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Isle of Man Water and Sewerage Authority, a Wholly-Owned Statutory Board of the Isle of Man Government

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Isle of Man Water and Sewerage Authority, a Wholly-Owned Statutory Board of the Isle of Man Government (Previously the Isle of Man Water Authority) Annual Report and Accounts Imraa as Coontaghyn Bleeaney 2010/2011 2 MEMBERS OF THE BOARD Back row: H M McCallion (Board Member), C H Coole (Board Member), M R Coleman (Board Member), Front row: J A Smith (Chief Executive – retired April 2011), T Crookall MHK (Chairman), Mrs C Christian MLC (Vice Chairman), P Winstanley (Chief Executive – appointed April 2011) Tim Crookall MHK Before being elected Member of the House of Keys for Peel in 2006, Tim Crookall was a postman, a builder and a Department of Health and Social Security Care Worker and served as a Peel Commissioner from 1991 – 2006. Since becoming an MHK in 2006, Mr Crookall has been a member of various Government Departments and is presently a member of seven Tynwald and Keys Committees. He was appointed Chairman of the Water Authority in May 2009 and is currently also a member of the Department of Infrastructure and the Department of Environment, Food and Agriculture. Clare Christian BSc MLC Before returning to the Island Clare Christian was a research chemist for Cadbury. As a member of Tynwald for over 20 years, Mrs Christian has served in both the House of Keys and the Legislative Council having been the Minister for the Department of Health and Social Security for many years and a Member of several other Departments including Treasury, Transport, Local Government and the Environment and the Department of Trade and Industry. She is currently a member of the Department of Economic Development. She has also chaired the Insurance and Pensions Authority and the Planning Committee and is Chairman of the Standing Committee of Tynwald on Public Accounts. Additionally, she has participated in the work of a wide variety of Select and Standing Committees of Tynwald. She was appointed Vice Chairman of the Water Authority in May 2009. 3 Michael R. Coleman LLB(Hons)(Open), CEng, FBCS, CITP, FIMIS Michael Coleman has been resident on the Isle of Man since August 1988 when he transferred from the Bahamas to what became Coutts & Co. He is a Chartered Engineer, Chartered Fellow of the British Computer Society (“BCS”) and is a former Chairman of the Isle of Man International Section. Michael has considerable executive management experience, having held numerous Directorships within Coutts & Co and other organisations. He also served as Joint Deputy Chairman of Coutts Bahamas and Coutts Cayman. He has had considerable experience of the water industry, having been responsible for information technology for a company specialising in the design and construction of water infrastructure based around major desalination plants located in the Middle East. This role also included responsibility for the process control systems at the water production facilities. Michael has been a Member of the Board of the Water Authority since January 2002, being reappointed to the Board in February 2007. He is Chairman of the Investments, Wayleaves & Easements and Water Act Committees and serves as a member of the Audit Committee. Charles H. Coole Eur Ing, C Eng, MICE, FCIWEM, C.WEM Charles Coole was educated locally before being taken on as a trainee engineer with Douglas Corporation Water Department. After four years (with part-time study) he joined Manchester Corporation Water Works as an assistant engineer where he stayed for six years, continuing part time study. A further move took him to the North West Worcestershire Board as a design engineer for four years, later joining Ward Ashcroft & Parkman (now Mouchel Consultants), initially working in Eastern Nigeria on refurbishment of water supplies damaged during the Biafran war. Charles spent eight years working for Parkman in Nigeria, gaining the position of Associate Partner and joining a World Bank mission to Eastern Nigeria appraising urban water supplies. Returning to the Isle of Man in 1979, Charles joined Rogers Consultants as a Company Secretary/Engineer, responsible for the day-to-day management of the company. Since 1984 he has worked as a consultant on a variety of projects, mainly large water supply schemes in Nigeria and Ethiopia, where his work included planning reports, detailed design work, construction administration and site supervision. Charles has been a Member of the Board of the Water Authority since January 2002, being reappointed to the Board in February 2007. He is Chairman of the Capital Projects Steering Group and also Chairman of the Authority’s Health and Safety Committee. Hugh M. McCallion FISE, M.Inst.M. Hugh McCallion was born in Belfast but spent the majority of his career in England. He started as a design engineer with De Havilland Propellers working on such projects as Blue Streak and Blue Steel Missiles. Following this he moved into sales and marketing and then management, eventually being appointed Managing Director of a company manufacturing metal components using a chemical machining process. During this period, in 1978, he was the first European to be invited to join the Photo Chemical Machining Institute who have their head office in Cape Cod, Massachusetts, USA. PCMI was then a USA organization but is now an international one. Hugh was the first non- American to join the Board and become President and is still an active past President Board Member. He is currently Chairman of a pump and filtration company in California and Shanghai and brings with him a wealth of commercial experience as well as knowledge of engineering and water treatment. Hugh has been a Member of the Board of the Water Authority from October 2004 to January 2007 and was reappointed a Member of the Board in February 2007. He is Chairman of the Authority’s Audit Committee, Vice Chairman of the Authority’s Investments Committee and Vice Chairman of the Authority’s Capital Projects Steering Group. 4 CONTENTS Foreword Pages 5 - 6 Chairman’s Statement Page 7 Statement of Internal Control Pages 8 - 10 Chief Executive’s Report Pages 11 - 15 Statement of the Board Page 16 Officers and Professional Advisors Page 16 Report of the Independent Auditors Page 17 Income and Expenditure Account Page 18 Balance Sheet Page 19 Cash Flow Statement Page 20 Notes to the Accounts Pages 21 - 28 Meetings and Sites/Works Visits Page 29 5 FOREWORD TO THE ANNUAL REPORT AND ACCOUNTS 2010/11 The purpose of this foreword is to offer an overview of the issues that the Board of the Isle of Man Water & Sewerage Authority (“the Authority”) consider to be the most significant financial matters reported within the 2010/11 accounts. This foreword also confirms the overall sustainability of the Authority and thereby gives comfort to customers that the quality of water supplied and the future availability of water resources will be maintained. It also provides comfort that water is monitored to industry standards and that the sewage treatment and sewerage systems will be similarly maintained and improved across all areas of the Island. The Authority will continue to operate prudent and regularly reviewed financial controls that will ensure value for money. 1. The Authority is wholly owned by the Isle of Man Government. 2. The Authority is funded through two distinct revenue streams. Income from water rates funds the potable water function and a 20 year capital expenditure programme of £108 million (M) supported by a Treasury Bond (“Bond”) with a value of £75M taken out with Government in 2000. This Bond is repayable in full in March 2030 and the Authority has a Sinking Fund (“Sinking Fund”) in place, which is funded wholly from Authority raised water income, to meet this obligation. The annual interest charge liability on this Bond (£4.2M) is also met from water rate receipts from customers. The sewerage function is funded by Government and this funding covers both revenue and capital commitments and is reviewed annually through the Government’s budget process. 3. The current financial position shown within these accounts is that the Authority has net assets of £52.8M and a positive cash flow in 2010/11 from revenue activities of £5.4M. The Accounts for 2010/11 show a surplus of £4.6M which is an essential part of both the financing of future capital schemes and building up suitable interim reserves to be able to repay in full the £75M Bond in 2030. 4. The Water Asset Management Plan (AMP) spend to March 2011 totals almost £80M, including £40M for the two new Water Treatment Works at Sulby (opened November 2005) and Douglas (opened May 2008). A further £28M (at 2011 prices) is scheduled to be spent between April 2011 and March 2021. This will then conclude the 20-year Water AMP programme set out in 1999 and revised in 2002. The capital expenditure within the year on sewerage infrastructure was just over £2M, mainly on refurbishing existing assets and finalising work on the IRIS sewage treatment programme for Douglas/Onchan and the South of the Island. The first phase of the Regional Sewage Treatment Strategy (RSTS) for the North, East, and West of the Island received Tynwald Approval in April 2011 with a value of £40.0M. Detailed design and construction work on these schemes will commence in 2011/12 for a target completion of this first phase by 2016. 5. The Authority runs a detailed financial model each year to continually review the long-term sustainability of the Authority and to confirm its ability to meet the commitments made to Tynwald in 1999 in respect of the £75M Bond and to ensure suitable funds are available for the required revenue and capital expenditure on an annual and long term basis. 6. The Authority continues to manage its Sinking Fund prudently with a bias towards highly rated Bonds with minimal exposure to any non-secure investments.
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