TIDMNTEA
RNS Number : 7736W
Northern Electric PLC
21 August 2015
The following regulated information, disseminated pursuant to
DTR 6.3.5, comprises the Half-Yearly Financial Report of Northern
Electric plc for the six months ended 30 June 2015.
Pursuant to LR 14.3.6, the document has been submitted to the
National Storage Mechanism and will shortly be available for
inspection at:
www.hemscott.com/nsm.do
The Half-Yearly Financial Report for the six months ended 30
June 2015 is also available on the website
www.northernpowergrid.com
Enquiries:
John Elliott 0191 223 5103
NORTHERN ELECTRIC plc
HALF-YEARLY FINANCIAL REPORT
SIX MONTHS ENDED 30 JUNE 2015
Page
INTERIM MANAGEMENT REPORT 1
Condensed consolidated statement of profit
or loss 8
CONDENSED Consolidated Statement of PROFIT
OR LOSS AND OTHER Comprehensive Income 9
CONDENSED Consolidated Statement of Financial
Position 10
CONDENSED Consolidated Statement of Changes
in Equity 12
CONDENSED Consolidated STATEMENT OF Cash FlowS 13
Notes to the Financial Statements 14
Cautionary Statement
This interim management report has been prepared solely to
provide additional information to shareholders to assess the
business strategies of Northern Electric plc (the "Company") and
its subsidiaries (together the "Group") and the potential for those
strategies to succeed and should not be relied on by any other
party or for any other purpose.
Review of the six months to 30 June 2015
The Company is part of the Northern Powergrid Holdings Company
group of companies (the "Northern Powergrid Group") and its
principal activity during the six months to 30 June 2015 was to act
as a holding company, with its main operating subsidiaries being
Northern Powergrid (Northeast) Limited ("NPg Northeast"),
Integrated Utility Services Limited ("IUS") and Northern Powergrid
Metering Limited ("Metering").
NPg Northeast distributes electricity to approximately 1.6
million customers connected to its electricity distribution network
in the northeast of England and is an authorised distributor under
the Electricity Act 1989. IUS provides engineering contracting
services to various clients and Metering rents smart meters to
energy suppliers. The Group operates a business model and strategy
based on the Northern Powergrid Group's core principles, details of
which can be found in the Group's annual reports and accounts for
the year ended 31 December 2014.
Financial strength
Results for the six months ended 30 June 2015
The half-yearly accounts for the six months ended 30 June 2015
consolidate the results of the Group and are prepared under
International Financial Reporting Standards. The half-yearly
accounts do not comprise statutory accounts required to be
delivered to the Registrar of Companies under the Companies Act
2006 and have not been subject to audit or review by the Group's
auditor. The Group will deliver its statutory accounts for the
current financial year ending on 31 December 2015 to the Registrar
of Companies by 30 June 2016.
The Group delivered a satisfactory performance for the six
months ended 30 June 2015, mainly due to increased distribution and
smart-metering revenues offset by cost increases and higher
depreciation charges. Distribution revenues increased as a result
of the five-year profile of allowed revenues inherent in the price
control formula under the Distribution Price Control 5 period to 31
March 2015 ("DPCR5") partially offset by lower tariffs from 1 April
2015 as the next price control period, known as ED1, began. A
summary of the key financial results is set out below:
Financial strength (continued)
Key financials
Revenue
Revenue at GBP200.6 million was GBP1.5 million higher than for
the six months ended 30 June 2014 mainly due to the higher
distribution revenues and smart metering rental income, partly
offset by lower contracting volumes.
Cash flow
Cash and cash equivalents as at 30 June 2015 were GBP28.3
million, representing a decrease of GBP57.3 million when compared
with the position at 31 December 2014.
NPg Northeast has access to GBP75 million under a five-year
committed revolving credit facility provided by Lloyds Bank plc,
Royal Bank of Scotland plc and Abbey National Treasury Services
plc. This revolving credit facility was restated and amended with
effect from 30 April 2015 and is now due to expire on 30 April
2020.
In addition, the Group has access to short-term borrowing
facilities provided by Yorkshire Electricity Group plc, a related
party, and to a GBP22 million overdraft facility provided by Lloyds
Bank plc.
Financial position
Profit before tax at GBP90.0 million was GBP0.1 million lower
than the six months ended 30 June 2014. Increased distribution and
smart metering revenues were offset by lower contracting volumes,
increased depreciation and amortisation charges and other cost
increases.
Dividends
No ordinary dividends were paid in the period resulting in
GBP58.7 million being transferred to reserves.
Related party transactions
The Company provides certain corporate functions to the Northern
Powergrid Group, including financial accounting and planning,
treasury, taxation, pensions, internal audit, legal advice,
insurance management, claims handling and litigation services.
Further details of the related party transactions entered into
by the Group and the Company and changes therein are included in
Note 8 to this half-yearly financial report.
Customer service
NPg Northeast's key customer service performance indicators are
customer interruptions ("CI") and customer minutes lost ("CML")
and, for the regulatory year to 31 March 2015 (the "Regulatory
Year"), both indicators were better than Ofgem's targets. As at the
date of this half-yearly financial report, NPg Northeast's reported
performance for the Regulatory Year is as follows:
Year to 31 March 2015 Year to 31 March 2014
Actual Target Actual Target
CML 56.1 70.6 64.6 70.7
CI 65.3 68.1 62.9 68.1
In June 2015 Ofgem issued its view on the impact of certain
events that occurred in the regulatory year to 31 March 2014 on the
Company's CML and CI performance for that year, which is reflected
in the above table.
Under the Broad Measure of Customer Satisfaction, an independent
market research company carries out telephone surveys with NPg
Northeast's customers to find out how satisfied they were with the
services provided. Those surveys are of a number of customers who
contacted NPg Northeast regarding an unplanned or a planned power
cut, requested a price quotation and a subsequent connection or had
a general enquiry where a service had been provided or a job
completed. NPg Northeast recorded an overall satisfaction score of
81.9% for the Regulatory Year and expects that the range of
initiatives in its customer service improvement plan will improve
the services provided to customers and so increase the satisfaction
ratings year-on-year.
In that respect, customer satisfaction with NPg Northeast's
response to unplanned high voltage power cuts showed some gradual
improvement in the first half of 2015 and the focus remains on
improving restoration times and providing more timely and accurate
information to customers. Customer satisfaction with planned power
cuts also showed some encouraging improvement with NPg Northeast
introducing a text and email service to remind customers three days
ahead of the power cut taking place.
Operational excellence
During the six months to 30 June 2015, NPg Northeast continued
to implement its approved network investment strategy in order to
deliver improvements in an efficient and cost-effective manner and
to enhance the network's resilience. That investment included the
refurbishment, replacement and construction of assets such as
substations, transformers, switchgear and overhead and underground
cables so that the number of power cuts that occur and number of
customers affected by those power cuts are minimised as far as
possible.
Operational excellence (continued)
NPg Northeast invested GBP116.7 million in the distribution
network during the six months to 30 June 2015, an increase on the
GBP101.8 million recorded in the six months to 30 June 2014, and
completed all outputs committed within the DPCR5 period by the
price control end date of 31 March 2015. A new guaranteed standard
for the restoration of supply within 12 hours of a power cut
occurring came into effect from 1 April 2015 and NPg Northeast's
initial performance in that respect has been encouraging, with its
new operational structure providing a more localised focus and,
therefore, improved response times in the event of a power cut.
IUS continued to operate its engineering contracting business
and saw a reduction in revenues in the six months to 30 June 2015,
mainly due to lower activity in delivering contracts for Network
Rail. Work on Multi-Utility contracts, which relate to the
provision of electric, gas and water connections to housing
developers, has increased in 2015 but competition for business in
the sectors, within which IUS operates, remained strong.
Metering continued to deliver a satisfactory performance in
terms of the contracts secured with energy suppliers for the
provision of smart meters in the United Kingdom and Ireland and
also continued to pursue business development opportunities with
other energy suppliers.
Employee commitment - Health and safety
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The safety of its employees continued to be of paramount
importance to the Group, with the on-going focus being on the goal
that no employees should be injured during their working time.
During the six months to 30 June 2015, the Group did not experience
any lost time accidents (six months to 30 June 2014: Nil) against
an annual target of one and incurred four preventable vehicle
accidents (six months to 30 June 2014: 6) against an annual target
of 12. The Group's performance in respect of both lost time and
preventable vehicle accidents was encouraging and none of the
incidents resulted in serious injuries to the employees
concerned.
Regulatory integrity
On 2 March 2015 NPg Northeast sought permission from the
Competition and Markets Authority (the "CMA") to appeal against the
licence modifications that give effect to the ED1 price control.
The appeal relates to three specific areas:
(i) Ofgem's decision to demand further cost savings in relation
to smart grid technology over and above the ones captured by its
original benchmarking exercise;
(ii) Ofgem's assessment of the variation in wage rates across the country; and
(iii) Ofgem's projections for labour cost increases.
Regulatory integrity (continued)
On 30 March 2015 the CMA granted NPg Northeast permission to
appeal and, between April and June 2015, NPg Northeast made
submissions to the CMA in support of the appeal. NPg Northeast's
appeal is expected to conclude in the fourth quarter of 2015 in
accordance with the timetable required of the CMA. British Gas
Trading Limited was also granted permission to appeal the price
control, with the same review timetable. The outcome of these
appeals may increase or reduce the revenue available to NPg
Northeast, if the CMA amends the price control determination.
Principal risks and uncertainties
Regulatory risk
During the term of the price control, the rate of inflation, as
measured by the Retail Prices Index ("RPI"), is taken into account
in setting NPg Northeast's allowed income in respect of each
regulatory year. Consequently, one of the risks faced by NPg
Northeast is that its costs may increase by more than RPI. Any
changes in costs incurred will have a direct impact on NPg
Northeast's financial results, as will changes in performance under
incentive schemes, such as in customer service, which can lead to
adjustments to allowed revenues.
Ofgem's final determination in respect of ED1 set out allowed
revenues and rules, by which Ofgem expects to adjust NPg
Northeast's revenues in certain circumstances during ED1 and,
excluding the effects of incentive schemes and any deferred
revenues from DPCR5, NPg Northeast's base allowed revenue will
decrease by approximately 20% in the regulatory year to 31 March
2016 before the addition of inflation, as measured by RPI, in order
to derive the final price change.
Under the ED1 price control effective from 1 April 2015, Ofgem
intends to:
- derive and update the allowed cost of debt by reference to a
long-run trailing average based on external benchmarks of utility
debt costs;
- lengthen the period over which new regulatory assets are
depreciated, from the current 20 years to 45 years, with the change
being phased over eight years;
- adjust revenues during ED1, rather than at the next price
control review, to partially reflect cost variances relative to
cost allowances;
- adjust revenues in relation to some new service standard
incentives, principally relating to the speed of and service
standards for new connections to the network; and
- undertake a mid-period review and adjust revenues in the
latter half of ED1 for any changes in the outputs required of
licensees for certain specified reasons.
Many other aspects of the DPCR5 price control remain in place
(either in their DPCR5 or a similar form), including adjustments to
revenues in relation to the number and duration of service
interruptions and customer service standards.
Principal risks and uncertainties (continued)
Financial risk
NPg Northeast's appeal to the CMA and the principal risks
associated with the regulatory environment, within which NPg
Northeast operates, are mentioned above.
As IUS' business is primarily in the competitive engineering
contracting market, it continues to be subject to the issues
created by the general economic environment and trading conditions
and the associated fluctuations in demand for its services. In
addition, there continues to be an enhanced risk of counter-party
default, with the associated increase in the potential for IUS to
be exposed to bad debt.
The Group addresses interest rate risk by a policy of having a
stable, low cost of financing over time, whilst observing approved
risk parameters. The Group finances its activities by a combination
of long-term borrowings at fixed rates of interest and by having
access to short-term borrowing facilities at floating rates.
As at 30 June 2015, 100% of the Group's long-term borrowings
were at fixed rates and the average maturity for these borrowings
was 13 years. Despite this position, the Group remains mindful of
the economic climate and the associated potential impact on the
cost of short-term borrowing. No material currency risks are faced
by the Group and it is policy that no trading in financial
instruments should be undertaken.
Further information on the principal long-term risks and
uncertainties and the internal control system are included in the
Company's latest annual reports and accounts for the year to 31
December 2014, which is available at www.northernpowergrid.com.
It is anticpated that these risks will continue for the
remaining six months of 2015 and NPg Northeast's appeal to the CMA
is expected to conclude in the fourth quarter of 2015.
Going concern
In the Company's latest annual reports and accounts for the year
to 31 December 2014 the directors set out a number of factors they
took into account when they considered continuing to adopt the
going concern basis in preparing those annual reports and accounts.
The directors confirm that no events have occurred during the six
months to 30 June 2015, which alter the view expressed in the
annual reports and accounts to 31 December 2014.
Future strategy and objectives
The Company will continue to develop its business as a holding
company in a manner that concentrates on the Group's principal
activities of electricity distribution, engineering contracting and
the rental of meters to energy suppliers.
NPg Northeast will continue to develop its business by operating
with the goal of efficiently investing in its distribution network
and improving the quality of supply and service provided to
customers and delivering the regulatory business plan for ED1.
IUS will look to develop further its engineering contracting
business by delivering a high standard of service to its existing
clients and pursuing further opportunities in other sectors and
Metering will continue to pursue business development opportunities
with energy suppliers.
Responsibility Statement
The board of directors confirm that to the best of their
knowledge:
(a) the condensed set of finanical statements, which has been
prepared in accordance with IAS 34, "Interim Financial Reporting",
gives a true and fair view of the assets, liabilities, financial
position and profit of the Company and the undertakings included in
the consolidation as a whole as required by DTR 4.2.4 R for the six
months to 30 June 2015;
(b) the interim management report contains a fair review of the
information required by DTR 4.2.7 R (indication of important events
during the first six months of the year and description of the
principal risks and uncertainties for the remaining six months of
the year); and
(c) the interim management report includes a fair review of the
information required by DTR 4.2.8 R (related parties' transactions
and changes therein).
By order of the board
P A Jones
Director
19 August 2015
6 Months 6 Months
ended 30 ended 30
June 2015 June 2014
(unaudited) (unaudited)
GBPm GBPm
Revenue 200.6 199.1
Cost of sales (22.1) (26.5)
------------ ------------
Gross profit 178.5 172.6
Operating expenses (71.3) (66.2)
------------ ------------
Operating profit 107.2 106.4
Other gains 0.2 0.4
Finance income 0.8 0.7
Finance costs (18.2) (17.4)
------------ ------------
Profit before tax 90.0 90.1
Income tax expense (19.3) (20.6)
------------ ------------
Profit from ordinary activities after tax 70.7 69.5
------------ ------------
6 Months 6 Months
ended 30 ended 30
June 2015 June 2014
(unaudited) (unaudited)
GBPm GBPm
PROFIT FOR THE PERIOD 70.7 69.5
OTHER COMPREHENSIVE INCOME
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Items that will not be reclassified subsequently
to profit or loss:
Employee benefit obligation (15.0) 11.1
Income tax relating to items of other comprehensive
income 3.0 (1.9)
------------ ------------
OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET
OF INCOME TAX (12.0) 9.2
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 58.7 78.7
------------ ------------
30 June 2015 31 December
2014
(unaudited)
GBPm GBPm
ASSETS
NON-CURRENT ASSETS
Intangible assets 27.7 23.8
Property, plant and equipment 2,048.3 1,946.9
Investments 3.3 3.5
Pension asset 55.6 52.9
Trade and other receivables 4.7 7.5
------------- ------------
2,139.6 2,034.6
------------- ------------
CURRENT ASSETS
Inventories 13.5 12.3
Trade and other receivables 70.9 72.0
Cash and cash equivalents 28.3 85.6
------------- ------------
112.7 169.9
------------- ------------
TOTAL ASSETS 2,252.3 2,204.5
------------- ------------
EQUITY
SHAREHOLDERS' EQUITY
Share capital 72.2 72.2
Share premium account 158.8 158.8
Other reserves 6.2 6.2
Retained earnings 708.4 649.7
------------- ------------
TOTAL EQUITY 945.6 886.9
------------- ------------
30 June 31 December
2015 2014
(unaudited)
GBPm GBPm
LIABILITIES
NON-CURRENT LIABILITIES
Trade and other payables 513.2 500.8
Borrowings 467.1 467.0
Deferred tax 110.3 107.9
Provisions 1.7 2.0
------------ ------------
1,092.3 1,077.7
------------ ------------
CURRENT LIABILITIES
Trade and other payables 129.4 146.8
Borrowings 75.8 85.2
Tax payable 7.8 6.3
Provisions 1.4 1.6
------------ ------------
214.4 239.9
------------ ------------
TOTAL LIABILITIES 1,306.7 1,317.6
------------ ------------
TOTAL EQUITY AND LIABILITIES 2,252.3 2,204.5
------------ ------------
The interim financial statements were approved by the board of
directors and authorised for issue on 19 August 2015 and were
signed on its behalf by:
P A Jones
Director
Share
Share Premium Other Retained
Capital Account Reserves Earnings Total
GBPm GBPm GBPm GBPm GBPm
Balance at 1 January
2015 72.2 158.8 6.2 649.7 886.9
Profit for the
period (unaudited) - - - 70.7 70.7
Other comprehensive
income (unaudited) - - - (12.0) (12.0)
Balance at 30 June
2015 72.2 158.8 6.2 708.4 945.6
-------- -------- --------- --------- -------
Share
Share Premium Other Retained
Capital Account Reserves Earnings Total
GBPm GBPm GBPm GBPm GBPm
Balance at 1 January
2014 72.2 158.8 6.2 518.8 756.0
Profit for the
period (unaudited) - - - 69.5 69.5
Other comprehensive
income (unaudited) - - - 9.2 9.2
Balance at 30 June
2014 72.2 158.8 6.2 597.5 834.7
-------- -------- --------- --------- ------
Share
Share Premium Other Retained
Capital Account Reserves Earnings Total
GBPm GBPm GBPm GBPm GBPm
Balance at 1 January
2014 72.2 158.8 6.2 518.8 756.0
Profit for the
year - - - 140.2 140.2
Other comprehensive
income 20.7 20.7
Dividends - - - - (30.0) (30.0)
Balance at 31 December
2014 72.2 158.8 6.2 649.7 886.9
-------- -------- --------- --------- -------
6 Months 6 Months
ended 30 ended 30
June 2015 June 2014
(unaudited) (unaudited)
GBPm GBPm
Cash generated from operations 113.6 126.2
Net interest paid (18.1) (17.8)
Tax paid (12.2) (7.9)
------------ ------------
Net cash from operating activities 83.3 100.5
------------ ------------
Investing activities
Proceeds from disposal of property,
plant and equipment 0.2 0.2
Purchase of property, plant and equipment (148.0) (115.1)
Purchase of intangible assets (5.2) (5.0)
Dividends received from joint venture 0.5 -
Receipt of customer contributions 20.9 18.5
------------ ------------
Net cash used in investing activities (131.6) (101.4)
------------ ------------
Financing activities
Movement in external loans (9.0) 8.7
Net cash (used in)/generated by financing
activities (9.0) 8.7
------------ ------------
Net (decrease)/increase in cash and
cash equivalents (57.3) 7.8
Cash and cash equivalents at beginning
of period 85.6 105.9
------------ ------------
Cash and cash equivalents at end of
period 28.3 113.7
------------ ------------
1. GENERAL INFORMATION
The information included within these condensed financial
statements for the year ended 31 December 2014, does not constitute
statutory accounts as defined in section 434 of the Companies Act
2006. A copy of the statutory accounts for that year has been
delivered to the Registrar of Companies. The auditor reported on
those accounts and that report was unqualified, did not draw
attention to any matters by way of emphasis and did not contain a
statement under section 498(2) or (3) of the Companies Act
2006.
2. ACCOUNTING POLICIES
Basis of preparation
The annual financial statements of the Group are prepared in
accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this half-yearly
financial report has been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union.
Going concern
In the Company's latest annual reports and accounts for the year
to 31 December 2014 the directors set out a number of factors they
took into account when they considered continuing to adopt the
going concern basis in preparing those annual reports and accounts.
The directors confirm that no events have occurred during the six
months to 30 June 2015, which alter the view expressed in the
annual reports and accounts to 31 December 2014.
Changes in accounting policy
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The Group's accounting policies and methods of computation are
the same as the accounting policies which are described in the
Group's financial statements for the year ended 31 December 2014.
The Group has not adopted any new or revised accounting standards
in the current year.
3. SEGMENTAL ANALYSIS
The Group operates in the principal area of activity of the
distribution of electricity in the United Kingdom.
There has been no change in the basis of segmentation or in the
basis of measurement of segment profit or loss in the period.
The following is an analysis of the Group's revenue and results
by reportable segment in the six months ended 30 June 2015
(unaudited):
Consolidation
Distribution Contracting Other Adjustments Total
GBPm GBPm GBPm GBPm
REVENUE
External sales 178.8 16.0 5.8 - 200.6
Inter-segment
sales 0.3 1.4 (0.2) (1.5) -
------------- ------------ ------ -------------- -------
Total Revenue 179.1 17.4 5.6 (1.5) 200.6
------------- ------------ ------ -------------- -------
SEGMENT RESULTS
Operating profit 90.4 0.2 (0.4) 17.0 107.2
------------- ------------ ------ --------------
Other gains 0.2
Finance income 0.8
Finance costs (18.2)
-------
Profit before
tax 90.0
-------
OTHER INFORMATION
Capital additions 116.8 - 26.6 - 143.4
Depreciation
and amortisation 35.8 - 1.3 (0.9) 36.2
Amortisation
of deferred
revenue 10.4 - - - 10.4
------------- ------------ ------ -------------- -------
3. SEGMENTAL ANALYSIS (CONTINUED)
The following is an analysis of the Group's revenue and results
by reportable segment in the six months ended 30 June 2014
(unaudited):
Consolidation
Distribution Contracting Other Adjustments Total
GBPm GBPm GBPm GBPm
REVENUE
External sales 175.0 20.9 3.2 - 199.1
Inter-segment
sales 0.3 0.5 (0.2) (0.6) -
------------- ------------ ------ -------------- -------
Total Revenue 175.3 21.4 3.0 (0.6) 199.1
------------- ------------ ------ -------------- -------
SEGMENT RESULTS
Operating profit 90.2 - (2.4) 18.6 106.4
------------- ------------ ------ --------------
Other gains 0.4
Finance income 0.7
Finance costs (17.4)
-------
Profit before
tax 90.1
-------
OTHER INFORMATION
Capital additions 102.2 0.1 1.5 (2.0) 101.8
Depreciation
and amortisation 32.7 - - (0.8) 31.9
Amortisation
of deferred
revenue 9.7 - - - 9.7
------------- ------------ ------ -------------- -------
"Other" comprises smart meter rental and business support
units.
Sales and purchases between the different segments are made at
commercial prices.
External sales to RWE Npower plc in the six months ended 30 June
2015 of GBP48.2 million (30 June 2014: GBP54.6 million) are
included within the Distribution segment.
3. SEGMENTAL ANALYSIS (CONTINUED)
The accounting policies of the reportable segments are the same
as the Group's accounting policies which are described in the
Group's latest annual financial statements. The segment results
represent the profit earned by each segment without allocation of
the share of profits of joint ventures, associates, finance income
and finance costs and income tax expense
Segment net assets 30 June 31 December
2015 Unaudited 2014
GBPm GBPm
Distribution 1,524.3 1,460.7
Contracting 14.6 13.0
Other 44.3 27.9
Consolidation Adjustments (64.6) (37.7)
---------------- ------------
Total net assets by segment 1,518.7 1,463.9
Unallocated net corporate liabilities (573.1) (577.0)
---------------- ------------
Total net assets 945.6 886.9
---------------- ------------
Unallocated net corporate liabilities include cash and cash
equivalents of GBP28.3 million (December 2014: GBP85.6 million),
borrowings of GBP542.9 million (December 2014: GBP552.2 million)
and taxation of GBP118.1 million (December 2014: GBP114.2
million).
4. INCOME TAX EXPENSE
Tax for the six month period ended 30 June 2015 is charged at
20.25% (six months ended 30 June 2014: 21.50%; year ended 31
December 2014: 21.50%) which represents the best estimate of the
average annual effective tax rate expected for the full year, as
applied to the pre-tax income of the six month period.
6 months 6 months
ended 30 ended 30
June June
2015 2014
Unaudited Unaudited
GBPm GBPm
Current tax 13.7 19.5
Deferred tax 5.6 1.1
Total income tax expense 19.3 20.6
---------- ----------
The Summer Finance Bill 2015 includes a provision for a 1%
reduction to the standard rate of corporation tax from April 2017
and a further 1% reduction from April 2020 but this bill will not
be substantively enacted until later in 2015 and, therefore, has
not impacted these condensed financial statements.
5. NOTES TO THE CASH FLOW STATEMENT
6 Months 6 Months
ended 30 ended 30
June 2015 June 2014
(unaudited) (unaudited)
GBPm GBPm
Profit before income tax 90.0 90.1
Depreciation charges 36.2 31.9
Profit on disposal of fixed
assets (0.2) (0.2)
Amortisation of deferred
revenue (10.4) (9.7)
Retirement benefit obligations (18.0) (20.7)
(Decrease)/increase in
provisions (0.6) 0.2
Finance costs 18.2 17.5
Finance income (0.8) (0.9)
------------ ------------
114.4 108.5
(Increase)/decrease in
inventories (1.2) 0.3
Decrease/(increase) in
trade and other receivables 5.6 (12.9)
(Decrease)/increase in
trade and other payables (4.2) 30.3
------------ ------------
Cash generated from operations 113.6 126.2
------------ ------------
6. RETIREMENT BENEFIT SCHEMES
The defined benefit obligation as at 30 June 2015 is calculated
on a year-to-date basis, using the latest actuarial valuation as at
31 December 2014. There have not been any significant fluctuations
or one-time events since that time that would require adjustment to
the actuarial assumptions made at 31 December 2014.
7. FINANCIAL INSTRUMENTS
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Except as detailed in the following table, the directors
consider that the carrying value amounts of financial assets and
financial liabilities are approximately equal to their fair
values:
Carrying value Fair value
30 June 31 December 30 June 31 December
2015 2014 2015 2014
Unaudited Unaudited
GBPm GBPm GBPm GBPm
Financial liabilities
Short-term loans 60.5 69.2 60.5 69.2
Inter-company short-term
loan 0.6 2.5 0.6 2.5
Bond 2020 - 8.875% (Northern
Electric Finance plc) 105.5 100.9 136.6 135.4
Bond 2035 - 5.125% (Northern
Electric Finance plc) 149.1 152.8 176.1 183.9
EIB Loans* 120.9 123.4 130.9 134.7
Yorkshire Electricity
Group plc 2037 - 5.9% 102.9 100.0 132.0 132.1
Cumulative preference
shares 3.4 3.4 165.3 160.8
---------- ------------ ---------- ------------
542.9 552.2 802.0 818.6
* The borrowings from the European Investment Bank were drawn
down in twelve tranches, repayable in 2018, 2019 and 2020. The
spread of interest rate is as follows:
2018: 3.901% - 4.283%
2019: 4.077% - 4.455%
2020: 4.227% - 4.586%
8. RELATED PARTY TRANSACTIONS
Group
Transactions entered into with related parties and balances
outstanding were as follows:
Finance
income/
Amounts (costs)
Sales Purchases owed to Borrowings from/(to)
to related from related related from related related
parties parties parties parties parties
GBPm GBPm GBPm GBPm GBPm
Related party
Six months ended
30 June 2015:
Integrated Utility
Services Limited
(Registered in Eire) - - - - -
Northern Powergrid
Gas Holding Limited 0.1 - - - -
Northern Powergrid
Insurance Services
Limited - 0.2 - - -
Northern Powergrid
Limited - - - - (3.1)
Northern Powergrid
(Yorkshire) plc 9.8 4.5 - - -
Vehicle Lease and
Service Limited 0.1 2.0 0.3 0.6 0.4
Yorkshire Electricity
Group plc - - - 102.9 (2.9)
------------ -------------- --------- -------------- -----------
10.0 6.7 0.3 103.5 (5.6)
============ ============== ========= ============== ===========
Six months ended
30 June 2014:
Integrated Utility
Services Limited
(Registered in Eire) - 0.8 - - -
Northern Powergrid
Gas Holding Limited 0.1 - - - -
Northern Powergrid
Insurance Services
Limited - 0.2 - - -
Northern Powergrid
Limited - - - - (3.1)
Northern Powergrid
(Yorkshire) plc 7.7 4.4 - - -
Vehicle Lease and
Service Limited - 1.9 0.1 0.6 0.4
Yorkshire Electricity
Group plc - - - 102.9 (2.6)
------------ -------------- --------- -------------- -----------
7.8 7.3 0.1 103.5 (5.3)
============ ============== ========= ============== ===========
8. RELATED PARTY TRANSACTIONS (CONTINUED)
Group - continued
Finance
income/
Amounts (costs)
Sales Purchases owed to Borrowings from/(to)
to related from related related to/(from) related
parties parties parties related parties parties
GBPm GBPm GBPm GBPm GBPm
Related party
Year ended 31 December
2014:
Integrated Utility
Services Limited
(registered in Eire) - 2.7 0.3 - -
Northern Powergrid
Gas Limited 0.1 - - - -
Northern Powergrid
Insurance Services
Limited - 0.5 - - -
Northern Powergrid
Limited - - - - (6.2)
Northern Powergrid
(Yorkshire) plc 21.8 9.9 - - -
Vehicle Lease and
Service Limited 0.2 3.7 0.4 2.5 0.5
Yorkshire Electricity
Group plc - - - 102.5 (5.5)
------------ -------------- --------- ----------------- -----------
22.1 16.8 0.7 105.0 (11.2)
============ ============== ========= ================= ===========
Sales and purchases from related parties were made at commercial
prices.
Interest on loans to/from Group companies is charged at a
commercial rate.
During the six months ended 30 June 2015 two directors (six
months ended 30 June 2014: 2, year ended 31 December 2014: 2)
utilised the services provided by Northern Transport Finance
Limited, a subsidiary company.
8. RELATED PARTY TRANSACTIONS (CONTINUED)
Company
Transactions entered into with related parties and balances
outstanding were as follows:
Finance
income/
Amounts (costs)
Sales Purchases owed to Borrowings from/(to)
to related from related related to/(from) related
parties parties parties related parties parties
GBPm GBPm GBPm GBPm GBPm
Related party
Six months ended
30 June 2015:
Integrated Utility
Services Limited - 0.3 - - -
Northern Powergrid
Gas Holding Limited 0.1 - - - -
Northern Powergrid
Limited - - - - (3.1)
Northern Powergrid
(Northeast) Limited 3.7 - - - -
Northern Powergrid
(Yorkshire) plc 2.3 - - - -
Vehicle Lease and
Service Limited 0.1 - - - 0.4
Yorkshire Electricity
Group plc - - - 29.0 0.1
------------ -------------- --------- ----------------- -----------
6.2 0.3 - 29.0 (2.6)
============ ============== ========= ================= ===========
Six months ended
30 June 2014:
Integrated Utility
Services Limited 0.2
Northern Powergrid
Gas Holding Limited 0.1 - - - -
Northern Powergrid
Limited - - - - (3.1)
Northern Powergrid
(Northeast) Limited 2.2 0.3 - - -
Northern Powergrid
(Yorkshire) plc 1.9 - - - -
Vehicle Lease and
Service Limited 0.1 - - - 0.4
Yorkshire Electricity
Group plc - - - 37.0 0.1
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August 21, 2015 07:50 ET (11:50 GMT)
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