Yorkshire Water reduces borrowing

Yorkshire Water reduces borrowing

Yorkshire Water has announced that it will reduce borrowing and simplify its finances as part of a long term drive to enhance services customers.

The company’s gearing, which currently equates to 76% of its total asset value, is set to fall to 70% by 2020, reducing interest costs and freeing up money for investment.

Offshore banking arrangements, which are used in the sector to manage high levels of borrowing, are to be removed.

Measures are also being taken to reduce annual interest costs by strengthening our balance sheet.

The company is also to use a ‘social bond’ that enables ethical investors to directly finance some of its plans for the next five years.

For example, plans to use natural flood management techniques to reduce flood risk for customers in Hull, Calderdale and the Aire Valley could be financed by these means, according to Yorkshire Water.

Liz Barber, group director of finance, regulation & markets, said: “By reducing what we spend on interest costs, it means that we’ll have more money to invest in better service.

“Customers expect us to provide safe and reliable services and we have a responsibility to have safe and resilient finances so that we meet their expectations. They want to know that we have the flexibility to cope with unplanned events like the last major floods in Yorkshire in 2015. By reducing our borrowing we’re better able to cope with this type of event, which on its own cost some £57m.”

Speaking about closing the company’s offshore arrangements in the Cayman Islands, she said: “There is a real challenge to the water industry’s legitimacy at the moment and complex financial structures only add to public concern as to the way in which companies are financed. We have some offshore companies in our structure which are no longer necessary or appropriate and we’re taking steps to remove these as soon as possible.”

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