West and how relatively they have come down against other companies' water bills.
Now, if you look at the average water bill for the South West, it's GBP 536 without that government contribution. That's the gross average bill that goes to customers. Now, we obviously support customers with affordable pinch points, and this five-year period, we've unlocked over GBP 110 million of financial support for them. And we've also been introducing some innovative new tariffs that allow customers to be more in control of their bills by modifying it even more than they have done in the past with their usage. So we've done things like introduced rising block tariffs, seasonal tariffs, and we've had campaigns like Stop the Drop where for a short period of time to manage resources, we've given money off bills. So we are in a good position.
It's the first time that we've had the results come back from the survey showing that we've had 100% affordability from customers with their responses, so I think we're in a relatively good position going into the next period. We know that bills will increase, and for those in the South West, as we start the new regulation period, on average, that'll be GBP 3 per customer per month in terms of an increase on that GBP 536, rising to about GBP 9 per month by the end of the period. Now, we know it is tough for customers, and we're just one bill in amongst many bills that they receive, which is why we continue with our subsistence support packages to help customers, so decision for government, not for us. Obviously, they've been having some tough choices, and this is one of those.
We're there to support customers, and we'll continue to do that. Where we do get financial outperformance, as we've done in the past, we share that with customers, either money off the bill or they get shares in the company. That's what we're doing around GBP 50 and the loss on it. I think I'll ask the question around efficiency, and then I'll pass over to Laura to talk about the gearing aspect. In terms of efficiency, as I've just alluded to, we want to make sure that we are always operating in an efficient way. Our reshaping and restructuring within the organization is going well, not just post the integration of companies that we've acquired, but also just right sizing and right shaping for what we've got to pay out. We've been realigning within the business.
By the end of this period, we'll have about 35% more people who are working on the front line, and we'll have a very slimmed-down corporate support service structure around that. I think it's the right model to have going forward. Now, your question was, well, how does that, if we outperform, how does that get shared? Now, obviously, we're all awaiting the FD on the 19th, so we don't know what those allowances will look like. So it's pretty hard to sit here today and say how that will land. But obviously, that will be part of our assessment when that FD lands in December as to what it looks like overall. But rather than wait for an FD, we are absolutely getting on and making sure that our cost base is in the right place.
So with that, I'll hand over to Laura to talk about the gearing point.
Yeah. Thank you, Susan. So we have a solid funding position today. We talked about the water group gearing being at 65%, recognizing that at the top end of the range we set for K7, that does also now include SEF, which, as you'll be aware, had financial resilience issues as we acquired it, and there's a significant amount of debt that's been consolidated into that number. And the Pennon that in South West Water with a slightly lower level of debt. As you'd expect, we are looking at a position ahead of K8 and would, in due course, confirm our policy and approach for the K8 period. As we sit here today, clearly, we're awaiting the next couple of weeks for final determinations, which will be key to that.
But on your point with regards to groups versus water business debt, I think I would also say we have been investing for Pennon Power. We have value related to that business, which we are now in the construction phase. The assets will be at the back end of this year. Some of those assets started to come into operation and be energized to provide another revenue stream to the business. We've also touched on this morning our non-household retail businesses, which are strengthening and increasing with profit and an opportunity with the SEF acquisition and then on regulated businesses to build on that portfolio and grow the value of those businesses as well.
While the regulated business is very much dominant within the group, there are other components which are driving that differential in gearing, as well as you would expect to see a little bit of gearing on a group level as well, which does also exist. I think whilst there is a differential, there are rationales and reasons behind that. We are now looking to the FD to allow us to have some certainty about the position and the flow going forward to make sure that we can set the right approach and policy for our balance sheet as we head towards K8.
So if I may, with a follow-up, I mean, Pennon Power has less than GBP 100 million, I believe, you've spent on that business. I can't imagine that the business, the private business, has any material debt capacity, as you've seen with some of the competitor companies. And on top of that, I believe there's about over GBP 100 million of dividends at year-end that SES, that sector group, has paid this year's dividends, which is all paid next year. So I can't imagine that those items you mentioned would really bridge the gap between the 3.8 and the 4.1. Thank you.
So I think, Mark, we've always talked about what we're investing in as a group. And yes, there are aspects at the group level that we will be considering as we go forward in terms of that funding position. But let's look at the gearing for the group and for the water business in the context of where we are today and what we're delivering. I think we're in a relatively good place. And obviously, when we reach the FD on the 19th of September, we'll be looking at our options going forward.
Okay. Thank you very much.
Thanks, Mark.
Thank you. The next question is from Jenny Ping from Citi. The line is now open.
Hi. Thanks very much. Good morning, everyone. Two questions, please. Firstly, just on the Totex expected underspend, I guess, underperformance, sorry. Last year, obviously, in your annual performance report, you talked about a 12% RoRE underperformance on Totex. Can you just confirm what your expectations are for this year? I presume it's a similar amount. And just tagging onto that, how do you envisage sort of the start of the next? Are we now being sufficiently overspend and bringing forward some of the spending from K8? Are we now at a stage where you've sort of corrected a lot of the operational issues and we're now into a territory of where you can start to look to meet your expectations, or at least not too far away? So that's my first question, Sarah Lester.
And then just secondly, on timing, if I look at your CMD out on the 25th of February, can you give us a sense of whether you're actually going to be coming out prior to that to accept or decide otherwise to go to the CMA for the review? Or are we really waiting for the transparency provided on the 25th of February? I can't actually remember what the final acceptance date is from Ofwat. So if you can remind us of that, please. Thank you.
Yeah, of course. Thanks, Jenny, so I'll let Laura talk about the outlook in terms of the Totex. I think in terms of the calculations, the RORE, as was saying on an earlier question, we've obviously accelerated investment. We've had Green Recovery. We've had accelerated investment. Obviously, the original FD didn't include those amounts and therefore wouldn't have been in that RORE calculation that I think is the Ofwat calculation for that. So if you include all the things that we are going to get through that revenue coming through for the next period, then the RORE looks different, but you're absolutely right. We have been advancing investment and RORE at the run rate that we need for K8. I think the answer is yes, and that run rate is what we've put into our business plan.
When we got the DB, we were around about 7% or 8% shy of the Totex that we'd asked for. So we'll see where the FD lands. Anything else you want to say in terms of Totex positioning for K8?
I mean, I think just to the point around ensuring we've got the right efficiencies and run rate coming out the back end of this period, we're very focused on making sure the business is positioned well for that. There are cost pressures this year, both in terms of the CapEx, making sure that we both close out the program for this period, but also that we make, as you say, a good start to K8, both in terms of performance and delivery with the additional performance deliverables that Ofwat is setting. And so it's really important that we start that period on the right footing. So we're very much focused on that in driving the right efficiency.
We are seeing some cost pressures in the current year, but very much focused on driving those to the right level with the right skills and resources in the business to deliver across K8.
So, I think, Jenny, in terms of your other question, which was around, yes, we've got our Capital Markets Day on the 25th of February, but between the FD landing and then and you coming out to the market ahead of then, I think was the question in a nutshell. So, look, we're going to get the FD on the 19th. As everybody saw with the DB, there are a number of moving parts within the framework that we need to carefully walk through and understand what they look like. We will then want to make sure that we understand what that means for the group going forward and have looked at all the assets that we need to look at to update the market accordingly. So, I think that's a long answer to say.
We're going to very methodically and carefully walk through what we've got as an FD. And when we've understood that and understood the positioning, then we will come out to the market and update. So until we've received that, Jenny, I think we need to take some time to digest it. The 25th of February, I think, is a really good time for us to update the market on all our deliverables and what we're doing for the next regulation period. It comes a few days after the decision point as to whether you refer to the CMA or not. So we thought it was a good time to have that capital market session. But we will be carefully walking through the FDs that we receive for the Bristol Water and the South West Water and making sure we're very clear about what that means for us.
We start from a good base because the DB was too far adrift in terms of Totex aspects. But there were aspects around capital, but also the ODI framework that everybody in the sector has been representing on, and we did too to see where that lands. And that will be part of our deliberation when it comes on the 19th, Jenny.
Thank you for that. Sorry. Two small follow-ups, please. So can you just clarify when is the deadline for you to respond to Ofwat? And then on the 12%, you talked about it would be lower. If you had done it on a like-for-like basis, adjusting for all of those sort of brought forward allowance or additional CapEx that weren't sort of included in the first instance, what is the equivalent number?
Okay. So in terms of the date for the CMA referral or not, I think it's the 19th of February. I think that's the date that we're working on. And then in terms of the Totex performance that we would have had if we'd had all those adjustments in, I think it's around about 2%.
Perfect. Thank you very much.
Thank you.
As a final reminder, if you'd like to ask any further questions, please press star followed by one on your telephone keypad now. It appears we have no further questions. So I'd like to hand back to the management team.
Great. Thank you very much. And thank you to everybody for joining this morning. And thank you for your questions. Obviously, we are all focused on December 19th of the FD for the businesses in the group that will be receiving those. We're obviously going to carefully consider it when it lands and update the market in due course. I look forward to seeing many of you over the coming weeks. And obviously, looking forward to our Capital Markets Day on the 25th of February. Thank you.
This concludes today's call. Thank you for joining. Now, this connection.