Delivering What Matters Northern Ireland Water
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Annual Integrated Report & Accounts 2019/20 Delivering what matters Northern Ireland Water Annual Integrated Report and Accounts For the year ended 31 March 2020 Laid before the Northern Ireland Assembly under Article 276 of the Water and Sewerage Services (Northern Ireland) Order 2006 by the Department for Infrastructure on 4 August 2020 About this report Tell us what you think of our report We hope that this report will be of use to all our stakeholders and would welcome feedback to This report aims to tell the story of how NI Water develop our future reporting. provides the water for life we all rely on to thrive. Please direct any feedback to the Business Reporting Manager, Finance and Regulation Directorate. Our contact details are on the back cover of this report. Reporting what matters Our Annual Integrated Report and Accounts aims to meet the information needs of all our stakeholders and tell the story of how we are delivering what matters by creating and sustaining value over the short, medium and long term. This value does not just focus on Dr Leonard J. P. O’Hagan CBE DL financial capital but extends across all six capitals or pools of resources – financial (financial Chairman efficiency and resilience), natural (plants, animals, water, soils and the eco-system services 25 June 2020 they provide), social (stakeholder relationships), human (talent, health and wellbeing), manufactured (pipes, treatment works, plant and equipment, IT and offices) and intellectual capital (knowledge and processes) to ensure that we are profiting from creating sustainable solutions for people and the planet. We have included information that we believe is material to our stakeholders and presented it in a way that we believe is fair, balanced and understandable. We listen to our stakeholders through multiple communication channels and have drawn on this regular engagement to develop a matrix approach on reporting what matters (page 27). We either include the important matters in this report or sign post the reader to other reports and information sources. We believe this approach meets the requirements of company law, best practice corporate governance for Government Owned Companies, IFRS and the International <IR> Framework, and that we go beyond those requirements where we feel it is particularly helpful to do so and where it can be done while still keeping it an easy read. Integrated Report We have been developing our approach to integrated reporting over a number of years. This Annual Integrated Report and Accounts is our first Integrated Report and has been prepared and presented in accordance with the International <IR> Framework published by the International Integrated Reporting Council. Integrated reporting is about telling a simple and concise story of how organisations create and sustain value over the short, medium and long term. The Board, which is responsible for the integrity of this report, has considered the preparation and presentation of this report and concluded that it has been prepared and presented in accordance with the Framework. Northern Ireland Water is a trademark of Northern Ireland Water Limited, incorporated in Northern Ireland, Registered Number NI054463. © Northern Ireland Water Limited copyright 2020. This information is licensed under the Open Government Licence v3.0. To view this licence visit: www.nationalarchives. gov.uk/doc/open-government-licence/version/3/ Any enquiries regarding this publication should be addressed to the Business Reporting Manager using the contact details on Cautionary note the back cover of this report. This document contains links to other websites. Any information We would like to acknowledge particular thanks to Michael contained on these websites has not been subject to audit. Cooper Photography who supplied the majority of images used Refer to the Independent Auditors’ Report on page 194 for in our report. details on which areas of this report have been subject to audit. Contents Strategic Welcome 9 Report Using less drinking water 11 About NI Water 13 How we create value 15 Business performance 17 Not all heroes wear capes 21 External environment 23 Listening to you 25 Reporting on what matters 27 Business strategy 28 Delivering our strategic priorities 29 Strategic threats and opportunities 59 Our finances explained 75 Financial performance 77 Governance Corporate governance 85 Directors’ report 99 Directors’ remuneration report 110 Statement of Directors’ responsibilities 116 Statutory Statutory Accounts 117 Accounts Independent Auditors’ Report 194 5 NI Water Annual Integrated Report and Accounts 2019/20 6 Strategic Report Strategic Report This Strategic Report is produced in accordance with The Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013. River Derg catchment, County Tyrone 7 NI Water Annual Integrated Report and Accounts 2019/20 8 Strategic Report We must better manage, understand and Agency and other stakeholders to reform the Welcome invest in water catchments, integrate land wastewater compliance model to improve management and flood defences with water compliance across the whole wastewater and sewerage, and do all this in ways that system. restore and enhance nature and support cleaner economic growth. This will require Towards net zero avoiding contradictory economic and Long term thinking The concentration of carbon in the environmental regulation and policy. No business can stand still and ours is no exception. atmosphere has been increasing remorselessly Our business faces unprecedented strategic challenges Getting smarter for the past quarter of a century. Almost due to the climate emergency, coupled with a growing everything we do from the moment we wake population, and continued underfunding. The outbreak of Every aspect of society is becoming more up to going to bed is carbon intensive. A key Covid-19 has added a new dimension to these challenges. digitalised and connected as the onset of development over the past year has been new technologies revolutionises day-to-day the legislated target for the UK to reach net life and business. Cutting-edge techniques zero greenhouse gas emissions by 2050. Our underpinned by the use of data analytics, strategy aims to decarbonise our business sensors, artificial intelligence and robotics is by taking a sustainable consumption path This year, we launched our new strategy to Underfunding over PC15 is part of a helping us build resilience against the effects and we recognise that we can play a key address these challenges. By supporting generational underinvestment in the sewerage of climate change, which will continue to make role in supporting the wider societal shift to long term thinking over the next quarter of infrastructure, which adds complexity and floods and drought more likely. Reducing a decarbonised circular economy through a century the strategy aims to put us in the significant inefficiency to the delivery of longer leakage will also become more and more areas such as battery storage, green charging best possible position to support a cleaner, term asset resilience, risks deterioration in important in the future. We lose around 25% infrastructures, hydrogen heating for homes greener and more prosperous society. We are levels of service for customers, and is leading of drinking water through leaks across our and businesses and energy from waste. encouraged by the broad endorsement from to inadequate environmental protection 27,000 km of underground water pipes. Our Biological carbon in the soil, peat bogs and our stakeholders, the profile given to water through increased sewer flooding and PC21 business plan sets out how we can forests across our water catchments can also and wastewater infrastructure in the ‘New pollution. embed the latest technologies such as satellite act as major carbon sinks. Decade, New Approach’ agreement for the re- Unless we start properly investing in our failing monitoring to drive down leakage. established Northern Ireland Assembly and the wastewater infrastructure we will have to make Partnering for prosperity high profile given to our challenges by our new difficult choices about our economy and our Using less drinking water We can’t solve these challenges on our own. Minister for Infrastructure. natural environment. The scale of the problem We also need to consider water efficiency. We Working with a range of stakeholders across requires a major, inescapable step change in use around 70% more water today than we did the public, private and third sectors is the only It’s time to fix our broken investment. Over £2bn is required in our next 40 years ago. As a society, more needs to be way in which we can develop a joined-up and funding model business plan period PC21 (2021-27), including done to reduce our water footprint by making holistic approach to help our society meet the £0.5bn for the Living with water programme Water companies sit at the heart of our homes and buildings more water efficient challenges of the 21st century. We support the to address strategic drainage in Belfast. NI and better understanding the hidden water National Infrastructure Commission’s call for society and provide an essential service Water’s Board and Executives continue to with considerable health dimensions. Our in the products we buy. By designing our a National Infrastructure Strategy to take a work with stakeholders to identify a means to homes to use ‘green water’ such as recycled long term perspective beyond the immediate abstraction and sewage treatment also have fund this vital investment. Although various major environmental consequences, and our water, storm water or rainwater to flush our spending review period and set out the infrastructure funding models exist across the toilets, wash our clothes or for outdoor use, Government’s expectations for infrastructure infrastructure is a foundation for sustainable UK and Ireland, a solution for Northern Ireland economic growth. the average person could reduce their water funding and policy up to 2050. has not yet been identified. Failure to do so usage by around 40% and NI Water’s total Despite this, Northern Ireland is unique will lead to an infrastructure funding crisis with water demand by 25%.