Annual Report &  
Financial Statements
For the year ended 31 March 2016 Annual Report & Financial Statements 2016 Dee Valley Group plc Your Local Water Company Overview 
03 02
Overview
Dee Valley Group plc, through its trading subsidiary 
Dee Valley Water plc, supplies drinking water to 
266,000 domestic and business customers in  
north-east Wales and in north-west Cheshire.
Our objective is to provide a reliable supply of 
wholesome drinking water and a high standard 
of customer service while maintaining charges at 
affordable levels.
Dee Valley Water has been supplying water to its 
community for more than 150 years.
Area of supply: 831 square kilometres, centred on 
Wrexham, Chester and the surrounding area. 
• Fourth lowest water charges in England  
and Wales 
• We supply 62 million litres of water a day 
• 80% of supplies are drawn from the River Dee 
• No customer is more than 40 minutes away from  
our head office
• We are the smallest independent water company  
in England and Wales 
• Water quality continued to improve with a  
27% reduction in customer contacts
• Most satisfied customers (87%) of all the water  
companies for value for money 
• 92% of domestic customers who interacted with  
us were satisfied with our service
• 13% reduction in written complaints 
• Leakage 9.71 (unaudited) million litres (Ml/d) of  
water a day (15.5%). We continue to have one of  
the lowest levels in the industry 
• 290km of mains cleaned - one seventh of  
the network
• 98% of customer calls answered within  
30 seconds
Dee Valley Group at a Glance
Contents List
Overview
Dee Valley Group at a Glance 2
Financial Highlights 3 
Chairman’s Statement 4
CEO’s Statement 6
Our Customer Performance Commitments 10
Vision and Values 12
Strategic Review of the Year
Our Customers 14
Water Quality 20
Operational Performance 22
Our People 28
Our Environment and Community 32
Principal Risks and Uncertainties 34
Financial Review
Financial Review 38
Governance  
Board of Directors 42
Corporate Governance Report 44
Audit Committee Report 48
Nomination Committee Report 52
Remuneration Committee Report 54
Directors' Report  60
Statement of Directors’ Responsibilities in Respect 
of the Annual Report and Financial Statements 62
Independent Auditor’s Report to the  
Members of Dee Valley Group plc 63
Financial Statements 
Group Income Statement 70
Group Statement of Comprehensive Income 70
Group and Parent Company Balance Sheet 71
Group Statement of Changes in Equity 72
Company Statement of Changes in Equity 73
Group and Parent Company Cash Flow Statement 74
Notes to the Financial Statements 75
Glossary of Terms 100
Shareholder Information
Notice of Meeting 101
Annual General Meeting Explanatory Notes 106
92%
domestic customers  
satisfied with 
 our service
87%
most satisfied 
customers of all the 
water companies for 
value for money
Wrexham/ 
Wrecsam
Llangollen
Mold/
Yr Wyddgrug
Oswestry
Chester
Ellesmere 
Port
England
Wales
Financial Highlights
Revenue (£000)
2016
23,149         
2015
24,599 
6,574 
2016 2015
7,453
Profit from operations (£000)
4,244              
2016 2015
4,558
Profit before tax (£000)
62.5
2016 2015
62.5
Total dividend  
(pence per ordinary share)
75.3
2016 2015
Adjusted earnings per share  
(pence per ordinary share)
100.5
River Dee Annual Report & Financial Statements 2016 Dee Valley Group plc Your Local Water Company
05 04
Overview
Chairman’s Statement
I am pleased to report that the Group made 
significant progress in the first year of our new 
five-year business plan (2015-2020) and we can look 
forward with confidence to achieving our customer 
performance commitments.
We have made significant commercial changes to 
the Company which have increased our operational 
performance and sharpened our focus on providing 
an even better service for our customers.
Financial performance
Our financial performance continues to be satisfactory 
with revenue of £23.1 million (2015: £24.6 million) and 
profit from operations of £6.6 million (2015:  
£7.5 million).
In common with most water companies, our  
financial performance was impacted by the PR14  
final determination, which imposed a reduction in 
prices and therefore contributed to the downturn 
in revenue in the current year. However, this was 
mitigated by an improvement in operating expenses 
and financing costs. 
Following the agreement of a five-year, £30 million 
revolving credit facility early in the year, the Group is 
well placed to deliver the investment plan agreed with 
Ofwat for the period to 2020. The facility provides cost 
effective funding to support the delivery of the largest 
capital investment plan in the Group’s history.
Strong progress has been made against the Group’s 
operational key performance indicators this year and 
this, alongside the financial certainty provided by the 
agreement of financing at favourable interest rates, 
ensures that the Group can progress confidently into 
the second year of AMP6. 
We proposed a final dividend of 42.0p per share on  
9 June, which is in accordance with our AMP6 divided 
policy published in May 2015.
Customer care
Customer service and care for our most vulnerable 
customers is of paramount importance for everyone  
at Dee Valley Water. This has been a key area of focus 
and I am proud to see the continuous improvement in 
our performance.
Customer satisfaction surveys show our approval 
ratings continue to go up – our own independent 
surveys say 92% of the domestic customers who 
interacted with us are satisfied with the service  
they received.
An independent survey for the Consumer Council for Water 
(CCWater) has confirmed that Dee Valley Water has the most 
satisfied customers (87%) of all the water companies in England 
and Wales when it comes to value for money.
In addition to high-quality customer service, we recognise that 
our customers also want low bills and a wide range of payment 
options. While we have the fourth lowest water bills in England and 
Wales, the difficulties faced by our many vulnerable customers is 
a key concern. From 1 April 2016 we launched our own social tariff 
for those with low household incomes. Eligible customers can 
get 30% off their bill. To supplement this and provide a local and 
personal service, we continue to offer flexible payment plans and 
our customer liaison team visit vulnerable elderly customers to 
give advice and help them to pay their bills.
Improved performance
We have embraced Ofwat’s shift in focus from capital expenditure 
(capex) based solutions to total expenditure (totex) and customer 
outcomes. This has enabled us to move away from primarily 
delivering high cost capital schemes. Instead, we are concentrating 
on how best to provide a resilient and high-quality supply of 
drinking water for our customers as efficiently as possible.
A good example of this is the work of our network teams who 
successfully cleaned 290km (one seventh of our network) in a 
priority effort to eliminate incidents of discoloured water caused 
by naturally occurring manganese – which is harmless to health. 
Our customers experienced an immediate benefit. As a result of 
this programme of work our water quality, mains replacement 
programme and burst mains record, have all improved.
We have continued with our strong environmental performance, 
and once again, we expect to have one of the lowest levels of 
leakage in the industry. Preliminary figures indicate that our 
leakage for 2015-2016 was 78.6 litres per property – well below 
Ofwat’s target of 90.8 litres per property. 
Culture change
This continued improvement in performance would not have been 
possible without the efforts of our people and teams. During the 
year the company has undergone a major cultural change.  
It culminated in us adopting a new vision and values to underpin 
and support our greater focus on placing the customer at the  
heart of the business.
Our new vision and values were introduced after extensive 
consultation and involvement with our people, who gave significant 
input. They have welcomed the clearer focus and greater 
commitment to our customers.
Future progress
Our Board continues to focus on driving change, innovation 
and greater efficiency within the company. Customer service 
and totex outperformance remain a key focus to ensure we can 
deliver effectively and efficiently for our customers and other 
stakeholders. We are well placed to achieve this with a Board 
membership which has worked at the highest level within the 
water industry. 
While the Board is pleased with the progress we have made and 
continue to make at the start of this new five-year business plan 
period, we are not complacent. There is still much to do if we are 
to achieve our vision to be the leading water service provider, with 
our local customers at heart.
This is how we will ensure we are delivering for all of our 
customers, our people, shareholders and the wider community. 
Jon Schofield 
Chairman
290km
we cleaned one seventh  
of our network Annual Report & Financial Statements 2016 Dee Valley Group plc
06 07
Your Local Water Company Overview
Chief Executive’s Statement
I have completed my first full year in Dee Valley 
Water and it has been a pleasure to work alongside 
our people and external stakeholders to bring 
significant improvements in service and operating 
performance for our customers.
We achieved a positive performance in the past year 
and can look forward to the next four years, and 
beyond, secure in the knowledge that we are laying 
strong foundations for long-term success. 
When I started in Dee Valley Water in August 2014 it was 
clear we had high-quality people with extensive local 
knowledge. It was also clear that this local knowledge 
should be used to drive improvements in customer 
service and operating performance. 
This coincided with the change in regulatory focus 
by Ofwat from capital expenditure (capex) based 
solutions to total expenditure (totex) and customer 
outcomes, which gave smaller companies such as ours 
the opportunity to be more flexible and agile in our 
means of delivering performance improvements.  
To fully take advantage of this regulatory shift we 
needed to create a culture that is forward looking 
with local customers at its heart. Achieving this 
would position us to deliver long-term value for our 
shareholders and external stakeholders. 
The changes we have made during the past twelve 
months have laid the foundations. We have 
harnessed the knowledge and skills of our people 
and teams to develop a shared companywide vision. 
We have simplified and modernised our working 
practices to ensure our managers can easily access 
the best operational and customer information; 
we have made structural changes to ensure we are 
organised in a way that delivers a great service on 
behalf of our customers. 
Everyone at Dee Valley Water now understands 
fully – and is completely aligned with – our vision to 
be the leading water service provider with our local 
customers at heart. (See Vision and Values on pages  
12 and 13). 
Our performance 
Our performance during the past year has demonstrated that we 
have the ability to bring about rapid improvements in a short space 
of time. This includes achieving industry leading results in some 
areas. However, we are not complacent and there are still areas 
where we need to continue to improve.
The safe and secure delivery of high-quality, wholesome 
drinking water is our primary objective. In the previous year our 
water quality performance was not to the standard we and our 
customers expect and require. Both our compliance and customer 
service were below the industry average. 
We rectified this by re-organising our teams to enable us to 
double the length of our annual mains cleaning programme and 
delivered this in the first quarter of the year. This tremendous 
effort by our networks teams, combined with improved customer 
communication, enabled us to achieve significant improvements 
in both water quality compliance and customer contacts for 
discolouration, where we improved our performance by more than 
40% year on year. 
We will continue to make improvements in both these areas, but 
with the work done this year, and the plans we have in place for the 
next four years, we are confident we will outperform the regulatory 
targets set by Ofwat and our Customer Challenge Group.
Our customers expect us to supply high-quality water free from 
interruptions. We have traditionally delivered excellent service and 
our performance in 2015-2016 was no different. 
A mild winter, combined with the benefits of a re-organised 
management structure for our below ground assets, has enabled 
us to respond more quickly to network problems. The year saw a 
30% reduction in the number of bursts, a 50% reduction in supply 
interruptions over three hours, and a stable performance for 
leakage, a measure where we are consistently one of the industry’s 
leading companies.
We’re confident we’ll outperform targets set by  
Ofwat and our Customer Challenge Group.
When customers have a problem and need to contact us, they 
expect to receive a level of service comparable with the best 
they would receive from any organisation. We are committed 
to improving ours to levels that stand comparison with the best 
across all industries. 
In 2015-2016 we modernised our management structure in 
customer service and invested in systems that have enabled us 
to transform our performance. Ofwat’s qualitative measure of 
customer service shows we have improved from eighth to fourth 
year on year; second for billing and sixth for clean water. On Ofwat’s 
quantitative measure we have seen a 5% reduction in unwanted 
contacts and a 13% reduction in complaints year on year. These 
improvements have increased our overall Ofwat SIM (Service 
Incentive Mechanism) score by 7% from 78 to 83.5 year on year.
It is vital that we deliver these high levels of service at a price that 
is affordable for customers. Our charges are the fourth lowest in 
England and Wales and we offer a full range of payment options  
to help customers manage their bill in a way that is most 
convenient for them. 
From 1 April 2016, we implemented a social tariff scheme to help 
customers who require further assistance. We are pleased and 
proud that our customers acknowledged our value for money 
service, as reported in the Consumer Council for Water’s annual 
survey of customer opinion.
Dee Valley Water’s customers were the most satisfied (95%) of all 
the water companies in England and Wales with the response they 
received from contact with the company. Annual Report & Financial Statements 2016 Dee Valley Group plc
08 09
Financial Statements Your Local Water Company
A year of change and improvement  
for our people and teams
The past year has seen considerable beneficial change 
in Dee Valley Water to create a more customer focused, 
efficient, innovative and resilient company. We are 
now better placed to face the challenges of a changing 
business and regulatory landscape.
We have improved our structure, modernised and 
simplified our working practices and introduced a 
new vision and company values. This was successful 
because we fully involved our people and teams. 
The Board was pleased and proud that Dee Valley 
Water was one of the first companies in Wales to 
become a Living Wage Employer.
I would like to take this opportunity to thank all our 
people for the way they have risen to the challenge of 
implementing change through business modernisation 
and simplification and for the real step change in 
performance they have delivered throughout the year. 
We have created a stronger culture that will enhance 
our ability to outperform our regulatory targets in 
the next four years and beyond. Well trained staff 
who understand the company vision and their role in 
achieving it, combined with strong local knowledge and 
close links to our customers, will enable us to deliver 
the best possible service.
I believe we can look forward to the next four years 
with confidence. Dee Valley Water is well placed to 
be successful within Ofwat’s changed regulatory 
environment of totex and customer outcomes. We 
will continue to work proactively and positively with 
the Welsh Government and our other regulators and 
stakeholders to benefit the local area in which we live 
and work.
Finally, I would like to thank all of our people, 
suppliers and business partners for their expertise, 
energy and support in helping us to provide the best 
possible service to our customers. It is because of 
all their efforts that we are able to report pleasing 
improvements in our operating and service 
performance. 
I look forward to our continuing successes in the  
year ahead.
Ian Plenderleith 
Chief Executive
Our charges are the fourth lowest 
in England and Wales. Annual Report & Financial Statements 2016 Dee Valley Group plc
10 11
Financial Statements Your Local Water Company
Our Customer Performance Commitments
Consumer Council for Water
The independent representative  
of household and business  
water consumers.
Ofwat
The economic regulator of the water sector 
in England and Wales.
Welsh Government
The Welsh Government is responsible for 
the water industry in Wales.
Environment Agency
Monitors water resources – including 
how much water can be drawn from the 
environment.
Natural Resources Wales
Responsible for functions of the Countryside 
Council for Wales, Forestry Commission 
Wales and Environment Agency in Wales, as 
well as certain Welsh Government functions.
Consumer Council for Water Wales 
The independent representative of 
household and business water consumers 
in Wales.
Drinking Water Inspectorate
Provides independent reassurance that 
water supplies in England and Wales are safe 
and drinking water quality is acceptable to 
consumers.
Our Regulators
Customer Experience                Performance Target Measurement
Service Incentive Mechanism (SIM) 83.5 80 Score out of 100
Water supply Interruptions                                                   0.087 0.2 Hours lost per property for three hours or longer     
Discoloured water contacts 1.32* 2.8 Complaints per 1,000 population
Number of bursts 169 247 Mains bursts
Non-household Service Incentive 
Mechanism
82.0 80 Score out of 100
*Calendar Year
Reliability and Stability             
Leakage 78.6 90.8 Litres per property per day
Security of supply index 100% 100% Index score     
Per capita consumption and  
water efficiency
128** 131.44 Litres per person per day
Mean zonal compliance percentage 99.95%*** 99.95%
**Unaudited ***Calendar Year
The key performance indicators set by Ofwat for the company are summarised in two high-level areas 
which provide a broad overview of performance. Annual Report & Financial Statements 2016 Dee Valley Group plc
12 13
Your Local Water Company Overview
Vision and Values
One Team
We work together as ‘one team’ to  
achieve our shared goals.
By sharing information, communicating well and 
helping each other, we can strengthen the customer 
and employee experience.
 
The company has undergone a major culture 
change in the past year which has culminated in it 
adopting a new vision and values to underpin and 
support its greater focus on placing the customer at 
the heart of the business.
The new vision and values were introduced after 
extensive consultation and involvement with Dee Valley 
Water people, who gave significant input. They have 
welcomed the clearer focus and greater commitment 
to our customers.
The benefits of having a clear set of values
A well-defined set of values ensures our people know what is 
required of them and are clear about how they are expected to 
perform. Everyone understands how each department should 
perform and what this means in practice.
Practices and procedures are quantifiable and consistent across 
the company – each employee understands what good looks like 
and what it means for them. There’s a better understanding of 
where we are and where we want to be. This reinforces everything 
being done and provides understanding of where improvements 
are required. This will be linked to reward via a company bonus 
structure. It can assist with succession planning in identifying the 
requirements for a role and how staff can develop to advance 
within the company.
Ownership
We hold ourselves accountable for the  
decisions and actions we take.
We are all jointly responsible for identifying issues 
and providing reliable solutions.
Passion
We are proud of what we do and bring  
commitment and enthusiasm to our work.
By caring about what we do, we deliver consistent, 
high-quality results and inspire those around us.
Trust
We trust each other to act responsibly and  
deliver on commitments.
We all have the ability to make the right decisions 
for our organisation and customers.
Respect
We respect each other and the environment  
within which we work and live.
We understand the importance of treating others  
as we would like to be treated and recognise the 
need to care for the environment.
Continuous Improvement
We look to do things better by continually evolving 
and improving the way we work.
By improving our processes and developing our 
people, we can be more efficient and provide a 
better service to our customers.
Our vision
We will be the leading water service provider, with 
our local customers at heart. 
Having a clear vision helps everyone at Dee Valley Water 
to understand how the company aspires to perform 
at the highest level across all of its operations and to 
provide industry leading customer service. 
All of our people have bought into our new vision  
and understand what is expected of them to help 
achieve this. 
Our values 
Our values are set out below. They summarise what we 
believe really matters and provide a framework for how 
things should be done. They are our guiding principles 
and underpin our behaviours. They will help us to 
achieve our vision. 
Our people know they must demonstrate these values 
in all that they do to ensure Dee Valley Water continues 
to improve its customer and operational performance 
and remains a great place to work.
Visual identity
Many of our customers will have noticed that we have changed 
our branding and visual identity – as shown in this Annual Report 
and Accounts. Dee Valley Water (and its people), now look like the 
modern, progressive, responsive company articulated and projected 
by its new vision and values.
Our vision is to be the leading water service 
provider, with our local customers at heart.  Annual Report & Financial Statements 2016 Dee Valley Group plc
14 15
Your Local Water Company Strategic Review of the Year
Strategic Report - Review of the Year 
Our Customers
Our vision for customers
We began this first year of our new five-year business 
plan period with a thorough review of how we could 
best achieve our commitment to placing our customers 
at the heart of our business and how we could meet 
and exceed Ofwat’s increased focus on customer 
outcomes. The result has been a new vision for the way 
we should provide customer service.
In this new era of instant communication, multi-
channel services and 24hr delivery on promises, 
customer expectations and demands have changed. 
They expect so much more from utilities such as Dee 
Valley Water.
So our focus is much more on a customer led service. 
Excellence is achieved by speaking to and listening to 
our local customers; observing what they do, how they 
are interacting with us and understanding what they 
want. For example, when making complaints or asking 
questions about billing. 
The key is identifying and understanding where the 
service we provide or interaction with our customers, 
is making life difficult for them and leaving them 
dissatisfied or mistrustful of the overall quality of our 
performance as a vital utility. 
This approach has already provided us with valuable 
insights into what we need to do to improve our service 
and enabled us to make significant improvements.
A key aspect of this new vision is to ensure we have an 
external view of our service. What does the customer 
experience? What view do they take away of Dee Valley 
Water? This is how customer attitudes are formed and 
how they measure our levels of service. Our aim is to 
get the same customer service scores as John Lewis 
and Amazon.
For example, we carried out an online survey with 
3,000 customers to identify and understand what was 
driving confusion and complaints about their bill. This 
has resulted in the bill being re-designed.
Polite, friendly, clear communication which was 
refreshing considering the difficulties one has 
experienced when phoning other companies.
Our charges are the fourth lowest 
in England and Wales.
How we have improved our customer contact centre
We carried out a full review of what matters to our customers and 
of our capabilities and response times. What really matters to 
our customers is being able to talk to us and to get an immediate 
response. Our billing and accounts team have really responded 
to the challenge and the customer contact centre has improved 
service levels dramatically. Lost call rates have plummeted –  
98% of customers are answered within 30 seconds.
By continuously reviewing our performance, we have implemented 
new systems, processes and training for customer facing staff. For 
example, we have upgraded our telephony systems and put quality 
monitoring in place internally. 
The adoption of our new Vision and Values (see pages 12 and 
13) has led to a new approach in how we communicate with 
customers, whether face to face, by telephone, email or text 
message. This ensures we always adopt the appropriate ‘tone of 
voice’ values that underpin this and stay true to our commitment to 
place our local customers ‘at the heart’ of the business. 
As a relatively small water only supplier whose customers are 
no more than 40 minutes away, we are in a rare position for this 
industry with opportunities to interact and gain feedback from 
them in person. 
A complete review of our written materials and communication 
techniques has been completed and change is underway to 
complement our new tone of voice. Our customers don’t want 
their local water company to sound corporate and distant, so 
an ‘accessible and easy to understand’ way of communicating 
has been designed and our people have been trained in how to 
respond in a friendly, knowledgeable and caring manner. Dee Valley Group plc
16 17
Your Local Water Company Annual Report & Financial Statements 2016
Rant and Rave
Percentage breakdown of scores:
Scores 
All
1 2 3 4 5
6,870 2.92% 1.62% 2.10% 9.00% 83.93%
As Ofwat’s quality of service survey shows, there has been pleasing 
confirmation that we are making good progress from key industry 
organisations. Another example comes from the Consumer Council 
for Water (CCWater). Its annual Written Customer Complaints 
report says written complaints from Dee Valley Water customers  
to CCWater have fallen by 27% in the past year.
This is the fourth year in succession that complaints to the 
company have fallen. Complaints have dropped by 64.9% since 
2010-11 to 20 per 10,000 customers.
Another domestic report from CCWater says Dee Valley Water has 
the most satisfied customer (87%) of all the water companies in 
England and Wales when it comes to value for money. 
Our customers were also the most satisfied (95%) with the response 
they receive from contact with the company.
Vulnerable customers
While we have the fourth lowest water bills in England and Wales, 
the difficulties faced by our many vulnerable customers is a key 
concern. An indicator of this is that on 1 April 2016 we launched 
our own social tariff for those with low household incomes. We 
consulted with our customers – using surveys and focus groups – 
before launching the tariff. Eligible customers can get up to 30% off 
their bill. 
We continue to offer a very wide range of flexible payment plans 
and our customer liaison team visit vulnerable elderly customers 
to collect their bills. 
Gaining a better understanding of the needs of our customers 
is vital and we are working with consultants to improve our local 
knowledge to ensure we can effectively target customers in 
vulnerable circumstances to offer tailored solutions to their needs. 
How are we performing?
Detailed customer research and extensive feedback 
mechanisms play a key role in fulfilling our commitment 
to understanding our customers’ needs. Research 
undertaken by Ofwat – and our own – clearly shows a 
steady and consistent improvement in our customer 
satisfaction scores. 
Ofwat’s annual quality of service survey of the 18 water 
suppliers in England and Wales last year placed Dee 
Valley Water in fourth place – we were eighth the year 
before. Our SIM (Service Incentive Mechanism) score 
moved up from 78 to 83.5. Ofwat’s target for us was 80. 
This improvement is very noticeable in our billing and 
customer accounts team. We are pleased that they have 
gone from being 10th overall in the last quarter of 2014-
15 to finishing second overall at the end of 2015-2016. 
In the past three quarters of this period we were placed 
first, second and first.
Our latest independent benchmark survey shows 92% 
of the domestic customers who interacted with us are 
satisfied with the service they received. There is a high 
degree of trust in us as a valued service provider in 
comparison to the likes of other emergency services. 
While these surveys are helpful, real time daily 
feedback is vital if we are to achieve our vision. In 
September last year, we launched Rant & Rave in our 
customer contact centre. This is a feedback engine that 
sends out a quick and simple text survey after every 
contact with our customers. 
They are asked to rate us between one and five. If 
any score is below three, one of our people ring the 
customer immediately to seek to resolve the issue. Rant 
and Rave has received rave reviews from our people in 
the customer contact centre and will be rolled out to 
other areas of the business throughout this year. 
Excellent customer service.  
Query handled with precision and care.
Complaints  
have dropped to
20
per 10,000
customers
Strategic Review of the Year Dee Valley Group plc Your Local Water Company Annual Report & Financial Statements 2016
18 19
How we are driving further change  
and improvement
While customers expect excellent service when they 
contact the company, they also require their water 
supply to be reliable and of equal high-quality. Our 
customer services teams have a strong focus on 
working collaboratively with the operational teams and 
this has helped produce great results (See Operational 
Performance, pages 22-27). 
Customers do not want or expect a complicated 
service. While our operational performance in terms 
of supplying high-quality water is good and – in some 
key aspects – at the highest level, there have been clear 
opportunities where we can improve our interaction 
with customers. 
We encourage customers to tell us as soon as possible 
when things go wrong. Through listening to them 
and understanding complaints, we have been able to 
respond swiftly to customers and make improvements 
to our networks and water quality.
An example of this ‘customer power’ is that following 
complaints, we moved a problem main from low down 
in the asset management plan to top of the list. We also 
held a meeting with the Parish Council in the affected 
area to tell them our plans.
Our independent Customer Challenge Group – which 
monitors our performance – will continue to be fully 
engaged to represent our customers and express their 
views, and to challenge us to deliver value for money. 
It will be closely involved in all of our research and 
customer engagement planning. 
Continuous improvement
We will continue to fulfil our vision of placing customers at the 
heart of our business by maintaining these higher levels of 
customer service while continuing to make improvements by 
more analytical reporting and continuous reviews – including 
benchmarking with our peers.
From analysing customer feedback we know they wanted 
improvements to our website and more online self-service 
capability. We have been aware of this for some time – not least 
because it will help to make some of our operations more efficient. 
Our new, much improved, website has now been launched. 
Feedback before the launch from our Customer Challenge Group 
and our people – who were fully engaged in the consultation – has 
been positive.
Apart from many other key features, the new website is a vital 
communication channel for all planned and unplanned works. 
It offers up to the minute information – whether it’s about an 
interruption to our water supply, installing a new water main or 
repairing a burst pipe. 
All of the staff I have ever spoken to at Dee Valley 
Water have always been very polite and really go 
out of their way to help the best way they can.
Responding to and informing our customers as early as possible 
when we have an incident which may affect their water supply 
is critical. We were one of the first companies to pioneer 
text messaging to customers and have continued to make 
improvements to the system. It is now more targeted to alert  
only those impacted. 
Unnecessary customer contact almost halved during the second 
part of the year following this improvement. 
Web chat will be introduced soon for those who prefer this 
alternative to making a telephone call. Our website is mobile 
friendly for those on the move. We will continue to explore how 
social channels can serve our customers for the future – but they 
have told us it is not high on their list of priorities.
Many customers have told us they prefer to talk to a real person 
and not all of them have access to digital channels. So we will 
continue to offer a full range of services to customers. For example, 
we have just been awarded certification for ‘Keep me posted’, 
a recognition that we are happy to work with customers in any 
medium of their choice – including paper.
98%
of customer calls  
are answered  
within 30 seconds
Strategic Review of the Year Annual Report & Financial Statements 2016 Dee Valley Group plc
20 21
Your Local Water Company
Water Quality
Discolouration improvements
Discolouration has been a major challenge for us 
during the past five years, due to the effects of a 
harmless mineral (manganese), in our raw water. We 
have been working through an improvement plan 
to upgrade our treatment works to ensure they stop 
manganese entering our mains network. We have 
also run an extensive mains cleaning programme to 
remove deposits of manganese which have built up in 
the pipes. 
There is now only one treatment works which does 
not have the capacity to remove manganese from the 
raw water. But modernising it would be expensive. 
Following a thorough cost benefit review of best 
options for our customers and the company to ensure 
we eliminate this problem, we have decided to upgrade 
our mains network in a way which will enable us to 
decommission this treatment site during 2017. 
Meantime, we are successfully controlling the 
manganese levels through careful selection of our 
source waters. This, combined with a step increase 
in mains cleaning, has helped to deliver improved 
performance for our customers. 
Our mains supply network is approximately 2,000km 
long and historically we used to clean 50km of mains 
each year. But in 2015 the Network team successfully 
cleaned 290km (one seventh of our network). Our 
customers experienced an immediate benefit from this 
level of cleaning and we are continuing with further 
increases in cleaning during 2016.
Our water quality continues to be of an excellent 
standard with 99.95% of the 29,000 regulatory 
tests meeting the required standards. We are also 
pleased to have recorded significant improvements 
in the level of quality related contacts from our 
customers with better performance on both taste 
and appearance (695 contacts in 2015 compared to 
957 in 2014).
How we met Ofwat’s Outcome  
Delivery Incentives
We made solid progress in the year for water quality 
performance with mean zonal compliance increasing 
from 99.88% in 2014 to 99.95% in 2015. Discoloured 
water contacts reduced from 2.27 in 2014 to 1.32 per 
1,000 people in 2015. 
We remain on target with our timescale based ODI’s 
(Outcome Delivery Incentives) for water quality 
improvements to customers supplied by our Legacy 
treatment works and the service reservoir upgrade 
programme.
During 2015, we moved to a more proactive way of informing 
our customers about discoloured water by sending them text 
messages when there was a potential for discolouration – such 
as following a mains burst. This has proved to be a success. 
Apart from the benefits of informing customers about possible 
discolouration, texting on this and other matters also improves our 
service by keeping them informed.
United Kingdom Accreditation Service
In March 2016, following a successful inspection by UKAS 
(United Kingdom Accreditation Service), we achieved ISO17025 
accreditation for our sampling and field testing. 
Achieving this accreditation shows the commitment to the highest 
standards of the whole water quality team. They have all adapted 
well to the new requirements. From a company perspective, it 
gives us greater confidence in the sample results that we use to 
drive decisions, which can only be a good thing.
Water Quality Improvement Programme
The AMP6 (2015-2020) period has the biggest capital delivery 
programme in our history. A large number of these improvement 
programmes have a significant water quality element and are 
contained within the 11 notices and one undertaking that we have 
agreed with the Drinking Water Inspectorate. 
We completed the first of these improvement schemes with the 
installation of an ultraviolet disinfection unit at Oerog Treatment 
Works. This scheme provides us with additional treatment 
capability in case of raw water deterioration and therefore ensures 
a more resilient water supply to customers in the Llangollen area.
Type Description
Reward  
level
Performance 
commitment
Penalty  
level
2015 
performance*
Mean zonal 
compliance
Percentage of samples results meeting 
the regulatory standards
N/A 100% 99.93% 99.95%
Discoloured  
water contacts
Number of customers that contact 
us with discoloured water divided by 
population served in 1,000s
1.01 2.80 3.69 1.32
0
Failures indicated 
that the water was 
harmful to health
11
Number of regulatory  
failures compared to 27 the  
previous year
3,927
Number of  
regulatory samples
28,774
Number of regulatory tests
Strategic Review of the Year
*Calendar Year Annual Report & Financial Statements 2016 Dee Valley Group plc
22 23
Your Local Water Company Operational Review
Operational Performance
The greater emphasis we have placed on putting 
customers at the heart of our business has helped 
shape the management and structural changes 
which have enabled our operational performance 
to continue to improve throughout the year. 
This helped us to out-perform some of our targets 
while meeting all the remaining commitments in 
our 2010-2015 Business Plan on time and within the 
overall capital expenditure budget allowed by Ofwat. 
In addition, the company’s buildings, equipment and 
infrastructure have been upgraded and are more 
resilient, leaving us better equipped to manage the 
business and meet customer expectations.
Ofwat’s shift in focus from capex based solutions to 
totex and customer outcomes has allowed us to think 
laterally and move away from simply delivering high 
cost capital schemes. Instead, we are concentrating on 
how best to provide a resilient and high-quality supply 
of drinking water for our customers as efficiently as 
possible, thereby ensuring they pay less for their water.
The largest capital expenditure commitment in our 
new Business Plan for 2015-2020 was to rebuild our 
Legacy water treatment works, west of Wrexham (see 
Water Quality, pages 20-21). Given the greater focus 
on putting customers at the heart of our business, 
we reviewed the cost/benefit of doing this, giving full 
consideration to resilience of supply, water quality and 
operating cost. 
As a result of the new totex world introduced by Ofwat, 
we have been able to cancel the rebuild. Our Legacy 
treatment works will be decommissioned and the loss 
in treatment capacity will be made up by increasing  
raw water treatment at our two largest and most 
modern facilities. 
The construction of new reservoirs, pumping stations 
and pipelines to replace the loss of our Legacy 
treatment works will enhance connectivity across 
our supply network. It will also reduce operating 
costs due to the decommissioning of the treatment 
works. Equally important, these improvements will 
be achieved with a reduced capital spend which will 
further benefit our customers.
Our focus on reducing risk to customers has been 
commended by the Drinking Water Inspectorate. Annual Report & Financial Statements 2016 Dee Valley Group plc
24 25
Your Local Water Company
Water quality improvements
As detailed in the Water Quality section (see pages 20-21), we made 
real progress in the year. Mean zonal compliance increased from 
99.88% in 2014 to 99.95% in 2015. Discoloured water contacts 
reduced from 2.27 in 2014 to 1.32 per 1,000 people in 2015. 
In 2015, the Networks team successfully cleaned 290km of mains 
(one seventh of our network). Our customers experienced an 
immediate benefit from this level of cleaning and we are continuing 
with further increases in the programme during 2016.
Our continued focus on reducing risk to customers has been 
commended by the Drinking Water Inspectorate (DWI) following 
the installation of a fully automated UV disinfection system at our 
Oerog Treatment Works which supplies the Llangollen area. This 
reduces the risk of cryptosporidium (which can cause stomach 
upsets), entering the water supply. Following incidents in the north 
of England in 2015, this is now a key issue for the regulator.
We are commissioning a new Orthophosphate dosing facility 
at the Oreog site to address plumbosolvency issues (leakage of 
lead), as some customers still have lead supply pipes within their 
properties. 
We have beaten Ofwat’s operational  
delivery incentive for interruptions to supply.
Once again, we expect to have one of the 
lowest levels of leakage in the industry.
We replaced 
2,733
older water  
meters
Fewer customers affected by  
interruptions to supply
Fewer customers have experienced interruptions to their water 
supply this year – including from burst pipes.
This is confirmed by Ofwat which set targets for interruptions to 
customers’ water supply in this AMP period. These are based on 
average supply interruptions per property. The target bands for 
this year were 0.33 hours per property to 0.20 hours. Our so far 
unaudited performance for 2015-2016 is well below the reward 
band. So we have again beaten our operational delivery incentive 
for this year.
There were 169 burst mains in 2015-2016. This is seven lower than 
the operational delivery incentive reward band (ODI) set by Ofwat 
for mains bursts and below the long term average. While another 
mild winter would have contributed to this, it is also an indication 
of how we have improved the management of our network.
We continue to replace water mains that have come to the end of 
their operational life and renewed 10.1 kilometres in 2015-2016. 
Customers save by switching to  
a water meter
Some customers would be better off switching to a measured 
supply and we continued to fit meters for people opting to change 
– 1,011 were installed in the year. We have switched to supplying 
internal remote read meters as standard. These can be read 
without troubling our customers. 
We replaced 2,733 older water meters during the year to ensure 
the accuracy of our readings. This will be an ongoing programme 
throughout the AMP.
Strategic Review of the Year Annual Report & Financial Statements 2016 Dee Valley Group plc
26 27
Your Local Water Company Operational Review
Fewer customers have experienced interruptions  
to their water supply – including from burst pipes.
Minimising leakage
Customers place a high importance on minimising 
leakage and reducing it has always been a top priority. 
Our teams have been heavily engaged in leakage 
detection this year and we expect we will be well within 
the performance bands set by Ofwat. Preliminary 
figures indicate that our leakage for 2015-2016 was 78.6 
litres per property – well within Ofwat’s target band of 
76.1 to 90.8 litres per property. Once again, we expect 
Dee Valley Water to have one of the lowest levels of 
leakage in the industry.
Water industry research indicates that approximately 
one third of all leakage is from customers’ supply pipes 
and fittings. Most often, this is on the supply pipe 
running from the boundary of their property to their 
home. We offer a subsidised repair scheme and free  
on site advice and leak detection to assist customers 
when they have leakage, or other problems with their 
supply pipe.
Improving and strengthening our  
supply network
As well as expecting us to provide top-quality water, 
our customers want us to have a reliable supply 
network. Building greater resilience into our network 
structure has been a key activity during the past year. 
We are finalising a project to ensure Boughton Water 
Treatment Works has the capability to withstand both 
power outages and power dips to provide a continuous 
operation. This will increase the resilience of our water 
supply to customers in and around Chester in line with 
Ofwat’s requirements in AMP6. 
Customers will also benefit from our largest service 
reservoir being rebuilt to provide greater storage at our 
principal water treatment works in Wrexham. A new 
pumping station will provide water to Wrexham 
and customers in the surrounding area, with a new 
large diameter pipeline reinforcing our delivery.
Thirty-six service reservoirs store our treated drinking 
water and we are carrying out detailed inspections of 
all of them. Nine were removed from service this year, 
cleaned, inspected and maintenance work completed. 
The full programme is scheduled to be completed by 
the end of 2017.
Several other projects, including booster pumping 
stations, additional cross connections within our 
existing network and new process waste treatment 
facilities, are being undertaken to increase our 
resilience and improve our ability to supply customers 
at all times.
Modernising working practices
We have installed state of the art software which 
is assisting us with detailed information to better 
manage and maintain all the company’s assets 
and infrastructure in a timely manner. It will help 
ensure interruptions to customers’ water supply are 
minimised, and provides the ability to schedule and 
monitor work electronically. This will enable our people 
to receive and report on work remotely using laptops, 
tablets and smartphones. 
Switching from reactive work to proactive maintenance 
will help to reduce our operating and maintenance 
costs. It will also enable us to work more effectively and 
removes much of the burden of administration. An Asset 
Manager has been appointed to structure our medium 
and long term asset management programme, providing 
us with the ability to plan longer term.
All these improvements benefit our customers by 
helping us to better manage operational and 
maintenance costs. Annual Report & Financial Statements 2016 Dee Valley Group plc
28 29
Your Local Water Company
Our People
Our people have played a key and critical role 
in driving the recent improvements in both our 
operational and customer service performance. 
The Board values their focus and commitment. We 
understand that by truly involving our people we 
can make the best use of their talents.
The continuous progression and achievements during 
the past year would not have been accomplished 
without their skills, expertise and dedication. It has 
been fundamental to our success. 
Our people recognise and understand the need to 
provide a high-quality service to both our business 
and domestic customers. Continuous training and 
development, modernisation and innovation will help 
us achieve our vision and values.
We have the best people with the right skills in the 
right roles to deliver the best possible service to our 
customers. 
Being a small and truly local company has many 
advantages. The majority of our staff live in the supply 
area and have a familiarity and knowledge of it which 
is a huge benefit when liaising with customers. Some 
have completed more than 40 years’ service,
It was uplifting to spend time with people whose 
enthusiasm for, and enjoyment of, their work was 
clear. I have always found people in the water 
industry who are passionate about their work and 
serving their customers. Yesterday provided me with 
a reminder of what this can look like at its best.
Water Branch, Energy, Water and Flood Division, Welsh Government
I’m enjoying it. Every day  
offers a different challenge.
Mike Rowland,  
Apprentice Network Inspector, Network Operations
Health and safety
Health and safety is a top priority for us – especially as 
some of our people are required to work in all weather 
conditions, within confined spaces and with hazardous 
materials. We strive for continuous improvement in 
our health and safety performance.
We have set up health and safety teams across the 
company and their strong communication skills have 
enabled good ideas and best practices to be shared. 
These teams have established an open, positive and 
supportive environment among team members and 
are in a better position to hear and learn about best 
practices from within the company.
In 2015-2016, we improved on the previous year and 
recorded our best-ever health and safety performance. 
There were no major incidents and time lost to injuries 
continued to fall. Near misses were again logged in 
high numbers.
Living Wage
We are proud that we were one of the first companies 
in Wales to have been accredited as a Living Wage 
Employer by The Living Wage Foundation. The living 
wage, which is a voluntary commitment by the 
company, is significantly higher than the national 
minimum wage and is updated annually.  Annual Report & Financial Statements 2016 Dee Valley Group plc
30 31
Your Local Water Company
Responsible employer
We recruited 22 people during the year. We aim to 
inspire, motivate and develop all new and existing 
staff to be the best. Our priority is to ensure Dee Valley 
Water is a great place to work to enable us to retain 
engaged, motivated and committed people. 
Our people are given the time to build their 
professional skills and the opportunity to advance their 
careers by identifying career paths within each job 
profile. 
As part of an effective succession planning programme, 
our enhanced training and development plan will 
feature a range of options for the growth of key 
individuals so they are able to learn from experienced 
colleagues. We endeavour to support our people so 
they enjoy working together as a team in an open and 
honest way, making the most of opportunities in a 
changing workplace. 
Improving working conditions
To enable our people to perform at their best, they 
need a working environment in which they can thrive 
as individuals and teams. To facilitate this, our head 
office at Packsaddle has been extensively refurbished 
to provide a more efficient and improved working 
environment. The upgrade has been welcomed by  
our people.
Employee Opinion Survey
We conducted our first employee opinion survey in 
March 2015 to enable us to listen to our people. It 
gave them an opportunity to give open and honest 
feedback. This provided important information on how 
people really felt and we were able to act to rectify or 
improve concerns. 
This is a vital tool for measuring employee 
engagement. This year’s survey will focus on the values 
we have introduced and ask questions that matter 
most to our people. Feedback is invaluable and will 
provide an understanding of how our people think 
about a range of important topics.
Employee Engagement Forum
Our Employee Engagement Forum was established 
two years ago to give our people the opportunity 
to express their views and for us to listen to them. 
This is a two-way communication tool which helps us 
exchange information and is one of the ways we have 
been working to improve our internal communications. 
It enables us to function more effectively; our people 
can have their say, together with providing regular 
updates on important developments.
Successes to date include improved working 
environments, the enhancement of our long service 
awards and a better staff suggestion scheme
Employee events
Our Staff Away Days continued during 2015-2016 to 
provide a business overview for all of our people. 
This ensures they are well informed about how the 
company is performing. It is an ideal opportunity to 
speak together in a different environment and to be 
able to communicate messages that everyone receives 
at the same time, in the same way and from the same 
people.
Our people are encouraged to ask questions and 
to complete feedback forms so we can assess how 
effective the event has been. This is an opportunity to 
improve staff engagement, so that they feel connected 
and recognise that their contributions are valued.
Listening and involving our people 
Diversity – building our team
We are committed to providing a supportive and non-
discriminatory working environment for all of our people.  
Our Dignity at Work Policy ensures everyone is treated  
equally and fairly. 
We want to attract and encourage the best people – based on  
their capability and contribution – regardless of their background 
and ethnicity. 
Flexible working arrangements can benefit our people and 
the business and we do our best to accommodate individual 
needs. Wherever possible, we provide training and development 
opportunities for anyone with disabilities.
Employees as at 31 March 2016 Male Female
Directors 5 0
Senior Managers 4 2
Employees 178 (including part time) 133 45
   
Our future leaders
The recruitment of new and talented young people is of the utmost 
importance. Investing in our young people helps sustain and 
support the company’s future. 
We have four apprentices in our Treatment and Plant Maintenance 
departments and two in Networks, aiming to qualify as competent 
operators and technicians. Our apprentices learn from hands on 
experience and knowledgeable colleagues. Where appropriate, 
they are given a high level of responsibility.
The keenness and diligence of these young people is a welcome 
indicator for our future operations.
Employees as at 31 March 2015 Male Female
Directors 5 0
Senior Managers 6 0
Employees 174 (including part time) 134 40
Strategic Review of the Year Annual Report & Financial Statements 2016 Dee Valley Group plc
32 33
Your Local Water Company
Our Environment and Community
We have a clear commitment to protecting the 
environment. Using water efficiently helps us deliver 
our long term plan to protect our natural resource. 
By reducing, reusing and recycling, we minimise 
our carbon footprint in water consumption, supply 
efficiency and organisational waste.
More is being done to help our customers become 
more water efficient. We are using a range of 
techniques to do this. These include offering free 
water saving devices, deploying water usage efficiency 
tools online and in contact centres for ongoing 
management and education; offering to install water 
meters and offering water saving advice, together with 
customer research and surveys to track progress and 
requirements. 
We are striving for greater engagement within the 
communities in our supply area. This includes using 
innovative ways to reach all of our customers to ensure 
they are supported and listened to. We will partner and 
support local businesses, initiatives and charities to 
support sustainable community objectives.
As part of this engagement, we are sponsoring two 
local sports clubs – Wrexham Rugby Club Under 7s and 
Wrexham Swimming Club. 
We are also focusing on reaching those who don’t contact 
us. For example, we have secured key visibility points at 
Wrexham Hospital to promote our social tariff agenda.  
It has a footfall of more than 112,000 patients a year. 
Educating our future customers
We are educating our customers of the future – our children –  
to learn the value of water and how to protect this vital natural 
resource. We are planning to expand our education programme 
and create a dedicated team and educational facility for onsite 
visits at one of our treatment works. 
Top performer for developer services
Dee Valley Water continues to top a performance chart  
measuring how the 18 water companies in England and  
Wales are co-operating with and providing services for  
property developers.
According to the company performance data on meeting  
developer services targets, published by Water UK, Dee Valley  
was the only company to attain a perfect score for water supply  
in the last quarter of the year.
Its report measures how all the water companies performed 
in dealing with a broad range of activities essential for housing 
development against levels of service customers, developers and 
self-lay organisations can expect in relation to the provision of 
water services infrastructure.
Working in partnership with local suppliers
We are continually forming and developing long term relationships 
with both local and national suppliers of all sizes to procure 
a variety of goods and services. These range from day to day 
requirements through to complex services critical to the delivery 
of our organisational targets. Good working partnerships with 
suppliers are crucial. 
While large national providers can offer advantageous economies 
of scale, we also choose to invest in our local community 
by working with many small local businesses and individual 
contractors that can equally deliver services that offer quality, 
safety and reliability gained from an understanding of our business 
needs. One example is the training we are receiving on daily vehicle 
safety from a local supplier. 
We are committed to collaborative working partnerships from 
dedicated supply chains where we discuss challenges and 
opportunities and how we can work together to share best 
practice and continuous improvement. This approach will ensure 
that our customers are afforded the highest level of quality  
and service.
We’re sponsoring  
Wrexham Rugby Club and 
Wrexham Swimming Club.
Strategic Review of the Year Annual Report & Financial Statements 2016 Dee Valley Group plc
34 35
Your Local Water Company
Principal Risks and Uncertainties
All of the company’s risks are identified and 
managed through a continuous corporate risk 
management process. Risks are recorded on a risk 
register which details the nature of the risk, an 
assessment of the probability of it materialising and 
the potential impact using standardised procedures. 
Mitigation is assessed as part of this process.
The Executive Directors keep the risk register  
under continuous review and this register is also 
reviewed by the Audit Committee on an annual basis 
as part of a wider review of the effectiveness of the 
Group’s system of internal control. The Board also 
monitors key risk and performance indicators at 
each Board meeting.
Risks are considered across all of the Group’s  
activities including:
• Regulation & Compliance
• Customer Service
• Operational
• Health & Safety
• Financial
The risk indicators overlap the key performance 
indicators Ofwat requires water companies to publish 
annually, as described in this Annual Report. The 
accompanying table contains a summary of the 
principal risks and uncertainties of the Group.
Risk What Does It Mean Mitigation
Regulation & Compliance
Ongoing regulatory reform and  
the potential increase in policy 
divergence between the English 
 and Welsh governments.
Our operational environment is highly regulated. Our 
policies and procedures ensure compliance with the 
regulatory framework. But market reform and the 
potential for differences in policy between the two 
governments creates risks.
Regulatory changes may increase costs of 
administration, reduce income and margin and lead  
to greater variability of returns.
We have developed strong relationships within the Welsh 
Government and take part in relevant consultations – 
particularly those which may impact policy and Regulation. 
We maintain close links with the supply area’s Members 
of Parliament and Assembly Members and the business 
community. All are aware of Dee Valley’s unique position  
as a cross-border water only supplier.
We are active within our trade body and other forums and 
contribute to the debate about our industry’s future.
We liaise and engage with Government, our regulators 
and other stakeholders to ensure we understand and  
can contribute to the future direction of policy.
Implementation of the 
recommendations outlined by the Silk 
Commission with respect to alignment 
of political and regulatory boundaries.
As our water supply area is mainly in Wales, we are 
currently Governed by Welsh Government policy 
across our entire water supply area, some of which 
is in England. The Silk Commission recommended 
an alignment of political and regulatory boundaries, 
creating a risk that we could be forced to adopt Welsh 
Government policy for our Welsh customers and 
English Government policy for our English customers 
if these recommendations are adopted. This would 
effectively split the business. The cost of compliance 
with two policy regimes could be significant, 
increasing customer bills and leading to a customer 
loss of confidence and reputational damage.
As a Welsh company we are committed to working 
proactively with the Welsh Government to develop its 
water strategy for its people.
We participate actively in the Wales Water Forum and have 
opened dialogue with local and national Welsh Assembly 
Members to develop this discussion to benefit customers.
We believe that changes in regulatory practice should bring 
proven benefits to customers and the wider environment. 
We are engaging with the Welsh Government, Natural 
Resources Wales, the Drinking Water Inspectorate, the 
Environment Agency and Ofwat to ensure that the focus 
remains on benefit to customers as they consider  
possible implementation.
Risk What Does It Mean Mitigation
Failure to meet regulatory  
performance targets.
Ofwat has set the company some challenging 
operational performance targets for PR14.
Delivery of the Legacy alternative scheme within 
the permitted timeframe is a significant example of 
this. Failure to complete the scheme in the agreed 
timeframe would lead to potentially significant 
financial penalties and a loss of credibility with  
key regulators.
Our review of processes, systems and equipment is ongoing 
and investments are being made to deliver significant 
improvements in the quality of product and service.
We have a series of internal measures that enable us 
to proactively monitor performance and take prompt 
corrective action when and where necessary.
Customer Service
Failure to meet the customer service 
standards expected by our customers.
Ofwat’s regulatory processes place customers at the 
heart of the business. Failure to meet these higher 
standards will lead to customer dissatisfaction and 
SIM penalties imposed by Ofwat, all of which will 
damage the company’s reputation.
We have re-shaped our customer service to ensure the 
customer is at our heart. We have also invested in training 
and new technology to enable us to better understand the 
needs of our customers and to overhaul all of our customer 
facing services.
Our performance – as measured by Ofwat’s SIM and 
independent surveys – has improved significantly in the 
year. We are committed to continuing this and achieving 
upper quartile performance in this AMP period.
Operational
Failure to maintain a constant supply 
of water to part of the supply area.
Failure of certain important assets could cause 
widespread loss of supply to customers with the risk 
of regulatory sanction, loss of reputation and higher 
operating costs.
Failure of assets could be through structural or 
equipment failure or extreme events, particularly 
flooding. There is no operational back-up for 
 some assets.
Assets are managed through condition monitoring 
and maintenance. When appropriate, risk-based asset 
investment planning identifies assets for replacement,  
which is a continuing process.
Planning is progressing for a flood protection scheme for  
a vulnerable river intake.
Contingency plans provide for major failures. These include 
bringing in water from other parts of the supply area; 
providing emergency supplies and mutual aid agreements 
with other water companies.
There is a risk that recurrent 
discoloured water incidents could 
result in a failure to comply with the 
wholesomeness of water requirement 
in the Drinking Water Standards.
Water quality failures caused by an historical issue 
could result in regulatory sanction, adversely affect 
our reputation and cause an increase in our costs.
The Drinking Water Safety Plan addresses the management 
of risks throughout the supply system from catchment to 
customer.
This ensures there are adequate mitigations in place for all 
risks, including discolouration in the form of operational 
procedures, processes, maintenance, monitoring and 
appropriately trained staff.
Risk-based investment planning plays an important part 
by ensuring equipment performs effectively and emerging 
risks are addressed.
There is a strategy in place to deal with the discoloured 
water problem specifically, with improvements seen in the 
current year and the Legacy alternative due to be delivered 
by December 2017.
Strategic Review of the Year Annual Report & Financial Statements 2016 Dee Valley Group plc
36 37
Your Local Water Company
Risk What Does It Mean Mitigation
Business interruption and/or data loss 
resulting from cyber threats..
Loss or corruption of computer systems or data 
is a real and growing threat and potentially, could 
have far reaching effects, particularly within our 
administrative and equipment operations.
The cyber threat is constantly evolving – as are our efforts to 
counter it. As a vital utility we take the threat very seriously 
and receive support and guidance at Government level and 
from other support structures. 
Our review of our existing systems and controls is underway 
and our people are being trained to be more security aware.
As a precaution, we have robust incident response, business 
continuity and disaster recovery procedures in place and 
regularly test our ability to recover from systems failure. 
We also maintain insurance cover for loss and liability. 
Health & Safety
The nature of the activities we 
undertake creates a potential to cause 
harm to our employees, contractors 
and the general public.
Our work requires our employees and contractors 
to use equipment and carry out tasks which have 
the potential to cause serious harm. In addition, we 
undertake a lot of work in dynamic public places such 
as busy streets. We take every precaution to prevent 
injury, however the failure of a procedure or the 
breakdown of an asset could lead to injury. 
We continually review our H&S strategies and working 
practices to look for improvements. Our assets are subject 
to regular monitoring and maintenance though proactive 
and reactive programmes of work. Our reservoirs are 
independently inspected and then maintained by our staff  
to ensure that they remain safe. 
We recognise that the key to a safer organisation is the 
behaviour of staff. As such, we encourage near miss 
reporting across the organisation as we believe this ensures 
we review incidents to address the root causes of incidents.
We have commenced the development of a new 
management system that will improve behavioural safety 
across all business areas, and we have reviewed and 
improved our risk management system, including a new 
reporting system. Senior leaders drive this new system and 
carry out a number of audits on key risk areas each year.
Risk What Does It Mean Mitigation
Financial
There is a risk that due to the economic 
environment and the demographic of 
the Group’s customer base, customers 
will not pay debts as they fall due.
In line with the licence arrangements for other UK 
regulated water companies, the Group is obliged to 
supply water to customers regardless of their credit 
worthiness which could result in a bad debt  
recovery risk.
Non-recovery of bad and doubtful debts or an 
inappropriate provisioning policy will result in 
reduced operating cash flow and income statement 
volatility.
An annual review of bad and doubtful debt provisioning 
is conducted by the Board and an assessment of 
appropriateness of the current provisioning is made. 
Following a review, the bad debt provision was increased 
last year to provide fully for all debts in excess of two years 
old and to provide for customers’ debts based on historic 
non-payment. 
Furthermore the Group operates extensive debt 
management and payment plans for customers to allow  
for greater recovery.
There is a risk that the costs associated 
with managing the Defined Benefit 
Pension Scheme affect the Group’s 
operating cash flow. 
This is because the pension scheme 
is in deficit on a funding basis, with a 
repair plan of 7 years at 31 March 2014. 
The pension scheme is also subject to 
a triennial valuation which, depending 
on economic conditions, can result in 
increased funding costs.
Deficit repair costs are forecast to be £0.5m per 
annum for AMP6 and ongoing contributions are 
around £0.6m.
Ofwat has allowed in the FD an annual contribution of 
£0.2m for deficit repair but only until 31 March 2020 
when this allowance will cease.
Such significant values, plus potential future volatility, 
means that the pension scheme poses significant risk 
to operational cash flows.
The annual business planning process provides a platform 
for the Board to review financeability and affordability.
Pension strategy and evaluation remains a key focus area 
for the Board.
Principal Risks and Uncertainties continued
Strategic Review of the Year Annual Report & Financial Statements 2016 Dee Valley Group plc
38 39
Financial Statements Your Local Water Company
Profit before tax for the year ended 31 March 2016 
remains broadly consistent with the prior year. Whilst 
underlying performance has been adversely impacted 
by a reduction in revenue, this has been partially offset 
by lower operating expenses.
Financial 
Review Annual Report & Financial Statements 2016 Dee Valley Group plc
40 41
Your Local Water Company Financial Review
Overview
Following the agreement of a five year, £30 million 
revolving credit facility early in the year, the Group is 
well placed to deliver the investment plan agreed with 
Ofwat for the period to 2020. The facility provides cost 
effective funding to support the delivery of the largest 
capital investment plan in the Group’s history.
Whilst capital delivery in the year ended 31 
March 2016 was focused on preparation for the 
decommissioning of the Legacy treatment site, which 
has now commenced, and other key projects for Asset 
Management Plan 6 (‘AMP6’), capital expenditure 
of £6.2 million was incurred in relation to the mains 
renewal programme and projects including investment 
at Oerog Springs.
The Group’s financial performance was impacted 
by the PR14 final determination, which imposed a 
reduction in prices and therefore contributed to the 
downturn in revenue in the current year. However, 
this was mitigated by an improvement in operating 
expenses and financing costs. 
Strong progress has been made against the Group’s 
operational key performance indicators this year and 
this, alongside the financial certainty provided by the 
agreement of financing at favourable interest rates, 
ensures that the Group can progress confidently into 
the second year of AMP6. Capital investment in the 
year ended 31 March 2017 is forecast to exceed £10 
million as work on the Legacy scheme progresses. 
Financial Results
Profit from Operations
Profit from operations for the year ended 31 March 2016 
was £6.6 million (2015: £7.5 million), with the impact of 
a reduction in revenue (£1.5 million) partially offset by a 
£0.7 million reduction in operating expenses.
Revenue for the year (£23.1 million; 2015: £24.6 million) 
was impacted by a 4% reduction in prices in this 
first year of AMP6, effective from 1 April 2015, and a 
reduction in consumption amongst certain large,  
non-household customers. 
The reduction in operating expenses in comparison 
to the prior year was influenced by a reduction in the 
bad debt charge and an increase in the capitalisation of 
labour costs.
A review of the doubtful debt provisioning estimate in 
the prior year lead to a one-off increase in the provision 
to ensure that it covered all debts that were greater than 
two years old and to specifically provide for customers’ 
debts based on historic default and non-payment. A 
consistent provisioning methodology has been applied 
in the current year, with the bad debt charge falling by 
£0.3 million year-on-year to a total of £0.5 million. 
In the year ended 31 March 2016, the capitalisation 
of labour costs has increased due to the additional 
headcount required and recruited to enable the Group 
to deliver its largest ever capital investment programme.
The operating cost benefit arising from the above 
factors has been partially offset by investment to 
enhance the Group’s Customer Service function. This 
investment will ensure that the Group continues to 
offer sector leading customer service, supported by 
an improved website and enhanced online payment 
options. 
Taxation
A taxation credit of £0.4 million has arisen in the year 
(2015: £1.0 million charge), the variance primarily relating 
to a deferred tax credit which results from a reduction in 
the UK corporation rate from 20% to 19% (effective from 
1 April 2017) and subsequently to 18% (effective from  
1 April 2020).
Both of these amendments were substantively 
enacted on 18 November 2015 and the full impact of 
the reduction has been applied in calculating the tax 
position. The deferred tax liability at 31 March 2016 has 
been calculated based on the rate of 18% (2015: 20%). 
A reconciliation of the tax charge for the year is 
contained in note 6 to the Financial Statements.
Profit after Taxation
Profit after taxation of £4.7 million is £1.2 million higher 
than the prior year (2015: £3.5 million). 
Whilst profit from operations fell by £0.9 million, this was 
offset by a reduction in the non-cash loan indexation 
charge, linked to the lower rate of RPI inflation during the 
year (£0.7 million), and the deferred tax credit referred 
to above (£1.3 million).
Earnings per share for the year (100.5p) is consequently 
higher than the prior year equivalent (75.3p). However, 
after adjustment for the deferred tax credit, adjusted 
earnings per share is broadly consistent with the prior 
year at 73.5p. 
Final Dividend
In the prior year the Group announced that the dividend policy for 
the period from 2015-2020 would be to maintain an annual dividend 
base of 62.5 pence per ordinary share, adjusted where appropriate 
for a share of any financial performance, whether from revenue 
or cost efficiency. The latter adjustment was to be assessed by the 
Board on an annual basis.
The Board has considered financial performance during the year 
ended 31 March 2016 and, following this assessment, has proposed 
a final dividend of 42.0 pence per ordinary share for the year ended 
31 March 2016. Operating profit has been adversely impacted by 
the decline in revenue this year and cost efficiencies have yet to 
be embedded, with management focusing on investment in key 
functions such as Customer Services this year. 
Together with the interim dividend of 20.5 pence per ordinary share, 
the total dividend for the year will therefore be consistent with the 
base position of 62.5 pence per ordinary share.
The final dividend is expected to be paid on 1 August 2016 to 
shareholders on the register at the close of business on 1 July 2016.
Balance Sheet
Group net assets increased by £2.9 million (9.8%) to £32.3 million 
during the year. The increase was due to the retained profit for 
the year of £4.7 million less dividends paid of £2.9 million, plus 
an actuarial gain, net of deferred taxation, on the defined benefit 
pension scheme of £1.1 million.
The net book value of Property, Plant and Equipment increased by 
£1.4 million to £97.5 million, with capital expenditure of £6.2 million 
offset by the depreciation charge for the period (£4.8 million). 
Contributions received in the year of £1.1 million (2015: £1.2 million) 
are recorded as deferred income (see note 17) and credited to 
the Income Statement over the life of the relevant asset. Whilst 
preparation for the commencement of the Legacy alternative 
project has continued, current year capex has focused on other 
projects including investment at Oerog Springs, Boughton WTP  
and the mains renewal programme.
The Directors continue to believe that asset lives applied in the 
carrying value of long life assets are appropriate and similar to 
those adopted by comparator companies.
A valuation of the Group’s defined benefit surplus as at  
31 March 2016 was performed by the Group’s actuarial advisors 
in accordance with IAS 19 Employee Benefits. The assumptions 
underlying the calculation of liabilities of the defined benefit 
scheme represent the current central estimates recommended by 
the actuaries. The defined benefit surplus increased to £9.7 million 
(2015: £7.9 million), influenced by a reduction in the value of the 
scheme’s obligations as a result of an increase in corporate bond 
yields and the impact of lower price inflation.
Further disclosures in respect of pensions are provided in note 22 
to the Financial Statements.
Liquidity and Financing
Short-term liquidity requirements are met from the Group’s normal  
operating cash flow and short-term bank borrowings. The objective 
is to ensure continuity of funding whilst also arranging funding 
in advance of being required to ensure that sufficient undrawn 
committed bank facilities are maintained. 
During the year the Group refinanced the previous £9.0 million 
revolving credit facility, which had been committed until 31 March 
2016. In order to secure future financing for the Group and to 
support the AMP6 investment plan, the Group entered into a 
five-year £30.0 million facility on 15 May 2015. This facility ensures 
committed funding for the Group through to 2020, with an option 
for a two year extension if required, providing flexible and cost 
effective financing. At 31 March 2016 this facility was undrawn (2015: 
£6.0 million drawn on the previous facility). The interest rate is fixed 
at the date of each drawdown.
Whilst the majority of the Group’s borrowings are at a fixed rate, 
the Group holds a significant RPI linked long-term borrowing and is 
therefore exposed to movements in this index. The original loan of 
£35 million was drawn in 2002 and has a 30 year term. At 31 March 
2016 the total outstanding liability had increased, with indexation,  
to £52.2 million (2015: £51.7 million).
Cash Flow
Net cash flow from operating activities was £12.0 million, £1.0 
million lower than the prior year (£13.0 million), primarily due to the 
reduction in operating profit.
Drawings on the revolving credit facility reduced by £6.0 million 
year-on-year and re-financing fees totalled £0.3 million. These items, 
offset by a reduction in capital expenditure (down £1.1 million to 
£5.6 million) resulted in a £6.3 million fall in net cash in comparison 
to the prior year. 
Capital Structure
The Group’s current capital structure was established in 2002 
following a Scheme of Arrangement and return of funds to 
shareholders. In view of the stable and predictable nature of the 
Group’s cash flows, the Board considers that gearing at the current 
level is both appropriate and financially efficient.
Ian Plenderleith 
Chief Executive Annual Report & Financial Statements 2016 Dee Valley Group plc
42 43
Your Local Water Company Governance
Governance
Kevin Starling (52)
Independent Non-executive Director
Appointed to the Board on 28 May 2015
Kevin has spent over 25 years in the utility industry, joining Anglian Water in 1988 
immediately prior to privatisation. Since then he has been CEO of a number of international 
businesses including United Utilities Australia, Sofia Water in Bulgaria and ESVAL, the first 
privatised water company in Chile. Kevin has also been a board member of many high 
profile listed and private utility companies including Aguas Argentinas in Argentina, Manila 
Water in the Philippines and Tallinn Water in Estonia.
External appointments: Director of K Star Solutions Ltd and Ferret Technology Ltd.
Committee membership: Chairman of the Remuneration Committee, member of the 
Audit and Nomination Committees.
Ian Plenderleith (52)
ACMA, Chief Executive
Appointed to the Board on 26 August 2014
Ian has spent his entire career in the utilities sector and the last decade in the water sector. 
He has specific expertise in capital markets and leading companies with the highest 
standards of corporate governance. He served as Chief Financial Officer of AS Tallinna 
Vesi (Tallinn Water, which is part of the United Utilities Group) from 2004 to 2007 where he 
played a significant role in their listing on the Tallinn Stock Exchange. From 2008 to June 2014 
he served as Chief Executive Officer of AS Tallinna Vesi. Prior to these roles he spent 16 years 
in various positions within the United Utilities Group. 
External appointments: None.
Committee membership: Member of Nomination Committee.
Jon Schofield (55)
FCA, Independent Non-executive Chairman
Appointed to the Board on 19 November 2010
Jon is a founding partner of Dow Schofield Watts, a leading corporate finance advisory firm 
which he established in 2002. He qualified as a Chartered Accountant with KPMG, working 
there for 12 years before joining a 3i backed management buyout in 1994. After exiting 
from the buyout, Jon became a partner in Grant Thornton advising corporate clients and 
financial institutions. In 1999 he joined Cammell Laird Holdings plc as Finance Director and 
subsequently was appointed acting Chief Executive.
External appointments: Non-executive Director of Atlantic & Peninsula Marine 
Services Ltd and The Liverpool School of Tropical Medicine, Director of Dow Schofield 
Watts Corporate Finance Ltd and DSW Capital Ltd.
Committee membership: Chairman of the Nomination Committee, member of the 
Audit and Remuneration Committees.
Philip Holder (67)
FCA, Senior Independent Non-executive Director
Appointed to the Board on 21 January 2014
Philip has spent much of his career in the water sector having served as Chief Executive of 
Sutton and East Surrey Water plc between 1997 and 2007 and as a Non-executive Director 
until 2010. He is currently Non-executive Chairman of Fulcrum Utility Services Limited, a 
company listed on the AIM market, and is also Non-executive Chairman of Forefront Group 
Limited. He is also an Operational Advisor to Trident Private Equity Fund III. Previously Philip 
was a Non-executive Director of the CLH Group (Compania Logistica de Hidrocarburos) and 
Operational Advisor to The Infrastructure Partnership.
External appointments: Non-executive Chairman of both Fulcrum Utility Services Ltd 
and Forefront Group Ltd.
Committee membership: Chairman of the Audit Committee, member of the 
Nomination and Remuneration Committees.
Board of Directors Annual Report & Financial Statements 2016 Dee Valley Group plc
44 45
Your Local Water Company Governance
Corporate Governance Report
The Board remains committed to the highest 
standards of corporate governance and ensuring 
transparent, effective reporting. The Group is 
pleased to report its compliance throughout the 
period with the UK Corporate Governance Code 
as published by the Financial Reporting Council in 
September 2014 (Code).
Responsibilities of the Board
The Board is responsible for ensuring that appropriate 
governance processes are in place and complied with. 
The Board is also responsible for:
• Setting the long-term strategy and objectives of the 
Group;
• Approving the annual operating and capital 
expenditure budgets;
• Reviewing and approving changes to the Group’s 
capital structure;
• Approving the periodic review business plan in 
advance of submission to Ofwat;
• The Group’s corporate responsibility arrangements 
including health, safety and environmental matters;
• Determining dividend policy; and 
• Ensuring sufficient resources are available to meet 
Board objectives.
The Board delegates to senior management the 
responsibility for the day-to-day activities leading 
toward achievement of the Group’s strategic direction. 
The Board has delegated to the Chief Executive the 
responsibility for running the affairs of the Group  
and to implement the policies and strategy set by  
the Board.
The roles of Chairman and Chief Executive are not 
exercised by the same individual and there is a clear 
division of responsibilities between the Chief Executive 
and Chairman, which is set out in writing.
During the year the Chairman and the Senior 
Independent Non-executive Director attended 
a meeting with Ofwat, continuing the Board’s 
commitment to proactively engage with the regulator. 
Board Membership
The Board comprises the Chairman and Non-executive Directors, all 
of whom are considered to be independent, together with the Chief 
Executive. Photographs of the members of the Board together with 
a brief description of their experience is contained on pages 42 and 
43. Following the retirement of David Weir in July 2015, Philip Holder 
was appointed as Senior Independent Non-executive Director 
and has served in this position throughout the remainder of the 
period under review. Andrew Bickerton remained Finance Director 
throughout the period but subsequently resigned on 25 April 2016.
One-third of the Directors must retire by rotation each year and all 
Directors are subject to retirement and re-election by shareholders 
at intervals of no more than three years. New Directors appointed 
to the Board are also subject to election by shareholders at the first 
Annual General Meeting after their appointment. Non-executive 
Directors who have served longer than nine years are subject to 
annual re-election.
Directors, including Non-executive Directors, have access to 
independent professional advice at the Group’s expense when they 
judge it necessary to discharge their responsibilities as Directors. 
The committees of the Board are also provided with sufficient 
resources to effectively undertake their duties and the Group has in 
place appropriate insurance cover in respect of legal action against 
its Directors.
Induction
Upon joining the Board, any new Director is provided with a 
full, formal and tailored induction programme which includes 
information on the Group structure, the regulatory framework in 
which the Group operates, financial and other key performance 
indicators. This also includes meetings with members of the Group’s 
wider management team and site visits.
During the year, the Board regularly meets senior managers who 
are responsible for managing and implementing all the day to day 
activities of the Group. This ensures that Directors continue to 
refresh their skills and knowledge of the Group’s activities.
On an annual basis, the Chairman reviews with each Director and 
the Board any training and development needs of Directors.
Company Secretary
The role of the Company Secretary is to provide the Board and 
committees with guidance on all governance matters and ensure 
compliance with Board procedures. The Company Secretary’s 
responsibilities also include ensuring good information flows within 
the Board and its committees and between senior management and 
Non-executive Directors.
The appointment and resignation of the Company Secretary is  
a matter for consideration by the Board as a whole. At the year end 
the Company Secretary was Andrew Bickerton.
We are actively seeking a new Company Secretary but in the interim 
the Board has nominated someone to discharge the functions of 
Company Secretary pursuant to s274 of the Companies Act.
Board Meetings
The Board meets sufficiently regularly to ensure that it  
discharges its duties in a responsible and effective manner and it 
considers those matters that are exclusively reserved for the Board’s 
decision. 
All Directors are expected to attend all Board and relevant 
Committee meetings.
The Board scheduled and held 10 meetings during the year with a 
number of other meetings being held as business circumstances 
dictated. The table below shows the attendance of each Director  
at the scheduled meetings of the Board. The figures in brackets 
show the maximum number of meetings which the Director could 
have attended.
Andrew Bickerton (3) 10 (10)
Philip Holder 10 (10)
Ian Plenderleith 10 (10)
Jon Schofield 10 (10)
Kevin Starling (1) 9 (9)
David Weir (2) 4 (4)
1 – Kevin Starling was appointed to the Board on 28 May 2015
2 – David Weir resigned from the Board on 31 July 2015
3 – Andrew Bickerton resigned from the Board on 25 April 2016 Annual Report & Financial Statements 2016 Dee Valley Group plc
46 47
Your Local Water Company
Board Committees
The Board has established committees in order to deal 
with specific issues.
There are three permanent committees of the Board – 
the Audit, Nomination and Remuneration committees.  
A Report from the Chair of each committee is set out  
on pages 48 to 59 of this report.
Performance Evaluation
During the year a formal internal review of the 
performance of the Board, Board committees and 
of each individual Director was completed. The 
review considered the balance of skills, experience, 
independence and knowledge of the Group on the 
Board along with a review of the detail and structure 
of Board papers. As part of this effectiveness review 
process, objectives have been set for the Board for the 
forthcoming year.
Non-executive Directors, led by the Senior Independent 
Director, reviewed the performance of the Chairman, 
taking into account the views of the Executive Directors.
The Board continues to consider that the skills  
and experience of the Board as a whole ensure effective 
leadership of the organisation and good corporate 
governance.
Relations with Shareholders
The Board values and attaches great importance to 
communicating with shareholders, and as such, its 
policy is to be available for meetings with institutional 
shareholders in order to explain the Group’s strategy, 
results, policies and other areas of interest to 
shareholders. These meetings are normally attended 
by the Chief Executive who, in turn, reports the views 
expressed by shareholders to the Board. 
The Board welcomes and encourages shareholder 
participation at the Annual General Meeting. At such 
meetings, Directors make themselves available to 
answer questions, both formally and informally, in 
respect of their responsibilities as a member of the 
Board and its committees (as relevant). Shareholders 
receive a copy of the Annual and Interim Reports.
The Group’s website contains up-to-date information 
for shareholders and other interested parties including 
Annual and Interim Reports, investor presentations and 
news releases.
Internal Control and Risk Management
The code requires the company to maintain a sound 
system of internal control to safeguard shareholders’ 
investment and the company’s assets. The Board 
must review the effectiveness of the system at least 
annually, covering all material controls, including 
financial, operational and compliance controls and risk 
management systems, and report to shareholders that 
it has done so. The system of internal control is designed 
to manage rather than eliminate the risk of failure to 
achieve business objectives, and provides reasonable, 
not absolute, assurance against material misstatement 
or loss. In the year there have been no significant control 
issues.
The Board confirms that there is an ongoing process for 
identifying, assessing and managing the principal risks 
faced by the Group. The executive team is responsible 
for the identification and evaluation of principal risks 
together with implementing mitigating actions to reduce 
either the impact or probability of risk materialising.  
Further information in respect of material risks is 
included in the Strategic Report on pages 14 to 37.
Steps are being taken to embed internal control and 
risk management further into the operations of the 
businesses and to deal with areas of improvement which 
come to management’s and the Boards attention. The 
process has been in place throughout the year and up to 
the date of approval of the Annual Report and Financial 
Statements. It is regularly reviewed by the Board and 
accords with the guidelines set out in the FRC’s Internal 
Control: Guidance to Directors’.
The Board confirms that the actions it considers 
necessary have been or are being taken to remedy such 
failings and weaknesses which it has determined to 
be significant from its review of the system of internal 
control. This has involved considering the matters 
reported to it and developing plans and programmes 
that is considers are reasonable in the circumstances.  
The Directors acknowledge that they are responsible for 
the Groups system of internal control, for setting policy 
on internal control and for reviewing the effectiveness 
of internal control. The role of management is to 
implement Board policies on risk and control.
The Board confirms it has performed its annual review 
of the effectiveness of internal control. The Board 
has concluded that, as at 31 March 2016, the Groups 
systems of control over financial reporting were 
effective.
Going Concern
The Group’s business activities together with the factors that are 
likely to affect its future development, performance and position 
are set out in the Strategic Report on pages 14 to 37 and the 
Financial Review on pages 40 and 41. The financial position of 
the Group including cash flows, liquidity position and borrowing 
facilities are described in the Financial Review on pages 40 and 41. 
In addition, notes 23 and 25 to the Financial Statements includes 
the Group’s objectives, policies and processes for managing 
its capital, financial risk and management objectives, details of 
financial instruments and also exposure to credit and liquidity risk.
During the year the Group refinanced the previous £9.0 million 
revolving credit facility, which had been committed until 31 March 
2016. In order to secure future financing for the Group and to 
support the AMP6 investment plan, the Group entered into a five-
year £30.0 million facility on 15 May 2015. This facility ensures 
committed funding for the Group through to 2020, with an option 
for a two year extension if required, providing flexible and cost 
effective financing. At 31 March 2016, this facility was undrawn 
(2015: £6.0 million drawn on previous facility). 
The Financial Statements have been prepared on the going concern 
basis. The Group has considerable financial resources together 
with a customer monopoly in its area of supply. Consequently, 
the Directors believe that the Group is well placed to manage its 
business risks successfully.
Viability Statement
In accordance with provision C2.2 of the UK Corporate Governance 
Code, the Directors have assessed the viability of the Group over a 
longer period than that required by the Going Concern assessment. 
For the purpose of this review, the Directors have assessed the 
Group’s viability over the three-year period to March 2019. The 
Board conducted this review taking account of the Group’s current 
position, future plans and the potential impact of the principal risks 
documented on pages 34 to 37.
Based on this review, the Directors have concluded that they have 
a reasonable expectation that the Group will be able to continue in 
operation and meet its liabilities as they fall due over the period to 
March 2019. This period was selected as:
• The Final Determination agreed with Ofwat provides the Group 
with a secure income stream over this three year period, 
indexed annually by RPI inflation;
• The Group’s business plan covers this period in its entirety and 
includes the Group’s cash flows and key financial metrics. The 
business plan has been sensitised to reflect the impact of severe 
but plausible scenarios, considering any potential mitigating 
actions available;
• The Group’s key projects for AMP6 are expected to be delivered 
over this period, most notably the Legacy alternative scheme, 
which must be completed by December 2017; and
• Following agreement of a five year Revolving Credit Facility, the 
Group has funding in place throughout the period, facilitating 
the delivery of the AMP6 capital expenditure programme.
Whilst this period is shorter than the forecast period that the Board 
reviews as part of AMP6, this three-year forecast period gives 
management and the Board sufficient, realistic visibility of the 
future. The Board has considered whether it is aware of any specific 
relevant factors beyond the three-year horizon and has confirmed 
that there are none.
Governance Annual Report & Financial Statements 2016 Dee Valley Group plc
48 49
Your Local Water Company
Key Objective
The key objective of the Committee is to ensure 
the provision of effective governance over the 
appropriateness of the Group’s financial reporting 
including the adequacy of related disclosures, 
the performance of the external auditor and the 
management of the Group’s systems of internal 
control, business risks and related compliance 
activities.
Governance
Audit Committee Report
Key Responsibilities
The key responsibilities of the Committee are to:
• Review the integrity of the Financial Statements 
and announcements relating to the financial 
performance of the Group and monitor compliance 
with relevant statutory and listing requirements;
• Review the effectiveness of the Group’s internal 
controls and risk management systems and 
monitor and review the effectiveness of the 
Group’s internal audit function;
• Make recommendations to the Board in relation 
to the appointment and removal of the external 
auditors and to approve their remuneration and 
terms of engagement;
• Review and monitor the external auditor’s 
independence and objectivity and the effectiveness 
of the audit process, taking into consideration 
relevant UK professional and regulatory 
requirements;
• Develop and implement policy on the engagement 
of the external auditor to supply non-audit 
services, taking into account relevant ethical 
guidance regarding the provision of non-audit 
services by the external audit firm; and to report 
to the Board, identifying any matters in respect of 
which it considers that action or improvement is 
needed and making recommendations as to the 
steps to be taken;
• Report to the Board on the appropriateness of 
accounting policies and practices including critical 
accounting policies and practices;
• Advise the Board on whether the Committee 
believes that the Annual Report and Financial 
Statements, taken as a whole, are fair, balanced 
and understandable and provide the information 
necessary for shareholders to assess the 
Company’s performance, business model  
and strategy;
• Consider management’s response to any external 
audit recommendations; and
• Report to the Board on how it has discharged its 
responsibilities.
The Committee’s terms of reference are available on 
the Group’s website www.deevalleygroup.com.
Membership
The Committee comprises three independent Non-executive 
Directors, Philip Holder, Jon Schofield and Kevin Starling. Philip 
Holder is Chairman of the Committee.
The Board is satisfied that the membership of the Committee 
includes recent and relevant financial experience. Further 
information in relation to the experience of Committee members  
is contained in the biographies on page 42 and 43.
Meetings
There were five scheduled meetings of the Committee during 
the year with full attendance at each meeting, reflecting the 
Committee’s detailed governance over the Group’s financial 
reporting processes and regular engagement with the external 
auditors. A summary of the main activities of the Committee are 
provided in the remainder of this report.
Only Committee members are entitled to attend a Committee 
meeting. However, the Executive Directors, external audit 
engagement partner and others attend meetings from time to time 
as appropriate at the invitation of the Chairman.
Financial Reporting
The primary role of the Committee in relation to financial reporting 
is to review with both management and the external auditor the 
appropriateness of the Annual Report and Financial Statements 
with particular emphasis on:
• The acceptability and appropriateness of the accounting 
policies and practices adopted;
• The clarity of the disclosures and compliance with financial 
reporting standards and relevant financial and governance 
reporting requirements;
• Material areas in which significant judgements have been 
applied or that have been the subject of discussion with the 
external auditor;
• Investigation of any concerns raised by management 
regarding the integrity of the financial reporting;
• Whether the Annual Report and Financial Statements, taken 
as a whole, is fair, balanced and understandable and provides 
the information necessary for shareholders to assess the 
Group’s performance, business model and strategy; and
• Any correspondence from regulators in respect of our 
financial reporting.
In order to aid its review, the Committee considers reports  
from management and also the report from the external auditor 
in respect of the outcome of their annual audit and other 
assurance work.
The primary areas of judgement considered by the Committee in 
relation to the Annual Report and Financial Statements for the year 
ended 31 March 2016 and how these were addressed were:
• Pension Scheme – The Group’s trading company, Dee 
Valley Water plc, participates in a defined pension scheme, 
the Water Companies Pension Scheme, for qualifying 
employees. Judgements are required in respect of the 
actuarial assumptions for the pension disclosures and on 
appropriate methods for valuing obligations and costs under 
IAS19. The Committee commissioned a report from actuarial 
advisors and also discussed the assumptions to be used with 
management and the external auditor;
• Provision for Doubtful Receivables – The Group estimates 
the recoverability of trade receivables on a regular basis 
during the year and at the balance sheet date. The Committee 
reviewed management’s process and assumptions for 
assessing the provision for impairment which is based on 
the relative age of receivables and customer segmentation. 
The provision for impairment was also subject to audit 
by the external auditor and the Committee discussed the 
judgements in respect of the impairment provision with 
the external auditor. During the year the Committee have 
confirmed their agreement with the methodology applied, 
which includes provision against current debts associated with 
customers that have a history of non-payment;
• Revenue Recognition: Unbilled Income – Revenue for 
customers with a water meter includes an estimate of usage 
between the date of the last meter reading and the balance 
sheet date. The Committee considered management’s process 
for deriving the unbilled income accrual and discussed the 
judgement in this accrual with the external auditor;
• Carrying Value of Property, Plant and Equipment – The 
Committee reviewed the carrying value of property, plant 
and equipment and discussed the assumptions applied in the 
impairment assessment with management and the external 
auditors; and
• Going Concern – The Committee reviewed a report from 
management in respect of going concern and longer-term 
viability and also discussed the conclusions reached in this 
report with the external auditor. Annual Report & Financial Statements 2016 Dee Valley Group plc
50 51
Your Local Water Company Governance
Risk Management
The Group’s risk management process and the way in 
which principal risks are managed is a key area of focus 
for the Committee. The Committee’s work is driven 
primarily by the Group’s assessment of principal risks 
and uncertainties, a summary of which is set out on 
pages 34 to 37. The Committee conducts an annual 
review of risk including the changes in those risks 
during the period under review.
The Committee regards this review as being critical 
to the role of the Committee as it allows independent 
challenge of management’s assessment of risk and the 
actions being taken to mitigate risk.
During the year an assurance plan has been 
established. This plan includes an assessment of 
the relative significance of risks faced by the Group, 
outlining the level of audit or assurance that will be 
performed in respect of each of these risks in order 
to ensure that the risk is appropriately mitigated. In 
developing the plan, extensive consultation with key 
external and internal stakeholders was undertaken. 
This implementation of this plan will be co-ordinated by 
the newly established internal audit function, of which 
further details are provided below.
Internal Audit
The Committee is committed to delivering robust 
internal control and vigorous assurance processes.  
Key areas of review and discussion during the year 
included areas of improvement which were identified 
following the PR14 process and the assurance plan that 
we are required to publish annually in AMP6. 
Following the Committee’s recommendation in the 
prior year, an internal audit function was established  
in 2015-2016 and our assurance plan was published on  
31 March 2016. External stakeholders were consulted 
on this plan in advance of publication and their 
feedback was used to refine its content. A full, risk-
based internal audit programme has been developed 
for 2016-17 and the internal audit function will report 
its findings directly to the Committee.
External Auditor
The Committee is responsible for the appointment 
of the external auditor together with approving the 
level of its remuneration. It is also responsible for 
reviewing the independence and objectivity of the 
external auditor and ensuring this is safeguarded 
notwithstanding the provision of any other non-audit 
services to the Group.
The Committee gives careful consideration before 
appointing the external auditor to provide other 
services. The Group regularly uses other service 
providers in respect of such work to ensure that 
independence and value for money are achieved. 
Other services carried out by the external auditor are 
generally limited to work that is closely related to the 
annual audit or where the work is of such a nature that 
a detailed understanding of the business is necessary. 
Note 3 to the Financial Statements discloses the fees 
paid to the external auditor in respect of the statutory 
audit and the fees paid in respect of non-audit services.
The effectiveness of the external audit process is dependent  
on appropriate audit risk identification at the commencement 
of the audit cycle. Deloitte LLP presented to the Committee a 
detailed audit plan which outlined its assessment of these key 
risks. The Committee assessed the effectiveness of the audit 
process in addressing these risks through the reporting received 
from Deloitte LLP at the year end and also through feedback from 
management on the effectiveness of the audit process. For the 
year ended 31 March 2016 the Committee was satisfied that  
there had been appropriate focus and challenge on the primary 
areas of audit risks and assessed the quality of the audit process 
to be good.
The Committee held a private meeting with the external auditor 
to provide additional opportunity for open dialogue and feedback 
from the external auditor without management present.
Philip Holder 
On behalf of the Audit Committee, 9 June 2016 Annual Report & Financial Statements 2016 Dee Valley Group plc
52 53
Your Local Water Company Governance
Nomination Committee Report
Key Objective
The key objective of the Committee is to ensure the 
Board comprises individuals who have the necessary 
skills, knowledge and experience to ensure that it is 
effective in discharging its responsibilities.
Key Responsibilities
The key responsibilities of the Committee are to:
• Review the size, structure and composition of the 
Board including the diversity and balance of skills, 
knowledge and experience and the independence 
of the Non-executive Directors;
• Lead the process for identifying and nominating 
for the approval of the Board candidates to fill 
Board vacancies giving consideration to succession 
planning and the leadership needs of the Group;
• Oversee the performance evaluation of the Board, 
its committees and individual Directors;
• Review the tenure of each of the Non-executive 
Directors; and
• Make recommendations to the Board regarding the 
composition of the Board’s committees.
The terms of reference of the Committee are available 
on the Group’s website www.deevalleygroup.com.
Membership
All Non-executive Directors are members of the Committee which 
is chaired by the Chairman of the Group. No one other than a 
member of the Committee is entitled to be present at its meetings, 
however, others may attend at the invitation of the Committee.  
In the event of matters arising concerning the Chairmanship of  
the Group, the Board’s Senior Independent Director would take  
the chair.
Meetings
There were two scheduled meetings of the Committee during  
the year with full attendance at each meeting.
During 2015, the Committee kept the structure, size and 
composition of the Board under review, as well as the diversity  
of skills and experience. To further enhance the existing skills and 
experience of the Board, the Committee appointed Kevin Starling 
on 28 May 2015. Kevin’s biography is included on page 43. David 
Weir subsequently retired on 31 July 2015 and was replaced as 
Senior Independent Director by Philip Holder. Andrew Bickerton 
resigned from the Board on 25 April 2016.
In respect of all Board appointments, candidates are identified  
and selected on merit against objective criteria and with due 
regards to the benefits of diversity on the Board, including gender. 
The Board acknowledges that diversity extends beyond the 
boardroom and supports management in their efforts to build and 
maintain a diverse organisation. It endorses the Company’s policy 
to attract and develop a highly qualified and diverse workforce; to 
ensure that all selection decisions are based on merit and that all 
recruitment practices are fair and non-discriminatory.
The Committee also reviewed the membership of the various 
Board committees.
In the year ahead, the Committee will continue to keep the size, 
structure and composition of the Board and Board committees 
under review.
Jon Schofield 
On behalf of the Nomination Committee, 9  June 2016
We top a chart measuring how the 18 water companies  
in England and Wales are co-operating with and providing 
services for property developers. Annual Report & Financial Statements 2016 Dee Valley Group plc
54 55
Your Local Water Company Governance
Purpose and Link to Strategy Operation Opportunity Changes in Year
Base salary To provide a competitive level 
of non-variable remuneration 
aligned to market practice for 
similar sized organisations; to 
reflect the seniority of the post 
and expected contribution to the 
delivery of the Group’s strategy.
Basic salaries are reviewed by the Committee 
annually with any increases effective from 1 April.
Increases are determined by reference to the 
average salary increase of all staff; cost of 
living; external benchmarking and market rates; 
responsibilities and individual performance.
Annual increase in line with the 
market or as the Committee 
deem appropriate based on 
role and responsibilities and/or 
external benchmarks.
No change to the salary 
policy in the year.
Benefits To aid the recruitment and 
retention of high-quality 
executives.
Annual review of benefits by Committee. Car/car allowance, private 
medical insurance, private fuel, 
life assurance.
None
Pension To aid the recruitment and 
retention of high-quality 
executives.
The Group will make pension contributions for 
all Executive Directors. If appropriate, a salary 
sacrifice arrangement can apply.
The Group contributes to a 
defined contribution scheme 
for both the Chief Executive 
and Finance Director. The 
pension contribution for both 
individuals is based on 15% of 
basic salary.
None
Annual bonus To incentivise performance 
on an annual basis against key 
performance indicators and 
personal objectives.
Objectives are set against strategic measures 
(financial and non-financial) and personal 
objectives. 
The key performance indicators and personal 
objectives for each Director are approved by the 
Committee. Performance against these objectives 
is assessed annually and this assessment forms 
the basis of the bonus award.
Maximum bonus potential is 
capped at 50% of salary.
Introduced and 
approved in the prior 
year; no change in 
approach in the year.
Remuneration Committee Report
The key objective of the Committee is to assess 
and make recommendations to the Board on the 
remuneration policy of the Group and to determine 
the pay and benefits for Executive Directors and 
Non-executive Directors.
Annual Statement  
Key Responsibilities
The key responsibilities of the Committee are to:
• Determine, on behalf of the Board,  
the remuneration policy of the Group;
• Determine the total remuneration packages for 
Executive Directors and Non-executive Directors 
including any compensation on termination of 
office;
• Monitor trends in remuneration and ensuring the 
remuneration policy is such that the Group can 
attract, retain and motivate Executives of sufficient 
calibre to run the Group successfully;
• Design policies with the long-term success of the 
group in mind;
• Operate within recognised principles of good 
governance; and
• Report to the Board and shareholders on how it has 
discharged its responsibilities.
The terms of reference of the Committee are available 
on the Group’s website www.deevalleygroup.com.
Key Decisions Reached by  
the Remuneration Committee
The key decisions reached by the Committee during the 
year were as follows:
• To re-confirm the remuneration policy of the Group. 
This policy remains unchanged on the prior year and 
is outlined on pages 54 to 57 of this report;
• To determine the total remuneration packages of the 
Executive Directors and Non-executive Directors. 
Executive Directors were awarded a 1% pay rise in 
the year, consistent with all other employees, and 
bonus payments totalling £59,000. These bonus 
payments were determined with reference to 
performance against the Group’s key performance 
indicators, including the commitments agreed 
during the AMP6 determination process, and the 
Directors’ personal objectives. The payments 
recognise the progress achieved against regulatory 
indicators during the year and the Group’s consistent 
financial performance, despite the revenue 
challenges outlined in the Financial Review.
• To affirm the Board’s commitment to sharing 
the benefit of financial outperformance with all 
employees through a company-wide bonus scheme. 
An appropriate means of delivering this is currently 
under consideration.
Membership
All Non-executive Directors are members of the 
Committee which is chaired by Non-Executive Director, 
Kevin Starling. No one other than a member of the 
Committee is entitled to be present at its meeting,   
however, others may attend at the invitation of the 
Committee. 
The Board considers that these Directors have suitable 
experience to serve on the Committee.
Meetings
There were four scheduled meetings of the Committee 
during the year with full attendance at all meetings. 
Only Committee members are entitled to attend a 
Committee meeting, although Executive Directors 
and external advisors are invited to attend meetings 
as considered appropriate and at the invitation of the 
Chairman. However, no Executive Director is involved in 
determining his own remuneration, nor is present when 
their own remuneration is discussed.
Remuneration Policy Report
Executive remuneration packages are designed to 
attract, motivate and retain Directors of sufficient 
calibre to lead the organisation and enhance 
shareholder value.
The table below summarises the main elements of the 
Group’s remuneration policy for Executive Directors.
The bonus award for the Executive Directors reflected 
performance against the Group’s key performance indicators, 
including the Performance Commitments and Outcome Delivery 
Incentives approved by Ofwat, and their own personal objectives. 
The performance measures used to assess the Directors’ bonus 
payments are aligned to the Group’s strategy and set with 
reference to the delivery of key financial and non-financial targets. 
As in the prior year, the bonus award was capped at a maximum  
of 50% of base salary.
The annual bonus is currently available to the Executive Directors 
and eight other members of the Group’s senior management 
team. The bonus available to these senior managers is capped at 
15% of salary. Management are committed to sharing the benefit 
of financial outperformance with all employees, and are currently 
considering options to facilitate this. The annual salary increase is 
linked to inflation during the year and was provided  
to all employees.
Whilst the Committee did not consult with employees in 
determining the Executive Directors’ remuneration, external 
benchmarking is conducted periodically and the package of 
benefits and incentives offered was carefully considered to ensure 
that it is appropriate for the Directors’ roles and provides sufficient 
rewards for strong performance. Shareholders’ views on Directors’ 
remuneration are sought annually, through the approval of the 
Directors’ remuneration report at the Annual General Meeting.
Non-executive Directors have specific terms of engagement and 
their remuneration is determined by the Board and based on 
independent surveys of fees paid to Non-executive Directors of 
similar organisations. Annual Report & Financial Statements 2016 Dee Valley Group plc
56 57
Your Local Water Company Governance
Remuneration on Recruitment
When setting the remuneration package for an 
Executive Director who is new to a role, the Committee 
will apply the same principles and implement the policy 
as set out in the above tables.
Base salary will be set at a level appropriate to the role 
and the expertise of the Director being appointed. This 
may include agreement on future increases up to a 
market rate, in line with increased experience and/or 
responsibilities, subject to good performance, where it 
is considered appropriate.
In relation to external appointments, the Committee 
may structure an appointment package that it 
considers appropriate to recognise awards or 
benefits that will or may be forfeited on resignation 
from a previous position, taking into account timing 
and valuation and such other specific matters as it 
considers relevant. The policy is that the maximum 
payment under any such arrangements (which may 
be in addition to the normal variable remuneration) 
should be no more than the Committee considers is 
required to provide reasonable compensation to the 
incoming Director.
If the Director will be required to relocate in order 
to take up the position, it is the Group’s policy to 
allow reasonable relocation, travel and subsistence 
payments. Any such payments will be at the discretion 
of the Committee.
Non-executive Directors’ base fees, including those 
of the Chairman, will be set at a competitive market 
level, reflecting experience, responsibility and time 
commitment. Fees will be reviewed annually. There are 
no additional fees paid in respect of the chairmanship 
of Board committees. Non-executive Directors are 
entitled to claim any reasonable expenses incurred 
in the course of carrying out their duties as a Non-
executive Director. Non-executive Directors are 
not entitled to participate in any Group pension 
scheme nor do they receive any performance related 
remuneration.
Payment for loss of office
If an Executive Director’s employment is to be 
terminated, the Committee’s policy in respect of the 
contract of employment, in the absence of a breach 
of the service agreement by the Director, is to agree 
a termination payment based on the value of base 
salary that would have accrued to the Director during 
the contractual notice period. The policy is that, as 
is considered appropriate at the time, the departing 
Director may work, or be placed on garden leave, for 
all or part of the notice period, or receive a payment 
in lieu of notice in accordance with the service 
agreement. The Committee will consider mitigation to 
reduce the termination payment to a leaving Director 
when appropriate to do so, having regard to the 
circumstances.
In addition, where the Director may be entitled to 
pursue a claim against the Group in respect of their 
statutory employment rights or any other claim arising 
from the employment or its termination, the Group 
will be entitled to negotiate settlement terms (financial 
or otherwise) with the Director that the Committee 
considers to be reasonable in all the circumstances. 
The Committee, in the best interests of the Group, 
may also enter into a Settlement Agreement with the 
Director to effect both the terms agreed under the 
service agreement and any additional statutory or 
other claims, including bonus payments and to record 
any agreement in relation to bonus in line with the 
policies described above. 
The Committee will consider whether a departing 
Director should receive an annual bonus in respect 
of the financial year in which the termination occurs 
or in respect of any periods of the financial year 
following termination for which the Director has been 
deprived of the opportunity to earn annual bonus. 
If the employment ends by reason of redundancy, 
retirement with the agreement of the Group, ill health 
or disability or death, the Director may be considered 
for a bonus payment. If the termination is for any other 
reason, any bonus would only be at the discretion of 
the Committee. It is the Committee’s policy to ensure 
that any such bonus payments reflects the departing 
Director’s performance and behaviour towards  
the Group.
Any bonus payment will normally be delayed until the 
performance conditions have been determined for 
the relevant period and may be time pro-rated, where 
appropriate. 
Non-executive Directors have letters of appointment, 
rather than service contracts, which provide for six 
months termination notice by either party. In the event 
of early termination Non-executive Directors are not 
entitled to receive compensation for loss of office.
Other Directorships
The Committee’s policy on other Directorships permits an 
Executive Director to hold one other Directorship, with the prior 
approval of the Board. In considering whether to grant or withhold 
any such approval the Board shall consider the nature of the other 
Directorship, the expected time commitment and the relevant 
skills and experience which the other Directorship may provide the 
Executive Director. Approval will only be granted where the Board 
considers that the other Directorship will not adversely affect their 
Executive responsibilities. An Executive Director may retain the 
fees in respect of another Directorship.
Annual Remuneration Report
PART A – Unaudited Information Base 
Salary and Benefits 
Basic salary and benefits for Executive Directors take into 
account the individual’s experience, roles, responsibilities and 
performance. This is reviewed, in accordance with the policy set 
out above, on an annual basis with any change being effective from 
1 April.
The non-salary benefits for Executive Directors comprise:
• a company car or cash alternative;
• private medical insurance; and
• life assurance.
Pensions
Pensionable remuneration includes those taxable benefits which 
comprise the overall remuneration package. The Group makes 
contributions to a defined contribution pension scheme in respect 
of Ian Plenderleith. Contributions to a defined contribution pension 
scheme in respect of Andrew Bickerton were made until his 
resignation on 25 April 2016. Details of the level of contributions 
are included in Part B of the Annual Remuneration Report.  
Non-executive Directors are not entitled to participate in any 
Group pension scheme.
Director Service Contracts and Letters of Appointment
The Group’s policy is that Executive Directors normally have 
service contracts terminable by the giving of not less than 12 
months’ notice, by either party.
The Group retains the right to terminate any Executive Director’s 
service contract by paying the Executive’s basic salary (as at 
the date of termination) for the unexpired portion of the notice 
period. Any such ‘payment in lieu’ may be paid by equal monthly 
instalments until the notice period would have expired. If given,  
the payment would also be reduced by the value of any basic  
salary earned in new paid employment during the notice period.
The service contract for Ian Plenderleith is dated 26 August 2014. 
The service contract for Andrew Bickerton dated 6 May 2014 
terminated on 25 April 2016 following his resignation.
Non-executive Directors have letters of appointment, rather than 
service contracts, which provide for six months termination notice 
by either party. In the event of early termination, Non-executive 
Directors are not entitled to receive compensation for loss of 
office. The letter of appointment of each Non-executive Director 
sets out the expected time commitment and is available for 
inspection at the Company’s registered office address and also at 
the Annual General Meeting.
Non-executive Directors under the age of 70 normally have a 
letter of appointment for three years, however, Non-executive 
Directors who have served for nine years or more have a letter 
of appointment for one year. Following David Weir’s retirement 
in July 2015, all of the Group’s Non-executive Directors have an 
appointment period in excess of a year.
Total Shareholder Return (TSR) Performance
TSR is the notional return from a stock or index based on 
movements in share prices and reinvestment of dividend income. 
The following graph shows the TSR performance of the Company 
since March 2009 compared to the FTSE Utilities Index. The FTSE 
Utilities Index has been selected as the most relevant benchmark 
for comparison purposes as it is an established comparator group 
of companies trading in the same sector. 
280
240
320
200
160
120
80
TSR (rebased to 100)
Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 Mar 14 Mar 15 Mar 16
Dee Valley Water FTSE Utilities Index Annual Report & Financial Statements 2016 Dee Valley Group plc
58 59
Your Local Water Company Governance
Directors’ Pension Entitlements
During the year, the Group made total contributions of £35,000 
into a defined contribution scheme in respect of Ian Plenderleith 
and Andrew Bickerton. Philip Holder, Jon Schofield, Kevin Starling 
and David Weir are not members of any Group pension scheme.
Relative Importance of the Spend on Pay
The table below shows the relative importance of the employee 
benefits expense (for all employees) compared with the returns 
distributed to shareholders:
2015/16 
£000
2014/15 
£000
% change
Remuneration paid to or 
receivable by all employees
6,490 6,191 4.8
Distributions to shareholders by 
way of dividends
2,895 2,895 -
Statement of Voting Outcome at General Meeting
The below table outlines the number and percentage of votes 
received in respect of the Directors’ Remuneration Report at the 
2015 Annual General Meeting.
For (1) Against Withheld
Number % Number % Number %
1,741,512 99.71 4,525 0.26 559 0.03
1. Includes 13,964 (0.8%) votes awarded at the Chairman’s discretion.
Directors’ Share Interests
The Directors of the Company during the year and the prior year 
and their beneficial interests in the shares of the Company were as 
follows:
Ordinary Shares
2016 No. 2015 No.
Andrew Bickerton 396 396
Philip Holder - -
Norman Holladay - 100
Ian Plenderleith - -
Jon Schofield 1,000 1,000
Graham Scott - 666
David Strahan - -
David Weir 1,666 1,666
Kevin Starling - -
Total 3,062 3,828
Directors’ share interests include interests of their spouses, 
civil partners and infant children, or stepchildren as required by 
Section 822 of the Companies Act 2006.
There were no changes in the beneficial interests of the Directors 
in the Company’s shares between 1 April 2016 and 10 June 2016.
The Report of the Remuneration Committee was approved by the 
Remuneration Committee and Board of Directors and signed on its 
behalf by:
Kevin Starling 
On behalf of the Remuneration Committee, 9 June 2016
Chief Executive Remuneration
The table below shows the Chief Executive’s remuneration (base salary, bonus and benefits in kind) over the same 
period as the TSR chart and the percentage of the maximum available bonus that was awarded each year.
2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16
CEO 
remuneration 
(£000)
132 (1) 116 (2) 119 (2) 124 (2) 147 (2) 204 (3) 217(4)
% of maximum 
bonus awarded 
(%)
- - - - - 92 90
2015
Base salary and fees  
£000
Bonus  
£000
Benefits in kind  
£000 
Pensions  
£000
Total 2014/15  
£000
Andrew Bickerton (1) 91 25 5 14 135
Philip Holder 23 - - - 23
Norman Holladay (2) 33 - 2 3 38
Ian Plenderleith (3) 78 35 4 12 129
Jon Schofield 37 - - - 37
Graham Scott (4) 12 - - - 12
David Strahan (5) 66 - 3 10 79
David Weir 23 - - - 23
363 60 14 39 476
Total CEO remuneration (base salary, bonus and benefits in kind) has increased by 6%. The increase in average 
remuneration for all employees was 1%.
PART B – Audited Information
This section of the Report of the Remuneration Committee provides details of the remuneration, pension and 
share interests of the Directors for the years ended 31 March 2015 and 2016.
Directors’ Remuneration
2016
Base salary  
and fees £000
Bonus  
£000
Benefits in kind 
£000 
Pensions 
£000
Total 2015/16 
£000
Total 2014/15 
£000
Andrew Bickerton (1) 101 - 6 15 122 135
Philip Holder 23 - - - 23 23
Norman Holladay (2) - - - - - 38
Ian Plenderleith (3) 131 59 7 20 217 129
Jon Schofield 37 - - - 37 37
Graham Scott (4) - - - - - 12
David Strahan (5) - - - - - 79
Kevin Starling (6) 20 - - - 20 -
David Weir (7) 8 - - - 8 23
320 59 13 35 427 476
1. Includes the emoluments of Bryn Bellis, who resigned as a Director 
on 1 December 2009 (£97,000), and Norman Holladay (£35,000);
2. Includes the emoluments of Norman Holladay only;
3.  Includes the emoluments of Norman Holladay, who resigned as a 
Director on 5 May 2014 (£35,000); David Strahan, who resigned as a 
Director on 26 August 2014 and was in post as Chief Executive from  
5 May 2014 to 26 August 2014 (£52,000) and Ian Plenderleith, who was 
appointed on 26 August 2014 (£117,000). The annual bonus scheme 
was introduced and approved in 2015 and the bonus percentage 
awarded relates to Ian Plenderleith only.
4. Includes the emoluments of Ian Plenderleith only.
1. Andrew Bickerton was appointed a Director on: 6 May 2014 and subsequently 
resigned on 25 April 2016 
2. Norman Holladay resigned as a Director on: 5 May 2014
3. Ian Plenderleith was appointed a Director on: 26 August 2014
4. Graham Scott resigned as a Director on: 1 August 2014
5. David Strahan resigned as a Director on: 26 August 2014
6. Kevin Starling was appointed as a Director on: 28 May 2015
7. David Weir resigned as a Director on: 31 July 2015 Annual Report & Financial Statements 2016 Dee Valley Group plc
60 61
Your Local Water Company Governance
Directors' Report
This Directors’ Report should be read in conjunction 
with the Strategic Report contained on pages 
14 to 37 and the Corporate Governance, Audit, 
Nomination and Remuneration Committee reports 
on pages 44 to 59.
Principal Activities
The principal business of the Group is the provision of 
water services to customers in an area of 831 square 
kilometres, in North East Wales and North West 
England, for which Dee Valley Water plc is the licensed 
water supply undertaker.
Future Development
The Directors’ Report should be read in conjunction 
with the Strategic Report on pages 14 to 37 and 
Financial Review on pages 40 and 41, which include 
information about the likely developments in the 
Group’s business.
Dividends per share
Interim Paid 
Pence per 
share
Final 
Proposed 
Pence per 
share
Total  
Pence per 
share
Ordinary shares 
and non-voting  
ordinary shares
20.5 42.0 62.5
The final dividend is payable on 1 August 2016.
Property, Plant and Equipment
Additions to property, plant and equipment, including 
infrastructure renewals, amounted to £6.2 million 
(2015: £6.8 million). 
Changes in property, plant and equipment during 
the year are summarised in note 10 to the Financial 
Statements. Land and buildings included within 
property, plant and equipment are used for the 
purpose of the Group’s water business. Significant 
portions of the Group’s buildings and installations are 
specialised and have a market value only in the context 
of the provision of a potable water supply.
Capital Structure
Details of the Company’s issued share capital, 
movements and rights attaching to shares are shown 
in note 19 to the Financial Statements. 
There are no specific restrictions on the size of a 
holding nor on the transfer of shares, which are both 
governed by the general provisions of the Articles of 
Association and prevailing legislation. The Directors are 
not aware of any agreements between holders of the 
Company’s shares that may result in restrictions on the 
transfer of securities or on voting rights.
No person has any special rights of control over 
the Company’s share capital and all shares are fully 
paid. The Company’s Articles of Association may be 
amended by a special resolution at a general meeting 
of the shareholders. 
Directors
The current members of the Board of Directors are 
listed below and their details are set out on pages 42 
and 43.
Philip Holder, Ian Plenderleith, Jon Schofield, Kevin 
Starling.
Kevin Starling was appointed Director on 28 May 2015.
David Weir resigned as a Director on 31 July 2015, 
Andrew Bickerton resigned as a Director on 25 April 
2016.
Philip Holder is to retire at the Annual General Meeting 
and will offer himself for re-election. 
Following an evaluation of their performance, the 
Board considers that Jon Schofield, Philip Holder and 
Kevin Starling continue to perform effectively and to 
demonstrate commitment to their roles.
The Articles of Association of the Company are in 
compliance with the Code, which provides that all 
Directors submit themselves for re-election at regular 
intervals and at least every three years. One-third of 
the Directors retire by rotation each year. In line with 
the Code, all Non-Executive Directors who have served 
for nine years or more will be subject to annual  
re-election.
Further details of Directors’ service contracts and 
Directors’ interests are given in the Remuneration 
Committee report on pages 54 to 59.
During the year, none of the Directors had an interest 
in any material Group transactions.
Greenhouse Gas Emissions
Global GHG emissions data for period 1 April 2015 to 31 March 
2016:
2014-15 2015-16
Emissions from:
Tonnes 
of CO2e
Tonnes 
of CO2e
Combustion of fuel & operation of facilities 970 1,065
Electricity, heat, steam and cooling purchased for own use 7,723 7,511
Company’s chosen intensity measurement:
Emissions reported above normalised to kilogrammes  
of C02e per person supplied
32.25 31.87
Emissions reported above normalised to kilogrammes  
of C02e per 1 million litres of drinking water
377.75 371.31
We have reported on all of the emission sources required under 
the Companies Act 2006 (Strategic Report and Directors’ Reports) 
Regulations 2013. These sources fall within our consolidated 
Financial Statement. We do not have responsibility for any emission 
sources that are not included in our consolidated statement.
We have used the “Workbook for estimating operational GHG 
emissions” version 10 which has been developed by UK Water 
Industry Research. The emissions factors used are Defra’s 
Environmental Reporting Guidelines (published in May 2015, 
updated in June 2015). Process emissions specific to the water 
industry have been calculated using industry-specific conversion 
factors. 
Substantial Interests
At 1 March 2016, the Company was aware of the following interests 
of 3% or more in its issued Ordinary Shares:
Number of shares %
Axa S.A. 1,368,048 33.1
Redemption of B Shares
During the financial year, the Company redeemed 55,625 (2015: 
14,179) B shares, representing 0.4% (2015: 0.1%) of the original 
issued capital. The nominal value and consideration amounted to 
£127,938 (2015: £32,612). The B shares were issued in connection 
with a return of capital to shareholders in 2002. The rights 
attaching to the B shares are shown in note 15.
Annual General Meeting
An explanatory note concerning the resolutions to be proposed at 
the Company’s Annual General Meeting is set out after the Notice 
of Annual General Meeting on pages 106 and 107 of this Annual 
Report.
Disclosure of Information to Auditor
In accordance with section 418 of the Companies Act 2006, each 
person who is a Director at the time this report is approved 
confirms that, so far as he is aware:
• There is no relevant audit information of which the Company’s 
auditor is unaware; and
• He has taken all the steps that he ought to have taken as a 
Director in order to make himself aware of any relevant audit 
information and to establish that the Company’s auditor is 
aware of that information.
Auditor
Deloitte LLP have expressed their willingness to continue in 
office and a resolution to reappoint them will be proposed at the 
forthcoming Annual General Meeting.
By order of the Board
Ian Plenderleith 
Chief Executive, 9 June 2016 Annual Report & Financial Statements 2016 Dee Valley Group plc
62 63
Your Local Water Company Governance
Statement of Directors’ Responsibilities in Respect  
of the Annual Report and Financial Statements
The Directors are responsible for preparing the 
Annual Report and the Financial Statements in 
accordance with applicable law and regulations.
Company law requires the Directors to prepare 
Financial Statements for each financial year. Under that 
law the Directors are required to prepare the group 
Financial Statements in accordance with International 
Financial Reporting Standards (IFRSs) as adopted by 
the European Union and Article 4 of the IAS Regulation 
and have also chosen to prepare the parent company 
Financial Statements under IFRSs as adopted by the EU.  
Under company law the Directors must not approve 
the accounts unless they are satisfied that they 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, International 
Accounting Standard 1 requires that Directors:
• Properly select and apply accounting policies;
• Present information, including accounting policies, 
in a manner that provides relevant, reliable, 
comparable and understandable information; 
• Provide additional disclosures when compliance 
with the specific requirements in IFRSs are 
insufficient to enable users to understand the 
impact of particular transactions, other events and 
conditions on the entity’s financial position and 
financial performance; and
• Make an assessment of the Company’s ability to 
continue as a going concern.
The Directors are responsible for keeping adequate 
accounting records that are sufficient to show and 
explain the Company’s transactions and disclose with 
reasonable accuracy at any time the financial position 
of the Company and enable them to ensure that the 
Financial Statements comply with the Companies Act 
2006. They are also responsible for safeguarding the 
assets of the Company and hence for taking reasonable 
steps for the prevention and detection of fraud and 
other irregularities.
The Directors are responsible for the maintenance and 
integrity of the corporate and financial information 
included on the company’s website.  
Responsibility statement
We confirm that to the best of our knowledge:
• The Financial Statements, prepared in accordance 
with International Financial Reporting Standards 
as adopted by the European Union, give a true 
and fair view of the assets, liabilities, financial 
position and profit or loss of the Company and the 
undertakings included in the consolidation taken 
as a whole;
• The strategic report includes a fair review of the 
development and performance of the business 
and the position of the Company and the 
undertakings included in the consolidation taken 
as a whole, together with a description of the 
principal risks and uncertainties that they face; 
and
• The Annual Report and Financial Statements, 
taken as a whole, are fair, balanced and 
understandable and provide the information 
necessary for shareholders to assess the 
Company’s performance, business model and 
strategy.
This responsibility statement was approved by the 
Board of Directors on 9 June and is signed on its  
behalf by:
Jon Schofield 
Chairman 
9 June 2016
Ian Plenderleith 
Chief Executive Officer 
9 June 2016
Independent Auditor’s Report to the Members of
Dee Valley Group plc
Opinion on Financial Statements of  
Dee Valley Group PLC
In our opinion: 
• The Financial Statements give a true and fair view of the 
state of the Group’s and of the parent Company’s affairs as 
at 31 March 2016 and of the Group’s profit for the year then 
ended;
• The Group Financial Statements have been properly 
prepared in accordance with International Financial 
Reporting Standards (IFRSs) as adopted by the European 
Union;
• The parent Company Financial Statements have been 
properly prepared in accordance with IFRSs as adopted by 
the European Union and as applied in accordance with the 
provisions of the Companies Act 2006; and
• The Financial Statements have been prepared in accordance 
with the requirements of the Companies Act 2006 and, as 
regards the Group Financial Statements, Article 4 of the IAS 
Regulation.
The Financial Statements comprise the Group Income Statement, 
the Group Statement of Comprehensive Income, the Group and 
Parent Company Balance Sheets, the Group and Parent Company 
Statements of Changes in Equity, the Group and Parent Company 
Cash Flow Statements and the related notes 1 to 26. The financial 
reporting framework that has been applied in their preparation is 
applicable law and IFRSs as adopted by the European Union and, 
as regards the parent Company Financial Statements, as applied 
in accordance with the provisions of the Companies Act 2006.
Independence
We are required to comply with the Financial Reporting Council’s 
Ethical Standards for Auditors and we confirm that we are 
independent of the group and we have fulfilled our other ethical 
responsibilities in accordance with those standards. We also 
confirm we have not provided any of the prohibited non-audit 
services referred to in those standards.
Going Concern
As required by the Listing Rules we have reviewed the Directors’ 
Statement regarding the appropriateness of the going concern 
basis of accounting contained within note 1 in the Financial 
Statements and the Directors’ Statement on the longer-term 
viability of the Group contained within the Corporate Governance 
Statement on page 47.
We have nothing material to add or draw attention to in  
relation to:
• The Directors’ confirmation on page 50 that they have 
carried out a robust assessment of the principal risks facing 
the Group, including those that would threaten its business 
model, future performance, solvency or liquidity;
• The disclosures on pages 34 to 37 that describe those risks 
and explain how they are being managed or mitigated;
• The Directors’ statement in note 1 to the Financial Statements 
about whether they considered it appropriate to adopt the 
going concern basis of accounting in preparing them of any 
material uncertainties to the group’s ability to continue to do 
so over a period of at least twelve months from the date of 
approval of the Financial Statements; and
• The Directors’ explanation on page 47 as to how they have 
assessed the prospects of the Group, over what period 
they have done so and why they consider that period to be 
appropriate, and their statement as to whether they have 
a reasonable expectation that the Group will be able to 
continue in operation and meet its liabilities as they fall due 
over the period of their assessment, including any related 
disclosures drawing attention to any necessary qualifications 
or assumptions.
We agreed with the Directors’ adoption of the going concern 
basis of accounting and we did not identify any such material 
uncertainties. However, because not all future events or 
conditions can be predicted, this statement is not a guarantee  
as to the Group’s ability to continue as a going concern. Annual Report & Financial Statements 2016 Dee Valley Group plc
64 65
Your Local Water Company Governance
Our Assessment of Risks of Material Misstatement
The assessed risks of material misstatement described below are those that had the greatest effect on our audit 
strategy, the allocation of resources in the audit and directing the efforts of the engagement team:
There have been no significant changes to the risks identified compared to the prior year.
The description of risks above should be read in conjunction with the significant issues considered by the Audit 
Committee discussed on page 48.
These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming 
our opinion thereon, and we do not provide a separate opinion on these matters.
Risk How the scope of our audit responded to the risk
Determination of the provision for impairment of trade 
receivables 
The Group has a bad debt provision (see note 12) in 2016 for £2.7 
million (2015: £2.4 million). Consistent with other UK regulated water 
companies, under the license arrangement the Group is obliged to 
supply water to domestic customers regardless of credit worthiness. 
Therefore, particularly in the current economic environment, the 
principal risk associated with receivables relates to recoverability. The 
bad debt provision model includes judgment around the likelihood of 
a customer to pay its bills based on historical experience of levels of 
recovery from accounts in particular ageing categories. 
Gross debtors have increased by £0.3 million in aged categories over  
2 years old which has resulted in an increased provision of £0.3 million.  
A consistent provisioning methodology (see note 1) has been applied in  
the current year.
We have:
• Evaluated the design and implementation of management’s 
controls around this risk, particularly around capturing the key 
data inputs to the model; 
• Reviewed and challenged the information used to determine 
the bad debt provision by considering cash collection 
performance against historical trends and the level of bad debt 
charges over time. Specifically, we reviewed the actual history 
of slow paying customers in Dee Valley Group in the period 
using analytical procedures to understand the collection of 
previously aged debtors and to re-compute the ageing analysis 
and bad debt charge based on that information and compared 
to the charge booked by management. This work included 
agreeing a sample of the data used in managements calculation 
back to its source, being the billing system; and
• Benchmarked the key components of the bad debt provision 
policy against water industry peers.
Potential impairment of goodwill and tangible assets 
The Group has a significant amount of goodwill (2016 and 2015: £5.4 
million – see note 9) and tangible assets (2016: £97.5 million, 2015: £96.1 
million – see note 10) on its balance sheet. The Group’s assessment of 
impairment is a judgemental process which requires estimating the 
value in use and fair value less cost of disposal of the Group’s tangible 
and intangible assets. The key estimation has been pinpointed to the 
premium rate used in the Regulated Capital Value model supporting 
the estimate of fair value less costs of disposal given this amount is 
higher than that determined in the value in use model (see page 76).
We have:
• Evaluated the design and implementation of management’s 
controls around this risk;
• Assessed whether the requirements of IAS 36 ‘Impairment of 
Assets’ have been followed; and
• Agreed the Regulated Capital Value and Group’s market 
capitalisation calculations of fair value less costs of disposal  
to third party data and compared these values  to the Group’s 
assets net book value.
Revenue recognition risk  in relation to the accuracy of the 
estimation of unbilled revenue
The Group has unbilled revenue in 2016 for £1.4 million (2015: 
£1.6 million). For water customers with water meters, the amount 
recognised depends upon the volume supplied, including an estimate 
of the sales value of units supplied between the date of the last meter 
reading and the year end. This is a key judgment because the estimated 
usage is based upon historical data and assumptions around future 
consumption patterns whereas actual revenue should be recognised 
based on actual meter reading usage.
We have:
• Evaluated the design and implementation of management’s 
controls around this risk, particularly in capturing the key data 
inputs to the model; and
• Challenged the validity of management’s estimate of the 
current year accrued revenue by comparing actual amounts 
billed post year end to the estimate made at the year end to 
determine the accuracy of the estimation techniques; and
• Agreed the accuracy of billing system data by tracing billed 
amounts to payment receipts.
Our Application of Materiality
We define materiality as the magnitude of misstatement in the 
Financial Statements that makes it probable that the economic 
decisions of a reasonably knowledgeable person would be 
changed or influenced. We use materiality both in planning the 
scope of our audit work and in evaluating the results of our work.
We determined materiality for the Group to be £204,500 (2015: 
£225,500), which is 5% (2015: 5%) of pre-tax profit.
We agreed with the Audit Committee that we would report to the 
Committee all audit differences in excess of £4,090 (2015: £4,510), 
as well as differences below that threshold that, in our view, 
warranted reporting on qualitative grounds.
We also report to the Audit Committee on disclosure matters 
that we identified when assessing the overall presentation of the 
Financial Statements.
An Overview of the Scope of Our Audit
Our Group audit was scoped by obtaining an understanding of 
the Group and its environment, including group-wide controls, 
and assessing the risks of material misstatement at the Group 
level. The Group has one key business, the supply of water, and 
a head office function in Wrexham. This location accounts for all 
of the Group’s revenue, profit before tax and net assets and was 
subject to a full scope audit by the Group audit team led by the 
Senior statutory auditor.
Opinion on other matters prescribed by 
the Companies Act 2006
In our opinion:
• The part of the Directors’ Remuneration Report to be 
audited has been properly prepared in accordance with the 
Companies Act 2006; and
• The information given in the Strategic Report and the 
Directors’ Report for the financial year for which the 
Financial Statements are prepared is consistent with the 
Financial Statements.
Matters on which we are required to report by 
exception
Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you 
if, in our opinion:
• We have not received all the information and explanations we 
require for our audit; or
• Adequate accounting records have not been kept by the 
parent Company, or returns adequate for our audit have not 
been received from branches not visited by us; or
• The parent Company Financial Statements are not in 
agreement with the accounting records and returns.
We have nothing to report in respect of these matters. Annual Report & Financial Statements 2016 Dee Valley Group plc
66 67
Your Local Water Company Governance
Directors’ remuneration
Under the Companies Act 2006 we are also required 
to report if in our opinion certain disclosures of 
Directors’ remuneration have not been made or 
the part of the Directors’ Remuneration Report to 
be audited is not in agreement with the accounting 
records and returns. We have nothing to report 
arising from these matters.
Corporate Governance Statement
Under the Listing Rules we are also required to review 
the part of the Corporate Governance Statement 
relating to the Company’s compliance with certain 
provisions of the UK Corporate Governance Code.  
We have nothing to report arising from our review.
Our duty to read other information in 
the Annual Report
Under International Standards on Auditing (UK and 
Ireland), we are required to report to you if, in our 
opinion, information in the Annual Report is:
• Materially inconsistent with the information in the 
audited Financial Statements; or
• Apparently materially incorrect based on, or 
materially inconsistent with, our knowledge of the 
Group acquired in the course of performing our 
audit; or
• Otherwise misleading.
In particular, we are required to consider whether 
we have identified any inconsistencies between 
our knowledge acquired during the audit and the 
Directors’ Statement that they consider the Annual 
Report is fair, balanced and understandable and 
whether the Annual Report appropriately discloses 
those matters that we communicated to the audit 
committee which we consider should have been 
disclosed. We confirm that we have not identified any 
such inconsistencies or misleading statements.
Respective Responsibilities of Directors  
and Auditor
As explained more fully in the Directors’ 
Responsibilities Statement, the Directors are 
responsible for the preparation of the Financial 
Statements and for being satisfied that they give a 
true and fair view. Our responsibility is to audit and 
express an opinion on the Financial Statements in 
accordance with applicable law and International 
Standards on Auditing (UK and Ireland). We also 
comply with International Standard on Quality Control 
1 (UK and Ireland). Our audit methodology and tools 
aim to ensure that our quality control procedures 
are effective, understood and applied. Our quality 
controls and systems include our dedicated 
professional standards review team and independent 
partner reviews.
This report is made solely to the Company’s members, 
as a body, in accordance with Chapter 3 of Part 16 of 
the Companies Act 2006. Our audit work has been 
undertaken so that we might state to the Company’s 
members those matters we are required to state to 
them in an auditor’s report and for no other purpose. 
To the fullest extent permitted by law, we do not 
accept or assume responsibility to anyone other than 
the Company and the Company’s members as a body, 
for our audit work, for this report, or for the opinions 
we have formed.
Scope of the Audit of the Financial 
Statements
An audit involves obtaining evidence about the 
amounts and disclosures in the Financial Statements 
sufficient to give reasonable assurance that the 
Financial Statements are free from material 
misstatement, whether caused by fraud or error. This 
includes an assessment of: whether the accounting 
policies are appropriate to the Group’s and the 
parent Company’s circumstances and have been 
consistently applied and adequately disclosed; the 
reasonableness of significant accounting estimates 
made by the Directors; and the overall presentation 
of the Financial Statements. In addition, we read all 
the financial and non-financial information in the 
Annual Report to identify material inconsistencies 
with the audited Financial Statements and to 
identify any information that is apparently materially 
incorrect based on, or materially inconsistent with, 
the knowledge acquired by us in the course of 
performing the audit. If we become aware of any 
apparent material misstatements or inconsistencies 
we consider the implications for our report.
Jane Boardman BSc FCA 
(Senior Statutory Auditor)
for and on behalf of Deloitte LLP
Chartered Accountants and Statutory Auditor
Manchester, United Kingdom
9 June 2016 Annual Report & Financial Statements 2016 Dee Valley Group plc
68 69
Financial Statements Your Local Water Company
Financial 
• Group Income Statement
• Group Statement of Comprehensive Income
• Group and Parent Company Balance Sheet
• Group Statement of Changes in Equity
• Company Statement of Changes in Equity
• Group and Parent Company Cash Flow Statement
• Notes to the Financial Statements
• Glossary of Terms
Statements Annual Report & Financial Statements 2016 Dee Valley Group plc
70 71
Financial Statements Your Local Water Company
Group Income Statement
for the year ended 31 March 2016
Notes
2016 
£000
2015
£000
Revenue
Other operating income
Other operating expenses (net)
2
3
23,149
2,300
(18,875)
24,599
2,459
(19,605)
Profit from operations 6,574 7,453
Finance income
Finance expenses
5
5
275
(2,605)
269
(3,264)
Profit before tax
Taxation 6
4,244
411
4,458
(968)
Profit for the year 4,655 3,490
Basic and diluted earnings per ordinary share 8 100.5p 75.3p
All results arise from continuing operations.
Group Statement of  
Comprehensive Income
for the year ended 31 March 2016 
Notes
2016 
£000
2015
£000
Profit for the year 4,655 3,490
Items that will not be reclassified to profit or loss
Actuarial gain on defined benefit pension scheme
Deferred tax charge on actuarial gain
Effect of change in corporation tax rate on accumulated actuarial gains
22
6
1,264
(228)
75
1,698
(340)
-
Other comprehensive income for the year 1,111 1,358
Total comprehensive income for the year net of tax 5,766 4,848
Group and Parent Company 
Balance Sheet
as at 31 March 2016
Notes
Group
2016
£000 
Group
2015
£000
Company
2016
£000
Company
2015
£000
Assets
Non-current assets
Goodwill
Property, plant and equipment
Retirement benefit surplus
Investments
9
10
22
11
5,381
97,521
9,689
2
5,381
96,131
7,866
2
-
-
-
32,365
-
-
-
32,365
Current assets
Inventories – raw materials and consumables
Trade receivables
Other receivables
Cash and cash equivalents
12
13
14
112,593
373
3,477
2,053
3,099
109,380
341
3,461
1,953
8,737
32,365
-
-
6,620
-
32,365
-
-
3,725
-
 9,002 14,492 6,620 3,725
Total assets 121,595 123,872 38,985 36,090
Liabilities
Current liabilities
Interest-bearing loans and borrowings
Trade and other payables
Current income tax liabilities
15
16
1,263
12,403
164
7,391
11,924
347
1,263
5,630
-
1,391
2,556
-
 13,830 19,662 6,893 3,947
Non-current liabilities
Interest-bearing loans and borrowings
Deferred income
Deferred tax
15
17
18
52,297
9,880
13,330
51,772
8,980
14,071
-
-
-
-
-
-
 75,507 74,823 - -
Total liabilities 89,337 94,485 6,893 3,947
Net assets 32,258 29,387 32,092 32,143
Issued share capital
Other reserves
Retained earnings
19
26
232
6,329
25,697
232
6,201
22,954
232
30,702
1,158
232
30,574
1,337
Total equity 32,258 29,387 32,092 32,143
Approved by the Board of Directors on 9 June 2016 and signed on its behalf by:
 
Jon Schofield Ian J A Plenderleith
Chairman Chief Executive
Company registered in England and Wales with Company Number 04316684. Annual Report & Financial Statements 2016 Dee Valley Group plc
72
Your Local Water Company
73
Financial Statements
Group Statement of 
Changes in Equity
Notes
Share 
capital 
£000
Capital 
redemption 
reserve 
£000
Other 
reserves 
£000
Fair 
value 
reserve 
£000
Retained 
earnings 
£000
Total 
equity 
£000
Balance at 1 April 2014
Profit
Actuarial gain (net of deferred tax) on defined 
benefit pension scheme
232
-
 
-
30,541
-
 
-
(32,316)
-
 
-
7,943
-
 
-
21,034
3,490
 
1,358
27,434
3,490
 
1,358
Total comprehensive income for the year - - - - 4,848 4,848
Repayment of B shares 
Dividends
15
20
-
-
33
-
-
-
-
-
(33)
(2,895)
-
(2,895)
Total contributions by, and distributions to, 
owners of the Company
- 33 - - (2,928) (2,895)
Balance at 1 April 2015
Profit
Actuarial gain (net of deferred tax) on defined 
benefit pension scheme
Effect of change in corporation tax rate on 
accumulated actuarial gains
232
-
 
-
 
-
30,574
-
 
-
 
-
(32,316)
-
 
-
 
-
7,943
-
 
-
 
-
22,954
4,655
 
1,036
 
75
29,387
4,655
 
1,036
 
75
Total comprehensive income for the year - - - - 5,766 5,766
Repayment of B shares 
Dividends
15
20
-
-
128
-
-
-
-
-
(128)
(2,895)
-
(2,895)
Total contributions by, and distributions to, 
owners of the Company
- 128 - - (3,023) (2,895)
Balance at 31 March 2016 232 30,702 (32,316) 7,943 25,697 32,258
Company Statement of 
Changes in Equity
Notes
Share  
capital  
£000
Capital 
redemption 
reserve  
£000
Retained 
earnings 
£000
Total equity 
£000
Balance at 1 April 2014
Profit
232
-
30,541
-
1,424
2,841
32,197
2,841
Total comprehensive income for the year - - 2,841 2,841
Repayment of B shares 
Dividends
15
20
-
-
33
-
(33)
(2,895)
-
(2,895)
Total contributions by, and distributions to, 
owners of the Company - 33 (2,928) (2,895)
Balance at 1 April 2015
Profit
232
-
30,574
-
1,337
2,844
32,143
2,844
Total comprehensive income for the year - - 2,844 2,844
Repayment of B shares 
Dividends
15
20
-
-
128
-
(128)
(2,895)
-
(2,895)
Total contributions by, and distributions to, 
owners of the Company - 128 (3,023) (2,895)
Balance at 31 March 2016 232 30,702 1,158 32,092 Annual Report & Financial Statements 2016 Dee Valley Group plc
74 75
Your Local Water Company
Group and Parent Company  
Cash Flow Statement
for the year ended 31 March 2016 
Notes
Group 
2016  
£000
Group 
2015 
£000
Company 
2016  
£000
Company 
2015  
£000
Cash flows from operating activities
Profit before tax
Adjustments for:
Depreciation
(Profit)/loss on disposal of assets
Net finance costs
10
3
5
4,244
4,790
(1)
2,330
4,458
4,505
154
2,995
-
-
-
-
-
-
-
-
11,363 12,112 - -
(Increase)/decrease in inventories
Decrease/(increase) in trade and other receivables
Increase in trade and other payables
Increase in retirement benefit surplus
(32)
175
798
(292)
14
(413)
1,675
(354)
-
(2,895)
3,047
-
-
-
87
-
Cash generated from operating activities 12,012 13,034 152 87
Interest paid
Tax paid
5 (2,022)
(666)
(1,992)
(726)
(51)
-
(54)
-
Net cash from operating activities 9,324 10,316 101 33
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sale of plant and equipment
Equity dividends received
Interest received 5
(5,626)
1
-
8
(6,725)
54
-
9
-
-
2,895
-
-
-
2,895
-
Net cash (used in)/ generated from investing activities (5,617) (6,662) 2,895 2,895
Cash flows from financing activities
Repayment of B shares
Equity dividends paid
Repayment of short-term borrowings
Re-financing costs
15
20
15
(101)
(2,895)
(6,000)
(349)
(33)
(2,895)
-
-
(101)
(2,895)
-
-
(33)
(2,895)
-
-
Net cash used in financing activities (9,345) (2,928) (2,996) (2,928)
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year 14
(5,638)
8,737
726
8,011
-
-
-
-
Cash and cash equivalents at end of year 14 3,099 8,737 - -
Notes to the Financial Statements
for the year ended 31 March 2016
1 Accounting Policies
Basis of Preparation
Dee Valley Group plc (Company) is incorporated and domiciled in 
the United Kingdom and is listed on the London Stock Exchange.  
Both the Parent Company Financial Statements and the Group 
Financial Statements have been prepared and approved by the 
Directors in accordance with International Financial Reporting 
Standards as adopted by the EU (Adopted IFRSs).  On publishing 
the Parent Company Financial Statements here together with the 
Group Financial Statements, the Company is taking advantage of 
the exemption in Section 408 of the Companies Act 2006 not to 
present its individual income statement and related notes as a 
part of these approved Financial Statements.
The Financial Statements are prepared on the historical cost 
basis except for certain items of property, plant and equipment 
that had been revalued to fair value at the date of transition to 
Adopted IFRSs and which are measured on the basis of deemed 
cost, being the revalued amount at the date of that revaluation.
The Financial Statements have been presented in pounds sterling, 
rounded to the nearest thousand.
The accounting policies have, unless otherwise stated, been 
applied consistently to all years presented in these Financial 
Statements.
In the current financial year, no new accounting policies which 
have been adopted have had a material impact on the Financial 
Statements.
New and revised IFRSs in issue but not yet effective
At the date of authorisation of these Financial Statements, the 
Group has not applied the following new and revised IFRSs that 
have been issued but are not yet effective and in some cases had 
not yet been adopted by the EU:
• IFRS 9 Financial Instruments
• IFRS 15 Revenue from Contracts with Customers
• IFRS 16 Leases
• IAS 1 (amendments) Disclosure Initiative
• IAS 16 and IAS 38 (amendments) Clarification of Acceptable 
Methods of Depreciation and Amortisation
• Annual Improvements to IFRSs: Amendments to IFRS 5  
Non-current Assets Held for Sale and Discontinued
• 2012-2014 Cycle Operations, IFRS 7 Financial Instruments: 
Disclosures, IAS 19 Employee Benefits and IAS 34 Interim 
Financial Reporting
The Directors do not expect that the adoption of the Standards 
listed above will have a material impact on the Financial 
Statements of the Group in future periods with the exception 
of IFRS 9. However, it is not practicable to provide a reasonable 
estimate of the effect of IFRS 9, IFRS 15 and IFRS 16 until a 
detailed review has been completed.
Going Concern
The Financial Statements have been prepared on the going 
concern basis. The Group has considerable financial resources 
together with a customer monopoly in its area of supply. 
Consequently, the Directors believe that the Group is well placed 
to manage its business risks successfully over the forthcoming 
twelve months.
During the year the Group refinanced the previous £9.0 million 
revolving credit facility, which had been committed until 31 March 
2016. In order to secure future financing for the Group and to 
support the AMP6 investment plan, the Group entered into a 
five-year £30.0 million facility on 15 May 2015. This facility ensures 
committed funding for the Group through to 2020, with an option 
for a two year extension if required, providing flexible and cost 
effective financing. At 31 March 2016, this facility was undrawn 
(2015: £6.0 million drawn on previous facility). 
The Directors therefore have a reasonable expectation that 
the Group has adequate resources to continue in operational 
existence for the foreseeable future and consider that the going 
concern basis continues to be appropriate in preparing the 
Financial Statements.
Critical Accounting Estimates and Judgements
The preparation of the Financial Statements requires the exercise 
of judgement both in the application of accounting policies and in 
the selection of assumptions used in the calculation of estimates. 
These estimates and assumptions affect the reported amount of 
assets and liabilities at the date of the Financial Statements and 
the reported amount of revenue and expenses during the periods 
presented.
These estimates and judgements are reviewed on an ongoing 
basis using historic experience, consultation with experts 
and other methods considered reasonable in the particular 
circumstances. However, actual results may differ positively or 
negatively from these estimates.
Financial Statements Annual Report & Financial Statements 2016 Dee Valley Group plc
76 77
Your Local Water Company
Notes to the Financial Statements continued
for the year ended 31 March 2016
Carrying Value of Long-Life Assets
The carrying value of property, plant and equipment (PPE) at 31 
March 2016 was £97.5 million. Additions to PPE during the year 
totalled £6.2 million and the depreciation charge for the year 
was £4.8 million. The estimated useful lives of PPE are based on 
management’s judgement and experience and those lives used 
generally in the water industry. When management identifies 
that actual useful lives differ materially from estimated useful 
lives used to calculate depreciation, the charge is adjusted 
prospectively.
The Group is required to evaluate whether the carrying value 
of PPE may be impaired and not recoverable. The impairment 
review compares the carrying value of PPE to the higher of 
its value in use and its fair value, less costs of disposal. Two 
valuation methods were considered in calculating the fair value, 
less costs of disposal, which is the higher of the two methods. 
Firstly, a market valuation based on market capitalisation plus 
net debt (Enterprise Value). Secondly, consideration was given to 
the Regulated Capital Value (RCV) of the business, including the 
premiums to RCV noted on recent transactions in the sector. The 
Directors consider the carrying amount of PPE to be recoverable 
based on these assessments of fair value, less costs of disposal.
Provision for Doubtful Receivables
The Group estimates the recoverability of trade receivables 
on a regular basis during the year and at the balance sheet 
date. The provision for impairment is based on the relative age 
of receivables and customer segmentation. The actual level 
of receivables recovered may differ from the estimated net 
recoverable value of receivables at the balance sheet date. At 31 
March 2016, the Group’s gross trade receivables were £6.1 million 
and the provision for impairment amounted to £2.7 million.
Carrying Value of Goodwill
Carrying value of goodwill is based on the difference between 
the fair value of consideration and the net assets acquired and is 
subject to an annual impairment review. The impairment analysis 
requires management to make subjective judgements concerning 
the fair value of cash-generating units.
The impairment review compares the carrying value of goodwill 
to the higher of its value in use and its fair value, less costs of 
disposal. Two valuation methods were considered in calculating 
the fair value, less costs of disposal, which is the higher of the 
two methods. Firstly, a market valuation based on market 
capitalisation plus net debt (Enterprise Value). Secondly, 
consideration was given to the Regulated Capital Value (RCV) 
of the business, including the premiums to RCV noted on 
Defined Contribution Pension Scheme
The Group operates two defined contribution pension schemes. 
Contributions to these schemes are charged to the Group Income 
Statement as they are incurred.
Basis of Consolidation
The Group Financial Statements consolidate the financial results 
of Dee Valley Group plc and all its subsidiary undertakings made 
up to 31 March each year.
Goodwill arising from business combinations is treated as a non-
current asset and is reviewed annually for impairment.
In the company’s Financial Statements, investments in subsidiary 
undertakings are stated at cost less any provision for impairment.
Revenue Recognition
Revenue comprises amounts due in respect of water supplied 
to measured and unmeasured customers during the year in the 
normal course of business. Other operating income includes 
billing commission received for the billing and collection of 
payments on behalf of sewerage providers operating in the 
Group’s licence area, recognised on collection of the debt. 
Revenue from the supply of other goods and services is not 
material.
Revenue from measured water charges comprises amounts billed 
plus an estimate of amounts unbilled at 31 March.
Revenue is stated net of VAT, where applicable.
Segmental Analysis
It is the opinion of the Directors that there is one reportable 
segment requiring disclosure under IFRS 8, being the water 
business which operates wholly within the UK.
Recognition of Dividends
Dividends declared after the balance sheet date are not 
recognised as a liability as at the balance sheet date, but are 
charged against retained earnings when the dividends become 
unconditional.
Borrowing Costs
Borrowing costs directly attributable to the acquisition, 
construction or production of qualifying assets, which are assets 
that necessarily take a substantial period of time to get ready for 
their intended use, are added to the cost of those assets, until 
such time as the assets are substantially ready for their intended 
use. All other borrowing costs are recognised in the Group 
Income Statement in the period in which they are incurred.
recent transactions in the sector. The Directors consider the 
carrying amount of goodwill to be recoverable based on these 
assessments of fair value, less costs of disposal.
Defined Benefit Pension Scheme
The estimation of the cash flows used in the calculation of the 
pension scheme’s liabilities includes a number of assumptions 
on mortality, inflation rates and the average expected service 
lives of employees. It also includes an assumption in respect of 
the discount rate used to calculate the defined benefit scheme 
liabilities. The selection of these assumptions requires the 
application of significant judgement by management, guided by 
independent actuarial advice. The assumptions are disclosed in 
note 22. Operating results may differ from actual results owing to 
changing market and economic conditions and longer or shorter 
lives of scheme members. Sensitivities to changes in the discount 
rate and mortality assumptions are shown in note 22.
The cost of providing benefits is determined using the 
Projected Unit Credit Method, with the last formal actuarial 
valuation (31 March 2014) being updated to the accounting 
date by an independent qualified actuary. Re-measurement 
comprising actuarial gains and losses and the return on 
scheme assets (excluding interest) are recognised immediately 
in the balance sheet with a charge or credit to the Group 
Statement of Comprehensive Income in the period which they 
occur. Re-measurement recorded in the Group Statement of 
Comprehensive Income is not recycled. Past service cost is 
recognised in profit or loss in the period of scheme amendment. 
Net interest is calculated by applying a discount rate to the 
defined benefit asset. Defined benefit costs are split into three 
categories:
•  Current service cost, past-service cost and gains and losses on 
curtailments and settlements;
•  Net-interest expense or income; and
•  Re-measurement.
The Group presents the first two components of defined benefit 
costs within operating expenses (net) in its Group Income 
Statement. 
Net interest expense or income is recognised within finance costs. 
The retirement benefit obligation recognised in the consolidated 
balance sheet represents the surplus in the Group’s defined 
scheme. Any surplus resulting from this calculation is limited to 
the present value of any economic benefits available in the form 
of refunds from the scheme or reductions in future contributions 
to the scheme.
Property, Plant and Equipment
Items of property, plant and equipment are stated at cost or 
production cost, less accumulated depreciation and impairment 
losses.
Depreciation is provided on all property, plant and equipment, 
excluding freehold land and easements, at rates calculated to 
write off the cost less estimated residual value of each asset 
evenly over the following estimated useful lives:
Fixed asset category Type of asset Estimated useful life
Freehold land, buildings 
and fixed plant
Buildings and service 
reservoirs
Fixed plant
50 – 80 years
10 – 40 years
Infrastructure assets Impounding reservoirs
Raw water aqueducts
Water mains
150 – 300 years
50 – 70 years
50 – 60 years
Mobile plant, vehicles 
and equipment
Equipment
Water meters
Mobile plant and vehicles 
Software
5 – 20 years
15 years
5 – 7 years
3 years
Inventories
Inventories are stated at cost less any provision necessary to 
recognise damage and obsolescence. Cost includes materials 
and, where appropriate, labour and overheads.
Trade and Other Receivables
Trade receivables are non-interest bearing and are initially 
recognised at invoice value less any provision necessary to reflect 
impairment. Impairment is determined according to the type and 
age of receivables. Other receivables are stated at the estimated 
recoverable amount.
Trade and Other Payables
Trade and other payables, excluding accruals, are stated at the 
cash amount payable and are non-interest bearing. Accruals are 
determined according to the best estimate of amounts payable 
for liabilities in existence at the year end.
Financial Statements Annual Report & Financial Statements 2016 Dee Valley Group plc
78 79
Financial Statements Your Local Water Company
Non-Current Liabilities: Index-Linked Loan
The index-linked loan is stated at the principal amount of £35 
million, plus indexation based on the relevant movement in the 
Retail Price Index since the loan was raised. Loan interest paid 
on the indexed principal amount at 3.635% is taken to the Group 
Income Statement as a finance expense. Indexation added to the 
loan during the financial period is also taken to the Group Income 
Statement as a finance expense.
Cash and Cash Equivalents
Cash and cash equivalents comprise cash balances and call 
deposits with an original maturity of three months or less. 
Bank overdrafts are included as a component of cash and cash 
equivalents for the purpose of the Group Cash Flow Statement, 
as these are used as an integral part of the Group’s cash 
management.
Deferred Income
Third party contributions in respect of fixed assets are accounted 
for and presented as deferred income. Note 17 to the Financial 
Statements contains further details in respect of deferred 
income.
Deferred Tax
Deferred tax is recognised using the liability method on taxable 
and deductible temporary differences at the balance sheet 
date, between the carrying amounts of assets and liabilities 
for financial reporting purposes and the amounts used for tax 
purposes.
Notes to the Financial Statements continued
for the year ended 31 March 2016
Deferred tax is not recognised for the initial recognition of 
goodwill, nor for the initial recognition of assets or liabilities in a 
transaction that is not a business combination and that affects 
neither accounting nor taxable profits.
Deferred income tax assets and liabilities are measured at the 
tax rates that are expected to apply to the year when the asset is 
realised or the liability settled, based on tax rates and laws that 
have been enacted, or substantively enacted, by the balance 
sheet date.
Deferred tax is recognised in the Group Income Statement unless 
it relates to items accounted for in equity.
Current Income Tax
Current income tax is the expected tax payable on taxable 
income for the year, using tax rates that have been enacted, or 
substantively enacted, at the balance sheet date together with 
any adjustments to current tax payable in respect of previous 
years.
Employee Costs Capitalised
Employee costs arising directly from the construction or 
acquisition of property, plant and equipment are identified by 
internal procedures and transferred from Employee Benefits 
Expense (note 3) to Property, Plant and Equipment (note 10).
Derivatives
In respect of forward contracts for energy, the Group applies the 
“own use” exemption in IAS 39 and accordingly does not account 
for them as financial instruments.
2 Other Operating Income
 
2016  
£000
2015 
£000 
Billing commission
Deferred contributions released
Other 
2,062
204
34
2,222
181
56
2,300 2,459
Billing commission represents the commission receivable for billing and collection of sewerage charges on behalf of sewerage providers 
operating in the Group’s licence area, recognised on collection of the debt.
3 Operating Expenses (Net)
 
2016  
£000
2015  
£000
Raw materials and consumables used
Employee benefits expense 
Other operating expenses
Depreciation
807
4,607
8,671
4,790
765
5,057
9,278
4,505
18,875 19,605
Included within ‘other operating expenses’ above are the following:
 
2016  
£000
2015  
£000
Auditor’s remuneration:
Audit of the Company’s annual accounts and consolidation
Audit of the Company’s subsidiaries
13
34
23
34
Total audit services
Other services pursuant to legislation
Tax services
Pension services
Other services
47
13
-
-
7
57
48
-
-
9
Total non-audit services 20 57
Total Auditor’s remuneration 67 114
Hire of property, plant and equipment
(Profit)/loss on disposal of assets
415
(1)
340
154 Annual Report & Financial Statements 2016 Dee Valley Group plc
80 81
Financial Statements Your Local Water Company
4 Employee Benefits Expense
 
2016  
£000
2015  
£000
Wages and salaries
Social security costs
Pension costs – defined benefit scheme (note 22)
Pension costs – defined contribution schemes (note 22)
Other post-retirement benefits
5,840
558
433
217
2
5,591
547
405
194
1
Less employee costs of own work capitalised (note 10)
7,050
(2,443)
6,738
(1,681)
4,607 5,057
Directors’ remuneration 427 476
The amounts above include remuneration in respect of Directors. Full disclosure of Directors’ remuneration is included in the 
Remuneration Committee report on page 54. 
The average number of employees in the Group, including executive Directors, was as follows:
 
2016 2015 
Water operations
Water administration
Services division
44
79
48
43
75
49
171 167
During the year the Company had no employees (2015: None).
5 Finance Income and Finance Expenses
 
2016  
£000
2015  
£000
Finance income:
Demand deposits
Net expected return on pension scheme assets (note 22)
8
267
9
260
275 269
Finance expenses:
Loan interest
Loan indexation
Fixed dividend on B shares
Amortisation of deferred financing costs
1,972
525
50
58
1,938
1,272
54
-
2,605 3,264
6 Taxation
 
2016  
£000
2015  
£000
(a) Analysis of (credit)/charge in the year
Current year tax
Current tax expense – continuing operations
Adjustment in respect of prior years
570
(87)
716
(41)
Current tax charge 483 675
Deferred tax
Accelerated capital allowances:
Current year
Prior years
Effect of substantive enactment of change in rate of corporation tax
212
126
(1,250)
130
40
-
(912) 170
Retirement benefits:
Current year
Effect of substantive enactment of change in rate of corporation tax
101
(83)
123
-
18 123
Deferred tax (credit)/charge (894) 293
Total tax (credit)/charge (411) 968
(b) Recognised in the Statement of Comprehensive Income
Deferred tax attributable to the actuarial gain on defined benefit pension scheme
Effect of change in corporation tax rate on accumulated actuarial gains
228
(75)
340
-
153 340
(c) Reconciliation of effective tax rate
Profit before tax 4,244 4,458
Profit before tax multiplied by the standard rate of corporation tax of 20% (2015: 21%)
Expenditure not deductible for tax purposes
Adjustment for prior years:
Current tax
Deferred tax
849
34
 
(87)
126
936
9
 
(41)
40
39 (1)
Effect of substantive enactment of change in rate of corporation tax (1,333) -
Other tax adjustments - 24
Total tax (credit)/charge (411) 968
A reduction in the UK corporation tax rate from 20% to 19% (effective from 1 April 2017) and subsequently to 18% (effective from 1 April 2020) was 
announced in the July 2015 budget and substantively enacted on 18 November 2015. The full impact of this change has been reflected in the deferred tax 
charge for the period ended 31 March 2016. The deferred tax liability at 31 March 2016 has been calculated based on the rate of 18% substantively enacted 
at the balance sheet date (2015: 20%).
The Company’s wholly-owned subsidiary, Energy Supplies UK Limited (ESUK), had unutilised tax losses of £1,788,000 at 31 March 2016 (2015: £1,788,000) 
that can only be used by ESUK. As the criteria for recognition of a deferred tax asset were not met, no asset has been recognised at the balance sheet date.
Notes to the Financial Statements continued
for the year ended 31 March 2016 Annual Report & Financial Statements 2016 Dee Valley Group plc
82 83
Financial Statements Your Local Water Company
7 Profit after Taxation
The profit for the year dealt with in the Financial Statements of the Company was £2,844,000 (2015: £2,841,000).
8 Earnings per Ordinary Share
Basic and diluted earnings per ordinary share (EPS) have been calculated on the basis of the weighted average number of ordinary 
shares in issue during the year of 4,632,170 (2015: 4,632,170).
The net profit for the year used in the calculation of EPS was as follows:
 
2016  
£000
2015  
£000
Continuing operations 4,655 3,490
9 Goodwill
 
2016  
£000
2015  
£000
Goodwill on the acquisition of Chester Water Limited 5,381 5,381
Goodwill relates to the acquisition of Chester Water Limited in 1997 and is subject to an annual impairment review. When this review 
indicates that the carrying value of the goodwill is not recoverable, it is written down through the Group Income Statement. The goodwill 
is allocated to the cash-generating unit that benefits from the acquisition, namely the whole of Dee Valley Water plc.
Two valuation methods were considered in calculating the fair value, less cost of disposal. Firstly, a market valuation based on market 
capitalisation plus net debt (Enterprise Value). Secondly, consideration was given to the Regulated Capital Value (RCV) of the business, 
including the premiums to RCV noted on recent transactions in the sector. The Directors consider the carrying amount of goodwill to be 
recoverable based on these assessments of fair value, less costs of disposal.
10    Property, Plant and Equipment
Freehold 
land, 
buildings and 
fixed plant 
£000
Infrastructure 
assets
£000
Mobile plant, 
vehicles and 
equipment 
£000
Total 
£000
Cost
At 1 April 2014
Purchased goods and services
Employee costs of own work capitalised
Disposals
64,613
3,022
324
-
59,811
858
1,357
(178)
17,291
1,202
-
(177)
141,715
5,082
1,681
(355)
At 1 April 2015
Additions:
Purchased goods and services
Employee costs of own work capitalised
Disposals
67,959
 
1,416
555
(31)
61,848
 
1,005
1,560
(7)
18,316
 
1,323
328
(7)
148,123
 
3,744
2,443
(45)
At 31 March 2016 69,899 64,406 19,960 154,265
Depreciation
At 1 April 2014
Charge for the year
Disposals
21,009
1,961
-
14,961
1,519
-
11,664
1,025
(147)
47,634
4,505
(147)
At 1 April 2015
Charge for the year
Disposals
22,970
2,209
(31)
16,480
1,578
-
12,542
1,003
(7)
51,992
4,790
(38)
At 31 March 2016 25,148 18,058 13,538 56,744
Net book value
At 31 March 2016
At 31 March 2015
At 31 March 2014
  43,796
  44,989
43,604
46,348
45,368
44,850
7,377
5,774
5,627
97,521
96,131
94,081
As at 31 March 2016, the gross carrying value of property, plant and equipment that was fully depreciated was £17,444,000  
(2015: £15,713,000).
The Company has no property, plant and equipment (2015: £Nil). The Company had no contractual commitments for the acquisition  
of property, plant and equipment at 31 March 2016 or 31 March 2015.
Notes to the Financial Statements continued
for the year ended 31 March 2016 Annual Report & Financial Statements 2016 Dee Valley Group plc
84 85
Financial Statements Your Local Water Company
11    Investments
Group
Other 
investments
(unlisted)
£000
Company
Shares in 
subsidiary 
undertakings
£000
Cost at 31 March 2016
Cost at 31 March 2015
2
2
32,365
32,365
The Group holds more than 10% of the equity of the following undertakings:
Subsidiary Undertakings
Nature
of business
Class
of shares Proportion held
Dee Valley plc
1
Dee Valley Water (Holdings) Ltd
Dee Valley Water plc
Dee Valley Services Ltd
North Wales Gas Ltd
Energy Supplies UK Ltd
Northern Gas Supplies Ltd
Chester Water Ltd
Wrexham Water plc
Aqua Deva Ltd
Holding company
Holding company
Water
Non-trading
Non-trading
Non-trading
Non-trading
Holding company
Non-trading
Dormant
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Non-voting ordinary
Ordinary
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
1
 Dee Valley plc is the only direct subsidiary of Dee Valley Group plc. All other subsidiaries are indirect.
All the above subsidiary undertakings are registered in England and Wales and operate entirely in the United Kingdom.
12    Trade Receivables
 Group  
2016  
£000
Group  
2015 
£000
Company  
2016  
£000
Company  
2015  
£000
Trade receivables
Impairment provision (note 25)
6,135
(2,658)
5,812
(2,351)
-
-
-
-
3,477 3,461 - -
 
13    Other Receivables
 Group  
2016  
£000
Group  
2015 
£000
Company  
2016  
£000
Company  
2015  
£000
Amounts owed by Group undertakings
Other receivables
Prepayments and accrued income
-
500
1,553
-
200
1,753
6,620
-
-
3,725
-
-
2,053 1,953 6,620 3,725
Amounts owed by Group undertakings are non-interest bearing and repayable on demand. In the opinion of the Directors,  
no impairment provision is required due to the financial resources available in the relevant Group undertakings.
14    Cash and Cash Equivalents
 Group  
2016  
£000
Group  
2015 
£000
Company  
2016  
£000
Company  
2015  
£000
Demand deposits
Cash at bank and in hand
2,904
195
8,609
128
-
-
-
-
3,099 8,737 - -
For the purposes of the cash flow statement, cash and cash equivalents comprised the following at 31 March:
 Group  
2016  
£000
Group  
2015 
£000
Company  
2016  
£000
Company  
2015  
£000
Cash at bank and in hand
Demand deposits
Overdrafts
195
2,904
-
128
8,609
-
-
-
-
-
-
-
3,099 8,737 - -
15    Interest-bearing Loans and Borrowings
Current
Group  
2016  
£000
Group  
2015 
£000
Company  
2016  
£000
Company  
2015  
£000
B shares
Short term loans
1,263
-
1,391
6,000
1,263
-
1,391
-
1,263 7,391 1,263 1,391
During the year, the Company redeemed 55,625 (2015: 14,179) B shares, representing 0.40% (2015: 0.10%) of the original issued capital. 
The nominal value and consideration amounted to £127,938 (2015: £32,612).
Notes to the Financial Statements continued
for the year ended 31 March 2016 Annual Report & Financial Statements 2016 Dee Valley Group plc
86 87
Financial Statements Your Local Water Company
86
The rights attaching to the B shares are set out below.
Dividend Rights
With effect from 20 August 2002, out of the profits available for 
distribution in respect of each accounting period, the holders of 
B shares are entitled, in priority to any payment of dividend or 
other distribution to the holders of the ordinary shares, to be paid 
a non-cumulative preferential dividend at a fixed rate of 3.8% per 
annum on the value of 230 pence per B share. The dividend shall 
be paid, without having to be declared, semi-annually in arrears 
on 20 February and 20 August or the next following business day. 
The holders of B shares are not entitled to any further right of 
participation in the profits of the Company.
Capital Rights
On a return of capital on a winding-up (except on a redemption 
in accordance with the terms of issue of any share) there shall be 
paid to holders of the B shares the sum of 230 pence in respect of 
each B share held, together with a proportion of the preferential 
dividend from the last payment date to the date of the winding-
up. If on such a winding-up the amount available for payment is 
insufficient to cover in full the amounts payable on the B shares, 
the holders of such shares will share rateably in the distribution 
of assets in proportion to the full preferential amounts to which 
they are entitled. The holders of B shares shall not be entitled to 
any further right of participation in the assets (or profits) of the 
Company.
Redemption Rights
Holders of B shares may elect to have their B shares redeemed 
at 230 pence per B share, semi-annually on 20 August or 20 
February, by their holders giving not less than ten business days’ 
written notice.
The Company may also give written notice to the holders of B 
shares to redeem all of the B shares then in issue, at a price of 230 
pence per B share, in the following circumstances:
(a) a resolution being passed for the winding-up of the Company; 
or
(b) the Board resolves to undertake a reorganisation of the 
Company; or
(c) an offer to acquire shares in the Company is accepted by 
members holding shares carrying more than 50% of the voting 
rights in the Company; or
(d) an agreement for the sale of the whole of the undertaking of 
the Company.
Notes to the Financial Statements continued
for the year ended 31 March 2016
Non-current
Maturity 
date
Group  
2016  
£000
Group  
2015 
£000
Company 
2016  
£000
Company 
2015  
£000
3.5% Irredeemable Consolidated Debenture Stock
3.635% Secured Index-linked Loan:
Principal
Indexation
2032
2032
99
35,000
17,198
99
35,000
16.673
-
-
-
-
-
-
52,297 51,772 - -
The index-linked loan was raised in August 2002 and is secured by a fixed and floating charge on the assets of Dee Valley Water plc and 
by a first fixed charge over the shares in Dee Valley Water plc held by Dee Valley Water (Holdings) Limited. In the event of default, the 
interest and capital payments are guaranteed by Assured Guaranty (Europe) Limited. The capital value of the loan is adjusted by the 
change in the Retail Price Index from year to year. Loan interest is calculated by charging interest on this inflated amount at 3.635% per 
annum. There are no terms allowing repayment of the index-linked loan prior to 2032.
16    Trade and Other Payables
Group  
2016  
£000
Group  
2015 
£000
Company  
2016  
£000
Company  
2016  
£000
Amounts owed to Group undertakings
Trade payables
Other taxes and social security
Other payables
Deferred income – third party contributions
Accruals
-
10,836
182
80
204
1,101
-
10,182
176
71
204
1,291
5,630
-
-
-
-
-
2,556
-
-
-
-
-
12,403 11,924 5,630 2,556
Voting Rights
The holders of B shares are not entitled to receive notice of any 
general meeting of the Company nor to attend, speak or vote at 
any such general meeting. Annual Report & Financial Statements 2016 Dee Valley Group plc
88 89
Financial Statements Your Local Water Company
17    Deferred Income
Third party contributions
Group
2016  
£000
Group
2015  
£000
Current
Non-current
204
9,880
204
8,980
10,084 9,184
18    Deferred Tax
 Group  
£000
Balance at 1 April 2015
Deferred tax movement for the year
14,071
(741)
Balance at 31 March 2016 13,330
Deferred tax liabilities are calculated at a rate of 18% (2015: 20%) and are attributable to the following:
 
At 1 April  
2015 
£000
Recognised 
in income 
statement
£000
Recognised in 
statement of 
comprehensive 
income
£000
At 31 March 
2016
£000
Accelerated capital allowances
Pension asset
12,498
1,573
(912)
18
-
153
11,586
1,744
14,071 (894) 153 13,330
 
At 1 April  
2014 
£000
Recognised 
in income 
statement
£000
Recognised in 
statement of 
comprehensive 
income
£000
At 31 March 
2015
£000
Accelerated capital allowances
Pension asset
12,328
1,110
170
123
-
340
12,498
1,573
13,438 293 340 14,071
19    Share Capital
Share Capital in Equity
Voting
Ordinary Shares
Non-Voting
Ordinary Shares
2016
£000
2015
£000
2016
£000
2015
£000
At 31 March 207 207 25 25
Issued and fully paid
2016 2015
Number of voting 5p ordinary shares
Nominal value of voting 5p ordinary shares
4,138,902
£206,945
4,138,902
£206,945
Number of non-voting 5p ordinary shares
Nominal value of non-voting 5p ordinary shares
493,268
£24,663
493,268
£24,663
Number of £1 deferred shares
Nominal value of £1 deferred shares
1
£1
1
£1
Number of £1 redeemable preference shares
Nominal value of £1 redeemable preference shares
-
-
-
-
Notes to the Financial Statements continued
for the year ended 31 March 2016 Annual Report & Financial Statements 2016 Dee Valley Group plc
90 91
Financial Statements Your Local Water Company
The rights attaching to the Non-Voting Ordinary Shares are set 
out below.
Dividend Rights
Profits available for distribution and resolved to be distributed 
by the Company in respect of any financial year are distributed 
amongst the holders of Ordinary Shares and Non-Voting Ordinary 
Shares (pari passu as if they constituted one class of share) 
rateably according to the amounts paid up or credited as paid up 
on such shares.
Capital Rights
In the event of the liquidation of Dee Valley Group plc, the 
remaining surplus assets shall be distributed amongst the 
holders of Ordinary Shares and Non-Voting Ordinary Shares 
rateably (without any priority) according to the amounts paid up 
thereon.
 
Voting Rights
The Non-Voting Ordinary Shares entitle the holders to receive 
notice of, but not to attend or vote at, any general meeting of Dee 
Valley Group plc, and to receive copies of all notices, circulars 
and other information sent by the Company to the holders of the 
Ordinary Shares.
The rights attaching to the Deferred Share are as follows:
The Deferred Share is non-voting, carries no right to dividend 
and is entitled to the payment of £1 on a return of capital or 
liquidation. The Deferred Share is redeemable at the option of the 
Company for £1.
Share Capital in Debt 
 
Authorised Issued and fully paid
2016 2015 2016 2015
Number of B shares
Nominal value of B shares
13,897,717
£31,964,749
13,897,717
£31,964,749
549,133
£1,263,009
604,758
£1,390,947
The rights attaching to the B shares are shown in note 15.
Capital Management Policies
The Directors consider the above capital and reserves, together 
with non-current borrowings (note 15) to be the managed capital 
of the Company and of the Group. Capital is managed to maintain 
the ability of the Company and Group to pay dividends in line with 
the Group’s dividend objective.
The Group is not subject to an externally imposed capital 
structure, however, does have due regard to Ofwat’s capital 
structure assumptions. The Group does not have a specific 
gearing target but seeks to maintain gearing at a level consistent 
with the Group’s capital management objectives. The interest 
cover ratio is maintained at a level to ensure compliance with the 
Group’s covenant obligations.
20    Dividends
The following dividends were paid by the Group during the financial year:
 
2016
 Pence per 
share
2016
£000
2015
 Pence per 
share
2015
£000
Ordinary shares
Previous year final dividend
Current year interim dividend
Non-voting ordinary shares
Previous year final dividend
Current year interim dividend
42.0
20.5
42.0
20.5
1,739
848
207
101
42.0
20.5
42.0
20.5
1,739
848
207
101
2,895 2,895
Dividends in respect of the financial year under review are as follows:
 
2016
 Pence per 
share
2016
£000
2015
 Pence per 
share
2015
£000
Ordinary shares
Current year interim dividend – paid
Current year final dividend – proposed 
Non-voting ordinary shares
Current year interim dividend – paid 
Current year final dividend – proposed 
20.5
42.0
20.5
42.0
848
1,739
101
207
20.5
42.0
20.5
42.0
848
1,739
101
207
2,895 2,895
The final dividend for the year ended 31 March 2016 of £1,946,000 (equivalent to 42.0 pence per share) will be proposed for 
approval at the Annual General Meeting on 21 July 2016 and has not been provided for as a liability at 31 March 2016.
21    Contractual Obligations
 
2016  
£000
2015  
£000
Capital expenditure contracted but not included in the Financial Statements 1,810 1,564
Notes to the Financial Statements continued
for the year ended 31 March 2016 Annual Report & Financial Statements 2016 Dee Valley Group plc
92 93
Financial Statements Your Local Water Company
22    Pension Schemes
The Group offers stakeholder pension schemes. For the year 
ended 31 March 2016 employer contributions to such schemes 
amounted to £217,000 (2015: £194,000).
The Group’s trading company, Dee Valley Water plc (DVW), 
participates in a defined benefit pension scheme, the Water 
Companies Pension Scheme, for qualifying employees. This is 
a sectionalised scheme and DVW participates in the Dee Valley 
Water plc Section of the Scheme. Under the scheme, each 
member’s pension at retirement is related to their pensionable 
service and their pensionable salary history.
The Section funds are administered by trustees and are 
independent of DVW’s finances. Contributions are paid to 
the Section in accordance with the recommendations of an 
independent actuarial adviser. The Section is closed to new 
entrants.
The weighted average duration of the expected benefit payments 
from the Section is around 17 years.
The funding target is for the Section to hold assets equal to the 
value of the accrued benefits allowing for future increases in 
those benefits. If there is a shortfall against this target, DVW and 
trustees will agree on deficit contributions to meet this deficit 
over a period. There is a risk that adverse experience could lead 
to a requirement for DVW to make additional contributions to 
recover any deficit that arises.
Contributions are based on funding valuations typically carried 
out every three years; the next formal actuarial valuation is due 
to be carried out at 31 March 2017. Over the year to 31 March 
2016, employer contributions of £848,000 (2015: £884,000) were 
paid to the Section. The estimated amount of total employer 
contributions expected to be paid to the Section during the year 
ended 31 March 2017 is £850,000.
The results of the latest formal actuarial valuation as at 31 March 
2014 were updated to the accounting date by an independent 
qualified actuary in accordance with IAS 19.
Remeasurements are recognised immediately through other 
comprehensive income.
The amounts included in the balance sheet arising from obligations in respect of the Section were as follows:
 
2016  
£000
2015  
£000
2014  
£000
Fair value of Section assets
Present value of defined benefit obligation
60,168
(50,479)
61,241
(53,375)
52,585
(47,031)
Net asset recognised in the balance sheet 9,689 7,866 5,554
The Group has concluded that it can recognise the full amount of this surplus on the grounds that a refund of the surplus assets would 
be available to it following the final payment to the last beneficiary of the Section.
The amounts recognised in the Group Income Statement were as follows:
 
2016  
£000
2015  
£000
Employer’s part of current service cost
Section expenses
Net interest credit
433
123
(267)
405
125
(260)
Total profit and loss charge 289 270
The amounts recognised immediately in other comprehensive income are as follows:
 
2016  
£000
2015  
£000
Net actuarial (gains)/losses in the year due to:
- Changes in financial assumptions
- Changes in demographic assumptions
- Experience adjustments on benefit obligations
Actuarial loss/(gain) on assets relative to interest on assets
(2,124)
-
(1,008)
1,868
6,060
(268)
403
(7,893)
Gain to recognise in other comprehensive income (1,264) (1,698)
The movement in the present value of the defined benefit obligation is as follows:
 
2016  
£000
2015  
£000
Opening defined benefit obligation
Employer’s part of current service cost
Interest cost
Contributions from scheme members
Actuarial (gain)/loss
Benefits paid
53,375
433
1,676
122
(3,132)
(1,995)
47,031
405
1,972
117
6,195
(2,345)
Closing defined benefit obligation 50,479 53,375
Changes in the fair value of the Section assets were as follows:
 
2016  
£000
2015  
£000
Opening fair value of Section assets
Expected return on Section assets
Actuarial (loss)/gain
Contributions by the employer
Contributions by Section members
Benefits paid
Expenses
61,241
1,943
(1,868)
848
122
(1,995)
(123)
52,585
2,232
7,893
884
117
(2,345)
(125)
Closing fair value of Section assets 60,168 61,241
Notes to the Financial Statements continued
for the year ended 31 March 2016 Annual Report & Financial Statements 2016 Dee Valley Group plc
94 95
Financial Statements Your Local Water Company
The current allocation of the Section’s assets is as follows:
 
2016 2015 
Equity instruments
Diversified growth funds
Debt instruments
Liability driven investment funds
Emerging markets multi-asset funds
High yield bonds
25%
8%
-
57%
5%
5%
28%
9%
54%
-
4%
5%
100% 100%
The majority of the Section assets are held within instruments with quoted market prices in an active market.
The Section does not invest directly in property occupied by the Group or in financial securities issued by the Group.
The investment strategy is set by the Trustee of the Section. The current strategy is to invest in a combination of lower risk assets 
(e.g. liability driven investments, which respond to factors such as changes in interest rates) and return-seeking assets (e.g. 
equities and other diversified assets) with the allocation to lower risk assets gradually increased so that by March 2035, 100% of 
the Section’s assets are invested in lower risk assets.
The following table sets out the key IAS 19 assumptions used in the Section.
Assumptions (per annum) 2016 2015  2014  
Retail Prices Index inflation
Consumer Prices Index inflation
Discount rate
Pension increases in payment
• Uncapped CPI
• CPI capped at 5% per annum
Pensionable salary increases (capped at 2% per annum)
Life expectancy of a male aged 60 at the balance sheet date
Life expectancy of a female aged 60 at the balance sheet date
Life expectancy of a male aged 60, twenty five years after the balance sheet date
Life expectancy of a female aged 60, twenty five years after the balance sheet 
date
3.1%
2.1%
3.4%
2.2%
2.2%
1.8%
27.8 years
29.7 years
30.8 years
32.2 years
3.2%
2.2%
3.2%
2.2%
2.2%
1.8%
27.7 years
29.6 years
30.6 years
32.1 years
3.6%
2.6%
4.3%
2.6%
2.6%
1.9%
27.4 years
29.7 years
29.9 years
31.8 years
Mortality tables used to calculate these assumptions: SAPS S2NA CMI2014 (1.5% for men, 1.25% for women).
The following table illustrates the sensitivities of the defined benefit obligation to some of the significant assumptions as at  
31 March 2016.
Key financial assumptions
Assumption 
adopted Sensitivity
Indicative 
change in 
liabilities
% £m
Discount rate
Consumer Prices Index (CPI) inflation
Life expectancy:
Current male pensioner aged 60 in 2016
Current female pensioner aged 60 in 2016
Future male pensioner aged 60 in 2041
Future female pensioner aged 60 in 2041
Sensitivity
3.4% p.a.
2.1% p.a.
27.8 years
29.7 years
30.8 years
32.2 years
+/- 0.5%
+/-0.5%
+1 year
-7%/+8%
+7%/-6%
3%
-3.7/+4.1
+3.4/-3.0
1.5
These sensitivities have been calculated to show the movement in the defined benefit obligation in isolation, and assuming no other 
changes in market conditions at the accounting dates. This is unlikely in practice – for example, a change in discount rate is unlikely to 
occur without any movement in the value of the assets held by the Section.
23    Analysis of Interest Rate Exposure
Total
£000
No 
interest 
paid/ 
received
£000
Fixed 
interest 
rate  
£000
Index-
linked
£000
Weighted 
average 
interest 
rate
%
Weighted 
average 
period for 
which rate 
is fixed
B shares
Irredeemable consolidated debenture stock
Index-linked loan to 2032 (note 15)
Short term loan
Cash at bank
Demand deposits
(1,263)
(99)
(52,198)
-
195
2,904
-
-
-
-
195
-
(1,263)
(99)
-
-
-
2,904
-
-
(52,198)
-
-
-
3.8
3.5
3.635
1
1.60
-
0.31
-
-
16yrs
-
-
-
Net debt at 31 March 2016 (50,461) 195 1,542 (52,198)
1
 Plus RPI
Notes to the Financial Statements continued
for the year ended 31 March 2016 Annual Report & Financial Statements 2016 Dee Valley Group plc
96 97
Financial Statements Your Local Water Company
The Group’s financial instruments comprise long and short-term 
borrowings, cash and liquid resources and various items such as 
trade debtors and creditors which arise directly from operations. 
The main purpose of these financial instruments is to raise 
finance for the Group’s operations. The main risk arising from the 
Group’s financial policies is interest rate risk. The Group’s policy 
is to finance its operations by a combination of long and short-
term borrowings and retained profits. The objective is to ensure 
adequacy of funding by means of drawn and undrawn facilities. 
At 31 March 2016, the Group held an undrawn revolving credit 
facility of £30.0 million. This facility has a five year term and 
is committed until 2020. For further details, see Note 1 to the 
Financial Statements (page 75).
It is the Group’s continuing policy that no trading in financial 
instruments shall be undertaken.
24    Related Party Transactions
The Group regards its key management to be the Directors of the 
Company and their remuneration is shown in the Report of the 
Remuneration Committee on pages 54 to 59. During the year, the 
Company received dividends of £2,895,000 (2015: £2,895,000) 
from Dee Valley plc, one of its subsidiaries.
25    Financial Instruments
The Group has exposure to the following risks from its use of 
financial instruments:
• credit risk;
• liquidity risk; and
• interest rate risk.
This note gives information about the Group’s exposure to 
each of the above risks and the Group’s objectives, policies and 
processes for measuring and managing risk. None of the Group’s 
financial assets and liabilities has a material variation between 
book value and fair value, with the exception of the index-linked 
loan, which has a fair value of £76.7 million (2015: £79.1 million) 
compared to a book value of £52.2 million (2015: £51.7 million).
Credit Risk
The Group’s exposure to credit risk is determined by the 
creditworthiness of each customer. As Dee Valley Water has a 
duty to supply all customers in its designated area, credit risk is 
not assessed prior to supply. However, bills for water services are 
regarded as due when issued, and customers without a payment 
plan are automatically issued with reminders and then assessed 
individually for further action.
The provision for impairment represents the Group’s best 
estimate of the irrecoverable amount of trade receivables. 
The calculation of the impairment provision takes into account 
the age of the debt, the recovery stage reached and customer 
characteristics. 
The ageing of trade receivables at the reporting date was:
 
2016
Gross
£000
2016
Impairment
£000
2016
Net
£000
2015
Gross
£000
2015 
Impairment
£000
2015 
Net
£000
Up to 1 year
Up to 2 years
Up to 3 years
Over 3 years
3,673
1,161
614
687
(460)
(897)
(614)
(687)
3,213
264
-
-
3,890
976
447
499
(757)
(702)
(396)
(496)
3,133
274
51
3
Trade receivables (note 12) 6,135 (2,658) 3,477 5,812 (2,351) 3,461
Impairment provisions are determined by reference to the age of debt and the stage reached in the debt collection process.
The movement in the allowance for impairment of trade receivables was as follows:
 
Group  
£000
At 1 April 2014
Provided during the year
Written off during the year
1,641
966
(256)
At 1 April 2015
Provided during the year
Written off during the year
2,351
497
(190)
At 31 March 2016 2,658
None of the Company’s assets were past due and impaired.
Notes to the Financial Statements continued
for the year ended 31 March 2016 Annual Report & Financial Statements 2016 Dee Valley Group plc
98 99
Financial Statements Your Local Water Company
Liquidity Risk
Liquidity risk is the risk that the Group will not be able to meet 
its financial obligations as they fall due. The Group’s approach 
to managing liquidity is to ensure that, as far as possible, it will 
always have sufficient liquidity to meet its liabilities when due, 
both under normal operating conditions and under all reasonably 
possible scenarios.
Liquidity risk is managed by short and long-term cash flow 
forecasts. At 31 March 2016, the Group held an undrawn 
revolving credit facility of £30.0 million. This facility has a five year 
term and is committed until 2020. For further details, see Note 1 
to the Financial Statements (page 75).
The following are the contractual maturities of the Group’s non-derivative financial liabilities, including estimated interest 
payments:
As at 31 March 2016
Carrying 
amount 
£000
Contractual 
cash flows
£000
6 months 
or less
£000
6-12 
months
£000
1-2 years
£000
2-5 years
£000
>5 years
£000
Secured bank loans
Short term loans
B shares
Irredeemable debenture stock
Trade and other payables
Bank overdraft
52,198
-
1,263
99
12,403
-
(117,892)
-
(1,263)
(100)
(12,403)
-
(949)
-
(1,263)
(2)
(12,403)
-
(968)
-
-
(2)
-
-
(2,013)
-
-
(4)
-
-
(6,423)
-
-
(12)
-
-
(107,539)
-
-
(80)
-
-
65,963 (131,658) (14,617) (970) (2,017) (6,435) (107,619)
As at 31 March 2015
Carrying 
amount 
£000
Contractual 
cash flows
£000
6 months 
or less
£000
6-12 
months
£000
1-2 years
£000
2-5 years
£000
>5 years
£000
Secured bank loans
Short term loans
B shares
Irredeemable debenture stock
Trade and other payables
Bank overdraft
51,673
6,000
1,391
99
11,924
-
(114,760)
(6,007)
(1,391)
(100)
(11,924)
-
(937)
(6,007)
(1,391)
(2)
(11,924)
-
(959)
-
-
(2)
-
-
(1,987)
-
-
(4)
-
-
(6,264)
-
-
(12)
-
-
(104,613)
-
-
(80)
-
-
71,087 (134,182) (20,261) (961) (1,991) (6,276) (104,693)
Contractual cash flows for irredeemable debenture stock are based on interest payments for 25 years.
Of the above financial liabilities, only the B shares relate to the Company.
Interest Rate Risk
At 31 March the interest rate profile of the Group’s interest-bearing financial instruments was:
 
2016  
£000
2015 
£000 
Fixed rate instruments
Financial assets
Financial liabilities
2,904
(1,362)
8,609
(7,490)
1,542 1,119
Variable rate instruments
Financial liabilities (52,198) (51,673)
Profit and Loss Sensitivity for Variable Rate Instruments
A change of 1% in the Retail Price Index during the reporting year would have increased/(decreased) profit or loss by the amounts 
shown below. This analysis assumes that all other variables remain constant.
Profit or loss
1% increase 
£000
1% decrease 
£000
Variable rate instruments
31 March 2016
31 March 2015
(547)
(535)
524
510
26    Purpose of Reserves
The Capital Redemption Reserve is the reserve arising on redemption of B shares.
Other Reserves are reserves arising from previous Schemes of Arrangement accounted for under the principles of merger accounting.
The Fair Value Reserve is a non-distributable reserve arising on restatement of infrastructure assets at fair value.
 
Notes to the Financial Statements continued
for the year ended 31 March 2016 Annual Report & Financial Statements 2016 Dee Valley Group plc
100 101
Your Local Water Company Shareholder Information
Glossary of Terms
Gearing
Gearing is defined as net debt as a percentage of the Regulatory 
Capital Value at the financial year end. 
Greenhouse Gas (GHG) emissions
Greenhouse gases are components of the atmosphere that 
contribute to the greenhouse effect. This indicator provides  
a measure of the annual operational GHG emissions of a water 
company.
Interest cover
Interest cover is calculated as net cash flow divided by debt 
service cost (cash interest only). Net cash flow is defined as actual 
operating profit (before depreciation) plus drawings on revolving 
credit facility plus interest income less income tax less total 
capital expenditure.
Leakage
Total leakage measures the sum of distribution losses and supply 
pipe losses in megalitres per day (Ml/d). It includes any water lost 
between the treatment works and the customer’s stop tap. It 
does not include internal plumbing losses.
Pollution incidents (water)
The total number of pollution incidents in a calendar year 
emanating from a discharge or escape of a contaminant from a 
Group asset.
Regulatory Capital Value (RCV)
The RCV represents the capital base of the Group on which it 
is allowed to earn a return at the defined cost of capital set by 
Ofwat. The forecast RCV published by Ofwat as at 31 March 2016 
was £76.0 million (2015: £71.2 million).
Security of Supply Index (SoSI)
This assesses the ability of a water company to supply customers 
in dry years without demand restrictions such as hosepipe bans. 
Companies with higher index scores have better security of 
supply.
Serviceability indicator (infrastructure and non-
infrastructure)
These indicators are used to monitor the output, or effectiveness, 
of asset management and maintenance from year to year. 
Serviceability indicators support the development of longer-term 
strategic plans for asset management, including submissions for 
price reviews.
Service Incentive Mechanism (SIM)
SIM assesses the overall service that customers experience 
from a water company. It provides a framework that allows 
each company to develop its own solutions to meeting the 
expectations of customers.
Water supply interruptions
This is the number of hours lost due to water supply interruptions 
for three hours or longer, per property served.
Notice of Meeting
This document is important and requires your immediate 
attention. If you are in any doubt about the action to be 
taken, you should consult your stockbroker, bank manager, 
solicitor, accountant or other independent adviser authorised 
pursuant to the Financial Services and Markets Act 2000 
immediately. If you have sold or transferred all of your holding 
of shares in Dee Valley Group plc, please send this notice and 
the accompanying Form of Proxy to the stockbroker or other 
agent through whom the sale or transfer was effected for 
transmission to the purchaser or transferee.
Notes explaining the resolutions to be proposed at the Company’s 
Annual General Meeting are set out after the Notice of Annual 
General Meeting on pages 106 and 107 of this Annual Report. 
The Directors consider that the proposals set out in the Notice of 
Annual General Meeting are in the best interests of the Company 
and shareholders as a whole and are most likely to promote the 
success of the Company. The Directors recommend shareholders 
vote in favour of the resolutions set out in the Notice as they intend 
to in respect of their own beneficial holdings, which as at 9 June 
2016 amounted to 1,000 shares (0.024% of the issued voting share 
capital).
Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting of Dee 
Valley Group plc (company registration number 04316684) will be 
held on 21 July 2016 at the Ramada Wrexham, Ellice Way, Wrexham, 
LL13 7YH at 10:30am. The business of the meeting will be:
Ordinary Business
1. To receive and adopt the Directors’ Report and audited 
Financial Statements for the Company for the year ended  
31 March 2016 together with the Independent Auditor’s report 
thereon.
2. To approve the Directors’ Remuneration Report (excluding 
the Directors’ Remuneration Policy on pages 54 to 55 of the 
Directors’ Remuneration Report), for the year ended 31 March 
2016.
3. To declare a final dividend of 42.0 pence per share on the 
Ordinary Shares and Non-Voting Ordinary Shares.
4. To re-elect Philip Holder who, being required to retire by 
rotation, offers himself for re-election.
5. To reappoint Deloitte LLP as auditor to the Company and to 
hold office until the end of the next Annual General Meeting, 
and to authorise the Directors to determine its remuneration.
Special Business
6. To pass as an Ordinary Resolution:
a. That the Directors be generally and unconditionally authorised 
for the purposes of Section 551 of the Companies Act 2006 
(the 2006 Act) to exercise all the powers of the Company to 
allot Ordinary shares in the Company, and to grant rights to 
subscribe for or to convert any security into Ordinary shares in 
the Company:
i. up to an aggregate nominal amount of £77,203  (such 
amount to be reduced by the aggregate nominal amount 
allotted or granted under paragraph (ii) below in excess of 
such sum); and
ii. comprising equity securities (as defined in Section 560(1) of 
the 2006 Act) up to an aggregate nominal amount of  
£154,405 (such amount to be reduced by any allotments or 
grants made under paragraph (i) above) in connection with 
an offer by way of a rights issue:
A. to Ordinary shareholders in proportion (as nearly as may 
be practicable) to their existing holdings; and
B. to holders of other equity securities as required by the 
rights of those securities or as the Board otherwise or 
considers necessary;
C. and so that the Board may impose any limits or restrictions 
and make any arrangements which it considers necessary 
or appropriate to deal with treasury shares, fractional 
entitlements, record dates, legal, regulatory or practical 
problems in, or under the laws of any territory or any other 
matter. Annual Report & Financial Statements 2016 Dee Valley Group plc
102 103
Your Local Water Company Shareholder Information
Such authorities to apply until the end of the Annual  
General Meeting of the Company to be held in 2017, save 
that the Company may before such expiry, make an offer or 
agreement which would or might require relevant securities 
to be allotted after such expiry and the Directors may allot 
relevant securities in pursuance of such an offer or agreement 
as if the authority conferred hereby had not expired. This 
authority is in substitution for the authority conferred on the 
Directors pursuant to Section 551 of the Companies Act  
2006 on 23 July 2015.
7. To pass as a Special Resolution:
a. That pursuant to and in accordance with Sections 570 and 573 
of the 2006 Act the Directors be empowered to allot equity 
securities (as defined in the 2006 Act) for cash pursuant to the 
general authority conferred by Resolution 7 above as if Section 
561 of the Act did not apply to any such allotment and so that:
i. reference to allotment in this Resolution shall be construed 
in accordance with Section 560(2) of the 2006 Act; and
ii. the power conferred by this Resolution shall enable the 
Company to make any offer or agreement before the expiry 
of the said power which would or might require equity 
securities to be allotted after the expiry of the said power 
and the Directors may allot equity securities in pursuance 
of any such offer or agreement notwithstanding the expiry 
of such power, provided however that this power shall 
expire at the conclusion of the Annual General Meeting of 
the Company to be held in 2017 or, if earlier, fifteen months 
after the passing of this Resolution except to the extent 
that the same is renewed or extended on or before such 
date and shall be limited:
A. to the allotment of equity securities in connection with any 
rights issue; and
B. to the allotment of equity securities (otherwise than 
pursuant to sub-paragraph (A) of this Resolution) up to an 
aggregate nominal value of £11,580. 
8. To pass as a Special Resolution:
a. That the Company is hereby generally and unconditionally 
authorised to make market purchases (within the meaning of 
Section 701 of the 2006 Act) of Ordinary Shares of 5 pence each 
and Non-Voting Ordinary Shares of 5 pence each in the capital 
of the Company on such terms and in such manner as the 
Directors may from time to time determine, provided that:
i. the maximum number of Ordinary Shares to be purchased 
is 413,890;
ii. the maximum number of Non-Voting Ordinary Shares to be 
purchased is 49,326;
iii. the minimum price that may be paid (exclusive of expenses 
payable by the Company) is:
A. 5 pence per Ordinary Share; and
B. 5 pence per Non-Voting Ordinary Share;
iv. the maximum price which may be paid for an Ordinary 
Share or Non-Voting Ordinary Share is an amount equal to 
105% of the average of the middle market prices shown in 
the quotation for such Ordinary Share or such Non-Voting 
Ordinary Share as derived from the London Stock Exchange 
Daily Official List for the five business days immediately 
preceding the day on which the Ordinary Share or Non-
Voting Ordinary Share is purchased (exclusive of expenses 
payable by the Company);
v. the authority hereby conferred shall expire on 31 July 
2017 or, if earlier, at the conclusion of the Annual General 
Meeting of the Company to be held in 2017 unless 
previously renewed, varied or revoked by the Company in 
general meeting; and
vi. the Company may make a contract to purchase its Ordinary 
Shares or Non-Voting Ordinary Shares under the authority 
hereby conferred prior to the expiry of such authority, 
which contract will or may be executed wholly or partly 
after the expiry of such authority, and may purchase 
its Ordinary Shares or Non-Voting Ordinary Shares in 
pursuance of any such contract.
By order of the Board
Ian Plenderleith 
Chief Executive 
9 June 2016
Packsaddle, Wrexham Road 
Rhostyllen, Wrexham LL14 4EH
Notes
5. To be valid, the form of proxy must be completed, signed and 
returned so as to reach the Company’s registrars, Capita Asset 
Services, PXS, 34 Beckenham Road, Beckenham, Kent, BR3 4TU 
not later than 48 hours before the Meeting. Please note that in 
determining whether the 48 hour deadline has been satisfied, 
no account shall be taken of any part of a day which is not a 
weekday on which commercial banks are generally open for 
business in London. A form of proxy is enclosed. Completion 
of the form does not preclude a member from subsequently 
attending and voting at the meeting.
6. A proxy need not be a shareholder of the Company but 
must attend the Meeting to represent you. A Form of Proxy 
is enclosed and instructions for use are shown on the form. 
You can only appoint a proxy using the procedures set out 
in these notes and the notes to the proxy form. The fact that 
shareholders may have completed forms of proxy will not 
prevent them from attending and voting in person should 
they afterwards decide to do so. Details of how to appoint the 
Chairman of the meeting or another person as your proxy 
using the proxy form are set out in the notes to the proxy form. 
If you wish your proxy to speak on your behalf at the meeting 
you will need to appoint your own choice of proxy  
(not the Chairman) and give your instructions directly to them.
7. You may appoint more than one proxy provided each proxy 
is appointed to exercise rights attached to different shares. 
You may not appoint more than one proxy to exercise rights 
attached to any one share.
1. The holders of the Ordinary Shares of 5 pence each are entitled 
to attend and vote at this meeting. This notice is sent to the 
holders of Non-Voting Ordinary Shares in accordance with the 
Articles of Association of the Company  
for information only.
2. To be entitled to attend and vote at the Annual General Meeting 
(and for the purpose of the determination by the Company of 
the votes they may cast), shareholders must be registered in 
the Register of Members of the Company at close of business 
on 19 July 2016, (or, in the event of any adjournment, close of 
business on the date which is two days before the time of the 
adjourned meeting). Changes to the Register of Members after 
the relevant deadline shall be disregarded in determining the 
rights of any person to attend and vote at the meeting.
3. As at 9 June 2016 (being the last business day prior to the 
publication of this Notice) the Company’s total issued share 
capital is 4,632,170 shares consisting of 4,138,902 Ordinary 
Shares, carrying one vote each and 493,268 Non-Voting 
Ordinary shares. Therefore, the total voting rights in the 
Company as at 9 June 2016 are 4,138,902. 
4. Members are entitled to appoint one or more persons as 
proxy to exercise all or any of their rights to attend and to 
speak and vote on their behalf at the meeting. Members may 
appoint more than one proxy in relation to the Annual General 
Meeting provided that each proxy is appointed to exercise 
the rights attached to a different share or shares held by 
that shareholder. To appoint more than one proxy you may 
photocopy the proxy card. Please indicate in the box next to 
the proxy’s name the number of shares in relation to which 
they are authorised to act as your proxy. Please also indicate 
by ticking the box provided if the proxy instruction is one of 
multiple instructions being given. All forms must be signed 
and should be returned together in the same envelope. Failure 
to specify the number of shares each proxy appointment 
relates to or specifying a number of shares in excess of those 
held by the member on the record date will result in the proxy 
appointment being invalid. The right of a member under 
section 324 of the 2006 Act to appoint a proxy does not apply 
to a person nominated to enjoy information rights under 
section 146 of the 2006 Act. Annual Report & Financial Statements 2016 Dee Valley Group plc
104 105
Your Local Water Company Shareholder Information
8. To change your proxy instructions simply submit a new 
proxy appointment using the methods set out in the notes 
to the Form of Proxy. Note that the cut-off time for receipt 
of proxy appointments set out in the Form of Proxy also 
applies in relation to amended instructions; any amended 
proxy appointment received after the relevant cut-off time 
will be disregarded. Where you have appointed a proxy 
using the hard copy proxy form and would like to change 
the instructions using another hard copy proxy form, please 
contact the registrars. If you submit more than one valid proxy 
appointment, the appointment received last before the latest 
time for the receipt of proxies will take precedence.
9. In order to revoke a proxy instruction you will need to inform 
the Company by sending a signed hard copy notice clearly 
stating your intention to revoke your proxy appointment to 
the registrars. In the case of a member which is a Company, 
the revocation notice must be executed under its common 
seal or signed on its behalf by an officer of the Company or an 
attorney for the Company. Any power of attorney under which 
the revocation notice is signed (or a duly certified copy of such 
power or authority) must be included with the revocation 
notice.
10. A vote withheld is not a vote in law, which means that the vote 
will not be counted in the calculation of votes for or against the 
resolution. If no voting indication is given, your proxy will vote 
or abstain from voting at his or her discretion. Your proxy will 
vote (or abstain from voting) as he or she thinks fit in relation 
to any other matter which is put before the meeting. The notes 
to the proxy form explain how to direct your proxy to vote on 
each resolution or withhold your vote.
11. In the case of joint holders, where more than one of the joint 
holders purports to appoint a proxy, only the appointment 
submitted by the most senior holder will be accepted. Seniority 
is determined by the order in which the names of the joint 
holders appear in the Company’s register of members in 
respect of the joint holding (the first named being the most 
senior).
12. A corporation which is a shareholder can appoint one or  
more corporate representatives who may exercise, on its 
behalf, all its powers as a member provided that no more  
than one corporate representative exercises powers over  
the same share.
13. CREST members who wish to appoint a proxy or proxies by 
utilising the CREST electronic proxy appointment service may 
do so for the Annual General Meeting and any adjournment(s) 
thereof by utilising the procedures described in the CREST 
Manual. CREST Personal Members or other CREST sponsored 
members, and those CREST members who have appointed 
a voting service provider(s), should refer to their CREST 
sponsor or voting service provider(s), who will be able to 
take the appropriate action on their behalf. In order for a 
proxy appointment made by means of CREST to be valid, the 
appropriate CREST message (a “CREST Proxy Instruction”) 
must be properly authenticated in accordance with Euroclear’s 
specifications and must contain the information required for 
such instructions, as described in the CREST Manual.
14. The message must be transmitted so as to be received by the 
issuer’s agent (CREST ID: RA10) by the latest time(s) for receipt 
of proxy appointments specified in the Notice of Meeting. For 
this purpose, the time of receipt will be taken to be the time (as 
determined by the timestamp applied to the message by the 
CREST Applications Host) from which the issuer’s agent is able 
to retrieve the message by enquiry to CREST in the manner 
prescribed by CREST. After this time, any change of instructions 
to proxies appointed through CREST should be communicated 
to the appointee through other means.
15. CREST members and, where applicable, their CREST sponsors 
or voting service providers should note that Euroclear does 
not make available special procedures in CREST for any 
particular messages. Normal system timings and limitations 
will therefore apply in relation to the input of CREST Proxy 
Instructions. It is the responsibility of the CREST member 
concerned to take (or, if the CREST member is a CREST 
personal member or sponsored member or has appointed a 
voting service provider(s), to procure that his CREST sponsor 
or voting service provider(s) take(s)) such action as shall be 
necessary to ensure that a message is transmitted by means 
of the CREST system by any particular time. In this connection, 
CREST members and, where applicable, their CREST sponsors 
or voting service providers are referred, in particular, to those 
sections of the CREST Manual concerning practical limitations 
of the CREST system and timings.
16. The Company may treat as invalid a CREST Proxy Instruction 
in the circumstances set out in Regulation 35(5) (a) of the 
Uncertificated Securities Regulations 2001.
17. Any person to whom this notice is sent who is a person 
nominated under section 146 of the 2006 Act to enjoy 
information rights (a “Nominated Person”) may, under an 
agreement between him/her and the shareholder by whom 
he/she was nominated, have a right to be appointed (or to 
have someone else appointed) as a proxy for the Annual 
General Meeting. If a Nominated Person has no such proxy 
appointment right or does not wish to exercise it, he/she may, 
under any such agreement, have a right to give instruction to 
the shareholder as to the exercise of voting rights.
18. The statement of the rights of shareholders in relation to the 
appointment of proxies in paragraphs 4 and 7 above does not 
apply to Nominated Persons. The rights described in these 
paragraphs can only be exercised by shareholders of the 
Company.
19. Shareholders should note that it is possible that, pursuant to 
requests made by shareholders of the Company under section 
527 of the 2006 Act, the Company may be required to publish 
on a website a statement setting out any matter relating to: (i) 
the audit of the Company’s accounts (including the auditor’s 
report and the conduct of the audit) that are to be laid before 
the Annual General Meeting; or (ii) any circumstance connected 
with an auditor of the Company ceasing to hold office since 
the previous meeting at which annual accounts and reports 
were laid in accordance with section 437 of the 2006 Act. The 
Company may not require the shareholders requesting any 
such website publication to pay its expenses in complying with 
section 527 of the 2006 Act. Where the Company is required 
to place a statement on a website under section 527 of the 
2006 Act, it must forward the statement to the Company’s 
auditor not later than the time when it makes the statement 
available on the website. The business that may be dealt with 
at the Annual General Meeting includes any statement that the 
Company has been required under section 527 of the 2006 Act 
to publish on a website.
20. Capita Asset Services maintain the Company’s share register. 
They also provide a telephone helpline service on 0871 664 
0300 (calls cost 12 pence per minute plus network extras. 
Lines are open 9.00a.m. to 5.30p.m., Monday to Friday). If 
you are calling from overseas, the helpline number is +44 371 
664 0300. If you have any queries about voting or about your 
shareholding, please contact Capita Asset Services.
21. Members have the right to ask questions at the meeting in 
accordance with section 319A of the 2006 Act.
22. The following documents are available for inspection by 
members at the registered office of the Company during 
normal business hours (except Bank Holidays) and at the place 
of the meeting not less than 15 minutes prior to and during the 
meeting:
a. The register of Directors’ interests required to be kept under 
Section 809 of the 2006 Act;
b. Copies of Directors’ service contracts and letters of 
appointment;
c. The articles of association of the Company.
23. Under s338 and s338A of the Companies Act 2006, members 
meeting the threshold requirements in those sections have 
the right to require the Company (i) to give, to members of 
the Company entitled to receive notice of the Annual General 
Meeting, notice of a resolution which may properly be moved 
and is intended to be moved at the Meeting and/or (ii) to 
include in the business to be dealt with at the Meeting any 
matter (other than a proposed resolution) which may be 
properly included in the business. A resolution may properly 
be moved or a matter may properly be included in the business 
unless (a) (in the case of a resolution only) it would, if passed, 
be ineffective (whether by reason of inconsistency with any 
enactment or the Company’s constitution or otherwise), (b) it 
is defamatory of any person, or (c) it is frivolous or vexatious. 
Such a request may be in hard copy form or in electronic form, 
must identify the resolution of which notice is to be given or 
the matter to be included in the business, must be authorised 
by the person or persons making it, must be received by the 
Company not later than 5.00p.m. on 9 June 2016, being the 
date 6 weeks before the Meeting, and (in the case of a matter 
to be included in the business only) must be accompanied by a 
statement setting out the grounds for the request.
24. A copy of this Notice, and other information required by section 
311A of the Companies Act 2006 can be found at  
www.deevalleygroup.com. Annual Report & Financial Statements 2016 Dee Valley Group plc
106 107
Your Local Water Company Shareholder Information
Annual General Meeting Explanatory Notes
Three of the resolutions at this year’s Annual General Meeting 
are to be taken as special business. By way of explanation of 
these and certain other resolutions:
Ordinary Business
Resolution 1 
Directors’ Report and audited  
Financial Statements
Pursuant to section 437 of the Companies Act 2006 (CA 2006), the 
Board of Directors propose a resolution receiving and adopting 
the Directors’ Report and audited Financial Statements for the 
Company for the financial year ended 31 March 2016 together with 
Independent Auditor’s report thereon. 
Resolution 2 
Directors’ Remuneration Report
Pursuant to section 439 of the CA 2006, the Board of Directors 
propose a resolution approving the Directors’ Remuneration 
Report (excluding the part containing the Directors’ Remuneration 
Policy) for the year ended 31 March 2016. Shareholders will note 
that the format of the Directors’ Remuneration Report has been 
amended following the changes which the Government brought 
into force in 2013, including the adoption of a remuneration policy 
section and an implementation section within the report. The 
Directors’ Remuneration Policy, which is set out on pages 54 to 57  
of the Report, is subject to a binding vote by shareholders at least 
every three years. The policy was approved at the Annual General 
Meeting in 2014, and therefore remains valid until the 2017 Annual 
General Meeting (subject to any changes being proposed prior to 
that date, or to the advisory vote on the annual implementation 
report on Directors’ remuneration not being passed). No changes 
are proposed to be made to the policy this year, and it has only 
been included in the 2016 Report for ease of reference.
Resolution 3 
Final dividend
A final dividend of 42.0 pence per Ordinary Share and Non-Voting 
Ordinary Share is recommended by the Directors for payment 
to shareholders on the register of members of the Company at 
the close of business on 1 July 2016 . Subject to approval by the 
Ordinary shareholders at the Annual General Meeting, the final 
dividend will be paid on 1 August 2016. An interim dividend of 20.5 
pence per Ordinary Share and Non-Voting Share was paid on 5 
January 2016. This gives a total dividend of 62.5 pence per Ordinary 
Share and Non-Voting Share for the year ended 31 March 2016.
Resolution 4 
Re-election of Director
Philip Holder is the Director retiring by rotation this year and he 
offers himself for re-election. One third of the Directors retire each 
year and all members of the Board of Directors submit themselves 
for re-election at least every three years. Brief biographical details 
about the Director standing for re-election appear on page 42 of 
this Annual Report.
Resolution 5 
Auditor
The Company is required to appoint the auditor at each general 
meeting at which accounts are presented, to hold office until the 
end of the next such meeting. Resolution 5 proposes the re-
appointment of the Company’s existing auditor, Deloitte LLP, who 
were appointed after a competitive tendering process completed 
in 2013. In accordance with standard practice, this Resolution also 
authorises the Directors to determine the remuneration of the 
Company’s auditor.
Special Business
Resolution 6 
Authority to issue shares
The purpose of resolution 6 is to renew the Directors’ power to 
allot shares.
Paragraph (i) of resolution 6 would give the Directors the authority 
to allot shares or grant rights to subscribe for or convert any 
securities into Ordinary Shares up to an aggregate nominal 
amount equal to £77,203. This amounts represents approximately 
one third of the issued Ordinary Share capital of the Company as at 
9 June 2016 , the latest practicable date prior to publication of this 
Notice. In line with guidance issued by the Investment Association, 
paragraph (ii) of this resolution would give the Directors authority 
to allot Ordinary Shares or grant rights to subscribe for or convert 
any securities into Ordinary Shares in connection with a rights 
issue in favour of Ordinary shareholders up to an aggregate 
nominal amount equal to £154,405, as reduced by the nominal 
amount of any shares issued under paragraph (i) of this resolution. 
This amount (before any reduction) represents approximately 
two thirds of the issued Ordinary Share capital of the Company 
as at 9 June 2016 , the latest practicable date prior to publication 
of this Notice. The authorities sought under paragraphs (i) and (ii) 
of resolution 6 will expire at the conclusion of the Annual General 
Meeting of the Company held in 2017. The Directors have no 
present intention to exercise the authorities sought under this 
resolution. As at the date of this Notice, no Ordinary Shares are 
held by the Company in treasury.
Resolution 7 
Disapplication of statutory rights of pre-emption
This proposed resolution seeks to obtain power under Section 570 
of the 2006 Act to enable the Directors to allot, for cash, shares 
with an aggregate nominal value of £11,580 equal to approximately 
5% of the Company’s current issued share capital without being 
required first to offer such securities to existing shareholders. The 
Company will thereby be given greater flexibility when considering 
future opportunities but the interests of existing shareholders will 
be protected as, except in the case of a rights issue, the Directors 
have no present intention to allot any part of the unissued share 
capital of the Company or, without the prior approval of the 
Company in general meeting, to make any issue which would 
effectively alter the control of the Company or the nature of its 
business. This authority will expire immediately following the next 
Annual General Meeting following the resolution or, if earlier, 15 
months following the resolution being passed.
Resolution 8 
Authority to purchase Ordinary Sharesn
At the Annual General Meeting, Ordinary shareholders are 
being invited to grant authority to the Company to make market 
purchases of its Ordinary Shares and Non-Voting Ordinary Shares. 
It is proposed such authority shall expire on the conclusion of the 
Annual General Meeting to be held in 2017 or on 31 July 2017, if 
earlier.
This authority will be limited to the purchase of not more than 
10% of the Ordinary Shares currently in issue. This represents the 
maximum amount of Ordinary Share and Non-Voting Ordinary 
Share capital in issue which is permitted before tender or partial 
offer to all shareholders is required to be made to perform any 
share buy-back. The maximum price payable under this authority 
will be 105% of the average of the middle market quotations of an 
Ordinary Share or Non-Voting Ordinary Share for the five business 
days before the relevant purchase and the minimum price will be  
5 pence per Ordinary Share or Non-Voting Ordinary Share.
In considering whether or not to purchase Ordinary Shares and 
Non-Voting Ordinary Shares under the market purchase authority, 
the Directors will take into account cash resources, the effect on 
gearing and other investment opportunities before exercising the 
authority. In addition, the Company will only exercise the authority 
to make such a purchase in the market when the Directors 
consider it is in the best interests of the shareholders generally to 
do so and it should result in an increase in Earnings per Ordinary 
Share and Non-Voting Ordinary Share. Dee Valley Group plc
Packsaddle
Wrexham Road
Rhostyllen
Wrexham
LL14 4EH
Registered in England and Wales
Registered number 04316684
LSE Stock Code: DVW
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