Annual Report & Accounts 2018/19 Delivering what matters Northern Ireland Water Annual Report and Accounts For the year ended 31 March 2019 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 29 August 2019 About this report Contents This report aims to tell the story of how NI Water provides the water for life we all rely on to thrive. Strategic Welcome 5 report Changing how we all think about water 7 Tell us what you think of our report About NI Water 8 How we create value 10 We hope that this report will be of use to all our stakeholders and would welcome feedback to develop our future reporting. Business performance 12 Please direct any feedback to the Business Reporting Manager, Finance and Regulation External environment 14 Directorate. Our contact details are on the back cover of this report. Listening to you 16 Business strategy 18 Delivering our customer promises 19 Risk and resilience 53 Strategic threats and opportunities 54 Our finances explained 62 Financial performance 64 Governance Corporate governance 70 Directors’ report 79 Directors’ remuneration report 82 Statement of Directors’ responsibilities 87 Statutory Statutory accounts 88 accounts Independent auditors’ report 162 Northern Ireland Water is a trademark of Northern Ireland Water Limited, incorporated in Northern Ireland, Registered Number NI054463. © Northern Ireland Water Limited copyright 2019. 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 162 for in our report. details on which areas of this report have been subject to audit. 2 NI Water Annual Report and Accounts 2018/19 NI Water Annual Report and Accounts 2018/19 3 Tree planting at the Glenedra River, County L’derry to reduce bankside erosion, improve water quality and restore ecosystems Strategic Report Strategic Report Welcome This Strategic Report is produced in accordance with The Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013. ‘NI Water must also play its part, and identify profitable solutions that underpin a healthy and thriving population, a growing economy, and a flourishing natural environment. In doing so, we can all help support a clean growth revolution.’ Changing how we all think through sustainable efficiencies. NI Water is one of the most successful examples of a about water public sector organisation achieving private Nature provides us with a range of eco- sector levels of performance and efficiency. services, which filter our fresh water, This year’s Annual Report is a testament to absorbing and retaining carbon, protect us that success. Over 2018/19 we have delivered from flooding, provide recreation, attract record levels of drinking water and used tourists and support our overall health and water compliance, record low pollution wellbeing. NI Water relies on fresh water incidents, our lowest ever levels of supply as the key input to provide its services. interruptions and the best ever levels of Sustainably managed, this renewable natural service for our customers. This has been capital infrastructure is a gift, which keeps on delivered while keeping bills affordable. giving, for free. As a society we need to place more value Drains before cranes on water; to reduce pollutants entering We want to continue to build on this our waterways and the millions spent on success and become world class. To do removing them through water treatment; so, we have developed a draft long term to work with nature rather than against it to strategy covering the next quarter of a support sustainable economic growth; to be century (2021-2046). The strategy outlines ready for more extreme weather conditions; how the use of world class approaches can to better design our homes to use less high successfully tackle some of the challenges quality drinking water for flushing the toilet over this period, most notably climate and washing the car; and reduce the millions change. We are engaging with all our spent keeping our sewer networks clear of stakeholders over 2019 on the draft strategy inappropriate items. NI Water must also play to ensure that our customers remain at the its part, and identify profitable solutions that heart of service delivery. underpin a healthy and thriving population, a growing economy, and a flourishing natural However, this future success and our environment. In doing so, we can all help progress to date is dependent on a solution support a clean growth revolution. being found to the funding of water and sewerage infrastructure. Northern Ireland Building on our success is unique within the UK as being the only part where the regulated water utility is Since our formation in 2007, we have been unable to fully implement the economic leading the challenge on doing more for regulator’s final determination due to public customers, with fewer resources. We have expenditure constraints. transformed the delivery of water services, delivering record levels of service for our customers while reducing our cost base 4 NI Water Annual Report and Accounts 2018/19 NI Water Annual Report and Accounts 2018/19 5 Strategic Report Strategic Report Underfunding of our PC15 business plan Putting back more than we 2015-21 (£990m actual versus £1.7bn Changing how we all required) has already resulted in curbs take out to economic development with new Our vision is to grow value and trust by think about water housing and businesses being unable to being world class. To do this, we need get connected to our sewerage system in to look beyond the traditional focus around 70 towns throughout the province. on financial capital and hard concrete Indeed, the growth of Belfast City, the solutions by ensuring that our decisions primary economic engine of Northern sustainably grow all forms of capital. This Ireland will stall unless the £1bn investment means maintaining not just our physical in strategic drainage, under the Living with water and sewerage infrastructure, Water Programme, is supported. The City but also our renewable natural capital Value water Deal risks not realising its full potential. If infrastructure. A notable example is the 1. you want to put up the cranes, you have to cross border ‘Source to Tap’ partnership As a society we need to invest in the drains. in the Erne and Derg areas, which focuses place more value on water Page 34 on improving our water catchment Read more about curbs to development ecosystems. This is economically wise and 2. Restore our natural will enable us to pass on a lasting legacy resources Tipping point to future generations, underpinning overall We are therefore facing a tipping point prosperity and wellbeing. NI Water is To improve the water catchments, as we approach the next business plan proud to be playing its part in this clean Eco-nomics rivers and lakes which are 3. sources of our drinking water period PC21 (2021-27), which will require an growth revolution. To support sustainable investment of around £2.5bn, including the economic growth Living with Water Programme. The NI Water Board and Executives continue to work with stakeholders to identify a means to fund Be resilient this vital investment. However, a solution 4. To be ready for more has not been identified. Our shareholder, extreme weather conditions DfI, needs to commit to fund this investment but faces competing pressures Dr Leonard J. P. O’Hagan CBE DL from transport infrastructure. Unlike in Chairman the rest of the UK, the risk of shareholder 20 June 2019 sanction from the Utility Regulator is much diminished due to our Government ownership. The absence of a NI Assembly places a greater role on the Department of Finance in identifying a solution to avert a funding crisis for vital infrastructure. 5. Use less 6. Keep it clear As consumers we need to And what we put down the sink think about our water consumption (no fats, oils and grease) and (average person uses 150 litres per day. toilet (only pee, poo and paper) Only around 4 litres is used for drinking, with around 100 litres used in the bathroom and the toilet) 7. Putting back more than we take out NI Water needs to invest in sustainable solutions 6 NI Water Annual Report and Accounts 2018/19 NI Water Annual Report and Accounts 2018/19 7 Strategic Report Strategic Report About NI Water It costs around £460m each year to 40,000km of water mains and sewers - deliver water services in Northern Ireland. one and a half times longer than Northern Thousands of assets at a value of around Ireland’s entire road network and long £3bn, are operated and maintained to enough to circle planet earth. provide these services. This includes over Water treatment works Delivering your We clean the water, making it safe to drink Recycling your drinking water 23 used water Service 710k Households and businesses reservoirs We collect used water from our customers Impounding 370 We store the drinking 24 reservoirs water in service reservoirs 1,030