Company Nbr: 9276929
MARKET OPERATOR SERVICES LIMITED
Minutes of the general meeting of members held at St Ermins Hotel, 2 Caxton Street, London, SW1H 0QW on Thursday 15th October 2015 at 14.00
Present:
Chairman: Andrew Pinder
Directors: Ben Jeffs – Chief Executive Officer
Peter Bucks – Independent Director
Margaret Beels – Independent Director
Members present: Undertaker Members
Peter Simpson – Director, Anglian Water Services Limited
Alison Ramsey – Secretary, Bournemouth Water Limited
Dylan Freeman – Proxy, Southern Water Services Limited
Ian Dearnley – Proxy, Severn Trent Water Limited
Nick Fincham – Proxy, Thames Water Limited
Chris Offer – Corporate Representative, Affinity Water Limited
New Entrant Members
Richard Moore – Proxy, Castle Water Limited
Others present: Jim Rickleton – Finance Director, MOSL
Adrian Smith – Public relations, MOSL
Emma Davies – Addleshaw Goddard LLP
Melanie Hughes – Addleshaw Goddard LLP
Apologies John Reynolds – Director, Castle Water Limited
The Chairman welcomed all members to the meeting, confirmed that a quorum was present under the Company's rules and introduced the members of the Board of Directors.
The Chairman also introduced the others present at the meeting and asked members if there were any objections to them being at the Meeting. No dissent was expressed.
Adjournment of meeting
There was a very short adjournment of the meeting, whilst the final undertaker member, Chris Offer settled into the meeting. The Chairman advised that all that the business conducted up until Chris's arrival had been the introduction of those present at the meeting.
Recommencement of meeting
The Chairman advised of simple housekeeping rules regarding the fire exits and requested that mobile phones be placed on silent.
The Chairman advised that there were two groups of members attending the meeting. The Undertaker members entitled to vote had been provided with a yellow name badge and the New Entrant members entitled to vote had been provided with a green name badge.
The Chairman advised that after he had read the purpose of the meeting, he would hand over to Ben Jeffs to provide a reminder of the business plan and the budget before he opened the floor to take questions.
The Chairman therefore read the notice of the meeting as follows:
The Notice of the General Meeting provides that in accordance with the articles of association of MOSL that the proposed budget for the Company for the period ended 31 March 2016 being £14,549,796 comprised of a forecast budget of £12,489,635 and a proposed contingency of £2,060,161 in the form as set out in the Business Plan for the Company for the year ending 31 March 2017.
After reading the notice of the meeting, the Chairman asked the members to confirm that the notice had been read. There was a general consensus from the room.
The Chairman continued and advised that the directors have unanimously recommended that the budget be received and approved by the members, and that the directors believed that the proposed budget was in the best long term interests of the Company's members. The board were therefore recommending the proposed budget and the Chairman suggested that the Members used their vote in favour of the resolutions to be proposed.
The resolution was then proposed by the Chairman and seconded by Peter Bucks:
The Chairman then handed over to Ben Jeffs to provide an update of the progress to date.
Ben Jeffs ("BJ") thanked the Chairman and provided comment on the progress of MOSL. He noted that over the past 3 months the Business Plan ("the Plan") had been circulated to members for consultation and feedback following which the Plan had been updated and revised. BJ advised that the Plan was building on principles surrounding the MAP which had been sent out in July.
BJ continued to brief on the budget within the plan for the year 2015/2016 and commented that there was also a forward looking budget for 2016/2017.
BJ provided a brief update regarding the CGI contract and it was noted that the contract was signed on 30 September 2015. It was noted that details of the CGI Delivery Plan had been shared with member company CIO's at a recent meeting. He also reiterated MOSL’s intent to be open and transparent wherever possible, however, there will be instances where we need to maintain a level of confidentiality.
BJ advised that the MAP document was now under change control by the ICP and that over the summer CGI had reviewed and provided comments – the changes that have been made are largely minor housekeeping adjustments or of a technical nature e.g. security arrangements.
BJ added comment that he now felt a lot of comfort as to the direction of the Company. MOSL was now building as a business with a new board of directors, premises and had a team of around 30 people in place.
In terms of moving forward, BJ updated on plans surrounding the appointment or test and data partners. He added that the Company was looking to implement a CIO Forum and a Systems Ready Forum and was planning for them to evolve in time to include dedicated special interest groups. In November, CGI will issue the first phase design document for MOSL to sign-off and that the test and data strategy would be in place. It was planned that a "De-risking" workshop would be held for CEOS of the water companies (or their representatives) in order to discuss the risks surrounding the market opening and that MOSL will construct an industry wide view of the risks involved to feed back to OFWAT and Defra as a market perspective..
It was also intended that an "Assumptions" workshop would be held surrounding the MAP principles. The Company wanted to engage the members and encourage them to share their assumptions to help each other understand the MAP and also to encourage more transparency.
Come December, the Company would be in the position to have a market and company readiness plan and start the interface testing.
In the first quarter of 2016, it was hoped to issue the 2016/2017 budget and have a systems trial with 5 market participants in order to test the systems as part of the Phase 1 build. A separate sector test system will be made available to members in Q1 ahead of the full system being available to aid member preparations.
BJ closed by thanking the members for their continued support and handed the meeting back to the Chairman.
The Chairman announced that they would now take questions and requested that those wishing to ask a question when called, to please provide their name and the company which is being represented.
Ian Dearnley - Severn Trent Water Limited. In terms of the Plan, noted that management will keep on top of the base services but queried to what extent members will be asked to further fund contingencies?
BJ responded to the question by stating that there are limited scope for further efficiencies, the contingency within the budget is a true contingency and there has been no padding, but as a private business the Board will apply the same level of scrutiny as members would of their own businesses to ensure the business is under effective and efficient control. As such the pressure on costs would be upward rather than downward.
Peter Simpson – Anglian Water Services Limited. Peter noted that he was attending not just as a Director of Anglian but also a director of MOSL.
He commended the business plan and said that the risk workshop was a positive move. He added that the assumptions workshop is also a good opportunity for wholesalers to share learning, but that MOSL must ensure it remains transparent and that this aspect is not exclusively aimed at wholesale companies. BJ added that they are fully aware that MOSL is a membership based business and wished to be as open, transparent and collaborative as possible.
Dylan Freeman – Southern Water Services Limited. Noted that the contingency included £2 million to fund upward pressure on the budget going forward and queried how members will be kept aware of changes?
BJ responded by advising that it was intended there be a quarterly review and on the back of that, they would report to members of any contingency changes which would then allow the CEO's to respond as necessary. It was noted that there was a need for a tailored monthly report to members which would also provide opportunities for any further risks to be highlighted. Peter Simpson had already been approached in order to provide input to the design of this report.
Alison Ramsey – Bournemouth Water Limited asked why there was reluctance to confirm that MOSL will be the market operator?
BJ responded by commenting that it is unlikely that MOSL will not be the market operator. The problem was the classification requirements under public accounts at the Treasury whereby they need to be comfortable with the classification of MOSL as a private body.
The Chairman discussed the point further noting that new rules had been introduced as to the definition of what is deemed to be a public body. A number of bodies are being re-classified and that great care needed to be taken so as to not fall foul of what a public body is and in this regard the Company was currently looking at the requirement to amend its articles. Peter Bucks also provided some further insight on the topic advising that Ofwat and Defra have a shared policy of a single market operator and what it should do and that it should remain in the private sector rather than be seen as in the public sector. It needs to be clear to the Treasury that the Company is a private sector body.
Alison provided further comment that it would be a comfort to have confirmation that the Company would be the single market operator and the Chairman agreed with her but added that the Company needed to adopt the right approach with the Treasury.
Nick Fincham – Thames Water Limited. Nick thanked BJ for his earlier summary. He asked Ben to elaborate a little further on the risk management processes.
BJ responded by advising that at the project management level MOSL maintained an up to date, detailed risk register. The risk register was reported to the board regularly and was fully discussed. The board are intending to put in place an Audit and Risk Committee which would manage both the upside and downside risks.
The Chairman added that the board did have very experienced people on it who had dealt previously with all aspects of risk. The governance processes on how to manage risks would be as you would expect and it would mitigate risks. As the risks evolve the register would be updated accordingly.
Ian Dearnley – Severn Trent Water Limited. Ian asked for any further comments in relation to the risk to system cost increases as it was perceived that there might be a large cost risk.
BJ responded by advising that there had been a detailed delivery plan agreed with CGI so he did not believe that there would be a major impact from a change in costs unless there are industry calls for significant changes to systems or market codes.
BJ advised that there are three areas where he was less certain about costs. These were the costs associated with procuring a Data Partner; a Test Partner how much member support was needed in terms of the testing and the development of systems as this may impact costs.
There were no further questions.
The Chairman described the voting process to members and advised that for the proposed budget to be approved, at least a 75% majority in both groups of the eligible members voting, whether in person or by proxy. The Chairman confirmed that only the Undertaker Members with a yellow name badge were eligible to vote and that the New Entrant Members with a green name badge were eligible to vote.
The Chairman re-read the motion and requested that Undertaker Members who wish to vote in favour of the budget now raise their hand
6 of the present Undertaker members raised their hands to vote in favour.
The Chairman requested that Undertaker members who wished to vote against the budget now raise their hand.
There were no objections.
The Chairman requested that the New Entrant members who wished to vote in favour of the budget now raise their hand.
1 member raised their hand to vote in favour.
The Chairman requested that the New Entrant members who wished to vote against the budget now raise their hand.
There were no objections.
The Chairman advised that the Company had received 10 proxies from Undertaker members which would be voting in favour and when added to the 6 votes received today provided a total of 16 votes in favour.
The Chairman further advised that the Company had received 5 proxies from New Entrant members which would be voting in favour and when added to the 1 vote received today provided a total of 6 votes in favour.
On the count of votes cast, the majority of each class of member present and voting in person or by proxy voted in favour of the resolution. The votes cast in favour represented 75% or more of the total valid votes cast by each member group on the Resolution.
The Chairman therefore declared that the Resolution had been duly passed.
The Chairman closed the meeting and thanked the members for their continued support.
The meeting closed at 14.50.
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Chairman
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Date
10-5707473-1/339000-1 2