(Previously the 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 for Peel in 2006, 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 . 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. As evidence to this prudent approach, despite exceptionally difficult global investment market conditions, investment income in the year to March 2011 still contributed £0.9M to the overall annual surplus. 7. The Authority completes a Statement of Internal Control which is approved by the Board and issued to Treasury in January of each year. A full annual Statement of Internal Control dated January 2011 is included in this year’s Report and Accounts. 8. It is worth noting in the current climate that the Authority has no direct pensions liabilities but does pay, in full, all annual Treasury demands for Employers superannuation contributions. 9. The Authority has a policy of reporting all exceptional items which have a financial impact to the Board, Treasury and, when of material importance, within the body of the Report and Accounts. 6 FOREWORD TO THE ANNUAL REPORT AND ACCOUNTS 2010/11 – continued

10. The Authority is obliged to comply with all changes to regulations and standards as set by industry or regulatory powers. Any material changes within the year are disclosed within the Report and Accounts. 11. As of 1st April 2010, the Water Authority merged with the Sewerage and Drainage Division of the previously named Department of Transport to form the Isle of Man Water and Sewerage Authority, a wholly-owned Statutory Board of the Isle of Man Government. This Report and Accounts contain consolidated figures for the two sides of the business together with individual accounts for Water and Sewerage for 2010/11 and the 2009/10 comparatives for Water only. Comparative 2009/10 figures for Sewerage are not available under the same reporting format due to the operations being part of a wider government department until 1 April 2010, which did not keep separate accounting records in the same manner as required for a separate legal entity. 12. Asset valuations for the sewerage assets were made as market value as at 1st April 2010 and a £93 million asset addition (net of depreciation to 1st April 2010) was added to the Authority’s Balance Sheet along with a Treasury Loan Account debt of £87M, Local Authority Loan liabilities of £3.6M and minor creditor liabilities brought forward from March 2010. 7

CHAIRMAN’S STATEMENT

The Isle of Man Water and Sewerage Authority has been operating as a single unit for just a year and it has been a steep learning curve for all those involved in developing a common understanding of this new organisation. It has been rewarding to see the two capable and committed workforces come together into a unified organisation whose main purpose is the delivery of a wholesome and reliable water supply to its customers, the collection and treatment of sewage, and the management of the Island’s main rivers. In delivering these prime objectives, the Authority will also operate as a customer focussed business ensuring that the objectives that it sets will drive the delivery of a service which meets customers’ needs at all times. The funding for the Water and Sewerage Authority is derived from two distinct sources. The water rates and metered water charges provide funding directly from the Authority’s customers and those funds are used exclusively to provide water supplies. The sewerage and drainage function is funded from Treasury through general taxation. The overall outcome for the year presents a very positive picture. The water supply function has delivered all its capital works within budget, its operating costs have been contained and the Sinking Fund has been maintained at the desired level to ensure that the Bond will be repaid when it comes due in 2030. As a result of this continuing success, the Authority was able to seek Tynwald approval to reducing the level of water rates increase in the coming years to be broadly in line with inflation. Tynwald approved that proposal in February 2011 and the increase in the financial year 2011/12 will be 4%. The operating costs of the sewerage function have been under a similar level of scrutiny in the last year and opportunities to reduce those costs have been sought and a reduction in the income from Treasury has been offered. Whilst delivering this valued service to the community, the Authority will ensure that it operates efficiently, delivering all its services at a reasonable cost to both the tax payers and the rate payers. In 2011/12 the Authority is demonstrating its commitment to this objective by reducing its revenue budget whilst ensuring that the service levels perceived by our customers and the community are maintained. This drive towards improved efficiency will continue year on year but the commitment to offering a consistent standard of service will not be compromised. The Water and Sewerage Authority is looking towards the future needs of the Island and the provision of adequate water and sewerage services. The significant improvements which have been delivered in the provision of water supplies through a well managed capital programme must now be replicated within the Regional Sewage Treatment Strategy and this will present an opportunity for the Authority to demonstrate its commitment to delivering significant environmental benefits to the whole Island through the effective delivery of its capital works programme.

T. Crookall MHK, Chairman 8 STATEMENT OF INTERNAL CONTROL YEAR ENDED 31 MARCH 2011

The Isle of Man Water & Sewerage Authority (“the Authority”) is constituted as a Statutory Board of Tynwald. This report is made by the Authority’s Accounting Officer to the Chief Financial Officer of the Isle of Man Government Treasury in accordance with the requirements of the Isle of Man Government’s Corporate Governance Principles and Code of Conduct (“the Code”). Responsibilities of the Board and the Accounting Officer The Board controls strategy, policy and key financial and operational matters within the Authority. In addition it is the Board’s responsibility to ensure that the work of the Accounting Officer and other senior officers supports the strategy and policies approved by the Board. As Accounting Officer, the Chief Executive of the Authority is responsible for implementing and maintaining systems of internal control and corporate governance which: • ensure compliance with legislation and other regulations; • safeguard public money, ensure that it is properly accounted for and that it is used economically, efficiently and effectively; and • support the achievement of the strategy, policies, aims and objectives approved by the Board. In discharging this responsibility, the Chief Executive works with senior officers to put in place arrangements for the governance of affairs of the Authority and the stewardship of resources in accordance with the Code. Significant changes 2010/11 On 1st April 2010 the Water Authority merged with the Sewerage and Drainage Division of the previously named Department of Transport to form the Isle of Man Water & Sewerage Authority. The two operations had similar corporate aims and reporting requirements associated with the provision of water services to customers throughout the Island. This report presents an overview of how those aims have been delivered within the corporate governance framework. Corporate Governance The two functions of the Authority have independently developed strong corporate governance frameworks which document the performance in the key areas of community focus, performance management, structures and processes, standards of conduct and risk management. The review, which has been carried out by the Accounting Officer for the financial year, shows that the newly merged Authority has continued to follow policies and procedures that have resulted in the overall performance of the organisation improving in many areas. Integration between the two elements of the new Authority has inevitably also highlighted the need for commonality and single systems in several key areas of its operation, not least in the monitoring of corporate governance. The Authority has identified where it anticipates those improvements can be achieved in the future and, allied to the continued development of its risk management programme across all areas, the merged Authority can look forward with confidence to developing an overall governance programme in 2011 which will enhance the production of its Statement of Internal Controls in future years. The Authority will not only strive to improve the standards and performance of all areas of the business, but also effectively monitor all areas of risk to ensure comprehensive programmes for risk mitigation are developed and reported against as an integral part of the overall governance process. Risk Management The Authority has continued to develop its approach to managing the key risks that would prevent the organisation from meeting its obligations as defined by the relevant Water, Sewerage and Land Drainage Acts or fulfilling the requirements of the Isle of Man Government’s Corporate Governance Principles and Code of Conduct. Those key risks may be categorised as Business Risks, Economic Risks or Operational Risks. Both the water and sewerage functions maintain their comprehensive list of all risks and mitigations and the two separate systems will be combined into a single system for the Authority in the coming year. 9

Business Risks are those which any organisation must manage and will generally relate to the failure of systems or procedures which are required to ensure the delivery of a service that they are obliged to provide in a timely manner and to the required standard. Similarly, the loss of the services of key staff may lead to an interruption to the service offered or the quality of that service. The Authority has sought to minimise this area of risk by introducing ISO Quality Assurance procedures in key areas across the organisation and also Water Safety Plans which manage the provision of service throughout its water production and supply function. The initiatives and their consistent application throughout the year are audited by both internal and external auditors. The Authority will continue with the development of ISO Quality Assurance procedures until all key business areas of the merged Authority are covered. Economic Risks are those which are related to the impact of wider economic issues on the financial stability of the Authority. The Water function is entirely self financing and receives its income directly from its customers. In order to deliver its substantial capital programme it has issued, through Treasury, a £75M Bond which must be repaid in 2030. The creation of a Sinking Fund in 2000, to ensure that sufficient funds are available to repay the bond, has resulted in the Authority having an investment portfolio which is affected by the changes in the wider economy. The Authority, through its Investment Committee, prudently manages its income and its investments to ensure that its commitments, with respect to capital expenditure, are affordable and that the repayment of the bond in 2030 is assured. Operational and capital expenditure in the Sewerage and Drainage functions of the Authority is funded by an allocation from Treasury on a year by year basis and therefore the underlying financial strength of that section of the organisation is dependent upon the overall funding available from Treasury. It has been an essential part of the merger of the two functions that common systems are adopted for the management of both operating cost expenditure and capital expenditure which ensure that a consistent approach to the management of all financial matters is achieved. In the last year the sewerage function has transferred onto the Authority’s Navision system which allows consistent budgetary management and control. In addition the Annual Report and Accounts for each function will be prepared using generally accepted accounting practices which will facilitate financial comparisons year on year. Operational Risks are those which would generally lead to a failure in the service delivered, for example due to the failure of a major asset. Both functions have many years of experience in monitoring the performance of their assets and ensuring that maintenance is undertaken in a timely manner. The increasing complexity of the assets and the systems which control those assets provides benefits in terms of the quality of the service delivered but may result in significant disruptions to supply if those systems fail. The Authority is committed to increasing its stockholding of essential apparatus and developing strong relationships with suppliers of key goods and services in order to minimise the risk of prolonged failures. The Authority is also reviewing the impact of the severe weather events on UK Water Undertakers in December 2010, with a view to ensuring that similar events in the future are covered within the risk register, and the lessons learned by those companies, contribute to the mitigations employed within the Authority. Review of Internal Control and Corporate Governance Environment The Authority’s water function has developed systems of internal control, risk management and corporate governance over the past decade through an ongoing process designed to identify the principal risks, to evaluate the nature and extent of those risks and to manage them efficiently, effectively and economically. Further evidence as to the effectiveness of internal controls and corporate governance arrangements is provided by reports issued during the year by the Treasury, Internal Audit, the External Auditors and other external reviewers. The Sewerage and Drainage functions of the Authority have similar controls and processes, that were implemented when part of the Department of Transport, and were covered by more global departmental reviews and controls. The integration of both sides of the Authority under one common set of corporate controls will continue during 2011. 10 STATEMENT OF INTERNAL CONTROL – continued YEAR ENDED 31 MARCH 2011

Report on Internal Control and Corporate Governance Environment Attention is drawn to the fact that systems of internal control and corporate governance are designed to manage, rather than eliminate, the risk of failure to achieve objectives. They can therefore only provide reasonable and not absolute assurance. Accordingly, reasonable assurance is given that the Authority’s internal control and corporate governance arrangements are adequate and operated effectively during the year ended 31 March 2011. The Authority is committed to a process of continuous development and improvement. It is recognised that there is always room for improvements to be made in the areas of internal control and corporate governance. While a number of planned business improvements have been identified during the assessment, there are no significant control weaknesses or issues to report in either branch of the organisation. The key challenge for 2011/12 will be to continue the amalgamation of the two sets of corporate governance controls into one cohesive format for future reporting.

John Smith, Chief Executive 11

CHIEF EXECUTIVE’S REPORT

INTRODUCTION On 1 April 2010, The Isle of Man Water Authority merged with the Department of Transport’s Sewerage and Drainage Division to form the Isle of Man Water and Sewerage Authority. At that time the then Chief Executive, Mr John Smith, stated that the Board was committed to building a single organisation that would provide some of the most important services to the population of the Island. The Board was also committed to ensuring that the strategy required to move the new organisation forwards would continue to be developed and implemented in the coming years. One year on, it gives me great pleasure, as the incoming Chief Executive, to report on all aspects of the Water and Sewerage Authority’s business over the last financial year and to extend the Authority’s sincere thanks to John Smith for his valued contributions over the last 13 years. The Authority can look back on a challenging first year of joint operation, where the focus has been primarily on establishing a common understanding of the issues which face us, and implementation of the required solutions. The Authority’s Mission Statement, and its Core Purpose, is to reliably supply all water and sewerage services to the population of the Isle of Man and I am pleased to be able to report that the progress on delivery of this core service has continued throughout the year. Whilst the Authority’s water supply function is funded via a charge to its customers through the water rates and metered water charges, funding for the sewerage function is derived wholly from Treasury’s revenue and capital budgets. As such, the Authority must maintain two sets of accounts, which must remain separate, and which are then consolidated for the purposes of this annual report. The necessary year on year improvements that we will strive to achieve as an Authority will require the right people with the right skills for the right jobs. It is clear that the men and women employed by the Authority are a capable, skilled and committed team whose contribution is crucial to the success of the Authority’s service delivery and, as such, I look forward to the years ahead. Potable Water Treatment and Distribution The unusual and extreme cold weather at the end of 2010 and the beginning of 2011 presented a particular challenge with an increase in both leakage and the number of burst pipes. This resulted in a significantly increased demand on the two Water Treatment Works at Douglas and Sulby. I am pleased to report that this demand was met without any impact on the quality of the water supplied or the continuity of service to our customers. It is pleasing to note the continued reduction in consumer contacts in relation to these issues. 12

CHIEF EXECUTIVE’S REPORT – continued

It is also pleasing to report that as a result of the resolute efforts by the Authority’s personnel, the leakage rates returned to an economic level.

Average Leakage Rates 2010-2011

10

8

6

4 Leakage Rate -

2 litres per property per hour per property litres

0 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

The Authority set a target rate for the number of properties experiencing unplanned and unwarned supply interruptions at less than 0.7% of the total number of properties. The recorded result for the year was 0.3%. 13

The Authority’s Drinking Water Safety Plan (DWSP) approach has been developed to organise and systematise a long history of management practices applied to the supply of drinking water on the Island. It utilises a multi barrier approach alongside a hazard and critical control point analysis, similar to that used in the food industry. There is a wide range of possible microbial and chemical constituents of water that can cause adverse effects to human health. The exposure of water to hazardous chemicals and the contribution of drinking water to the transmission of infectious diseases must be considered and assessed throughout each stage of the water supply chain. Health based targets are an essential component of the DWSP framework and in this regard, the Authority continues to work closely with the Department of Health and the Department of Environment, Food and Agriculture. Water Quality Indices have been adopted as a reporting tool for water quality data across England and Wales. The Authority continues to adopt the same approach.

2010-2011

The commissioning of the Douglas Water Treatment Works has removed the necessity for pre-chlorination of the raw water and this has resulted in an overall improvement in the water quality and the continued 100% compliance with the Trihalomethane standard. The Authority has continued with measures to control plumbosolvency. These include the practice of orthophosphate dosing which reduces the absorption of lead from communication pipes and customer supply pipes, and the replacement of lead service pipes. The Authority renewed 198 lead service pipes during the year. 14

CHIEF EXECUTIVE’S REPORT – continued

SEWAGE TREATMENT AND SEWERAGE The Meary Veg Sewage Treatment Works currently treats sewage from 67% of the Island’s population in compliance with the standards established by the Environmental Protection Unit. This has resulted in improvements in the quality of the bathing waters in the south of the Island. Tynwald has approved funding of £40M for a five-year programme of work for Phase 1 of the Regional Sewage and Sludge Disposal Strategy. The implementation of the whole Regional Strategy will result in the construction of new modern sewage treatment facilities across the rest of the Island over the course of the next ten years. Once these facilities are operational, raw sewage will no longer be discharged to sea which will lead to further bathing water and environmental improvements. The Authority has also continued with schemes to refurbish its underground assets. The framework contract to refurbish sewers has resulted in a significant reduction in the levels of groundwater infiltration into the sewer systems. A contract to refurbish sewage pumping stations has extended their asset life and the installation of telemetry systems has allowed the operation pumping stations to be monitored from the Control Room at Meary Veg. This ongoing asset maintenance programme must continue to ensure the Authority’s assets do not deteriorate and become un-serviceable.

FLOOD RISK MANAGEMENT/ LAND DRAINAGE The Authority exercises a general supervision of all matters relating to drainage on the Island and as such is responsible for the maintenance of the designated Main Rivers. Plans are in place to develop a Flood Risk Strategy for the Island and the introduction of a Flood Risk Management Bill into the Legislative Programme will provide the legislative framework for this strategy. The Bill has passed its second reading in the House of Keys and will be reintroduced in the legislative programme during Autumn 2011. 15

CORPORATE AND OTHER SERVICES The Corporate Service Section provides all back office support to the Authority, ensuring that a culture of quality management, operational governance, Government compliance and continuous improvement is embedded throughout the organisation. The two newly merged functions of the Authority (Water and Sewerage) have independently developed strong corporate governance frameworks which document the performance in the key areas of community focus, performance management, structures and processes, standards of conduct and risk management. There is a clear need for an integrated overall governance programme, which will unfold over the course of the next year as the common understanding of cross functional governance issues progresses. The Authority has already identified where it anticipates improvements can be achieved in the future, not only in the improvement of performance, but also in the effective monitoring of all areas of risk. Going forward, this will ensure comprehensive programmes for risk mitigation and control are developed and reported against. A consistent and standard approach to managing and reviewing organisational processes and the inherent risks is being encouraged throughout the organisation through compliance with Quality Assurance standards and procedures. This programme has been successfully introduced over the past few years and similar improvements will continue to ensure that the Authority demonstrates a continuous review and improvement philosophy. The Authority is committed to ensuring the Health, Safety and Welfare of its staff and others who may be affected by our work. The Authority’s Health and Safety Team has completed an extensive exercise which reviewed the existing policies, procedures and systems and has implemented a full Health and Safety Management System which is in full compliance with Quality Assurance procedures.

PLANNING AND DEVELOPMENT The Authority’s Planning & Development Section vets every planning application to ascertain the impact of proposed development on the Authority’s infrastructure. Computer modelling techniques are used to confirm whether the development can be supplied with water and effectively drained. The Authority works closely with the Planning Department of the Department of Infrastructure in these matters.

INFORMATION TECHNOLOGY / GIS The Authority has invested in the latest geographic information systems (GIS) and now has detailed maps and computer records of its infrastructure. The Authority has also prepared flood maps to show the areas of the Island that are at risk of flooding from both tidal and river flooding.

STAFF Since the formation of the Water and Sewerage Authority in April 2010, there have been many hurdles to overcome, not least bringing the two organisations together whilst maintaining a quality service to our customers. The staff of the Authority have risen to these challenges and worked extremely hard in effectively managing, operating and maintaining the water and sewerage systems. The Authority has a committed and skilled workforce and I take this opportunity to thank them for their dedication and hard work.

Peter Winstanley, Chief Executive 16 STATEMENT OF THE BOARD OF THE ISLE OF MAN WATER AND SEWERAGE AUTHORITY’S RESPONSIBILITIES

The Isle of Man Water & Sewerage Authority is constituted under the Transfer of Functions Order 2010 as a Statutory Board of Tynwald. The Board is responsible for preparing the Chairman’s Statement, the Chief Executive’s Report and the accounts in accordance with applicable laws and regulations. The Board is responsible for preparing the Boards’ Report and the financial statements in accordance with applicable law and regulations. In addition, the Board has elected to prepare the financial statements in accordance with UK Accounting Standards, as modified by any Directions issued by Treasury under the Audit Act 2006. The financial statements are required to give a true and fair view of the state of affairs of the Authority and of the profit or loss of the Authority for that period. In preparing these financial statements, the Board is required to: • select suitable accounting policies and then apply them consistently; • make judgements and estimates that are reasonable and prudent; • state whether they have been prepared in accordance with UK Accounting Standards, as modified by any Directions issued by Treasury under the Audit Act 2006; and • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Authority will continue in business. The Board is responsible for keeping proper accounting records that are sufficient to show and explain the Authority’s transactions and disclose with reasonable accuracy at any time the financial position of the Authority and to enable them to ensure that the financial statements comply with the Accounts and Audit regulations 2007 to 2008, made under the Audit Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Authority and to prevent and detect fraud and other irregularities.

OFFICERS AND PROFESSIONAL ADVISORS

Headquarters Tromode Road Douglas Isle of Man IM2 5PA Board Members T M Crookall MHK Mrs C Christian BSc MLC M R Coleman LLB (Hons)(Open), CEng, FBCS, CITP, FIMIS C H Coole Eur Ing, C Eng, MICE, FCIWEM H M McCallion FISE, M. Inst.M. Chief Executive J A Smith BSc, CEng, MICE, MBA (Retired April 2011) P Winstanley BEng, CEng, MICE, MCIWEM (Appointed April 2011) Bankers Isle of Man Bank Royal Bank House 2 Victoria Street Douglas Isle of Man IM99 1NJ Auditors KPMG Audit LLC Heritage Court 41 Athol Street Douglas Isle of Man IM99 1HN Advocates Callin Wild Number 15-19 Athol Street Douglas IM1 1JB Investment Managers Thomas Miller Investment (Isle of Man) Limited 16-17 Mount Havelock Douglas Isle of Man IM1 2QG 17 REPORT OF THE INDEPENDENT AUDITORS, KPMG AUDIT LLC, TO THE ISLE OF MAN WATER AND SEWERAGE AUTHORITY

We have audited the financial statements of the Isle of Man Water and Sewerage Authority (“The Authority”) for the year ended 31 March 2011 which comprise Income and Expenditure Account, the Balance Sheet, the Cash Flow Statement, and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and UK Accounting Standards. This report is made solely to the Authority, as a body, in accordance with Section 4 of the Audit Act 2006. Our audit work has been undertaken so that we might state to the Authority those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Authority, for our audit work, for this report, or for the opinions we have formed.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS As explained more fully in the Directors’ Responsibilities Statement set out on page 18 the Directors are responsible for the preparation of financial statements that give a true and fair view. Our responsibility is to audit, and express an opinion on, the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.

SCOPE OF THE AUDIT OF THE FINANCIAL STATEMENTS An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Authority’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements. We report to you our opinion as to whether the accounts give a true and fair view and are properly prepared in accordance with UK Accounting Standards as modified by any Directions issued by Treasury under Section 13 of the Audit Act 2006, are properly prepared in accordance with the Accounts and Audit Regulations 2007 to 2008, made under the Audit Act 2006, and comply with the requirements of any other statutory provision applicable to them.

OPINION ON THE FINANCIAL STATEMENTS In our opinion the financial statements: • give a true and fair view of the state of the Authority’s affairs as at 31 March 2011 and of its surplus for the year then ended; and • have been properly prepared in accordance with UK Accounting Standards as modified by any Directions issued by Treasury under section 13 of the Audit Act 2006 and the Accounts and Audit Regulations 2007 to 2008.

KPMG Audit LLC Chartered Accountants Heritage Court 41 Athol Street Douglas Isle of Man IM99 1HN 18 INCOME AND EXPENDITURE ACCOUNT YEAR ENDED 31 MARCH 2011

Notes 2011 2011 2010 2010 ££££

Charges for Water & Sewerage 2 27,579,748 16,678,535 Less: Cost of Water & Sewerage

Supply 3 7,278,166 4,198,545

Distribution 4 8,379,604 2,922,904

(15,657,770) (7,121,449)

11,921,978 9,557,086

Other income 5 866,146 235,706

12,788,124 9,792,792

Less: Indirect expenses

Management and general expenses 6 (4,155,368) (2,060,528)

8,632,756 7,732,264

Less: Financial expenditure less income

Financial expenses Interest paid on loans from Government (4,218,750) (4,218,750) Discounts/collection charges 7 (712,459) (678,646) Other financial charges 7 (459,366) (12,857) (5,390,575) (4,910,253)

Financial income Bank interest 464,365 50,718 Portfolio interest 917,937 1,558,968 1,382,302 1,609,686

Net financial expenses (4,008,273) (3,300,567)

Operating surplus 4,624,483 4,431,697

Profit on sale of fixed assets 11,367 7,454

Surplus for year 4,635,850 4,439,151

Comparatives for 2009/10 are for Water only, the merger with the Sewerage and Drainage Division was effective as of 01/04/2010. In both current and preceding financial periods, there were no recognised gains and losses other than those dealt with in the Income and Expenditure account. The Board consider that all results derive from continuing activities. The notes on pages 21-28 form part of these accounts. 19 BALANCE SHEET 31 MARCH 2011

Notes 2011 2011 2010 2010 ££££

Fixed assets 9 176,193,076 82,042,571 Capital works in progress 10 1,757,645 861,563

Current assets Stocks 318,707 332,980 Debtors 11 1,353,309 1,534,167 Cash at bank and in hand 19,036,516 14,570,483 Investment portfolio 12 3,488,366 6,585,409 Sinking Fund 12 20,601,236 16,603,822

44,798,134 39,626,861

Creditors: Amounts falling due within one year 14 (3,694,183) (2,009,563)

Net current assets 41,103,951 37,617,298 Total assets less current liabilities 219,054,672 120,521,432

Creditors: Amounts falling due after more than one year Trade creditors (31,708) (10,509) Borrowings outstanding 15 (165,559,640) (75,000,000) Provisions for liabilities and charges 16 (675,000) (568,077)

Net assets 52,788,324 44,942,846

Capital reserves Capital and retained reserves 17 52,788,324 44,942,846

Comparatives for 2009/10 are for Water only, the merger with the Sewerage and Drainage Division was effective as of 01/04/2010. The notes on pages 21-28 form part of these accounts. The financial statements were approved by the Board and signed on 23 September 2011 on their behalf by

T Crookall MHK M R Coleman Chairman Board Member 20 CASH FLOW STATEMENT – YEAR ENDED 31 MARCH 2011

Notes 2011 2011 2010 2010 ££££

Net cash inflow from operating activities 18 15,138,895 10,702,127

Returns on investment and servicing of finance Interest received 18 1,383,620 1,630,730 Interest paid 18 (4,218,750) (4,218,750) 12,303,765 8,114,107 Capital expenditure Purchase of fixed assets 9 (6,026,601) (1,792,286) Capital works in progress (988,471) (433,794) AMP Retentions 92,388 177,433

(6,922,684) (2,048,647)

Increase in cash 19 5,381,081 6,065,460

Comparatives for 2009/10 are for Water only, the merger with the Sewerage and Drainage Division was effective as of 01/04/2010. The notes on pages 21-28 form part of these accounts. 21 NOTES TO THE ACCOUNTS – YEAR ENDED 31 MARCH 2011

1. ACCOUNTING POLICIES Basis of accounting The financial statements are prepared under the historical cost convention, and in accordance with United Kingdom accounting standards. They have been prepared in accordance with the Accounts and Audit Regulations 2007 to 2008, made under the Audit Act 2006. They have also been prepared in accordance with the Isle of Man Statement of Recommended Practice 2007 on accounting for entities subject to the Audit Act 2006 (“the SORP”), to the extent applicable to the Authority. The principal accounting policies used in preparing the financial statements are described below: Fixed assets Expenditure on fixed assets is depreciated using a straight-line method over the estimated operating lives of the assets, that are principally as follows: Original sewerage mains 70-100 years Raw water mains / relined sewerage mains 30-60 years Pump station improvements 25 years Distribution assets (service reservoirs and treated water mains) 30-60 years Freehold property and improvements 25-50 years Other assets (vehicles, telemetry and IT equipment, computers, plant) 3-10 years New Water Treatment Works improvements 60 years buildings, 20 years installation work, 10-20 years mechanical assets, 5-15 years electrical assets Expenditure on assets in the course of construction is included in capital works in progress. Assets in the course of construction are not depreciated until they are commissioned. Commissioning is deemed to occur when a new works/construction is formally taken over from the contractor and is put into operational use. Treated water mains are renewed/replaced as an ongoing process and depreciation commences once laid. A full year’s depreciation is applied in the year in which the asset is either purchased or put into operational use. No depreciation is charged in the year of disposal or shutdown. No depreciation is charged on the value of land or impounding reservoirs. There is a £3,000 minimum on all plant and assets, purchases below that value are taken to the revenue account in the year of purchase. Non-working assets All non-working assets with a Market Valuation in excess of £5,000 are valued in the accounts at current Market Values as per SORP 2007. Stocks Stocks are valued on a First In First Out (FIFO) basis and provision made for obsolete, deteriorated or unusable stocks that are valued at the lower of written down value and net realisable value. Bad debts The bad debt provision against un-metered charges is calculated by applying recovery rates to an aged-debt profile. The bad debt provision for all other debts is obtained by considering the recoverability of individual debts. Customer capital contributions Customer capital contributions received are deducted from the costs of the related fixed assets. Finance costs Finance costs incurred when the Bond was issued are amortised on a straight-line basis through the Revenue Account over the life of the Bond. The deferred finance charge on the balance sheet is subject to additional amortisation where profits on the sale of investments are realised in the accounting period. The amount of additional amortisation is equal to the realised profits on the investments sold. Investments Investments which are intended to be held to maturity are valued at amortised cost. Equities are re-valued to market value at the balance sheet date and any gains or losses on revaluation are taken through the Income and Expenditure Account. Turnover Turnover comprises income from charges for water supply and distribution together with an annual Treasury grant to Sewerage. Both are accounted for during the year on an accruals basis. 22 NOTES TO THE ACCOUNTS – YEAR ENDED 31 MARCH 2011 - CONTINUED

- - £ only 98,567

235,706 137,139 621,550 473,446 (note 24) 2010 comparison 866,146 119,385 746,761 259,623 -- 15,989,072 1,937,899 14,887,474 1,791,061 - 1,406,527 1,371,404 - 8,150 665,466 665,466 - 7,195,777 7,195,777 - 2,457,000 2,457,000 £ 2011 81,295 200,680 715,298 1,764,008119,385 2,479,306 251,473 Water Sewerage Combined Water 4,396,094 2,882,0723,283,843 7,278,166 5,095,761 4,198,545 8,379,604 2,922,904 2,037,020 2,118,348 4,155,368 2,060,528 1,937,899 1,189,1311,406,527 1,800,436 1,861,705 1,020,3672,568,545 3,050,836 2,820,803 3,331,753 1,126,788 1,700,353 5,900,298 2,301,354 1,785,547 2,110,198 3,895,745 1,587,082 17,926,971 9,652,777 27,579,748 16,678,535 15,989,072 EXPENSES

SEWERAGE

&

ANDGENERAL WATER

FOR

INCOME

OTHER MANAGEMENT CHARGES SUPPLY DISTRIBUTION

Net profit on Water chargeable work relates to income of £221,960 (2010: £262,438). (2010: £221,960 of income to relates work chargeable Water on profit Net Metered Treasury Advance from Revenue 2. Unmeasured Treasury Loan from Repayment 3. Filtration and treatment Depreciation charge in year 4. Mains and general distribution Depreciation charge in year 5. Net profit on chargeable work Rents and miscellaneous 6. Administration and general Depreciation charge in year Maintenance and reservoirs The total rateable value of properties charged under unmeasured water usage was £6.5 million £6.5M)(2010: The annual water rate was 265.43p in the £ 248.07p(2010: in the £) with commercial and selected other properties at Seweragehalf chargesrates are for Revenue and Loan advancesTreasury. from 23 NOTES TO THE ACCOUNTS – YEAR ENDED 31 MARCH 2011 - CONTINUED - - £ £ 83 1,802 6,335 6,335 6,335 Salary only 58,510 33,437 12,857 19,005

620,136 678,646 (22,465) (note 24) 2010 comparison 2,409 7,961 60,978 41,628 (9,352) 200,000 651,481 712,459 459,366 216,720 ------672 217,392 216,720 - £ 1,737 7,961 2011 60,978 41,628 (9,352) 200,000 651,481 712,459 241,974 Water Sewerage Combined Water MANAGEMENT SENIOR AND MEMBERS Charges BOARD

OF Charges

EXPENSES

Financial

FINANCIAL REMUNERATION

Bond (release)/costs Audit fees management Investment fees Increase in for provision bad debts The remuneration The of remuneration the Board Members and Senior Management who served during the year is set out below: Mr M R Coleman Board Member 8. Mr C H Coole Board Member The Authority political Amounts Members shown & of above are Water Sewerage the the made payments Board by are paid the directly from Government. in 2010/11 to Board Members. A Smith Mr J senior managers Water paid between £50,000 and 4 There were £57,999 (2009/10 - 4). Chief Executive £85,651 3 There were senior Sewerage managers paid between £50,000 and £71,999 (2009/10 – 3). 7. Discounts allowed Collection charges Other Bank charges Authority Interest charges Loans on Local Mr H McCallion Board Member Discount/Collection 24 NOTES TO THE ACCOUNTS – YEAR ENDED 31 MARCH 2011 - CONTINUED - £ £ only

861,563 376,250 485,313 (note 24) - 101,965,901 - 19,923,330 - - 82,042,571 £ comparison 2010 Total Combined 297,666 - 120,458,890 120,458,890 - 26,775,254 26,775,254 - £ Total Sewerage - £ -- £ £ 4,416 1,455,563 1,459,979 2011 302,082 1,455,563 1,757,645 297,666 Water Sewerage Combined Water - £ - £ assets 5,196,299 18,785,644 1,382,349 1,410,962 fixed PROGRESS

- - £ down IN

166,605 668,264 5,005,793 39,291 146,648 3,923,921 2,102,680 6,026,601 225,505 2,517,983 2,479,306 77,315 259,622 2,767,208 2,792,524 5,559,732 Supply Treatment Distribution Property Other Water 1,925,812 7,900,599 5,481,110 492,373 4,123,436 19,923,330 2,151,317 15,614,881 26,746,060 1,952,037 5,794,020 22,690,538 29,567,778 52,258,316 23,987,895 34,998,418 21,763,991 838,558 453,709 82,042,571 25,913,707 42,899,017 27,245,101 1,330,931 4,577,145 101,965,901 26,080,312 70,451,192 117,350,845 8,434,288 6,134,755 105,889,822 122,561,570 228,451,392 23,928,995 54,836,311 90,604,785 6,482,251 340,735 83,199,284 92,993,792 176,193,076 write to WORKS

ASSETS

Value provided CAPITAL Book

cost FIXED

The movement The in movement work in from 2010 progress to 2011 reflects the new service reservoirs and ongoing associated water raw mains. 10. Distribution assets fixed works in progress assets fixed works in progress Treatment 01 April 2010 01 Additions At April 2010 01 01/04/10 on take Sewerage - 26,883,911 85,099,951 7,064,066 1,410,962 Sewerage take on 01/04/10 on take Sewerage 9. Disposals 31 March 2011 Non-working assets due for disposal been to have transferred a property reserve inside the Sinking Fund prior to disposal. Amounts Charge for period 31 March 2010 Net 31 March 2011 31 March 2010 Fixed assets Fixed includes land with a value of £525,848 which has not been subject to depreciation. In the period current no there were recognised gains or losses other than those dealt with in account. the revenue 25 NOTES TO THE ACCOUNTS – YEAR ENDED 31 MARCH 2011 - CONTINUED - - £ only 40,741

840,000 912,611 167,457 (note 24) comparison 2010 - (5,000,000) - 864,000 182,136 220,734 350,000 900,371 1,537,635 - - -- 23,189,231 24,939,596 --- 15,133,028 2,515,967 1,362,000 13,626,249 2,343,087 1,712,000 -- - (350,000) 1,712,000 - 20,601,236 16,603,822 -- 24,089,602- 3,488,366 23,189,231 24,089,602 6,585,409 23,189,231 - - 24,089,602- 23,189,231 5,078,607 5,507,895 158,639 1,267,573 156,632 288,092 1,353,309 1,534,167 (27,179) (1,181,134) (426,642) - - £ 2011 64,102 864,000 182,136 350,000 900,371 (350,000) Water Sewerage Combined Water 1,108,934 2,515,967 1,362,000 1,065,217 3,488,366 5,078,607 23,189,231 15,133,028 20,601,236 24,089,602 24,089,602 24,089,602 (1,153,955) Sinking Fund FUND

follows: as up DEBTORS INVESTMENTPORTFOLIO SINKING

Debtors Amounts due from Isle of Man Government Accrued meter income Withdrawals Equities Property portfolio Fixed interest Fixed securities Movement of Movement property portfolio from cash to Sinking Fund portfolio Transferred returns Investment Debtors are stated net of for provision doubtful debts £800,000) of £1,000,000 (2010: Represented Represented in the Balance Sheet as portfolioInvestment in excess Valuation of All £5,000 non-working assets are valued with in a the Market accounts at value market current as per SORP 2007. 11. Accrued interest receivable recoverable VAT 12. Balance brought forward Profit on sale of investments of portfolioinvestment Value at end of year Cash balances 13. The Sinking The Fund Sinking is Fund segregated from will the Authority's in be other borrowing 2030. used cash the to balances repay and of investments Authority and at the the year Equities end equities not may was and form in invested greater than cash. interest fixed securities, 15% of the Sinking Fund. Made 26 NOTES TO THE ACCOUNTS – YEAR ENDED 31 MARCH 2011 - CONTINUED - - - - £ only 10,509

278,975 409,458 609,403 568,077 (41,326) (note 24) comparison 2010 31,708 380,048 523,195 568,077 106,923 675,000 - 1,664,943- 1,321,130 - 75,000,000 75,000,000 - - - 139,668 523,195 YEAR

ONE

YEAR - (154,056) (154,056) -- - 86,590,501 3,600,000 86,590,501 3,600,000

£ THAN 2011 31,708

240,380 564,328 1,084,864 1,649,192 568,077 106,923 675,000 ONE Water Sewerage Combined Water

1,664,943 2,469,651 1,224,532 3,694,183 2,009,563 75,000,000 75,000,000 90,559,640 165,559,640 75,000,000 MORE

WITHIN

CHARGES

AFTER

DUE

AND DUE

FALLING

FALLING

LIABILITIES

OUTSTANDING

FOR AMOUNTS

AMOUNTS

advances CREDITORS: BORROWINGS PROVISIONS

Trade creditors Trade 14. on Payments account Accruals and income deferred CREDITORS: Retentions on capital projects 15. Government Authority Loans repaid in Local year Balance carried forward 16. April 2010 At 1 Account in year Released to Revenue At 31 March 2011 Balance brought forward £75,000,000 relates to Interest is a annually at payable Bond 5.625% issue and undertaken the by on Government Bonds Authority. behalf are of the Authority has guaranteed The that it will meet The all £87,113,696 costs carried in forward in re loans Sewerage 2030. repayable relation to the bonds. to is Government to capital cover infrastructure works paid for via and Government repaid a over 30 year period or where otherwise directed for Authority Loan The accounts Local are for obligations on taken in respect of mains/assets sewer to transferred from Sewerage Treasury. by repayment Authorities pre 2007. Local Advances and shown are as therefore Loan a creditor at year Treasury end. All assets Sewerage are funded via Loan re take-on Sewerage loan Sewerage in movement year Authority Loans on taken Local at merger The at provision the year end a represents proportional estimate of the decommissioning Authority costs expects which to the incur when the existing It is anticipated are closed. that this Works reserve will be utilised 2011-13 in the Works. decommissioning of Treatment 5 old Water 27 NOTES TO THE ACCOUNTS – YEAR ENDED 31 MARCH 2011 - CONTINUED - - - £ only 41,785 22,465

(note 24) ACTIVITIES

2010 comparison - 1,429,355 9,352 14,272 (27,853) OPERATING

FROM - 1,089,355 1,429,355 -- (1,383,620) 4,218,750 (1,630,730) 4,218,750 - 43,853,491 39,074,340 - - (37,072,828) (43,138,288) -

0 4,671 4,635,8504,671 4,439,151 4,635,850 4,439,151 941,025393,741 1,513,445 1,097,693 (167,570) 261,025 5,371,729 6,042,995 261,025 5,381,081 6,065,460 INFLOW

- 3,209,628 3,209,628 - -- (86,590,501) (523,195) (86,590,501) (523,195) £ CASH

9,352 2011 14,272 572,420 703,952 (40,956) (154,056) (195,012) (228,750) NET (163,578) (158,637) (322,215) (167,361) Water Sewerage Combined Water 1,089,355 4,218,750 4,631,179 4,631,179 5,120,056 (86,852,671) (81,732,615) 6,065,460 5,110,704 5,120,056 2,767,208 2,792,524 5,559,732 2,795,350

43,853,491 49,574,025 3,214,299 52,788,324 44,942,846 11,319,627 3,819,268 15,138,895 10,702,127 (1,383,620) (37,072,828) (31,952,772) (86,852,671) (118,805,443) (37,072,828) TO

YEAR

THE

FOR

DEBT

RESERVES

NET

SURPLUS

OF

OF

RETAINED

AND

CAPITAL RECONCILIATION RECONCILIATION

Property revaluation Property reserve revaluation Depreciation Depreciation charges in Decrease/(increase) stocks Increase in debtors in (Decrease)/Increase creditors Increase in for provisions liabilities and charges Decrease in Govt debtors Interest received Interest paid Balance as part of on take Sewerage 01/04/2010 Change in net debt 17. Balance brought and carried forward Surplus for the year Balance carried forward 18. Surplus for year SORP asset - revaluation non cash expenditure Net cash inflow from operating activities 19. Increase in cash Release of Bond purchase costs in Movement year of loan Government Net debt brought forward Net debt carried forward Revaluation Revaluation of non-working assets as recommended under UK SORP. Debt to at Government on take of operation sewerage 28 NOTES TO THE ACCOUNTS – YEAR ENDED 31 MARCH 2011 - CONTINUED £ Total 3,670,502 - -- 20,601,236 (75,000,000) Total Combined 261,025 19,036,515 261,025 43,308,253 (87,113,696) (87,113,696) Total Sewerage £ £ - 19,036,515 18,775,490 - 20,601,236 20,601,236 - (75,000,000) (75,000,000) £ (87,113,696) (87,113,696) - £ DEBT Flow Other 31/03/11 Water

NET

£ IN

2009/10

6,752,867 (3,091,717) 9,352 3,670,502 3,670,502 16,603,822 3,997,414 37,927,172 5,371,729 9,352 43,308,253 43,047,228 01/04/10 Cash (37,072,828) 5,371,729 (87,104,344) (118,805,443) (31,952,772) (86,852,671) (118,805,443) DISCLOSURE SCHEME

NOTES

CHANGES

OF

PARTY COMMITMENTS

PENSION

CAPITAL STAFF RELATED COMPARATIVE ANALYSIS

. Cash at bank and in handportfolio Investment 14,570,483 4,466,032 (including portfolio interest) portfolio (including 20 Sinking Fund loan Government Sewerage 21. There are now no Capital current commitments with the exception of retentions being held totalling £261,592 as (£387,002 at at 31 31 March 2011. March 2010). 22. The Isle of Man operates Government final salary pension Under schemes the for both Whitley Civil Council Servantsstaff Authority. who and work at the Authority only has terms the a of liability this to All a arrangement, pay liabilities contribution fixed relating to the in Government relation to its employees. contributes employee the and pay pensionable to been pension therefore included arrangements have in employee's the financial the statements. of 22% contributes Authority the 2007 April of as Scheme, Service Civil the of provisions the Under contribution). higher a paying by years 40 of maximum a to up service of years additional buy to opted has she or he (unless 3.5% and 1.5% between Authority April contributes 2007 18% as Whitley the Council of of Under Scheme, the the pensionable of employee's and provisions pay the the employee with similar contributes options 5%, for purchasing additional years of service. 23. loans already disclosed and and Treasury the monthly revenue payroll funding Bond of loan, capital Sewerage via With Treasury the exception of the no there were sums due to or from any related parties as at Authority 31/03/11. Treasury, and Isle & of Sewerage Water Man transactions between the 24. The merger with the and Sewerage Drainage Division was figures. completed as Comparatives Water for 2009/10 of only 01/04/10 comprise and of shown All notes as to such the in accounts the where 2010/11 comparative figures been are accounts. shown accordingly. have marked Government loan Water loan Government (75,000,000) 29 MEETINGS AND SITES/WORKS VISITS AND STAFF BRIEFINGS 1ST APRIL 2010 TO 31ST MARCH 2011

1st April 2010 to Board Audit Investment Capital Finance Visits to Staff Presentations 31st March 2011 Meetings Committee Committee Programme /Other Sites/ Briefings

Meetings Meetings Steering Meetings Works and Events Group Meetings

Number of Meetings 13 44912 4 11 3 1st April 2010 to 31st March 2011

Chairman 13 + 25 Mr Tim Crookall meetings ---8311 3 MHK with Chief Executive

Mrs Clare Christian 13 ----22 3 MLC

Mr Coleman 13 44-722 2

Mr Coole 13 --9-22 3

Mr McCallion 13 448422 3

30

Final Sewage Settlement Tank – Meary Veg by Burroughs Stewart Associates

Cornaa River by Colin Russell, Isle of Man Landscapes.com 31

Clypse Reservoir – Onchan by Allan Brown IOM WSA

New Ramsey Service Reservoir by Ian Cameron, Civac Construction Ltd The information in this report can be provided in large print on request

Isle of Man Water & Sewerage Authority Tromode Road Douglas Isle of Man IM2 5PA Telephone 01624 695949 Fax 01624 695956 Email [email protected] or [email protected] Website www.gov.im/water

Designed and produced by Isle of Man Advertising & PR Limited tel 01624 620440 www.isleofmanadvertising.com Printed on recycled paper