Annual Report 2016 | Page 40

Annual Report 2016
“ The financial results were supported by continuing tight cost control and focus on cash flow .”
Annual Report 2016

STRATEGIC REPORT

Liquidity headroom of

£ 44.8m

“ The financial results were supported by continuing tight cost control and focus on cash flow .”
• Water quality - the risk that South Staffs Water is unable to meet its legal and regulatory obligations for the supply of clean , safe drinking water or that water quality is not of an acceptable standard
• Market and regulatory reform - the risk of non-compliance within a regulatory environment which is complex and changing and the risk of these changes having a detrimental impact on the success and financial position of the Group
• Asset quality and maintenance - the risk of failure of key infrastructure and other assets or processes which may result in South Staffs Water ’ s inability to provide a continuous supply of clean , safe drinking water
• Availability of adequate water resources - the risk that , due to inadequate water resources , South Staffs Water is unable to meet its legal and regulatory obligations for the secure and resilient supply of water
• Customer service - the risk of failure to maintain industry leading customer service levels to ensure that the Group is delivering what customers require
• Security and availability of information and systems - the risk that the security over the Group ’ s information and assets is breached and the risk to the Group of the loss of key systems
• Economic uncertainty - the risk to the Group of uncertain future economic conditions , including inflation , interest rates , availability of capital markets and customer creditworthiness
Long term viability and financial resilience The Group has prepared a detailed business plan which states its long-term strategic objectives and operational plans and the key business issues that the Group faces both now and those anticipated in the future and how the Group proposes to address these issues .
As part of this business planning process , the Group has assessed its future prospects and , as part of this assessment , has prepared operational forecasts including expectations of its performance in important operational matters . The Group has also prepared consolidated financial forecasts for the three-year period to 31 March 2019 , which reflect the stated strategic objectives and operational plans , and include but are not limited to trading forecasts with turnover , operating and capital maintenance costs along with cash flow projections including operating cash flows , the planned investment programme , tax and finance related cash flows . The level of net debt is also projected through the period and is compared to the level of gearing as permitted in the Group ’ s borrowing covenants as is its interest cover .
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