Thames Water is a step closer to winding up its offshore subsidiaries in the Cayman Islands having passed a “key milestone” in the approvals process.
Brandon Rennet, chief financial officer at Thames Water told Utility Week: “We have had full approvals from debt investors to close the Cayman structures and we’re pleased about that.”
He said Thames Water would not be issuing more debt out of the Cayman entities and will transfer the functions to a UK plc over the next few months.
In a bid to boost transparency for customers and stakeholders, Thames Water has been carrying out a review of its corporate structure.
The review was launched earlier this year following the arrival of Ian Marchant as the independent chairman of the operating company, Thames Water Utilities Limited.
Thames has pledged to have a majority of independent non-executive directors on its board and last week announced the appointment of Alistair Buchanan, the former chief executive of Ofgem.
Marchant said the closure of the Cayman companies is “purely an administrative process from now on – getting all the consent was a key milestone.”
The company plans to “prioritise investment” to improve services and has revealed it will not pay external shareholders dividends for the next two years.
Its chief executive, Steve Robertson will not receive a bonus until 2020 and then it will be linked to meeting customer commitments instead of financial performance.
Robertson said: “The Cayman Islands companies have always been registered for UK tax; they are nothing other than legitimate.
“But people hear Cayman and think there is something not quite right and automatically assume the worse.
“We could say ‘no’ as much as we like but it won’t change the perception people have, so we have decided to take action.”
Rennet said the company’s taxes can appear “complex” but he insisted it is focused on transparency.
“The misconceptions around corporation tax are huge. We are focused on improving our reporting and communicating better with customers and stakeholders.
“Thames Water is not paying corporation tax at the moment and the only people to benefit from this are our customers through lower bills”.
Robertson said: “If customers think something is dodgy it becomes hard to have a discussion about it. We want to have a healthy and good relationship with our customers.”
Marchant described the changes being made within Thames Water as “the right thing to do for the business”.
He said: “Ofwat rightly shone a spotlight on problems in the water sector and to use a poker term we have seen them and raised them.
“We have met the challenge and gone beyond. Society wants us to go further so we will. We need to change perception and reality.”
Anglian Water removed its Cayman subsidiary from its financial structure in June, after it announced plans to “speed up” the removal in March, as part of a wider transparency overhaul.
Yorkshire Water is expected to transfer £3 billion of bonds and US Private Placement notes into a new UK incorporated company later this month as it received an “unequivocal vote” of approval from its bondholders to proceed with the closure.
Southern Water also plans to close its offshore financial company by the end of 2018.