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Glas Cymru Holdings Cyfyngedig | Annual Report & Accounts Glas Cymru Holdings Cyfyngedig | Annual Report & Accounts Chairman’S Statement | 5 G L A S CYMRU REPORT & ACCOUNTS 2017—2018 CHAIRMAN’S STATEMENT 4 STRATEGIC REPORT 8 CHIEF EXECUTIVE’S REVIEW 10 OUR HISTORY: WHO WE ARE 14 HOW WE DO IT 15 HAVING YOUR SAY 16 CHATBOT INNOVATION 17 YEAR IN REVIEW: 2017-18 18 EXTREME WEATHER — OUR CHALLENGE 20 HOW WE’RE DOING 22 OUR DIRECTORS 40 OUR REGULATORS AND KEY STAKEHOLDERS 42 OUR APPROACH TO RISK MANAGEMENT 43 KEY RISKS FACED BY THE GROUP 44 LONG-TERM VIABILITY STATEMENT 48 GOVERNANCE REPORT 50 CHAIRMAN’S INTRODUCTION 52 OUR CORPORATE STRUCTURE 53 THE BOARD OF DIRECTORS 54 ROLES AND RESPONSIBILITIES 57 INTERNAL CONTROL 63 REPORT OF THE AUDIT COMMITTEE 64 END OF YEAR FINANCIAL STATEMENTS 65 QUALITY AND ENVIRONMENT COMMITTEE REPORT 67 NOMINATIONS COMMITTEE REPORT 68 FINANCE COMMITTEE REPORT 68 REMUNERATION COMMITTEE REPORT 69 POLICY REPORT 72 ANNUAL REPORT ON REMUNERATION 75 DIRECTORS' REPORT 83 FINANCIAL REVIEW AND RESULTS 95 INDEPENDENT AUDITORS’ REPORT 96 APPENDICES 134 GLOSSARY 135 MEASURES OF SUCCESS: DEFINITIONS 138 4 | CHAIRMAN’S STATEMENT GLAS CYMRU HOLDINGS CYFYNGEDIG | ANNUAL REPORT & ACCOUNTS GLAS CYMRU HOLDINGS CYFYNGEDIG | ANNUAL REPORT & ACCOUNTS CHAIRMAN’S STATEMENT | 5 CHAIRMAN’S STATEMENT I began writing this statement whilst returning home from our early March board meeting — its second day should have run in Swansea from 9am until 2pm: in fact it ran in Cardiff from 8:30am until 10am. That’s because 1st March turned out to be the worst day of winter weather since 2010 with a rare Met Office red weather warning in south Wales for snow. Our Executive Directors had more pressing operational matters to attend to than reporting on historical performance to the Board! I mention this because 1st March, and the subsequent days of harsh weather and following thaw, exemplified what makes the commitment of Welsh Water colleagues to our customers so special. IT IS A PRIVILEGE To bring this to life — in Gwent our Our business can be hugely our objective whilst the trunk maintenance team abandoned unpredictable, in particular as a mains bursts that followed a cold TO CHAIR A their vehicles and walked carrying consequence of the weather we snap shortly before Christmas, their tools a mile through snow experience. Good weather in the combined with the effects of Storm BUSINESS WHERE drifts up to two metres deep to summer can lead to high demand Emma, has led to failing our target fix problems at our Sluvad Water to put more water into the system for reliability of supply. However, Treatment Works near Pontypool in quickly which in turn increases to set these in context, we met, THERE IS SUCH order to maintain supply for nearly flow rates, disturbing sediment in or over-achieved, against most 600,000 customers in south-east areas of ageing cast iron trunk of the other 25 operational water, SELFLESS PRIDE Wales. At our call centre in St mains, and increasing customer wastewater and customer service Mellons we had 150 of our people contacts about the appearance of targets for the year. volunteer — and I mean volunteer! their water. Dry weather similarly IN SORTING OUT The role of the Board is, of — to come in to help respond to reduces flows through the sewers, course, to ensure the business the seven-fold increase in customer increasing the concentration is resilient to external shocks calls for support and help during of waste and making it more PROBLEMS FOR whether environmental, economic, the period of freeze followed by difficult to treat within prescribed or financial. Where that resilience rapid thaw — with all the problems environmental limits, and making is threatened, by single points of CUSTOMERS. to which both extremes of weather odour issues more frequent. On the failure, ageing assets, scarce skills, gave rise. Over five days we had other hand frequent storms, of high or insufficient financial resources 1,800 people finding and fixing intensity but short duration, trigger the Board needs to have a plan hundreds of leaks! In Ceredigion at discharges into watercourses to achieve the required level of our Strata Florida and Bontgoch from the release mechanisms resilience. On the 14th March we water treatment works our that prevent our sewers becoming launched Welsh Water 2050 at operating team stayed at work all overwhelmed whilst heavy rain on the Senedd, intended to provide night to keep the works running our upland catchments increases a clear long-term framework for despite then becoming snowed in the run-off of pollutants, both our future business planning to by huge drifts. natural and man-made, into our become a truly world class, resilient raw water sources, in turn changing It is a privilege to chair a business and sustainable water service for the treatments required at our where there is such selfless pride in the benefit of future generations. clean water production sites. sorting out problems for customers, Our not-for-shareholder ownership So, after a dry hot period in no matter the personal sacrifice of model makes it easier for us to 2017, our measure of customer individual colleagues and teams. focus on the long-term, particularly ALASTAIR LYONS acceptability did not achieve important for us as the provider CHAIRMAN 6 | CHAIRMAN’S STATEMENT GLAS CYMRU HOLDINGS CYFYNGEDIG | ANNUAL REPORT & ACCOUNTS GLAS CYMRU HOLDINGS CYFYNGEDIG | ANNUAL REPORT & ACCOUNTS CHAIRMAN’S STATEMENT | 7 of an essential public service, with very direction of travel set out in Welsh Water in their lives, particularly when the a live reservoir that serves three- long-lived assets. The opportunity to plan 2050, whilst ambitious, is not implausible. circumstances governing their lives quarters of a million households for the next 30 years differentiates us from IT IS CLEAR THAT change for some reason be it frailty across Birmingham, Mid-Wales With our unique constitution Welsh Water companies which traditionally only planned in old age, ill health, bereavement, and Hereford — a truly spectacular exists to serve its customers and the SIGNIFICANT for the length of the next price control, or loss of employment. Our achievement. communities of which they are a part. being five years. With an articulated vision INVESTMENT WILL challenge as a provider of an Whilst our management are expert in this Finally I very much want to of what type of business we would like to essential utility is to identify such industry and our Board has a depth of BE REQUIRED TO recognise the retirement from the be in 2050, and what service we would vulnerable customers, determine understanding from which to challenge Board of Stephen Palmer. Stephen aspire then to provide our customers, we DELIVER MANY OF how best to engage with them, and management’s plans of what we need to joined the Board in 2009 and took can create the detailed plans of what then develop ways we can mitigate deliver to meet our regulatory requirements, THE STRATEGIC over the chair of our Quality and we propose to achieve in each five-year those vulnerabilities, in particular it is for our customers to tell us what their Environmental Committee in 2013. price control along the journey to 2050: RESPONSES by ensuring they are registered for priorities and their concerns are — which in Over this period he has made an as I write the business is in the midst priority services. turn form the base of our objectives. So we enormous contribution to Welsh of creating these plans for innovation, This is something to which the consulted deep and wide on Welsh Water Water. With a scientific public incremental efficiency, and investment whole Welsh Water team can make 2050 across 2017 with input varying from health background as Professor over the period of the next two price a contribution from the meter 17 detailed responses from stakeholder of Epidemiology and Public Health controls, being 2020-2030 and beyond, reader who recognises that an groups and other interested parties to over at Cardiff University Stephen has to achieve outcomes that are affordable, elderly customer is somewhat frail 20,000 customers feeding back online brought an analytical rigour to the meet customers’ service expectations and and confused, to the maintenance and face-to-face. We have also been able deliberations of the Quality and protect our environment for the benefit of gang who have to dig up the main to discuss all of this input over the period Environment Committee; and to future generations. outside the home of someone who with our Customer Challenge Group, and our Board an incisive intellect and is disabled, and the billing adviser Welsh Water 2050 is centred around 18 I would like to thank Peter Davies (Chair a deep concern for our impact on who takes a call from a customer strategic responses to the challenges that of the Customer Challenge Group) for communities, particularly those whose sight is so poor that the the future trends we can identify are likely his regular contribution to our Board in less fortunate circumstances. last bill cannot be read. We have to pose to our ability to deliver against our discussions. We will miss him greatly both as ambitious targets to increase the six fundamental customer promises: a director and as a friend. number of our customers who ——— Clean, safe, drinking water for all WITH OUR UNIQUE are registered for Priority Services As one door closes another opens ——— Safeguard our environment for future and the extent of take-up of those — so we welcome Professor Tom generations CONSTITUTION WELSH WATER services. Crick who was appointed a Non- Executive Director at the beginning ——— Personal service that’s right for you We have achieved an enormous EXISTS TO SERVE ITS CUSTOMERS of October.
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