Investor Presentaiton
Introduction
Affinity Water is seeking the removal of its Cayman Island incorporated financing company
Affinity Water
Affinity Water ("AW") established a whole business securitisation ("WBS") structure in 2013 to raise long-term finance
for its investment programme and operations. At the time of implementing the whole business structure AW believed,
and continues to believe, that the WBS structure offers many advantages to AW through ensuring access to long term
capital, best matched to the financing needs of AW. A Cayman Island subsidiary ("Cayco") was established to facilitate
access to the international bond markets under the WBS structure
This was needed to comply with two competing pieces of legislation under English law:
•
Public bonds could only be issued by a PLC
A prohibition on PLCs providing "financial assistance" in respect of the purchase of their own shares
Although the financial assistance rules were recast under the 2006 Companies Act, there was little precedent at the
time AW's WBS structure was established that would give comfort a UK PLC could be used without infringing such
rules. A Cayco was therefore considered a more efficient and expedient route to the establishment of the Financing
Group
The Cayco is exclusively UK managed and a UK tax resident and has always been since its incorporation. The
Cayco does not confer any tax advantage to AW
Notwithstanding this, operating to the highest standards of governance and transparency is of the utmost importance to
AW. As part of this we have a continuing commitment to ensure that all aspects of our business support this, alongside
all our wider objectives - including delivering a financing approach that best ensures the ongoing financial resilience of
AW
Recently, HM Government and Ofwat have both questioned whether the presence of off-shore finance companies within
the financing structure of water companies is consistent with a transparency objective – indeed three water companies
(Anglian, Yorkshire and Thames) have already instigated these changes
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