The scale of regulatory change for the sector is unprecedented. The review of the Independent Water Commission, led by Sir Jon Cunliffe, was published in July 2025, following which, Defra published a white paper ‘A new vision for water’ in January 2026. The transition to a more integrated regulatory model provides the group with an opportunity to ensure that the organisation is internally well prepared and ready to work collaboratively; to provide a better outcome for customers, communities and the environment in the North West and provide a more attractive offering for those investing, or looking to invest, in our fantastic region.

We are committed to work through the transition to the new regulatory model proactively engaging to ensure our region and stakeholders are well represented. For the moment, we continue to work with the existing teams and we continue to co-operate fully with Ofwat and the Environment Agency investigations into water and wastewater companies in England and Wales, the board has been kept fully informed of the progress of the Investigations.

Notwithstanding the significant change in the regulatory arena, management has been focused on running the business and the first year of our over £13 billion AMP8 capital programme has seen considerable progress, with the board contributing its views on the modernisation of the approach to the supply chain. Following a thorough procurement and due diligence exercise, over 100 supply chain partners were supported through the onboarding and mobilisation process in the early part of the year – we believe our chosen partners have the capabilities and capacity to accommodate changes that might be required over the course of the AMP. Our new ways of supply chain management were reviewed by a panel of independent experts who provided positive feedback on our approach, particularly the increased use of standardisation in the design, delivery and procurement of assets and modernising our supply chain management through better systems and automation and applying skilled resource to more value-adding activities. This approach will play a vital role in keeping us within cost and quality allowances while accelerating delivery for customers and communities.

The board approved the final terms of the contract, with Cascade Infrastructure, which was formed by the STRABAG Equitix consortium, as the ‘competitively appointed provider’ to design, build, finance and maintain the replacement of six single-line tunnel sections of the Haweswater Aqueduct. The board has been kept fully informed throughout the competitive procurement process (with financial close being achieved in August 2025) given the critical nature of the aqueduct in supplying water to customers in Cumbria, Lancashire and Greater Manchester with the work being central to our upgrade of infrastructure assets in our region.

I am pleased to report that the progress on refreshing our ‘Home Safe and Well programme’ continues at pace and the board has received regular updates and opportunities to discuss progress and challenge management. More information can be found on page 78. The three safety values empower colleagues to follow behaviours to support themselves and others getting home safe and well. The refresh was launched at the March 2025 all-colleague event in Blackpool and further rolled out to our contracting partners at an event in April 2025. Driving for work was the first of the 12 life-saving rules to be introduced. A key risk area for the business given the many miles being driven by colleagues on a daily basis both on company business and commuting to work. A contractor engagement strategy has seen many AMP8 contracting partners providing input into the programme – a further session for our contracting partners on our joint progress with the capital programme and focus on our life-saving rules was held in March 2026 in Blackpool, and attended by around 650 colleagues from our supply chain partners. The refreshed programme featured at the February 2026 all-colleague event held in Liverpool, which was attended by a number of board colleagues.

Cyber security is routinely discussed by the board with commentary included in the CEO’s monthly reporting pack. Focused board reports are presented twice a year by the chief security officer on the mitigating activities employed in response to the ever evolving threat of cyber attacks. The board is kept apprised of industry-wide and national security briefings on the matter.

Marina Wyatt joined the board on 1 October 2025, succeeding Doug Webb as chair of both the audit committee and the treasury committee with effect from 14 November 2025. The board considers that Marina, as a chartered accountant and having recently retired from the role of CFO at Associated British Ports Limited, has recent and relevant financial experience, as does Doug Webb.

Alison Goligher will step down from the board at the conclusion of the AGM on 17 July 2026 after over nine years on the board. During her time as a non-executive director she has made a huge contribution to the board with her experience of large capital programmes, and her wise counsel and pragmatic approach. As the first designated non-executive director for workforce engagement, Alison built a relationship of trust and openness with the members of the Colleague Voice Panel.

In the following pages of this corporate governance report, we set out how the board has fully applied the principles and fully complied and reported on the provisions of the 2024 UK Corporate Governance Code (the code) as applicable to the financial year ended 31 March 2026. In relation to provision 10, Alison Goligher has served beyond a nine-year term, but she has remained a valuable and independent member of the board, free from any conflicting interests with those of the group. As set out in the 2025 annual report, the board concluded it would be beneficial to retain Alison’s experience of large capital programmes, providing continuity among board members to support the board’s oversight of the transition to AMP8. Alison has continued to bring her independent perspective and mindset to board discussions, and she will be much missed. We wish her well in her future roles.

I look forward to welcoming shareholders to the company’s main offices in Warrington at the annual general meeting in July, the details of which are set out in the notice of meeting, which this year includes a non-binding advisory vote on the company’s net zero transition plan. A resolution on climate-related disclosures was a matter last considered at the 2022 annual general Meeting.

Sir David Higgins
Chair