Board leadership and company purpose

Code principleEvidence and outcomes
Principle A:
A successful company is led by an effective and entrepreneurial board, whose role is to promote the long-term sustainable success of the company, generating value for shareholders and contributing to wider society.
See Corporate governance report for our reporting against provision 1 and the s172(1) Statement in Promoting the success of the company of all.
Principle B:
The board should establish the company's purpose, values and strategy, and satisfy itself that these and its culture are aligned. All directors must act with integrity, lead by example and promote the desired culture.
See Corporate governance report for our reporting against provisions 2 and 5.
Principle C:
The board should ensure that the necessary resources are in place for the company to meet its objectives and measure performance against them. The board should also establish a framework of prudent and effective controls, which enable risk to be assessed and managed.
See Nomination committee regarding succession pipeline, and Corporate governance report for the board's approach to risk management and internal control.
Principle D:
In order for the company to meet its responsibilities to shareholders and stakeholders, the board should ensure effective engagement with, and encourage participation from, these parties.
See Corporate governance report in relation to our engagement with shareholders and stakeholders for our reporting against provision 3.
Principle E:
The board should ensure that workforce policies and practices are consistent with the company's values and support its long-term sustainable success. The workforce should be able to raise any matters of concern.
See Corporate governance report in relation to engagement with employees for our reporting against provisions 5 and 6.


Overview of the board's responsibilities

  • Sets the strategy of the group, ensuring the long-term success of the group for customers, investors and wider stakeholders;
  • Is responsible for challenging and encouraging the executive team in its interpretation and implementation of how it manages the business, and that it is doing so in accordance with the strategic goals the board has set;
  • Has responsibility for ensuring the company's internal control systems (including financial, operational and compliance) and processes are sound and fit for purpose (see Corporate governance report);
  • Must ensure that the company has the necessary financial resources and people with the necessary skills to achieve its objectives. It also reviews managerial performance annually;
  • Approves appointments to and removal from the board and membership of the committees;
  • Applies the principles of the Code and reports against the provisions; and
  • Has oversight of major capital expenditure projects within UUW that exceed £150 million, and any project which materially increases the group's risk profile or is not in the ordinary course of the group's business.



Providing great water and more for the North West

Understanding what matters

Board members, individually and collectively, are cognisant of their statutory duties as set out in the Companies Act 2006 (the Act). In accordance with section 172 of the Act, directors are individually required to act in the way they consider, in good faith would most likely be to promote the success of the company for the benefit of its members as a whole. In doing so, the directors must have regard to the likely consequences of any decision in the long term and the interests of employees, customers, suppliers, the community and the environment, and on the company's reputation.

Incorporating sustainability in our stewardship

Historically, a board's success criteria has primarily been judged on the company's financial performance and while this is still fundamental, boards of companies are now encouraged to adopt a more holistic approach to their stewardship. It is the responsibility of the directors to exercise their judgement, balancing the use of the company's resources to ensure its sustainable long-term success and at times, the requirements and criteria for assessing our success by our different stakeholders groups will be in competition. Sustainability is a key component of the way in which we manage our business. We set out in Our business model how we create value for our shareholders and other stakeholders. Our board governance ethos, our culture and the way we operate as a business is to behave responsibly towards all our stakeholders.

Investing in a high quality and resilient future

When we formulated our business plan for the 2020–25 asset management period and which was submitted to Ofwat in September 2018, our engagement with customers indicated that they wanted high-quality, sustainable and resilient water and wastewater services at a price they could afford. We recognise that customers place their faith in us to deliver a responsible approach to managing risk. We consulted widely with our customers and other stakeholders and applied the insight from this engagement to our long-term plans for the next asset management period and beyond. Understanding the implications of extreme weather events and the return frequency of such events is an ever emerging risk for us.

Being a guardian for future generations

On behalf of the board, the corporate responsibility committee has taken the lead in overseeing management's development of a climate change mitigation strategy as part of the transition to a low carbon future. Notwithstanding this, the board is fully versed on the impacts of climate change from an operational perspective. There have been a number of extreme weather events impacting our region and our operations in recent years, most recently Storm Ciara. When such incidents occur, the CEO keeps board members fully apprised of the impact on operations and our response via conference call and other forms of communication.

Working with our regulators – our final determination

We were asked, when Ofwat published its initial assessment of our business plan in January 2019, to commit to more stretching targets further enhancing our offering to a number of stakeholders groups. We worked with Ofwat towards this objective, culminating in the final determination published in December 2019 and accepted by the UUW board on 28 January 2020. Further information on the final determination can be found in Our business model.

The financial implications of the final determination were taken into account when deciding on the company's dividend policy for 2020–25 (see Chairman and Chief Executive Officer's review) and is included in the statement by the directors in performance of their statutory duties in accordance with s172(1) of the Act set out in Promoting the success of the company for the benefit of all.

Long-term planning for AMP7 and beyond

We create value by delivering or outperforming our five-year regulatory contract that has been agreed with Ofwat, and doing so in accordance with our strategic themes of providing the best service to customers, at the lowest sustainable cost and in a responsible manner. Planning is vital to ensure our long-term sustainable success and for effective management of the business and allocation of our resources – the details of our planning horizons are set out in Our business model.

Delivering against our regulatory contract

Under the current regulatory model, we are a monopoly supplier of water and wastewater services to our domestic customers. Simplistically, the opportunities for improving our financial performance are based on outperforming our five-year contract. Underlying this is a complex set of regulatory key performance indicators, including total expenditure outperformance (totex), the outcome delivery incentive mechanism (ODI), customer measure of experience (C-MeX) and financing expenditure (see How we measure our performance) which are managed and monitored by the business.

Risk management and internal control

The principal risks and uncertainties to the success of the business, which are agreed by the board, and the ways in which these risks are managed, monitored and mitigated are set out in Our risk management.

Governance structure for our board and our committees

The board has responsibility for establishing the strategy, which is broken down into the three strategic themes. The governance structure encompassing the board, its principal committees and the principal management committees (and set out in the diagram below) contributes to ensuring that the group focuses on its strategic themes. The committees have specific roles and responsibilities, which are directly linked to implementing the three strategic themes which are represented by the coloured squares on the diagram.

In line with the Code, the board delegates certain roles and responsibilities to its principal board committees. While the board retains overall responsibility, a sub-committee structure allows these committees to probe the subject matters more deeply and gain a greater understanding of the detail. The committees then report back to the board on the matters discussed, decisions taken, and where appropriate, make recommendations to the board on matters requiring its approval. The reports of the principal board committees required by the Code can be found on the subsequent pages. Minutes of the board and principal board committee meetings (with the exception of the remuneration committee) are tabled at board meetings and the chairs of each of the board committees report verbally to the board on their activities. The Chairman chairs the nomination committee; all other principal board committees are chaired by independent non-executive directors who have particular skills or interests in the activities of those committees.

The executive team is chaired by the CEO, and its members are the senior managers who have a direct reporting line to the CEO. Our executive team meets monthly; it is responsible for the day-to-day running of the business and other operational matters and implementing the strategies that the board has set. Short biographies of the executive team can be found on our website at unitedutilities.com/executive-team. The diagram below shows the principal management committees and a brief description of their roles. These committees are vital to the implementation of the group's strategic themes. These committees enable senior management to meet to understand, delegate the implementation of appropriate actions, and monitor progress and provide challenge as needs be. The board received reports from the CEO and CFO at every scheduled board meeting, providing the board with an updated overview of the business, its financial and operational performance.

Governance structure of the board and its principal committees and the principal management committees

Group board

Chair: Sir David Higgins




Principal board committees

Audit committee

Chair: Brian May


Remuneration committee

Chair: Sara Weller




Nomination committee

Chair: Sir David Higgins



Corporate responsibility committee

Chair: Stephen Carter



Treasury committee

Chair: Brian May


The committee considers and approves borrowing, leasing, bonding and other banking facilities within limits set by the board. The CFO and treasurer are also members. Some powers are sub-delegated, within certain limits, to the CFO and treasurer.

Chief Executive Officer

Steve Mogford

Principal management committees

Executive team

Chair: Steve Mogford, CEO




This forum is responsible for implementing the board's strategy and the day-to-day operation of running the business and the CEO will cascade decisions made by the board to the business via this forum.

Group audit and risk board

Chair: Steve Mogford, CEO


Quarterly business review

Chair: Steve Mogford, CEO




This forum is responsible for the quarterly review of operational and financial performance.

Political and regulatory steering group

Chair: Gaynor Kenyon, corporate affairs director


This forum is responsible for discussing political and regulatory issues affecting the company, where any 'horizon scanning' issues are raised and business responses to consultations are agreed.

Capital investment committee

Chair: Steve Mogford, CEO




The committee is responsible for authorising expenditure relating to the capital investment programme.


The best service to customers

At the lowest sustainable cost

In a responsible manner

Summary of board activity in 2019/20

ActionsOutcomesCross referenceLink to strategic themes
Leadership and employees
Review of health, safety and wellbeing activities and consideration of health and safety incidents of employees and contractors and implementing an improved health and safety culture within the business branded as 'home safe and well'.Ongoing roll-out of 'home safe and well' training programme and development and implementation of wellbeing policies and activities.Our business model and Our performance in 2019/20


Review of board succession plan.Succession plans for the roles of Chairman and CFO implemented during the year.Nomination committee



Reviewed ongoing development of our employer brand and our aspiration for a multi-generational and diverse workforce.Board kept apprised of potential succession pipeline and progress in improving diversity.Nomination committee


Reviewed the structure and composition of the executive management team to address business challenges of the 2020–25 asset management period and beyond.Endorsed the restructuring of the executive management team and associated reporting lines.Nomination committee


Reviewed and discussed the results of the annual employee engagement survey and received updates on employee voice workforce engagement mechanisms including the Employee Voice panel chaired by Alison Goligher, the non-executive director designated for engagement with the workforce.Awaiting the findings from a number of working groups proposed by Employee Voice panel including: encouraging greater collaboration among employee network groups; and gaining a better understanding of what culture means for employees.Corporate governance report



Reviewed the company's dashboard of cultural metrics and associated analysis.Monitored and assessed culture and agreed it was aligned with the company's purpose, values and strategy.Corporate governance report



Reviewed and amended the board diversity policy to better reflect diversity criteria, thereby including 'social and ethnic backgrounds, cognitive and personal strengths'.The board diversity policy was amended to include a measurable ethnicity objective expressed in our policy as the board should include 'one director of non-white ethnicity' by 2021.Nomination committee



Discussed and reviewed the price review submissions and outputs throughout the process and implications for the group, and Ofwat's final determination for the 2020–25 asset management period.Endorsed the acceptance of the final determination in January 2020.Our business model




Considered the financial implications of the final determination for the company's dividend policy for the 2020–25 asset management period.Approved the company's dividend policy for the 2020–25 asset management period.Our performance in 2019/20


Received regular updates at each meeting of items with a strategic component, such as emerging changes to regulation, major capital expenditure and business structuring decisions.Facilitates more informed board discussion and planning.-




Discussed the group's preparations in relation to Brexit.Agreed action plan to mitigate and make preparations in relation to Brexit, with ongoing monitoring of the Government proposals for terms of exit.Our risk management and Corporate responsibility committee


Discussed the impact of proposed renationalisation of the water sector.External legal and financial advice sought.Corporate responsibility committee
Reviewed and debated the risk profile of the group, and in particular the principal risks, emerging risks and risk appetite, including a review of the most significant operational risks.Endorsed management's view that the risk appetite approach remained fit for purpose and should continue to be applied for the forseeable future.Our risk management




Reviewed the risk management systems, including financial, operational and compliance controls and reviewed the effectiveness of the internal control systems.The risk management and internal control systems were considered to be effective.Audit, risk and internal control




Reviewed and discussed developments in cyber crime.Approved the activities undertaken to enhance the effectiveness of the group's security controls.Our risk management



Reviewed the terms of reference for the audit, remuneration, treasury and corporate responsibility committees and received post-meeting reports from the chairs of each committee summarising discussions and actions.Approved amendments to the terms of reference of the company's committees as recommended particularly relating to the 2018 Code.



Reviewed biannual updates on changes and developments in corporate governance.Matters implemented as considered appropriate.


Reviewed and discussed the external evaluation of the board, its committees and individual directors and conflicts of interest.Identified action points and any ongoing training needs.Nomination committee



Reviewed the performance of the statutory auditor and recommendation for reappointment both at the 2020 AGM and for a further term following the completion of the statutory auditor tender process.Accepted the recommendation from the audit committee that KPMG be reappointed at the 2020 AGM and as the preferred candidate following the tender process for the statutory auditor.Audit committee



Reviewed the approach and progress of work to identify areas where there is any risk of modern slavery occurring in our supply chain.Approved the 2020/21 slavery and human trafficking statement.Directors' report



United Utilities Water Limited (UUW) regulated business and its stakeholders
Regular review and monitoring of the business plan submission for the 2020–25 regulatory period as it progressed to the announcement of acceptance of Ofwat's final determination in January 2020.The board was kept fully informed throughout the price review process.Our business model




Reviewed customer service performance measures.In year customer performance measures monitored along with preparations for monitoring customer service in AMP7.How we measure our performance




Other group business
Considered exercise of the put option to dispose of the group's interest in the Muharraq sewerage treatment plant and associated statutory entities both in Bahrain and in the Jebel Ali Free Zone, Dubai.Disposed of the group's interests in Muharraq in accordance with the arrangements agreed in 2011.



Regular review of progress of Water Plus, the group's joint venture with Severn Trent serving commercial customers.Approved the renewal of working capital arrangements.Audit committee




Shareholder relations
Received and discussed a presentation by Rothschild Investor Advisory on investors' views and perceptions of the group in relation to, among other things: strategy; the group's unique selling proposition; dividend policy; and how the company compares with other listed water and wastewater companies.Provide the board with indirect view of investor perceptions.Board engagement with shareholders and other stakeholder




Regularly received and discussed feedback from roadshows, presentations and face-to-face meetings between investors and the CEO and/or the CFO and other communications received from large investors.Provide the board with direct view of investor perceptions and provide point of comparison with indirect approach.Board engagement with shareholders and other stakeholder




Reviewed the 2020–25 business plan and the 2020/21 budget.Approved the 2020–25 business plan and the 2020/21 budget.




Reviewed and approved the half and full-year results and associated announcements.Approved the half and full-year results and associated announcements




Reviewed management's proposed going concern and long-term viability statement.Approved the going concern and long-term viability statement.Audit, risk and internal control




Reviewed tax policies and objectives proposed by management for 2019/20.Approved tax policies and objectives for 2019/20.Tax policies and objectives




Reviewed the annual pensions update.Pensions strategy affirmed.Our performance in 2019/20




Reviewed the annual treasury update.Approved the treasury policies; the group's funding requirements for the year and the potential sources to meeting these funding requirements; and managing the group's interest rate and other market risk exposureOur performance in 2019/20




Reviewed the annual insurance arrangements for 2020/21.Approved the annual insurance arrangements for 2020/21.




Reviewed progress with material litigation involving the group.Strategy to defend claims robustly affirmed.Material Litigation




Key to strategic themes:


The best service to customers

At the lowest sustainable cost

In a responsible manner

Attendance at board and committee meetings

Nine scheduled board meetings were planned and held during the year (2019: eight). A number of other board meetings and telephone conferences were held during the year, as the need arose. The table below shows the number of scheduled meetings attended and the maximum number of scheduled meetings that the directors could have attended. Only in exceptional circumstances would directors not attend board and committee meetings. Similarly, every effort is made to attend ad hoc meetings either in person or via the use of video or telephone conferencing facilities if needs be. None of our non-executive directors has raised concerns over the time commitment required of them to fulfil their duties. Scheduled meetings are normally held face- to-face, but due to the COVID-19 restrictions, meetings were held remotely via audio or video conference.

On the evening before most scheduled board meetings all the non-executive directors meet either by themselves, or together with just the CEO, or with the entire board and the company secretary, and this time is usefully spent enabling board colleagues to share views and consider issues impacting the company. Time together also helps to build relationships on a personal level, which contributes to better relationships and decision-making around the board table.

Nomination committeeCorporate
Sir David Higgins





Dr John McAdam





Steve Mogford





Russ Houlden





Steve Fraser



Mark Clare







Sara Weller







Brian May











Stephen Carter









Alison Goligher









Paulette Rowe







Meetings attended

Possible meetings

Meetings attended possible meetings

Actual number of meetings attended/maximum number of scheduled meetings which the directors could have attended during the financial year ended 31 March 2020.

  1. Nine board meetings were scheduled this year, with the additional meeting relating to the endorsement of the final determination as accepted by the UUW board.
  2. Sir David Higgins was appointed to the board on 13 May 2019.
  3. Dr John McAdam was unable to attend two meetings of the board and a nomination committee meeting due to unforeseen circumstances. He resigned on 31 December 2019.
  4. Steve Fraser resigned on 31 August 2019.

Purpose, values and strategy

As established by the board, our company's purpose, values and strategy, were revised during the year, following initial work by the corporate responsibility committee. We engaged the services of Corporate Citizenship and Edmonds Elder to help us provide a clearer articulation of why we exist and to recommend how we can communicate this more effectively to all our stakeholders. A diagram of this can be found in Delivering our purpose.

Our purpose is to provide great water and more for the North West. Our vision is to be the best UK water and wastewater company through providing the best service to customers, at the lowest sustainable cost and in a responsible manner. In reviewing the company's purpose, the board took into account information and views from stakeholders, utilising much of the research and engagement that contributed to our business plan submission and the feedback obtained from customers as part of the company's brand refresh undertaken during the year. For the year ended 31 March 2020, the board is satisfied that the formulation of our aspirations in terms of our purpose, values and culture have been informed by our stakeholders and we operate our business in such a way that will create long-term value for all.

Our values demonstrate how we behave individually and collectively as the board and how we ask our employees to behave. Our employees are fundamental to delivering our strategy and achieving our purpose. Our values of being customer focused, trustworthy and innovative underpin our culture of behaving as a responsible business in the way we interact with all the stakeholders we serve. We must continually reinforce these values so that the right behaviours cascade throughout the organisation, ensuring our culture of behaving responsibly drives what we do. Key to this is taking action to address any issues where there is misalignment with the company's culture. As well as our engagement survey we run regular employee barometers to ask employees what they are seeing, hearing and feeling. This approach allows us to act quickly if there are any areas of misalignment and take immediate action.

We have been accredited with the Fair Tax Mark which recognises organisations that 'demonstrate that they are paying the right amount of corporation tax in the right place at the right time' (see Tax policies and objectives).

Culture and employee engagement

Our employees are at the heart of the culture of our business and further insight and evidence, as part of the board's assessment and monitoring of culture, has been gathered, and fed back to the board by Alison Goligher, the current designated non-executive director for engagement with the workforce. During the year Alison has met with employees and visited a number of the company's sites. Furthermore, Alison chairs the newly formed Employee Voice panel (the panel) formed from representatives of a number of employee groups and employee networks already in existence within the business and with representatives drawn from across the geographical region. Alison is keen to ensure, through these interactions, that there is a two-way flow of communication and information between the board and the workforce.

1 Dashboard of cultural metrics

In addition to the existing reporting, management has developed a dashboard of cultural metrics in order to provide a comprehensive overview to support the board in fulfilling its role in monitoring and assessing culture. The dashboard comprises relevant metrics derived from: the annual employee engagement survey; human resources policies in relation to diversity and associated training; whistleblowing reporting; health, safety and wellbeing policies and practices; and business principles measures and other key performance indicators.

2 Corporate responsibility committee review of dashboard

Prior to its review by the board, the dashboard was presented to the corporate responsibility committee. In future years, the committee will review the dashboard biannually.

3 Annual board review of dashboard

The board was satisfied that policy, practices and behaviours within the business were aligned with the company's purpose, values and strategic themes, although there was more work to do to encourage colleagues to look out for each other's health and safety.

Employee groups, as set out in the table below from within the business, were approached and employees from within these groups volunteered to join the panel.

Employee voice

Outcomes from the work to bring our employees' voices to the board include the transfer of the governance of the annual employee survey to the Employee Voice panel. Changes made by the panel included: enhancing the underlying anonymity of the survey and providing more opportunity for employees to provide greater insight into their views.

The board

Employee Voice panel
Chair:Alison Goligher (non-executive director)

Employee networks groups:

  • Multicultural
  • GENEq
  • Armed Forces
  • LGBT Identity+
  • Ability

Employee champion groups:

  • Health, safety and well-being
  • Engagement champions
  • Colleague engagement group
  • Career development forums

Early careers and managers:

  • The Early Careers Board
  • Aspiring managers
  • Apprentices
  • Graduates
  • Bands 3 and 4 managers

Union partners:

  • Unite
  • GMB
  • Unison
  • Prospect


It is expected that the members of the panel will be rotated every two years. There is an open invitation to all board members to attend meetings of the panel, which will be rotated around the company's sites. It is the intention, going forward, that a member of staff based at the location where the meeting is being held will be also be invited to attend. The panel has met three times during the year. The initial pilot meeting established terms of reference discussed ways of working and the structure of the panel. Working sub-groups, made up of panel members, were formed to focus on specific aspects of the business including cross networks, culture and the employee engagement survey. Each sub-group provided an update on progress made at the second meeting, next steps and identified metrics to track progress against. Updates will be provided by Alison twice a year on the activities and findings of the panel to the corporate responsibility committee and reported annually to the board.

Listening to our employees

Employees' views are measured annually through the employee engagement survey with the objective of taking any required action to improve how employees feel about the company and understand its direction. Employees are provided with information through briefings and access to online materials, to enable them to understand the financial and economic factors affecting the group's performance (see How we measure our performance). Along with our employee relations team, our CEO holds regular face-to-face meetings with senior trade union representatives to facilitate a two-way flow of information and engagement with the views of employees' representatives.

Set out in How we create value for stakeholders is the company's approach to our engagement with and creating value for employees, with health, safety and wellbeing being a priority. Furthermore, an explanation of the company's approach to rewarding the workforce can be found in the report of the remuneration committee Pay arrangements across the wider workforce.

Whistleblowing policy

The following sets out the company's compliance with Code provision 6.

As part of our two-way flow of communication the board has responsibility for reviewing the group's arrangements for individuals to raise matters of concern and the arrangements for the investigation of such matters. The group's whistleblowing policy (the policy) supports the culture within the group where genuine concerns may be reported and investigated without reprisals for whistleblowers. We operate a confidential telephone helpline and a web portal to enable employees (including agency workers and contractors) to raise matters or concerns for possible incidents of fraud, dishonesty, corruption, theft, security and bribery. Furthermore, employees are encouraged to raise any matters relating to health and safety and any activities of the business that have caused or may cause damage to the environment, such as pollution or other contamination. Both the helpline and web portal are operated by a third party enabling any concerns to be reported anonymously. The policy states that no employee will be victimised for raising a matter in accordance with the policy. Matters raised with the helpline/portal are in the first instance raised with the relevant director and investigated by senior managers independent of any involvement of the issues being considered. Details of the findings of the investigation and proposed solution are considered by the whistleblowing committee (whose membership comprises the company secretary, customer services and people director, head of internal audit and commercial director) and which meets quarterly. The board routinely reviews matters considered by the whistleblowing committee, the outcome of the investigation and the ways in which the matters were brought to a conclusion thus ensuring that the core value of integrity is upheld and fostering an environment where employees feel it is 'safe to speak up' and to do so without fear of reprisal.

Board engagement with shareholders and other stakeholders


The board as a whole accepts its responsibility for engaging with shareholders and is kept fully informed about information in the marketplace including:

  • The investor relations adviser produces an annual survey of investors' views and perceptions about United Utilities, the results of which are presented and discussed by the board;
  • The board receives regular updates and feedback on investor meetings involving the CEO, CFO and/or investor relations team and reports from sector analysts to ensure that the board maintains an understanding of investors' priorities; and
  • The executive and non-executive directors are available to meet with major shareholders and institutional investors; this is also one of the specific roles of the senior independent director. When revising the directors' remuneration policy, the chair of the remuneration committee has invited engagement from the company's major shareholders. Feedback from any such engagement would be shared with all board members.

Institutional investors

We are always keen to engage with our shareholders, hear their views and update them on developments in our business. As well as current investors, we engage actively with institutional investors who do not currently hold shares in United Utilities, as we are keen to ensure our business is well understood across the investment community, and to hear and discuss the views of all investors.

We have an active investor relations programme, which includes:

  • An invitation to major shareholders to meet with the Chairman;
  • A regular schedule of face-to-face meetings between the CEO and CFO and representatives from our major shareholders, supplemented with meetings hosted by our investor relations team;
  • Presentations by the CEO and CFO to groups of institutional investors, both on an ad hoc basis and linked to our half and full-year results announcements;
  • The programme covers a range of major global financial centres, typically including the UK, Europe, North America and the Asia Pacific region;
  • Regular feedback is provided to the board on the views of our institutional investors following these meetings; and
  • Close contact is also maintained between the investor relations team and a range of City analysts that conduct research on United Utilities.

In 2019/20, through our investor relations programme, we met or offered to meet with 82 per cent (2018/19: 78 per cent), by value, of the active targetable institutional shareholder base (after adjusting for shareholders who do not typically meet with companies, such as indexed funds).

Frequent areas of common interest arising in meetings with investors include operational and environmental performance, customer service, capital investment, efficiency initiatives, regulatory performance, regulatory changes and political risk. Investors are always keen to observe financial stability and are interested in: the level of gearing versus regulatory assumptions; cost of finance; our debt portfolio and debt maturity profile; future financing requirements; and dividends. Investors are also keen to understand how the company is performing relative to the price review allowances and targets each year, along with the potential implications of regulatory change and political risk.

Retail shareholders

Despite the privatisation process being around 30 years ago, we have retained a large number of individual shareholders with registered addresses in the North West of England – in fact, over 50 per cent of registered shareholdings on the share register. We have historically always held our AGM in our region in Manchester, which enables our more local shareholders, many of whom are also our customers, to attend the meeting. We endeavour to hold the meeting at a venue that is both centrally located in the city (to enable shareholders to use public transport should they so wish) while being mindful of the costs.

There is a considerable amount of information on our website, including our online report which provides information on our key social and environmental impacts and performance during the year. Together with the annual and half-yearly results announcements, our annual report and financial statements are also available on our website; these are the principal ways by which we communicate with our retail shareholders. Our company secretariat and investor relations teams, along with our registrar, Equiniti, are on hand to help our retail shareholders with any queries. Information for shareholders can also be found on the inside back cover of this document, with a number of useful website addresses.

Other stakeholders

The board has direct contact with other stakeholder representatives including: Ofwat and YourVoice (the independent customer challenge group). Indeed, the chair of YourVoice regularly attends parts of UUW board meetings to provide an opportunity for discussion, in-depth customer insight and the sharing of views.

Prior to the AGM in 2019, Sara Weller, as chair of the remuneration committee, consulted with shareholders in relation to the revised directors' remuneration policy, which was proposed to shareholders for approval at the 2019 AGM, which was approved by 99.41 per cent of the votes cast.

Engagement with representatives of all our stakeholder groups occurs widely across many aspects of the business, and more information can be found on Engaging our stakeholders.

Further information on stakeholder engagement can be found in the report of the corporate responsibility committee in the Corporate responsibility committee and on the responsibility pages of our website. The stakeholder metrics table (see How we measure our performance) provides data on a number of stakeholder and cultural indicators.

Outcome of 2019 AGM

At the 2019 AGM, votes were cast in relation to approximately 67 per cent of the issued share capital. All 23 resolutions proposed by the board were passed by the required majority; there were no significant votes cast against the board's recommendations.

Votes cast in favour of the reappointment of the board directors were as follows:

Dr John McAdam99.15%Alison Goligher99.26%
Steve Mogford99.66%Russ Houlden99.43%
Stephen Carter99.18%Brian May99.12%
Mark Clare99.18%Paulette Rowe99.34%
Steve Fraser99.52%Sara Weller99.03%

Sir David Higgins was elected with 99.77% of the votes cast in favour.

Relations with banks and credit investors

Running a water and wastewater business, by its very nature, requires a long-term outlook. Our regulatory cycle is based on five-year periods, and we raise associated funding in order to build and improve our water and wastewater treatment works and associated network of pipes for each five-year cycle and beyond. We are heavily reliant on successfully raising long-term funding from banks and credit investors to fund our capital investment programme and refinance upcoming debt maturities.

This requires long-term support from our credit investors who invest in the company by making term funding available in return for receiving interest on their investment and repayment of principal on maturity of the loans or bonds. We arrange term debt finance in the bond markets (with maturities typically ranging from seven years to up to 50 years at issue). Debt finance is raised via the group's London listed multi-issuer Euro Medium Term Note Programme, which gives us access to the sterling and euro public bond markets and privately arranged note issues. Committed credit facilities are arranged with our relationship banks on a bilateral basis. Additionally, the European Investment Bank (EIB), which is the financing arm of the European Union (EU), remains our single biggest lender, currently providing around £1.8 billion of loan funding supporting past capital investment programmes.

Given that the UK left the EU on 31 January 2020, we are unlikely to obtain future funding from the EIB under its existing mandate, with our existing loan portfolio with the EIB entering into 'run-off' in line with the scheduled maturities of each loan. A greater proportion of the group's term finance is therefore likely to come from the debt capital markets, and during the year the group raised a total of £650 million of term funding in the sterling bond market.

The group currently has gross borrowings of circa £8,363 million. Given the importance of debt funding to our group, we have an active credit investor programme coordinated by our group treasury team, which provides a first point of contact for credit investors' queries and maintains a dedicated area of the company's website. One-to-one meetings are held with credit investors through a programme aimed at the major European fund managers known to invest in corporate bonds that may be existing holders of the group's debt or potential holders. Regular mailings of company information are sent in order to keep credit investors informed of significant events. The treasury team has regular dialogue with the group's relationship banks and the EIB and the credit rating agencies. More information can be found on our website at unitedutilities.com/corporate/investors/credit-investors

Rating agency services continue to be provided to the group by Moody's Investors Service Limited, Fitch Ratings Ltd and S&P Ratings Europe Limited under contracts signed at the beginning of 2020 for an initial three-year term. Existing and future debt capital markets issuance by the group will therefore continue to benefit from solicited ratings with all three rating agencies.

Chairman of the board

The role and behaviour of the Chairman is fundamental to the effective operation and decision-making of the board and in creating an atmosphere where open and frank discussion is facilitated and encouraged. The roles and responsibilities of the Chairman are set out as part of the company's governance framework. Sir David Higgins took over the role as Chairman after Dr John McAdam stepped down with effect from 31 December 2019. Sir David was appointed to the board in May 2019, as chairman designate; he was independent on appointment when assessed against the circumstances set out in provision 10 of the Code. United Utilities Group PLC is Sir David's first chairmanship of a UK-based FTSE 100 company, and as such the nomination committee felt that a handover period between John and Sir David would be of particular benefit, and at a particularly critical time for the company in its five-year regulatory cycle. The 2019/20 annual board and committee evaluation process was conducted in December/January prior to Sir David assuming chairmanship of the board, and reflected John's tenure as chairman.

It is the role of the Chairman, supported by the company secretary, to drive forward the business agenda of board meetings to ensure that the board is kept abreast of the regulatory drivers and strategic needs of the business.

It is also the role of the Chairman, supported by the company secretary, to ensure that the directors receive accurate, timely and clear information. The Chairman and company secretary hold regular meetings to discuss agenda items and board materials. Board packs are distributed electronically five days before the meeting. Ensuring board materials are of an appropriate length, on what can be particularly complex and technical issues, is a constant challenge.


   Division of responsibilities

Code principleEvidence and outcomes
Principle F:
The chair leads the board and is responsible for its overall effectiveness in directing the company. They should demonstrate objective judgement throughout their tenure and promote a culture of openness and debate. In addition, the chair facilities constructive board relations and the effective contribution of all non-executive directors, and ensure that directors receive accurate, timely and clear information.
Chairman of the board. Sir David Higgins was independent on appointment when assessed against the circumstances set out in provision 10, his biography is in the Board of directors.
Principle G:
The board should include an appropriate combination of executive and non-executive (and, in particular, independent non-executive) directors, such that no one individual or small group of individuals dominates the board's decision-making. There should be a clear division of responsibilities between the leadership of the board and the executive leadership of the company's business.
Board of directors for our reporting against code provision 10; and the governance structure of the board and its principal committees in the Governance structure of the board and its principal committees.
Principle H:
Non-executive directors should have sufficient time to meet their board responsibilities. They should provide constructive challenge, strategic guidance, offer specialist advice and hold management to account.
Conflicts of interest and time commitment.
Principle I:
The board, supported by the company secretary, should ensure that it has the policies, processes, information, time and resources it needs in order to function effectively and efficiently.
The board evaluation seeks the view of board members on the whether it receives the necessary support and information, see Nomination committee.


Conflicts of interest and time commitment

The following section sets out the company's compliance with Code provision 7.

The company's articles of association contain provisions which permit unconflicted directors to authorise conflict situations. Each director is required to notify the Chairman of any potential conflict or potential new appointment or directorship, and the board reviews the position of each director annually. No changes were recorded that would impact the independence of any of the directors.

The board does not specify the precise time commitment it requires from its non-executive directors in taking on the role as they are expected to fulfil it and manage their diaries accordingly. The board is content that none of its directors are overcommitted and unable to fulfil their responsibilities as a board director for United Utilities and are not overboarded. Each individual's circumstances are different, as is their ability to take on the responsibilities of a non-executive directorship role. Should a director be unable to attend meetings on a regular basis, not be preparing appropriately or not contributing appropriately to board discussions, the Chairman would be responsible for discussing the matter with them and agreeing a course of action. During the year, Brian May was appointed as a non-executive director at ConvaTec Plc with effect from 2 March 2020; Brian sought permission from the board prior to accepting the appointment, which the board endorsed taking into account that Brian had retired from his executive director's role at Bunzl Plc on 31 December 2019. The board approved the appointment of Sara Weller, as a non-executive director of BT Group Plc with effect from July 2020.

Executive directors are not normally allowed to take on more than one non-executive position. During the year, Russ Houlden, whose retirement was announced on 5 February 2020, was appointed as a non-executive director of Babcock International Group PLC (Babcock) with effect from 1 April 2020, in addition to his membership of the supervisory board and his role as chairman of the audit committee at Orange Polska SA. The board regarded Russ's request in relation to the non-executive position at Babcock to be an acceptable exception to the normal rules, given his impending retirement from United Utilities.