Anglian Water has become the first UK water company to complete the removal of its Cayman Islands company from its financial structure.
The Cayman Islands company was always registered in the UK for tax and Anglian Water never received any tax advantage from its location. The company was also never used to raise debt finance, unlike some others in the industry.
Excellent management of the process prior to and during the removal, plus close relationships with its lenders and debt investors has meant Anglian Water has been able to achieve this swiftly and smoothly, and well ahead of the rest of the industry.
Commenting on the completion, Anglian Water Water’s Chief Executive Officer, Peter Simpson, said:
“As a responsible business, I’m delighted with the progress we’ve made in removing the Cayman company, and the speed at which we have been able to start implementing all of our corporate commitments announced in March.
“This is a clear demonstration of where Anglian Water is leading by doing and paving the way for others in the sector to follow.”
The removal of the Cayman company is just one of a wide range of commitments made by the water company earlier this year when Anglian Water’s Board and shareholders resolved to redouble their efforts to ensure it continues to make the right choices for current and future customers, and the environment.
These are being rapidly progressed to enhance transparency, trust and customer confidence:
Enhanced transparency and clarity of its financial structures
- Anglian Water has improved the clarity of its financial structures, with the repayment of an inter-company loan in March. The changes simplify the presentation of its accounts and allow for greater clarity of financial reporting, in particular around actual dividends paid to shareholders.
Placed public interest at the heart of its business
- Anglian Water is engaged in work with Ofwat on proposals on a common principles-based licence for companies to continue to put customers at the heart of everything they do, ensuring they act in the public interest.
- It is changing the composition of the Anglian Water Services Board so that Independent Non-Executive Directors are in the majority, and not just the largest group.
- A new Independent Non-Executive Director, Natalie Ceeney, has been appointed.
Made an additional investment commitment to 2020
- An extra £65m of additional investment will be made in resilience, a significant proportion of which will be invested to improve the security of supply in south Lincolnshire by 2020 – a scheme not included in the company’s original plan. Work is underway.
- This improves the region’s ability to deal with drought and flooding and will be paid for by the shareholders through a reduction in dividends.
Committed to reduce dividends and borrowings through to 2025
- Anglian Water will substantially reduce dividends through to 2025, resulting in a significant reduction in the company’s level of debt and gearing
“As well as committing to simplifying our accounts, we’ve also wound up and removed the Cayman company from our structure, appointed additional Independent Non-Executive Directors to the Board, and we are making swift progress on reducing gearing through reduced shareholder dividends.
“We already hold ourselves to the highest standards of accountability and transparency, but as we have shown here, when there is public concern, we act comprehensively and swiftly, setting the standard for the sector. I’m grateful to our shareholders for their support in making these changes.
“This is the next chapter adding to our solid track record of anticipating and responding to challenge. We are proud that, since the introduction of our Love Every Drop strategy in 2011, we have made terrific steps forward in operational performance, customer service and environmental stewardship. This culminated in being named Business in the Community’s Responsible Business of the Year in 2017. We recognise that these and the further changes we will make will help to strengthen trust and confidence in the water industry. We intend to remain at the forefront of this positive change.”
More information is included in Anglian Water Services’ Preliminary Results released today.
Notes to editors
- Anglian Water’s Cayman Islands company was always registered in the UK for tax. Anglian Water never received any tax advantage from its location. The Cayman Islands company was never used to raise debt finance (unlike some other companies in the industry). It was set up to enable structural changes in 2002, but subsequent changes to UK legislation mean it would not be needed if Anglian Water were to do the same again. The subsidiary has been effectively dormant. Bond-holder and Cayman Islands High Court consent was secured, and the company was removed from the Anglian Water financial structure in May 2018.
- Anglian Water shareholders: Anglian Water Group is owned by a consortium of investors, made up of Colonial First State Global Asset Management (32.3%), Canada Pension Plan (CPP) Investment Board (32.9%), IFM Investors (19.8%) and Camulodunum (15%), itself a consortium comprising Dalmore Capital and GLIL Infrastructure. Camulodunum completed its purchase of 3i’s 15% stake in February 2018.