TIDMBC39
RNS Number : 8737R
Northern Powergrid (Yorkshire) plc
26 September 2017
NORTHERN POWERGRID (YORKSHIRE) plc
HALF-YEARLY FINANCIAL REPORT FOR THE SIX MONTHSED 30 JUNE
2017
Cautionary Statement
This interim management report has been prepared solely to
provide additional information to shareholders to assess the
business and strategies of Northern Powergrid (Yorkshire) plc (the
"Company") and should not be relied on by any other party or for
any other purpose.
Business Model
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 2017 was to act
as an authorised distributor under the Electricity Act 1989. The
Company distributes electricity to approximately 2.3 million
customers connected to its electricity distribution network within
its distribution services area.
Results for the six months ended 30 June 2017
The Company delivered a satisfactory performance for the six
months ended 30 June 2017 although profit after tax reduced by
GBP5.0 million when compared to the previous year mainly as a
result of higher depreciation and operating costs.
Revenue
Revenue at GBP207.9 million was GBP1.3 million higher than for
the six months ended 30 June 2016 mainly due to higher amortisation
of customer contributions and recharge of staff costs to Northern
Powergrid (Northeast) Limited, partly offset by lower units
distributed.
Cash flow
Cash and cash equivalents as at 30 June 2017 were GBP221.0
million, representing an increase of GBP21.7 million when compared
with the position at 31 December 2016.
The Company 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, which is due to expire on 30 April 2020.
In addition, the Company has access to short-term borrowing
facilities provided by Yorkshire Electricity Group plc, a related
party, and to a GBP19 million overdraft facility provided by Lloyds
Bank plc.
Financial position
Profit before tax at GBP70.9 million was GBP7.2 million lower
than the six months ended 30 June 2016 mainly as a result of higher
depreciation and operating costs.
Dividends
No ordinary dividends were paid in the period resulting in
GBP57.0 million being transferred to reserves.
Related party transactions
Details of the related party transactions entered into by the
Company and changes therein are included in Note 7 to this
half-yearly financial report.
Strategic review
During the period to 30 June 2017, the Company remained focused
on delivering activity in support of the achievement of the
Northern Powergrid Group's six core principles and underlying
strategic objectives.
Core Principle Strategic Objective Activity undertaken
to 30 June 2017
--------------- ----------------------------- -------------------------------------------------------------
Financial Effective stewardship
strength of the Company's * Retained a grade A credit rating
financial resources,
investing in assets
and focusing on * Further detail can be found in the 'results for the
long-term opportunities, year ended 30 June 2017' above
which contribute
to the Company's
future strength.
--------------- ----------------------------- -------------------------------------------------------------
Customer Delivering reliability,
service dependability, fair * Implemented initiatives from the Company's customer
prices and exceptional experience improvement plan to improve the Broad
service. Measure of Customer Satisfaction scores
* Enhanced the content of written communications and
provided a text and email service ahead of planned
power cuts
* Embedded a revised stakeholder improvement strategy
* Invested in technology to support customer
relationship management
* Further developed services for vulnerable customers
* Expanded education initiatives to promote safety and
energy conservation
--------------- ----------------------------- -------------------------------------------------------------
Operational Setting high standards
excellence for the Company's * Invested significantly in network improvements
operations, system including innovative technologies
investment and maintenance.
* Utilised the major incident management procedure at
times of adverse weather to minimise disruption to
supply
* Continued to deploy the flood defences programme to
increase network resilience
--------------- ----------------------------- -------------------------------------------------------------
Employee Equipping employees
commitment with the resources * Promoted safety in all areas of the business at all
and support they times
need to operate
successfully and
in a safe and rewarding * Completed the telematics installation programme
work environment.
* Supported employees by providing dedicated welfare
services
* Retained and recruited key talent
* Continued to instil the values embedded in the
Berkshire Hathaway Energy code of business conduct
--------------- ----------------------------- -------------------------------------------------------------
Environmental Using natural resources
respect wisely and protecting * Replaced fluid filled cables to reduce environmental
the environment damage from oil leaks
where it is impacted
by the Company's
operations. * Improved the distribution networks impact on the
landscape by undergrounding overhead lines
* Initiated several new innovation projects in the area
of fault detection and domestic energy storage
* Actively engaged with stakeholders on the Open
Networks Project
--------------- ----------------------------- -------------------------------------------------------------
Regulatory Adhering to a policy
integrity of strict compliance * Operated without any material regulatory
with applicable non-compliances
laws, regulations,
standards and policies.
* Commenced preparation for the General Data Protection
Regulation
* Managed risks through regular meetings of the
Governance and Risk Management Group
--------------- ----------------------------- -------------------------------------------------------------
Principal risks and uncertainties
The Company operates a stable and regulated electricity
distribution business, in respect of which the Company's allowed
income is set for each regulatory year through the special
conditions in the electricity distribution licence.
Information on the principal risks and uncertainties facing the
Company and the internal control system are included in the
Company's latest annual reports and accounts for the year to 31
December 2016, which is available at www.northernpowergrid.com.
It is anticpated that these risks will continue to be the
principal risks facing the business for the remaining six months of
2017.
Going concern
In the Company's latest annual reports and accounts for the year
to 31 December 2016 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 2017, which alter the view expressed in the
annual reports and accounts to 31 December 2016.
Future strategy and objectives
The directors intend that the Company will continue to develop
its business by operating with the goal of efficiently investing in
its distribution network, improving the quality of supply and
service provided to customers and delivering the regulatory
business plan for ED1.
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, gives a true and fair view of
the assets, liabilities, financial position and profit of the
Company as required by DTR 4.2.4R for the six months to 30 June
2017; and
(b) the interim management report contains a fair review of the
information required by DTR 4.2.7R.
By order of the board
P A Jones
Director
21 September 2017
6 Months 6 Months
ended ended
30 June 30 June
2017 2016
(unaudited) (unaudited)
GBPm GBPm
Revenue 207.9 206.6
Cost of sales (9.5) (8.0)
------------ ------------
Gross profit 198.4 198.6
Operating expenses (103.2) (97.3)
------------ ------------
Operating profit 95.2 101.3
Other gains 0.2 0.3
Net finance costs (24.5) (23.5)
------------ ------------
Profit before tax 70.9 78.1
Income tax expense (13.9) (16.1)
------------ ------------
Profit from ordinary activities
after tax 57.0 62.0
------------ ------------
CONDENSED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME - SIX MONTHSED 30 JUNE 2017
There is no other comprehensive income for the Company for the
six months to 30 June 2017 or the comparative six month period in
2016 other than the profits reported above.
30 June 31 December
2017 2016
(unaudited)
GBPm GBPm
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 3,104.9 3,054.6
------------- ------------
3,104.9 3,054.6
------------- ------------
CURRENT ASSETS
Inventories 0.3 0.3
Trade and other receivables 50.3 68.5
Cash and cash equivalents 221.0 199.3
------------- ------------
271.6 268.1
------------- ------------
TOTAL ASSETS 3,376.5 3,322.7
------------- ------------
EQUITY
SHAREHOLDERS' EQUITY
Share capital 290.0 290.0
Retained earnings 1,005.9 948.9
------------- ------------
TOTAL EQUITY 1,295.9 1,238.9
------------- ------------
LIABILITIES
NON-CURRENT LIABILITIES
Trade and other payables 768.3 762.5
Borrowings 1,023.1 1,022.8
Deferred tax 127.9 127.7
Provisions 1.1 1.2
------------- ------------
1,920.4 1,914.1
------------- ------------
CURRENT LIABILITIES
Trade and other payables 115.3 115.3
Borrowings 25.8 33.3
Tax payable 18.0 20.1
Provisions 1.1 1.0
------------- ------------
160.2 169.7
------------- ------------
TOTAL LIABILITIES 2,080.6 2,083.8
------------- ------------
TOTAL EQUITY AND LIABILITIES 3,376.5 3,322.7
------------- ------------
The interim financial statements were approved by the board of
directors and authorised for issue on 21 September 2017 and were
signed on its behalf by:
P A Jones
Director
Share Retained
Capital Earnings Total
GBPm GBPm GBPm
Balance at 1 January 2017 290.0 948.9 1,238.9
Profit for the period (unaudited) - 57.0 57.0
Balance at 30 June 2017 290.0 1,005.9 1,295.9
-------- --------- --------
Share Retained
Capital Earnings Total
GBPm GBPm GBPm
Balance at 1 January 2016 290.0 829.5 1,119.5
Profit for the period (unaudited) - 62.0 62.0
Balance at 30 June 2016 290.0 891.5 1,181.5
-------- --------- --------
Share Retained
Capital Earnings Total
GBPm GBPm GBPm
Balance at 1 January 2016 290.0 829.5 1,119.5
Profit for the year - 148.1 148.1
Equity dividends paid - (28.7) (28.7)
Balance at 31 December 2016 290.0 948.9 1,238.9
-------- --------- --------
6 Months 6 Months
ended ended
30 June 30 June
2017 2016
(unaudited) (unaudited)
GBPm GBPm
Cash generated from operations 150.3 138.6
Net interest paid (32.8) (32.6)
Tax paid (17.0) (9.6)
------------ ------------
Net cash from operating activities 100.5 96.4
------------ ------------
Investing activities
Proceeds from disposal of property,
plant and equipment 0.2 0.3
Purchase of property, plant and
equipment (103.0) (117.6)
Receipt of customer contributions 24.0 28.3
------------ ------------
Net cash used in investing activities (78.8) (89.0)
------------ ------------
Financing activities
Movement in external loans - -
Movement in loan from group undertaking - -
Net cash generated by financing - -
activities
------------ ------------
Net increase in cash and cash
equivalents 21.7 7.4
Cash and cash equivalents at beginning
of period 199.3 145.7
------------ ------------
Cash and cash equivalents at end
of period 221.0 153.1
------------ ------------
1. GENERAL INFORMATION
The information included within these condensed financial
statements that refer to the year ended 31 December 2016 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 Company are prepared in
accordance with International Financial Reporting Standards 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 2016 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 2017, which alter the view expressed in the
annual reports and accounts to 31 December 2016.
Changes in accounting policy
The Company's accounting policies and methods of computation are
the same as the accounting policies which are described in the
Company's financial statements for the year ended 31 December 2016.
The Company has not adopted any new or revised accounting standards
in the current year.
3. SEGMENTAL ANALYSIS
Revenue, profit before tax and net assets are attributable to
electricity distribution. Revenue is all in respect of sales to
United Kingdom customers.
Revenue represents charges made to customers for use of the
distribution system, rental of meters, the recharge of costs
incurred on behalf of related parties, amortisation of customer
contributions and other goods sold and services provided, exclusive
of value added tax.
4. INCOME TAX EXPENSE
Tax for the six month period ended 30 June 2017 is charged at
19.25% (six months ended 30 June 2016: 20.00%; year ended 31
December 2016: 20.00%), 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
2017 2016
(unaudited) (unaudited)
GBPm GBPm
Current tax 13.7 15.6
Deferred tax 0.2 0.5
Total income tax expense 13.9 16.1
------------ ------------
The Finance No2 Act 2015 reduced the rate of corporation tax to
19% effective from 1 April 2017 and to 18% effective from 1 April
2020. The Finance Act 2016, which was substantively enacted on 6
September, 2016 further reduced the rate of corporation tax
effective from 1 April 2020 to 17%. Accordingly deferred tax assets
and liabilities have been calculated at the tax rates which will be
in force when the underlying temporary differences are expected to
reverse.
5. NOTES TO THE CASH FLOW STATEMENT
6 Months 6 Months
ended ended
30 June 30 June
2017 2016
(unaudited) (unaudited)
GBPm GBPm
Profit before income tax 70.9 78.1
Depreciation charges 50.2 46.6
Profit on disposal of fixed
assets (0.2) (0.3)
Amortisation of deferred
revenue (13.1) (12.2)
Movement in provisions 0.1 (0.1)
Finance costs 24.5 23.5
132.4 135.6
Decrease in inventories - 0.1
Decrease/(increase) in trade
and other receivables 0.3 (5.4)
Increase in trade and other
payables 17.6 8.3
------------ ------------
Cash generated from operations 150.3 138.6
------------ ------------
6. FINANCIAL INSTRUMENTS
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
2017 (unaudited) 2016 2017 (unaudited) 2016
GBPm GBPm GBPm GBPm
Financial liabilities
Bond 2020 - 9.25% 208.1 217.3 248.7 266.4
Bond 2025 - 2.5% 148.8 150.5 158.5 160.4
Bond 2032 - 4.375% 153.8 150.5 190.6 187.2
Bond 2035 - 5.125% 199.0 203.9 271.2 276.7
EIB Loan - 4.133% 156.8 153.7 180.4 179.9
EIB Loan - 2.564% 131.8 130.1 141.6 139.5
EIB Loan - 2.073% 50.6 50.1 51.3 50.7
1,048.9 1,056.1 1,242.3 1,260.8
7. RELATED PARTY TRANSACTIONS
Transactions entered into with related parties and balances
outstanding were as follows:
Amounts
Purchases owed Interest
Sales from from Borrowings from
to related related related to related related
parties parties parties parties parties
GBPm GBPm GBPm GBPm GBPm
Related party
Six months ended
30 June 2017:
Integrated Utility
Services Limited 0.1 0.4 - - -
Integrated Utility
Services Limited
(registered
in Eire) - 0.1 - - -
Northern Electric
plc - 2.0 - - -
Northern Powergrid
Metering Limited 0.2 - - - -
Northern Powergrid
(Northeast)
Limited 5.9 9.5 - - -
Vehicle Lease
and Service
Limited - 2.0 0.2 - -
Yorkshire Electricity
Group plc - - - 221.0 0.3
------------ ---------- --------- ------------ ---------
6.2 14.0 0.2 221.0 0.3
============ ========== ========= ============ =========
Six months ended
30 June 2016:
Integrated Utility
Services Limited 0.1 0.2 - - -
Integrated Utility
Services Limited
(registered
in Eire) - 0.1 - - -
Northern Electric
plc - 2.5 - - -
Northern Powergrid
Metering Limited 0.2 - - - -
Northern Powergrid
(Northeast)
Limited 4.7 8.2 - - -
Vehicle Lease
and Service
Limited - 2.0 0.2 - -
Yorkshire Electricity
Group plc - - - 153.1 0.4
------------ ---------- --------- ------------ ---------
5.0 13.0 0.2 153.1 0.4
============ ========== ========= ============ =========
Purchases Amounts Interest
Sales from owed Borrowings from
to related related to related to related related
parties parties parties parties parties
GBPm GBPm GBPm GBPm GBPm
Year ended 31
December 2016:
Integrated Utility
Services Limited 0.1 1.2 - - -
Integrated Utility
Services Limited
(registered
in Eire) - 0.3 - - -
Northern Electric
plc - 4.9 - - -
Northern Powergrid
Insurance Services
Limited - 0.6 - - -
Northern Powergrid
Metering Limited 0.4 - - - -
Northern Powergrid
(Northeast)
Limited 10.8 17.4 - - 0.1
Vehicle Lease
and Service
Limited 0.1 4.0 0.4 - -
Yorkshire Electricity
Group plc - - - 199.3 (0.6)
------------ ---------- ------------ ------------ ---------
11.4 28.4 0.4 199.3 (0.5)
============ ========== ============ ============ =========
Sales and purchases from related parties were made at commercial
prices.
Interest on loans to/from Group companies is charged at a
commercial rate.
The company news service from the London Stock Exchange
END
IR LLFSVAAIRFID
(END) Dow Jones Newswires
September 26, 2017 09:58 ET (13:58 GMT)
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