www.tideway.london [email protected] TIDEWAY ANNUAL REPORT 2020/21 ANNUAL REPORT TIDEWAY ANNUAL REPORT 2020/21 Name & Registered Office: Bazalgette Tunnel Limited, Cottons Centre, Cottons Lane, London, SE1 2QG Company number: 09553573 Registered in England and Wales Contents About us 01 Tideway Highlights Bazalgette Tunnel Limited, Term Definition 02 Strategic Report Main Works Contracts The contracts between Tideway and the main works contractors to engineer, 05 Chairman’s Introduction trading under the name procure, construct and commission the three sections (West, Central and East) 06 Chief Executive Officer’s Report Tideway, began operating of the Thames Tideway Tunnel. 08 Our Vision, Purpose & Values More by River Tideway’s strategy to enhance the use of the River Thames for logistics. 10 Who We Are & What We Do 20 Our Business Model as an independent regulated Regulatory Capital Value (RCV) The value of Tideway’s capital base. Tideway’s RCV is calculated on a cash basis using a methodology set out in the Company’s licence. 22 Our Strategy 24 Our Performance water company in August It comprises project-related expenditure that does not fall into specified excluded 56 Financial Performance Review 2015, when Ofwat awarded categories, and that has been verified by the Independent Technical Assessor. 64 Risk Management Revenue Agreement The agreement under which Thames Water collects revenue from its wastewater 70 Long-Term Viability Statement customers on Tideway’s behalf. 76 Section 172 Statement us our Licence to design, RightWay Tideway’s approach to introducing transformational Health, Safety and Wellbeing. 78 Governance build, commission, maintain RightStart Tideway’s approach to getting the Health, Safety and Wellbeing basics right from the 81 Chairman’s Introduction very start, to help us avoid incident spikes often seen at the start of major projects. 82 Board Leadership, and finance the Thames Transparency and Governance System Acceptance The point at which the entire Thames Tideway Tunnel system is accepted to serve 101 Committee Reports Tideway Tunnel. as part of Thames Water’s sewer network. 122 Relationship with Shareholders Thames Water Works Thames Water’s activities, including enabling and interface works, which are 126 Directors’ Report necessary for the development and connection of the Thames Tideway Tunnel 128 Financial Statements Since Licence Award, to the sewer network. 130 Independent Auditor’s Report The Alliance The alliance between Tideway, Thames Water, the main works contractors 136 Financial Statements our shareholders have and the system integrator, designed to incentivise collaborative working, 138 Notes to the Financial Statements invested £1.3bn. realise synergies and share best practice. 152 Regulatory Reporting Tideway Reporting Group The top tire of governance of the three independent public-facing bodies, the Thames Tideway Tunnel Forum, the Independent Compensation Panel and the 154 Introduction Close to half of the total equity Independent Complaints Commissioner, which interface between the Tideway 158 Regulatory Accounting Statements project and the wider public. The Tideway Reporting Group is independently 172 Transfer Pricing Information has come from UK investors, chaired and considers the performance of the three bodies and cross-cutting 174 Risk and Compliance Statement issues arising therefrom. (See pages 14 to 15 for more information.) 175 Condition K Reporting including many pension funds, 178 Board Statement on Accuracy and Tunnel Boring Machine (TBM) Machine used to excavate tunnels with a circular cross section through a variety Completeness of Data and Information giving 3 million UK pension of soil and rock strata. 182 Auditor’s Report 188 Glossary holders a stake in Tideway. Visit: www.tideway.london Email: [email protected] ANNUAL REPORT TIDEWAY 185 Tideway Highlights Our year at a glance Objective Recognition Highlight Finalist Employer • No major injuries or significant Initiative of the Year – marine incidents Inside Out Mental • More than 100 Mental Health Health Awards 2020 First Aiders & Wellbeing& Health, SafetyHealth, • Handover by end of calendar Q1 2025 • Costs expected to be £4.1bn edie Sustainable Business (vs £3.4bn regulatory baseline) Leaders’ Awards 2021: • More by River strategy: Building/Infrastructure To date 4.5m tonnes transported by Project of the Year river (1.2m this year). 550,000 HGV & Quality journeys avoided to date equivalent Schedule, Cost to 14m miles or 14,500 tonnes of CO2 • 90% of live legacy commitments Global Good Awards 2020: on track against a target of 85% Company of the Year • Community investment programme benefitted over 11,000 people & Reputation & Vision, Legacy Business In The Community Staff engaged and enabled Responsible Business survey results: Awards 2020 – Responsible Business Champion for • 93% I am treated with respect Outstanding Employment. as an individual Pe & ople Company • 88% Tideway values and promotes diversity • High level of liquidity with sufficient funds secured to cover construction costs • No distributions were paid in 2020/21 Treasury Team • Aligned legacy commitments with of the Year for CSR Sustainable Development Goals and Sustainability at target level Financing • Excellent culture from S&P’s ESG assessment ANNUAL REPORT TIDEWAY 01 Strategic Report 05 Chairman’s Introduction 06 Chief Executive Officer’s Report 08 Our Vision, Purpose & Values 10 Who We Are & What We Do 20 Our Business Model 22 Our Strategy 24 Our Performance 56 Financial Performance Review 64 Risk Management 70 Long-Term Viability Statement 76 Section 172 Statement TBM Selina at the bottom of the shaft at Chambers Wharf 02 TIDEWAY ANNUAL REPORT ANNUAL REPORT TIDEWAY 03 Strategic Report Chairman’s Introduction As we move toward the commissioning phase of the project, our level of engagement with Thames Water is increasingly important. Main Works Contractors, the In times of change the culture and Programme Manager, the Systems values of an organisation can provide Integrator and our extended supply chain a welcome level of stability and, despite adapted their methods of working and the extraordinary challenges of the last showed great commitment to delivering year, our workforce was determined to SIR NEVILLE SIMMS the works. We were also pleased to have continue to support the wider community. NON-EXECUTIVE CHAIRMAN had the support of our regulator, Ofwat, Project staff volunteered over 2,000 to help us navigate through an extremely hours, finding new ways to deliver difficult period. Shareholders, too, activities remotely as well as working TBM Selina arrives ast year was a year of exceptional continued to demonstrate their support at food banks, testing and vaccination at Chambers Wharf, challenge for people in the UK and for the project, contributing to much centres and other community services. transported by a Skylift around the world. We all felt the additional Board activity and agreeing In total our teams have supported 180 3000 barge in July 2020 L impact of Covid-19, at home and at work with other Board members to defer the organisations, through volunteering and and were forced to adapt to new ways of distributions that would ordinarily have fundraising activity. Issues of diversity living, while facing an uncertain future. been payable, in the year, until there is and inclusion have been prominent, with My first duty, therefore, on behalf of the more certainty. employees engaging in a programme of Board is to say ‘thank you’ to everyone As we move toward the commissioning talks, discussions and training activities who has continued to work tirelessly on phase of the project, our level of designed to encourage self-learning, the delivery of the Thames Tideway Tunnel, engagement with Thames Water is reflection and open-dialogue. throughout what has been a particularly increasingly important. Staff from both As you will see, this Annual Report difficult period and to offer our sincere Tideway and Thames Water who would records not just the achievements of condolences to those who have lost ordinarily be co-located at Tideway’s head the last year, but also the challenges family and friends as a consequence office have continued to work together that lie ahead. At the time of writing of the pandemic. through the pandemic, albeit remotely, there remains uncertainty regarding both Covid-19 brought a range of new and but we have a plan for regular engagement the short and the longer term financial unexpected challenges to the project. going forward which I am confident will impact of the pandemic and the effect Government restrictions required us to continue to strengthen relationships of the extraordinary macroeconomic devise and adopt new and different between the organisations and secure the interventions, introduced by government, methods of working. Plans for critical successful result we both need to achieve. on revenue calculations and the activities had to be adapted to allow for The target of completion is now in sight regulatory response to these matters. previously unforeseen circumstances. and we need to ensure that staff and We will continue to work closely with Decision-making had to proceed, with less management resources are appropriate stakeholders to tackle the challenges person to person contact and discussion. for the current and future phases of the that lie ahead and to deliver a project I am proud of the way the whole project. Business reorganisation activities that both cleans up the