2.1 Director’s report

THE BOARD

The Board is responsible for our overall direction and performance, including its efficiency and effectiveness as a public body. Members come from various business backgrounds and bring a wealth of knowledge and expertise.

During this period, our Board was chaired by Donald MacRae until his resignation on 21 October 2024. Following his departure, Ronnie Hinds was appointed as interim chair. Three other members were Robin McGill (chair of the ARC), Ann Allen, and Morag Sheppard.

During this period, Ronnie Hinds's interim chair appointment was extended until 31 December 2025, and Morag Sheppard’s interim member appointment was extended until 15 October 2025.

Scottish Ministers appoint members of the Board. The length of appointments may vary to ensure continuity of membership, but they are usually three or four years. A further term is possible, subject to evidence of effective performance and satisfying the skills, knowledge, and personal qualities required on the Board at the time of re-appointment.

A summary of the official appointment dates for members serving during 2024-25 is detailed below.

Name	Position	Initial appointment date	Re-appointment date	Appointment end date
Donald MacRae*	Chair	01/07/2016	01/05/2022	30/04/2026
Ronnie Hinds	Interim Chair	21/10/2024	-	31/12/2025
Ronnie Hinds**	Interim Member	15/07/2024	-	15/07/2025
Morag Sheppard	Interim Member	15/07/2024	-	15/10/2025
Ann Allen***	Member	01/07/2020	01/07/2024	30/06/2028
Robin McGill	Member	01/01/2020	01/01/2024	31/12/2027

*Donald MacRae resigned from the Board on 21 October 2024. 
**Ronnie Hinds was appointed interim Chair from 21 October 2024.
***Ann Allen resigned from the Board on 30 April 2025. 

The CEO of WICS is also a member of the Board. The Board appointed David Satti as Interim Chief Executive, effective 20 March 2024.

DIRECTORS 

During 2024–25, the leadership team, alongside the Interim Chief Executive, was made up of:

• Donna Very, Director of International and Corporate Affairs
• Colin McNaughton, Director of Analysis
• Andrea Mancini, Director of Price Reviews

As part of a leadership restructure in early 2025, roles were realigned to strengthen accountability and focus. From January 2025, David Satti was appointed Director of Pricing, and Colin McNaughton became Director of Performance and Reporting.

At the close of the reporting period, two director positions, the Director of Finance and Corporate Affairs and the Director of Markets, were being filled. Since year-end, the Director of International and Corporate Affairs has accepted voluntary severance (June 2025), and David Satti has been appointed as the permanent Chief Executive. Recruitment will continue in 2025–26 to ensure the leadership team has the full complement of skills and experience needed to deliver WICS’ objectives.

INTERESTS HELD BY THE BOARD 

Our Board Members and Directors are asked to complete a declaration of interest, and we publish a register of interests on our website. During the year, neither the Board Members nor Directors held interests in other bodies with which WICS has dealings.

AUDITORS

Under the Public Finance and Accountability (Scotland) Act 2000, our independent auditors are appointed by the Auditor General for Scotland. Audit Scotland has been appointed as our external auditors for five years from 2022-23 to 2026-27. The appointment is undertaken in accordance with the Code of Audit Practice approved by the Auditor General.

The fees paid to Audit Scotland for the independent statutory audit for the financial year 2024-25 are £22,963 (2022-23: £22,460).

All relevant audit information has been made available to our auditors, and the Accountable Officer has taken steps to ensure that the auditors are aware of any relevant audit information.

OTHER INFORMATION 

We had no notifiable data breaches to the Information Commissioner’s Office until 31 March 2025.  

SIGNIFICANT EVENTS SINCE THE END OF THE FINANCIAL YEAR

In June 2025, WICS agreed on a voluntary severance arrangement with the Director of International and Corporate Affairs. As the agreement was entered into after 31 March 2025, it does not give rise to a liability in these financial statements. The payment will be recognised in the financial year 2025–26.

2.2  Statement of Accountable Officer’s responsibilities

Under the Water Industry (Scotland) Act 2002, as amended by the Water Services etc. (Scotland) Act 2005, Scottish Ministers have directed WICS to prepare for each financial year a statement of accounts in the form and on the basis set out in the Accounts Direction.  The financial statements are prepared on an accruals basis. They must give a true and fair view of our state of affairs and our income and expenditure, statement of financial position and cash flows for the financial year.

In preparing the financial statements, the Accountable Officer is required to comply with the requirements of the FReM, and to:

• Observe the Accounts Direction issued by Scottish Ministers, including the relevant accounting and disclosure requirements, and apply suitable accounting policies on a consistent basis.
• Make judgements and estimates on a reasonable basis.
• State whether applicable accounting standards have been followed, as set out in FReM, and disclose and explain any material departures in the financial statements.
• Prepare the financial statements on a going-concern basis.

The Permanent Secretary has appointed the CEO as the Accountable Officer of WICS. The responsibilities of an Accountable Officer, including responsibility for the propriety and regularity of the public finances for which the Accountable Officer is answerable, for keeping proper records and for safeguarding our assets, are set out in the SPFM published by Scottish Ministers.

So far as the Accountable Officer knows, there is no relevant audit information of which WICS’ auditors are unaware. The Accountable Officer has taken all the steps he should have taken to make himself aware of any relevant audit information and establish that WICS’ auditors are aware of that information.

The Accountable Officer confirms that the annual report and accounts are fair, balanced, and understandable and that he takes personal responsibility for them and the judgments required to determine whether they are fair, balanced, and understandable.

2.3 Governance Statement

THE GOVERNANCE FRAMEWORK

WICS is a non-departmental public body. The broad framework in which WICS operates is set out in a Framework Document, which defines key roles and responsibilities which underpin the relationship between WICS and the Scottish Government. While this document does not confer legal powers or responsibilities, it forms a key part of WICS’ accountability and governance framework.

Non-departmental public bodies are directed by Scottish Ministers to comply with the SPFM. The SPFM provides guidance on the proper handling of public funds to ensure:

• Compliance with statutory and parliamentary requirements.
• Value for money.
• High standards of propriety.
• Effective accountability and robust systems of internal control.

The SPFM is issued by Scottish Ministers to provide guidance to the Scottish Government and other relevant bodies on the proper handling and reporting of public funds. It sets out the relevant statutory, parliamentary and administrative requirements, emphasises the need for economy, efficiency and effectiveness, and promotes good practice and high standards of propriety.

The Accountable Officer is responsible for maintaining a sound governance framework that supports the achievement of the organisation’s policies, aims, and objectives set by Scottish Ministers, while safeguarding the public funds and assets for which they are personally responsible, in accordance with their responsibilities.

THE PURPOSE OF THE GOVERNANCE FRAMEWORK

The governance framework comprises the systems, processes, culture, and values that govern our activities and behaviours. It enables us to monitor the achievement of our strategic objectives and consider whether those objectives have led to the delivery of appropriate, cost-effective services.

The internal control system is a significant part of that framework and is designed to manage risk to a reasonable level. It cannot eliminate all risks of failure to achieve policies, aims, and objectives, and can therefore only provide reasonable, not absolute, assurance of effectiveness. The system of internal control is based on an ongoing process designed to identify and prioritise risks to the achievement of our policies, aims, and objectives. It evaluates the likelihood of those risks being realised and the impact should they be realised, and manages them efficiently, effectively, and economically.

WICS’ broader governance framework is currently under review to ensure it remains robust and proportionate. As part of this process, the Framework Document, which outlines the respective roles and responsibilities of WICS, its Board, and the Scottish Government, was comprehensively reviewed, updated, and finalised in early 2025.

The governance framework has been in place for the full year ended 31 March 2025 and up to the date of approval of the annual report and accounts.

THE BOARD 

The Board's role is to provide strategic leadership, direction, support, and guidance to ensure that we deliver and are committed to delivering our functions effectively, efficiently, and in accordance with Scottish Ministers' aims, policies, and priorities.

Board members are responsible for ensuring that we fulfil our statutory duties and any targets agreed upon with Scottish Ministers, and for promoting the efficient and effective use of staff and other resources in accordance with Best Value principles.

The Board’s scheme of delegation details its role and responsibilities in full. Board members are required to comply with the Code of Conduct for board members. They discharge their duties in accordance with the guidance set out in their appointment letters and On Board: A Guide for Members of Statutory Boards. 

Board Members’ terms of appointment and attendance

The Board meets regularly and held seven formal meetings during 2024-25. At each formal meeting, the Board was mandated to focus on strategic issues relating to monitoring Scottish Water’s performance, the Strategic Review of Charges, and developments in the retail market. The Board held three informal update meetings to discuss current issues and matters arising between formal meetings.

Members have participated in Board business by attending and contributing to board and ARC meetings since their appointment.

In addition to attending Board meetings and strategy meetings, Board Members engage with stakeholders non-executively. Reports of engagement activity are provided at each subsequent Board meeting to ensure that the activity is documented and to facilitate discussions among members and management regarding any issues arising from this activity.  

Statistics on attendance at board meetings and board composition are presented in the tables below.

Board attendance

Key

X = full attendance

P = attendance for part of the meeting

Name	Position	Formal board meeting	Board update meeting	ARC meeting
Donald MacRae	Chair	6/6 X	2/2 X	-
Ronnie Hinds	Interim Member / Interim Chair	5/5 X	1/2 X	1/1 X
Morag Sheppard	Interim Member	5/5 X	2/2 X	3/3 X
Ann Allen	Member	4/7 (P, P, P)	3/3 X	1/1 X
Robin McGill	Member	5/7 (P, P)	3/3 X	4/4 X
David Satti	Interim CEO	7/7 X	3/3 X	4/4 X

Board composition

The non-executive gender representation  of WICS’ Board during the period 1 April 2024 to 31 March 2025 was:

Date	Total	Female	% female
1 April 2024	3	1	33%
15 July 2024	5	2	40%
31 March 2025	4	2	50%

During the year, non-executive Board membership ranged from 3 to 5 members, with female representation varying between 33% and 50%.

When the Board was at full complement from 15 July 2024 until 31 March 2025, the length of service was as follows: 

Length of service	%
0-2 years	40
3-5 years	20
5+ years	40

Board effectiveness 

As part of our commitment to strong governance, the Board undertook a self-effectiveness review during 2024–25. This provided an opportunity for Members to reflect on how the Board operates, identify areas of good practice, and agree on improvements to strengthen its effectiveness.

This self-evaluation is aligned with key areas within WICS’ Governance Framework and highlights both strengths and areas for improvement.

The self-effectiveness review covered the period 1 April 2024 to 31 March 2025. However, only two Members have been in post for the full duration of this period.

The review confirmed that the Board operates with integrity, high ethical standards, and effective oversight through the ARC. Meetings are well-structured and supported by comprehensive papers, enabling open discussion and clear decision-making. Staff engagement with the Board was also highlighted as a positive feature.

The review also identified several areas for improvement:

• Board capacity and composition – at the time of this review (May 2025) the Board was at the statutory minimum. Additional appointments are required to enhance resilience, improve succession planning, and broaden the scope of skills (for example, economic regulation and competition law).
• Governance framework – Members emphasised the importance of completing revisions to the Scheme of Delegation and other key governance documents to clarify roles and responsibilities.
• Strategic vs operational focus – given recent challenges, the Board has necessarily engaged more in operational matters. Members recognised the need to return to a more strategic role once stability is restored.
• Induction and succession planning – formalising induction arrangements and reintroducing individual Board evaluations were identified as necessary steps for strengthening performance and development.
• Stakeholder engagement – Members agreed there is scope to increase direct Board-level engagement with stakeholders, including Scottish Water, to reinforce WICS’ role and support delivery of the Strategic Review of Charges.

Several actions have already been implemented or are in progress as part of our organisational change programme, including:

Improvement area(s)	Action	Status
Governance framework Strategic vs operational focus	Review and revise WICS’ governance framework  (Rules of Procedure, Scheme of Delegation and Code of Conduct)	Completed in June 2025.
Board resource, capacity and performance	Review and develop a Board Induction programme	Completed in September 2025.
Board resource, capacity and performance	Recruit and on-board three new Board Members	Completed in September 2025.
Stakeholder engagement	Develop a communications strategy	Completed in August 2025.

Further planned actions include:

• A dedicated strategy session once new Members are onboard, to refocus the Board on long-term priorities and developing the 2027–33 Corporate plan.
• Reintroducing Board Member appraisals in line with best practice.
• Incorporating a suite of SMART KPIs into the 2027–33 Corporate plan to strengthen performance reporting.

Through this improvement programme, the Board is committed to building on its strengths and ensuring it is well-resourced, well-informed, and focused on delivering strategic oversight in the years ahead.

CORPORATE PLAN

As agreed with the Scottish Ministers, our corporate plan sets out WICS’ strategic aims and objectives. It outlines the key objectives and performance targets for the regulatory period, along with the strategies for achieving them. The plan also explains how our work contributes to the Scottish Government’s primary purpose and aligns with the National Performance Framework.

For the current regulatory period (2021–2027), we have developed a comprehensive corporate plan that outlines the measures against which we assess and report our performance. In March 2025, we updated this plan's objectives, outcomes and KPIs to reflect organisational changes following the Section 22 report and to ensure alignment with the decision to pause revenue-generating international projects. These updated objectives are outlined in our 2025–26 annual work plan and serve as the basis for reporting in this annual report.

RISK MANAGEMENT

All bodies to which the SPFM is directly applicable must operate a risk management strategy in accordance with relevant guidance issued by Scottish Ministers. The SPFM outlines the general principles for a successful risk management strategy, which we have used to inform our own strategy.

WICS maintains internal control and risk management systems to support the achievement of its statutory duties and objectives, while safeguarding public funds and assets. The ARC oversees these arrangements and receives regular reports on the corporate risk register, compliance and internal audit.

The ARC oversees risk management at WICS and considers the corporate risk register at each meeting. During 2024–25, the ARC collaborated closely with the leadership team to review risk ownership, scoring, and mitigation strategies. The leadership team also reviews the register on a weekly basis. It discusses whether any matters require escalation to the ARC or Board level, ensuring that emerging risks are addressed promptly and transparently.

Towards the end of the financial year, WICS prepared a revised risk management strategy, which was formally adopted in May 2025. Although this falls outside the reporting period, it marks a significant development in establishing a more mature and consistent approach to risk management. The new strategy provides clearer definitions of risk appetite, introduces assurance mapping to test the adequacy of controls, and outlines the creation of organisation-wide risk registers, ensuring that risk considerations are embedded in day-to-day decision-making.

Additionally, WICS has launched a staff training programme to build awareness of risk management principles and support a culture in which risks are consistently identified, escalated, and monitored across the organisation.

These changes represent a shift from a reactive, compliance-based approach to one where risk management is integrated into governance and strategic decision-making.

BOARD COMMITTEES 

Audit and risk committee (ARC)

The Board has appointed the ARC to assist in fulfilling the Board’s statutory and fiduciary responsibilities by reviewing the comprehensiveness and reliability of assurances on governance, risk management, the control environment, and the integrity of financial statements and annual reports. The Board appoints members to the ARC, which is governed by its terms of reference and remit.

The ARC meets to receive reports from internal and external auditors and our employees. The internal and external auditors may attend all ARC meetings and contact the Chair of the ARC at any time to express specific concerns identified during audit work.

The ARC meets at least four times a year. During the year, Robin McGill chaired the ARC. The board appoints members based on the breadth of skill, knowledge, and experience they can bring to the ARC.

The ARC operates independently and reports to the board. The ARC presented its annual report to the May 2025 board meeting, outlining the work undertaken by the ARC to review its control systems and financial reporting processes, as well as to measure and manage the risk inherent in delivering the organisation’s objectives.

The annual report confirmed that the ARC had discharged its responsibilities effectively during the year, with a focus on risk management, financial procedures, and organisational governance.

The ARC noted significant progress in strengthening financial controls, embedding new policies and procedures, and taking a more consistent and mature approach to risk management. It welcomed the constructive engagement of both internal and external audit and acknowledged management's commitment to responding to recommendations and implementing improvements.

While recognising that further work is required to refine assurance mapping, strengthen procurement controls, and embed cultural change across the organisation, the ARC concluded that arrangements for governance, risk management and internal control had improved materially during 2024–25 and were continuing to move in the right direction.

Organisational change assurance group (OCAG) 

The OCAG was established in late 2024 to oversee WICS’s organisational change programme independently. As the group came into being towards the end of the financial year under review, its initial role was to agree its remit and to begin considering the key risks and dependencies associated with the change programme.

Early discussions focused on governance and accountability arrangements, financial and risk controls, and embedding cultural change and clearer role responsibilities across the organisation.

Therefore, much of OCAG’s substantive work has continued into 2025–26. The group is now providing the leadership team with independent challenge and assurance to the Board that the reform programme is being delivered in line with best practice and that improvements are being embedded sustainably.

INTERNAL AUDIT

Internal audit is central to good governance in any public sector organisation. It provides independent and objective assurance on the adequacy of risk management, control, and governance arrangements, helping the board and ARC hold management accountable and safeguard public funds. In doing so, internal audit supports transparency, accountability, and continuous improvement — all of which are vital to maintaining public confidence.

In October 2024, following a competitive tender process, WICS appointed Azets as its new internal auditors. Although their appointment came midway through the financial year, the auditors successfully delivered the full internal audit programme for 2024–25. This included reviews of financial procedures, risk management, and the regulatory framework:

• The review of financial procedures confirmed that material improvements had been made to expenditure controls, delegated authorities and documentation.
• The risk management review found that WICS had adopted a more mature approach, noting that further refinement is needed to ensure consistency in risk scoring, alignment with the organisation’s developing risk appetite, and clearer ownership and reporting.
• The regulatory framework review examined the robustness of WICS’s approach to overseeing Scottish Water and the retail market. It highlighted strengths in transparency and stakeholder engagement, while recommending further work to formalise documentation and to ensure consistency in how regulatory judgements are recorded and reviewed.

Azets also examined progress against earlier audit recommendations. Four of the 24 actions still open when appointed were confirmed as complete by March 2025, with structured arrangements to track and close the remainder.

In its annual report to the ARC in May 2025, Azets concluded:

“In our opinion, WICS has a framework of governance, risk management and controls that provides reasonable assurance regarding the effective and efficient achievement of objectives.”

The ARC and board welcomed this opinion, recognising the progress made in a short period and the value of the new audit team's constructive and professional approach.

The internal audit programme has provided clear and practical recommendations that help embed a stronger culture of compliance and accountability across the organisation. In 2025–26, further good progress has already been made: by August 2025, only five audit actions remain open, demonstrating the organisation’s commitment to addressing all outstanding issues and moving towards a more resilient and mature control environment.

Review of effectiveness 

As the Accountable Officer of WICS, I am responsible for reviewing the effectiveness of the internal control systems. My review of the effectiveness of these systems is informed by the work of the internal auditors and the executive managers within the organisation. The executive managers are responsible for developing and maintaining the internal control framework.

I also rely on the comments made by the external auditors in their management letter and other reports. The ARC has advised me on the systems' effectiveness. Based on the evidence available to me, I am satisfied that WICS maintained an adequate and improving framework of governance, risk management, and internal control throughout 2024–25 and up to the date of approval of these accounts.

Significant progress has been made during the year to strengthen financial controls, update key governance documents, and embed a more mature and consistent approach to risk management. The findings of internal and external audit, along with the work of the ARC and the Organisational Change Assurance Group, assure that our governance arrangements are operating effectively and that identified areas for improvement are being addressed.

While further work is required to consolidate these improvements and ensure full embedding across the organisation, I am confident that the actions taken during the year have materially enhanced WICS’s overall control environment and positioned it well to deliver its statutory functions with integrity, transparency, and accountability.

2.4 Remuneration and staff report

REMUNERATION POLICY

The Board and CEO’s remuneration packages are agreed upon within the parameters set by the Scottish Government’s pay policy. The Scottish Government approves the daily fee to be paid to the chair, members, and the CEO’s remuneration package.

Board Members contribute at least one day per week to supporting WICS’ activities, and the Chair at least two days per week.

There is no separate remuneration committee, and remuneration-related issues are brought to the attention of the Board as they arise. No performance payments were made in 2024-25 in accordance with the Scottish Government pay policy.

DIRECTORS’ SALARIES AND PENSION ENTITLEMENTS 

The total overall remuneration of the CEO in the year was £141,969 (2023-24: £218,784 ).  

The CEO and other directors are active Falkirk Council Pension Scheme members. The table below outlines the total remuneration of all the directors, including accrued pension benefits:

Audited information	Gross salary £(000)	2024-25 Pension benefits £(000)	Total £(000)	Gross salary £(000)	2023-24 Pension benefits £(000)	Total £(000)
David Satti, CEO and Accountable Officer	140-145	50-55	195-200	125-130	25-30	155-160
Colin McNaughton, Director of Analysis	130-135	45-50	180-185	125-130	30-35	155-160
Donna Very, Director of International and Corporate Affairs	130-135	45-50	175-180	125-130	10-15	140-145
Andrea Mancini	100-105	40-45	145-150	125-130	25-30	155-160
Alan Sutherland, former CEO	-	-	-	210-215	15-20	230-235

The retirement benefits of the directors are as follows: 

Audited information				Cash equivalent transfer value
	Accrued pension as at 31 March 2025 and related lump sum £(000)	Accrued pension as at 31 March 2024 and related lump sum £(000)	Change in pension net of inflation and related lump sum £(000)	At 31 March 2025 £(000)	At 31 Marc 2024 £(000)	Increase net of members' contribution £(000)
David Satti	20-25 No lump sum	15-20 No lump sum	0-5 No lump sum	228	181	27
Colin McNaughton	15-20 No lump sum	10-15 No lump sum	0-5 No lump sum	207	165	25
Donna Very	30-35 Lump sum: 0-5	30-35 Lump sum: 0-5	0-5 Lump sum: -2.5-0	610	517	63
Andrea Mancini	20-25 No lump sum	20-25 No lump sum	0-5 No lump sum	335	229	88
Alan Sutherland	-	-	0-2.5 Lump sum: -2.5-0	-	706	4

The directors’ normal retirement age is 67 for members born before April 1977 and 68 for all others. This is the earliest date the member can take full benefits without consent and reduction. The directors would not become entitled to any other benefits on early retirement.

BOARD REMUNERATION 

The remuneration of the board members, other than the CEO, was as follows:

Audited information	2024-25		2023-24
Name, position	Day rate (£)	Total £(000)	Day rate (£)	Total £(000)
Ronnie Hinds, interim chair	350	15-20	-	-
Ronnie Hinds, interim member	304	0-5	-	-
Morag Sheppard, interim member	304	10-15	-	-
Robin McGill, member	304	15-20	304	15-20
Ann Allen, member	304	15-20	304	15-20
Donald MacRae	383	20-25	383	35-40
Jo Armstrong, member	-	-	304	10-15

Board members are not members of the pension scheme. No benefits in kind were paid in the year.

NON-SALARY REWARDS (AUDITED INFORMATION)

No taxable benefits were paid to employees during the year (2023-24: gifts—£207; entertaining—£519; homeworking—£704; eyecare—£690; tax and national insurance on benefits—£1,718).  

FAIR PAY DISCLOSURE (AUDITED INFORMATION)

Reporting bodies must disclose the relationship between the remuneration of the highest-paid director in their organisation and other employees. The following table sets out information on staff remuneration and numbers, including the relationship between the remuneration of the highest-paid director and that of other employees.

Metric	2024-25	2023-24	% change
Staff remuneration - lowest (£000)	25-30	25-30
Staff remuneration - highest (£000)	140-145	210-215
Highest paid director (CEO) (£000)	140-145	210-215
Average salary, excluding the CEO (£000)	60-65	60-65
25th percentile (£)	39,464	42,897	8% reduction
25th percentile pay ratio	3.6	5.0
50th percentile (£)	45,024	43,818	3% increase
50th percentile pay ratio	3.2	4.9
75th percentile (£)	89,914	101,515	11% reduction
75th percentile pay ratio	1.6	2.11
Average number of persons employed, including the CEO	22	25
Average number of persons employed - directors	4	5
Average number of persons employed - other employees	18	20
Average number of persons employed - agency staff	0.4	-

The reduction in the highest paid director’s remuneration from £210–215k in 2023–24 to £140–145k in 2024–25 reflects the change in Chief Executive during the previous year and the appointment of a new Chief Executive on revised terms. This has also contributed to lower pay ratios across the organisation.

Average salaries for staff excluding the Chief Executive remained stable at £60–65k. Movements in the 25th, 50th and 75th percentiles reflect the organisation’s relatively small size and the impact of vacancies during the restructure.

The average number of staff employed during the year decreased from 25 to 22 FTE, mainly due to vacant posts arising from the organisational change programme. Within this, the average number of directors fell from five to four. Temporary agency staff were also engaged for part of the year, averaging 0.4 FTE, to provide specialist HR and project management support.

EXIT PACKAGES

No exit packages were paid to employees during the year (2023-24: £86,268 paid to the former Chief Executive following his resignation, effective 31 December 2023). A voluntary severance arrangement for a leadership team member was agreed upon after the year-end and is therefore not included within the figures reported for 2024–25. Further details are provided in the note on significant events since the end of the financial year in section 2.1.

Staff composition

At the end of the financial year, the number of employees of each sex was as follows:

	Male	Female	Total
Directors	2	1	3
Other employees	10	9	19
Agency staff	-	2	2

Total staff costs for the year were £2,105,159 (2023-24: £2,378,966). Staff costs are outlined in more detail in note 3.5.4 of the financial statements.

All employees hold permanent UK employment contracts. As mentioned above, two part-time agency staff were in place to support the organisational change programme. One provided HR support for two and a half days per week from July 2024, while the other was appointed in February 2025 as a project manager to assist with the programme's delivery.

OTHER EMPLOYEE INFORMATION

Key employee metrics

The table below outlines the key staff metrics for the year. The information does not include agency staff.

	2024-25			2023-24
Metric	Male	Female	Total	Male	Female	Total
Total staff employed (%, avg FTE)	50%	50%	22	51%	49%	25
of which were recruited in the year	68%	32%	0.5	100%	-	1
Part-time workers (%, avg FTE)	-	-	-	-	-	-
of which were recruited in the year	-	-	-	-	-	-
Employees earning < £25,000	-	-	-	-	-	-
Employees earning £25,001 - £40,000	38%	62%	4	29%	71%	5
Employees earning £40,001 - £80,000	52%	48%	11	56%	34%	11
Employees earning < £80,000	57%	43%	7	61%	39%	8
Employees aged 16-24	-	-	-	100%	-	1
Employees aged 25-34	50%	50%	10	46%	54%	13
Employees aged 35-49	51%	49%	7	57%	43%	7
Employees aged 50+	52%	48%	4	60%	40%	5
Employees from ethic minorities	-	-	-	-	-	-
of which were recruited in the year	-	-	-	-	-	-
Employees with a declared disability	-	-	-	-	-	-
of which were recruited in the year	-	-	-	-	-	-
Staff turnover (%)	9%	18%	14%	16%	8%	12%
of which were recruited in the year	-	-	-	-	-	-
Average number of sick days per person	-	26	13	-	7	4
Average length of absences (days)	1	13	12	1	9	7

Equality and diversity in our workplace

We remain committed to valuing and promoting equal opportunities and diversity in all aspects of our work. Our workforce in 2024–25 remained evenly balanced between men and women (50/50), consistent across most age groups. Staff are represented across all pay bands, though women are more strongly represented in the £25,001–£40,000 range while men predominate at higher levels.

We adhere to the Scottish Government’s Pay Policy, which ensures a progressive approach to pay and protects those on lower incomes. Our staff handbook sets out our equal opportunities policy, and we actively promote a culture in which all employees can develop their potential, regardless of protected characteristics.

Throughout the year, all employees participated in equality, diversity, and inclusion training, demonstrating our ongoing commitment to awareness and improvement.

Sickness absence and staff turnover

Staff turnover decreased slightly this year, from 17% in 2023–24 to 14% in 2024–25. Female staff experienced higher turnover (18%) than male colleagues (9%).

Sickness absence also increased significantly, with the average number of sick days per person rising to 13, compared with 4 the previous year. The average length of absence also increased from 7 to 12 days.

We continue to provide supportive policies for employees experiencing ill health, including flexible return-to-work arrangements. In addition, our confidential employee assistance programme offers counselling and guidance for staff, helping to address personal and work-related concerns. These trends highlight the importance of our renewed focus on health and well-being.

Health, safety and well-being

Our health and safety policy is committed to providing a safe and supportive working environment. Most staff continued to work from home during the year, though a phased return to office working began in 2024–25. Annual workstation assessments were carried out for all employees, with equipment and well-being needs followed up on individually.

Staff survey results on hybrid working showed that many colleagues value flexibility, the opportunities for collaboration, and the real-time support that an office environment provides. These insights have helped inform the new hybrid working policy, which requires a minimum office presence of two days per week on average, every quarter.

We undertook several well-being initiatives during the year, including surveys and workshops to explore feedback in more depth.  The recent internal audit on whistleblowing highlighted the need to strengthen our processes and engagement in this area.  

Following the appointment of a Head of HR, collaborative work is ongoing to review, develop, and refresh employment policies to ensure they are legally compliant, comprehensive, user-friendly, and designed to ensure fairness, equity, and consistency.  The level of employee engagement in executing these policies, and the design of these policies themselves, underpin the continuing journey of cultural change at WICS.

Alongside an annual national HSE Wellbeing Survey, which was rolled out in 2024-25, a tailored staff survey is being designed to capture eight areas of the employee experience within WICS. This will identify areas requiring more definition, support, focus, or investment to enhance employees' lived experiences.

Learning and development

We actively encourage learning and development for all staff. Our performance management and development framework supports the identification of training needs and opportunities, and we continued to invest in professional development throughout the year.

The appointment of a dedicated HR resource in 2025 has enabled us to strengthen this work. In August 2025, the Audit and Risk Committee and the Board approved new employment policies on recruitment and selection, performance management, career development, training and development, and hybrid working.

Recruitment activity

Recruitment activity during 2024–25 was limited, but three new colleagues joined towards the end of the financial year as part of our organisational change programme. This marked the beginning of a planned renewal and growth period, with further recruitment planned in both the regulatory and corporate services directorates as the change programme progresses.

WICS remains committed to promoting equality and diversity across the organisation, and this commitment has been highlighted within the new recruitment and selection policy, specifically in recognising areas of current underrepresentation in the organisation structure. 

2.5 Parliamentary accountability report

FUNDING

We have a corporate plan, which has been agreed upon with Scottish Ministers and published on our website. We agree with the Scottish Government on the issues to be addressed in the plan and the timetable for its preparation and review. The finalised plan reflects our strategic aims and objectives as agreed by Scottish Ministers, indicative budgets and any priorities set by Scottish Ministers.

Under the 2002 Act, as amended by the 2005 Act, WICS is funded by a levy paid by Scottish Water. Following approval by Scottish Ministers of the corporate plan, the sponsor directorate instructs Scottish Water to pay the amount, determined by WICS, every month. Fees are payable by licensed providers on a cost-recoverable basis, sufficient to meet the costs WICS incurs in exercising its functions relating to water and sewerage services.

The corporate plan, or elements thereof, is updated between Strategic Reviews as and when necessary, and a copy is provided to the sponsoring unit before the Strategic Review period starts.  

LOSSES AND SPECIAL PAYMENTS

There were no losses or special payments in the year (2023-24: £nil).

GIFTS

No gifts were made during 2024-25 (2023-24: £192).

CONTINGENT LIABILITIES

There were no contingent liabilities at 31 March 2025 other than those disclosed at note 3.5.13 (2023–24: £nil).

David Satti
Accountable Officer
11 December 2025

2.6 Independent Auditor’s Report 

Independent auditor’s report to the members of the Water Industry Commission for Scotland, the Auditor General for Scotland and the Scottish Parliament 

REPORTING ON THE AUDIT OF THE FINANCIAL STATEMENTS

Opinion on financial statements 

I have audited the financial statements in the annual report and accounts of the Water Industry Commission for Scotland for the year ended 31 March 2025 under the Water Industry (Scotland) Act 2002, as amended by the Water Services etc. (Scotland) Act 2005. The financial statements comprise the Statement of Comprehensive Net Expenditure, the Statement of Financial Position, the Statement of Cash Flows, the Statement of Changes in Equity and notes to the financial statements, including material accounting policy information. The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards, as interpreted and adapted by the 2024/25 Government Financial Reporting Manual (the 2024/25 FReM).

In my opinion the accompanying financial statements:

• give a true and fair view of the state of the body’s affairs as at 31 March 2025 and of its net expenditure for the year then ended;
• have been properly prepared in accordance with UK adopted international accounting standards, as interpreted and adapted by the 2024/25 FReM; and
• have been prepared in accordance with the requirements of the Water Industry (Scotland) Act 2002, as amended by the Water Services etc. (Scotland) Act 2005 and directions made thereunder by the Scottish Ministers.

Basis for opinion

I conducted my audit in accordance with applicable law and International Standards on Auditing (UK) (ISAs (UK)), as required by the Code of Audit Practice approved by the Auditor General for Scotland. My responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of my report. I was appointed by the Auditor General on 2 December 2022. My period of appointment is five years, covering 2022/23 to 2026/27. I am independent of the body in accordance with the ethical requirements that are relevant to my audit of the financial statements in the UK including the Financial Reporting Council’s Ethical Standard, and I have fulfilled my other ethical responsibilities in accordance with these requirements. Non-audit services prohibited by the Ethical Standard were not provided to the body. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Conclusions relating to going concern basis of accounting

I have concluded that the use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work I have performed, I have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the body’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from when the financial statements are authorised for issue.

These conclusions are not intended to, nor do they, provide assurance on the body’s current or future financial sustainability. However, I report on the body’s arrangements for financial sustainability in a separate Annual Audit Report available from the Audit Scotland website.

Risks of material misstatement

I report in my separate Annual Audit Report the most significant assessed risks of material misstatement that I identified and my judgements thereon.

Responsibilities of the Accountable Officer for the financial statements

As explained more fully in the Statement of Accountable Officer's Responsibilities, the Chief Executive, as the Accountable Officer, is responsible for the preparation of financial statements that give a true and fair view in accordance with the financial reporting framework, and for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Accountable Officer is responsible for assessing the body’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless there is an intention to discontinue the body’s operations.

Auditor’s responsibilities for the audit of the financial statements

My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes  my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. I design procedures in line with my responsibilities outlined above to detect material misstatements in respect of irregularities, including fraud. Procedures include:

• using my understanding of the central government sector to identify that the Water Industry (Scotland) Act 2002, as amended by the Water Services etc. (Scotland) Act 2005, and directions made thereunder by the Scottish Ministers are significant in the context of the body;
• inquiring of the Accountable Officer as to other laws or regulations that may be expected to have a fundamental effect on the operations of the body;
• inquiring of the Accountable Officer concerning the body’s policies and procedures regarding compliance with the applicable legal and regulatory framework;
• discussions among my audit team on the susceptibility of the financial statements to material misstatement, including how fraud might occur; and
• considering whether the audit team collectively has the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations.

The extent to which my procedures are capable of detecting irregularities, including fraud, is affected by the inherent difficulty in detecting irregularities, the effectiveness of the body’s controls, and the nature, timing and extent of the audit procedures performed.

Irregularities that result from fraud are inherently more difficult to detect than irregularities that result from error as fraud may involve collusion, intentional omissions, misrepresentations, or the override of internal control. The capability of the audit to detect fraud and other irregularities depends on factors such as the skilfulness of the perpetrator, the frequency and extent of manipulation, the degree of collusion involved, the relative size of individual amounts manipulated, and the seniority of those individuals involved.

A further description of the auditor’s responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website www.frc.org.uk/auditorsresponsibilities. This description forms part of my auditor’s report.

REPORTING ON REGULARITY OF EXPENDITURE AND INCOME

Opinion on regularity

In my opinion in all material respects the expenditure and income in the financial statements were incurred or applied in accordance with any applicable enactments and guidance issued by the Scottish Ministers.

Responsibilities for regularity

The Accountable Officer is responsible for ensuring the regularity of expenditure and income. In addition to my responsibilities in respect of irregularities explained in the audit of the financial statements section of my report, I am responsible for expressing an opinion on the regularity of expenditure and income in accordance with the Public Finance and Accountability (Scotland) Act 2000.

REPORTING ON OTHER REQUIREMENTS

Opinion prescribed by the Auditor General for Scotland on audited parts of the Remuneration and Staff Report

I have audited the parts of the Remuneration and Staff Report described as audited. In my opinion, the audited parts of the Remuneration and Staff Report have been properly prepared in accordance with the Water Industry (Scotland) Act 2002, as amended by the Water Services etc. (Scotland) Act 2005, and directions made thereunder by the Scottish Ministers.

Other information 

The Accountable Officer is responsible for the other information in the annual report and accounts. The other information comprises the Performance Report and the Accountability Report excluding the audited parts of the Remuneration and Staff Report.

My responsibility is to read all the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If I identify such material inconsistencies or apparent material misstatements, I am required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact. I have nothing to report in this regard.

My opinion on the financial statements does not cover the other information and I do not express any form of assurance conclusion thereon except on the Performance Report and Governance Statement to the extent explicitly stated in the following opinions prescribed by the Auditor General for Scotland.

Opinions prescribed by the Auditor General for Scotland on Performance Report and Governance Statement

In my opinion, based on the work undertaken in the course of the audit:

• the information given in the Performance Report for the financial year for which the financial statements are prepared is consistent with the financial statements and that report has been prepared in accordance with the Water Industry (Scotland) Act 2002, as amended by the Water Services etc. (Scotland) Act 2005, and directions made thereunder by the Scottish Ministers; and
• the information given in the Governance Statement for the financial year for which the financial statements are prepared is consistent with the financial statements and that report has been prepared in accordance with the Water Industry (Scotland) Act 2002, as amended by the Water Services etc. (Scotland) Act 2005, and directions made thereunder by the Scottish Ministers.

Matters on which I am required to report by exception

I am required by the Auditor General for Scotland to report to you if, in my opinion:

• adequate accounting records have not been kept; or
• the financial statements and the audited parts of the Remuneration and Staff Report are not in agreement with the accounting records; or
• I have not received all the information and explanations I require for my audit.

I have nothing to report in respect of these matters.

Conclusions on wider scope responsibilities

In addition to my responsibilities for the annual report and accounts, my conclusions on the wider scope responsibilities specified in the Code of Audit Practice are set out in my Annual Audit Report.

USE OF MY REPORT

This report is made solely to the parties to whom it is addressed in accordance with the Public Finance and Accountability (Scotland) Act 2000 and for no other purpose. In accordance with paragraph 108 of the Code of Audit Practice, I do not undertake to have responsibilities to members or officers, in their individual capacities, or to third parties.

Richard Smith CPFA
Senior Audit Manager
Audit Scotland
4th Floor, 8 Nelson Mandela Place
Glasgow, G2 1BT