We describe how condensation and evaporation are included in the existing (otherwise dry) simplified ABC model. The new model (Hydro-ABC) includes transport of vapour and condensate within a dynamical core, and it transitions between these two phases via a micro-physics scheme. The model shows the development of an anvil cloud and excitation of atmospheric waves over many frequencies. The covariances that develop between variables are also studied together with indicators of convective motion.