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Directors’ Statement
Statement of Directors' Responsibilities
The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
The Companies (Jersey) Law 1991 requires the directors to prepare financial statements for each financial year in accordance with generally accepted accounting principles. The financial statements of the Company are required by law to give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the directors should:
• Select suitable accounting policies and then apply them consistently; • Make judgements and estimates that are reasonable and prudent; • Specify which generally accepted accounting principles have been adopted in their preparation; • Notify its Shareholders of the use of disclosure exemptions, if any, used in the preparation of the financial statements; • Prepare the financial statements on the going concern basis of accounting unless it is inappropriate to presume that the
Company will continue in business. The directors are responsible for keeping accounting records which are sufficient to show and explain its transactions and to disclose with reasonable accuracy at any time the financial position of the Company. Therefore, enabling them to ensure that the financial statements prepared by the Company comply with the requirements of the Companies (Jersey) Law 1991. They are also responsible for safeguarding the assets of the Company and henceforth taking reasonable steps for the prevention and detection of fraud and other irregularities.
They are further responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in Jersey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Responsibility Statement of the Directors in Respect of the Annual Report
We confirm that, having considered all of the matters considered by the Board during the year and to the best of our knowledge, the financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company’s position and performance, business model and strategy.
We confirm that we have carried out a review of the Company’s risk management and internal control systems. We are satisfied that the systems are aligned with our strategic objectives and these systems are being developed, applied and maintained appropriately. We are satisfied that the Company has effective processes in place to monitor and review material financial, operational and compliance controls.
Statement of Viability
The Directors are responsible for assessing and expressing their view on the longer term viability of the Company, taking into account the Company’s current position and principal risks. The Code requires that Directors should explain this process and outcome in the annual report.
In accordance with the Code, the Directors have assessed the prospect for the Company over a longer period than the 12 months required by the ‘Going Concern’ provision. The Board conducted this review for a period of five years, in line with the Company’s five-year strategic business plan, for which the Company has sufficiently robust financial forecasts. The fiveyear plan contains sufficiently robust financial forecasts, made up of detailed plans for the years one and two with indicative forecasts for years three to five. Capital investment plans are detailed for the full five years.
The Board has considered the impact that the principal risks or combination of risks may have on the business, including those that would threaten its business model, future performance, solvency, or liquidity. A summary of the principal risks can be found on pages 31-33. Where relevant, financial forecasts were subject to sensitivity analysis to illustrate the potential effects of significant risks, and to identify whether any could represent serious threats to the Company’s liquidity or operation.
The following sensitivities were used in stress-testing the forecasts:
• Climate events resulting in the need to restrict water use; • An operational failure or pollution event impacting our ability to produce water, thus requiring increased expenditure from the operation of the desalination plant for a significant period of time; • Increased operating and financing costs as a result of increasing inflation and higher interest rates; • Persistently low profitability resulting from higher than anticipated costs; • The operational and financial impact of significant supplychain disruption; and • Significant cyber event.
The stress testing included (but was not limited to) various combinations of the following risk mitigation:
• Operating the desalination plant for a significant period; • Replacement of critical infrastructure; • Alternative water treatment processes; • Re-prioritisation of investment; • Tariff change; and • The insurance we have in place for a material, adverse event.
Scenario outcomes were also considered, along with the Company’s financial resources, the ability to raise finance, the Water Resource and Drought Management Plan, its wide and varied customer base within Jersey, the steady demand for its products and services and its stable and well established treatment and distribution network.
Based on the assessment of prospects and viability described, we confirm that we have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the five-year period ending 30 September 2027.
Going Concern
We also consider it appropriate to prepare the financial statements on a ‘going concern’ basis, as explained in note 3 (‘Basis of preparation’) of the financial statements.
Approved by the Board on 7 December 2022 and signed on its behalf by
Heather MacCallum
Chair
