Anglian Water is embarking on a transparency overhaul with a raft of commitments announced today (15 March), which will see it “speed up” the removal of its Cayman Islands subsidiary, reduce dividends, increase investment and review its corporate structure.
The company hopes its “series of financial and corporate initiatives” will improve transparency, trust and customer confidence.
The programme has been developed in response to challenges laid down by Ofwat’s chairman Jonson Cox and environment secretary Michael Gove earlier this month at the annual Water UK City Conference.
In a bid to improve “transparency and clarity” of its financial structures, Anglian Water said it will “significantly speed up” the removal of its Cayman Islands subsidiary. It plans to repay an inter-company loan to “simplify” the presentation of its accounts, particularly around real dividends, and aims to complete this by the end of this financial year.
The company said its Cayman Islands subsidiary “is and always has been” registered in the UK for tax and it has never received any “tax advantage” from this location, nor has it been used to raise debt finances. “The subsidiary is effectively dormant,” it said.
Anglian has also pledged to reduce dividends through to 2025, which it said will result in a “significant reduction” in the company’s level of debt and gearing.
By reducing dividends to shareholders, it will invest an extra £65 million in resilience schemes not included in the company’s original business plan for the current regulatory period, by 2020. The money will be used to improve the region’s ability to deal with drought and flooding.
The company said the commitments build on the £5 billion it has already pledged to invest between 2015 and 2020.
Peter Simpson, Anglian Water Group chief executive, said: “I thank our investors, who represent funds which support the pensions of millions of people, for supporting the initiatives we are announcing today. We already hold ourselves to the highest standards of accountability and transparency, but we must acknowledge when there is public concern and act accordingly.
“I believe the actions we are taking are another significant step forward for Anglian Water, working with our regulators and government to achieve the right balance for all our stakeholders. They will help us continue to serve our region responsibly, tackling the challenge of delivering for our current and future customers, whilst also addressing the longer-term issues of climate change, population growth, and the maintenance of a flourishing environment.”
He added: “This is the next chapter to add 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.
“We recognise that further changes will help to strengthen trust and confidence in the water industry. We want to be at the forefront of this.”
The commitments have been agreed by Anglian Water’s board, in conjunction with its pension fund-backed shareholders (First State Investments, Canada Pension Plan Investment Board, IFM Investors, Dalmore Capital and GLIL Infrastructure).
Anglian Water said it will place public interest at the “heart of the business” and will change the composition of the Anglian Water Services board so independent non-executive directors “are in the majority and not just in the largest group”.
Last week it emerged the company could be facing strike action over changes to pensions.
Meanwhile towards the end of last year, Yorkshire Water and Thames Water both vowed to close their Cayman Islands subsidiaries.