TIDMBC39
RNS Number : 5864B
Northern Powergrid (Yorkshire) plc
21 September 2018
NORTHERN POWERGRID (YORKSHIRE) plc
HALF-YEARLY FINANCIAL REPORT FOR THE
SIX MONTHSED 30 JUNE 2018
INTERIM MANAGEMENT REPORT
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 2018 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 2018
The Company delivered a satisfactory performance for the six
months ended 30 June 2018 and profit after tax remained in line
with the 6 months ended 30 June 2017.
Revenue
Revenue at GBP214.4 million was GBP6.5 million higher than for
the six months ended 30 June 2018 mainly due to higher tariffs,
increased units distributed and higher amortisation of customer
contributions.
Cash flow
Cash and cash equivalents as at 30 June 2018 were GBP197.9
million, representing an increase of GBP11.2 million when compared
with the position at 31 December 2017.
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 GBP71.2 million was in line with the 6
months ended 30 June 2017 with higher revenues largely offset by
higher costs including depreciation.
Dividends
No ordinary dividends were paid in the period resulting in
GBP57.8 million being transferred to reserves.
Principal risks and uncertainties
Information concerning the principal risks and uncertainties
facing the Company are included in the Company's latest annual
reports and accounts for the year to 31 December 2017, which is
available at www.northernpowergrid.com. It is anticpated that these
risks will continue to be the principal risks facing the Company
for the remaining six months of 2018.
Going concern
In the Company's latest annual reports and accounts for the year
to 31 December 2017 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 2018, which alter the view expressed in the
annual reports and accounts to 31 December 2017.
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
2018; 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
7 September 2018
CONDENSED STATEMENT OF PROFIT OR LOSS -- SIX MONTHSED 30 JUNE
2018
6 Months 6 Months
ended 30 ended 30
June 2018 June 2017
(unaudited) (unaudited)
GBPm GBPm
Revenue 214.4 207.9
Cost of sales (9.0) (9.5)
------------ ------------
Gross profit 205.4 198.4
Operating expenses (109.3) (103.2)
------------ ------------
Operating profit 96.1 95.2
Other gains - 0.2
Net finance costs (24.9) (24.5)
------------ ------------
Profit before tax 71.2 70.9
Income tax expense (13.4) (13.9)
------------ ------------
Profit from ordinary activities after tax 57.8 57.0
------------ ------------
CONDENSED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME - SIX MONTHSED 30 JUNE 2018
There is no other comprehensive income for the Company for the
six months to 30 June 2018 or the comparative six month period in
2017 other than the profits reported above.
CONDENSED STATEMENT OF FINANCIAL POSITION - SIX MONTHSED 30 JUNE
2018
30 June 2018 31 December
2017
(unaudited)
GBPm GBPm
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 3,216.7 3,170.6
------------- ------------
3,216.7 3,170.6
------------- ------------
CURRENT ASSETS
Inventories 0.4 0.8
Trade and other receivables 61.4 72.9
Cash and cash equivalents 197.9 186.7
------------- ------------
259.7 260.4
------------- ------------
TOTAL ASSETS 3,476.4 3,431.0
------------- ------------
EQUITY
SHAREHOLDERS' EQUITY
Share capital 290.0 290.0
Retained earnings 1,090.5 1,032.7
------------- ------------
TOTAL EQUITY 1,380.5 1,322.7
------------- ------------
LIABILITIES
NON-CURRENT LIABILITIES
Trade and other payables 784.2 780.0
Borrowings 1,023.8 1,023.4
Deferred tax 127.5 128.0
Provisions 1.1 1.2
------------- ------------
1,936.6 1,932.6
------------- ------------
CURRENT LIABILITIES
Trade and other payables 114.0 124.2
Borrowings 25.8 33.3
Tax payable 18.6 17.3
Provisions 0.9 0.8
------------- ------------
159.3 175.7
------------- ------------
TOTAL LIABILITIES 2,095.9 2,108.3
------------- ------------
TOTAL EQUITY AND LIABILITIES 3,476.4 3,431.0
------------- ------------
The interim financial statements were approved by the board of
directors and authorised for issue on 7 September 2018 and were
signed on its behalf by:
P A Jones
Director
CONDENSED STATEMENT OF CHANGES IN EQUITY - SIX MONTHSED 30 JUNE
2018
Share Retained
Capital Earnings Total
GBPm GBPm GBPm
Balance at 1 January 2018 290.0 1,032.7 1,322.7
Profit for the period (unaudited) - 57.8 57.8
Balance at 30 June 2018 290.0 1,090.5 1,380.5
-------- --------- --------
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 2017 290.0 948.9 1,238.9
Profit for the year - 113.6 113.6
Equity dividends paid - (29.8) (29.8)
Balance at 31 December 2017 290.0 1,032.7 1,322.7
-------- --------- --------
CONDENSED STATEMENT OF CASH FLOWS -- SIX MONTHSED 30 JUNE
2018
6 Months 6 Months
ended 30 ended 30
June 2018 June 2017
(unaudited) (unaudited)
GBPm GBPm
Cash generated from operations 150.3 150.3
Net interest paid (32.6) (32.8)
Tax paid (12.6) (17.0)
------------ ------------
Net cash from operating activities 105.1 100.5
------------ ------------
Investing activities
Proceeds from disposal of property, plant
and equipment - 0.2
Purchase of property, plant and equipment (109.6) (93.6)
Receipt of customer contributions 15.7 14.6
------------ ------------
Net cash used in investing activities (93.9) (78.8)
------------ ------------
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 11.2 21.7
Cash and cash equivalents at beginning of
period 186.7 199.3
------------ ------------
Cash and cash equivalents at end of period 197.9 221.0
------------ ------------
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
1. GENERAL INFORMATION
The information included within these condensed financial
statements that refer to the year ended 31 December 2017 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 2017 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 2018, which alter the view expressed in the
annual reports and accounts to 31 December 2017.
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 2017,
with the only changes being outlined below.
Application of new and revised IFRS
In the current year, the company has a number of amendments to
IFRS by the International Accounting standards Board ("IASB) that
are mandatorily effective for an accounting period that begins on
or after 1 January 2018:
IFRS 9- Financial Instruments A revised version of IFRS 9 was
issued to mainly include impairment
requirements for financial assets,
and amendments to the classification
and measurement requirements by
introducing a 'fair value through
other comprehensive income measurement
category for certain simple debt
instruments. The application of
these amendments has had no material
impact on the Company's financial
statements.
IFRS 15- Revenue from Under IFRS 15, an entity recognises
contracts with customers revenue when a performance obligation
is satisfied. Far more prescriptive
guidance has been added in IFRS
15 to deal with specific scenarios.
Furthermore, extensive disclosures
are required by IFRS 15. The application
of these amendments has had no
material impact on the Company's
financial statements.
New and revised standards in issue but not yet effective
The Company has not yet applied the following new and revised
IFRSs that have been issued but not yet effective for the period
ended 30 June 2018:
IFRS 16- Leases (1 January IFRS 16 introduces a comprehensive
2019) model for the identification of
lease arrangements and accounting
treatments for both lessors and
lessees. IFRS 16 will supersede
the current lease guidance including
IAS 17 Leases and the related
interpretations when it becomes
effective. IFRS 16 distinguishes
between leases and service contracts
on the basis of whether an identified
asset is controlled by a customer.
Distinctions between operating
leases and finance leases are
removed for lessee accounting,
and is replaced by a model where
right-of-use asset and a corresponding
liability have to be recognised
for all leases by lessees except
for short term leases and leases
of low-value assets. As at 30
June 2018, the Company had non-cancellable
operating lease commitments of
GBP11.1 million, IAS 17 does not
require recognition of any right-of-use
asset or liability for future
lease payments for these leases.
A preliminary assessment indicated
that these arrangements will meet
the definition of a lease under
IFRS 16, and hence the Company
will recognise a right-of-use
asset and corresponding liability
in respect of all these leases
unless they qualify for low-value
or short-term leases upon the
application of IFRS 16.
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 2018 is charged at
19.00% (six months ended 30 June 2017: 19.25%; year ended 31
December 2017: 19.25%), 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
2018 2017
(unaudited) (unaudited)
GBPm GBPm
Current tax 13.9 13.7
Deferred tax (0.5) 0.2
Total income tax expense 13.4 13.9
------------ ------------
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 30 ended 30
June 2018 June 2017
(unaudited) (unaudited)
GBPm GBPm
Profit before income tax 71.2 70.9
Depreciation charges 53.0 50.2
Profit on disposal of fixed assets - (0.2)
Amortisation of deferred revenue (14.0) (13.1)
Movement in provisions 0.1 0.1
Finance costs 24.9 24.5
135.2 132.4
Decrease in inventories 0.4 -
Decrease in trade and other receivables 11.0 0.3
Increase in trade and other payables 3.7 17.6
------------ ------------
Cash generated from operations 150.3 150.3
------------ ------------
6. FINANCIAL INSTRUMENTS
Except as detailed in the following table, the directors
consider that the carrying value amounts of financial assets and
financial liabilities recorded at amortised cost are approximately
equal to their fair values:
Carrying value Fair value
30 June 31 December 30 June 31 December
2018 (unaudited) 2017 2018 (unaudited) 2017
GBPm GBPm GBPm GBPm
Financial liabilities
Bond 2020 - 9.25% 208.2 217.4 231.8 250.1
Bond 2025 - 2.5% 149.0 150.8 154.4 159.7
Bond 2032 - 4.375% 154.0 150.6 184.2 187.4
Bond 2035 - 5.125% 199.1 204.0 262.1 276.7
EIB Loan - 4.133% 156.9 153.7 174.0 175.1
EIB Loan - 2.564% 131.8 130.1 139.3 140.1
EIB Loan - 2.073% 50.6 50.1 50.3 50.8
1,049.6 1,056.7 1,196.1 1,239.9
7. RELATED PARTY TRANSACTIONS
Transactions entered into with related parties and balances
outstanding were as follows:
Amounts
Sales Purchases owed from Borrowings Interest
to related from related related to related from related
parties parties parties parties parties
GBPm GBPm GBPm GBPm GBPm
Related party
Six months ended
30 June 2018:
Integrated Utility
Services Limited - 1.0 - - -
Integrated Utility
Services Limited
(registered in Eire) - 0.2 - - -
Northern Electric
plc - 2.0 - - -
Northern Powergrid
Metering Limited 0.3 - - - -
Northern Powergrid
(Northeast) Limited 6.9 10.4 - - -
Vehicle Lease and
Service Limited - 2.4 0.3 - -
Yorkshire Electricity
Group plc - - - 197.9 0.5
------------ -------------- ----------- ------------ --------------
8.2 16.0 0.3 197.9 0.5
============ ============== =========== ============ ==============
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
============ ============== =========== ============ ==============
Amounts
Sales Purchases owed to Borrowings Interest
to related from related related to related from related
parties parties parties parties parties
GBPm GBPm GBPm GBPm GBPm
Year ended 31 December
2017:
Integrated Utility
Services Limited 0.1 2.1 - - -
Integrated Utility
Services Limited
(registered in Eire) - 0.3 0.8 - -
Northern Electric
plc - 4.2 - - -
Northern Powergrid
Metering Limited 0.6 - - - -
Northern Powergrid
(Northeast) Limited 12.6 19.1 - -
Vehicle Lease and
Service Limited 0.1 0.5 0.5 - -
Yorkshire Electricity
Group plc - - - 86.7 (0.6)
------------ -------------- --------- ------------ --------------
13.4 26.2 1.3 86.7 (0.6)
============ ============== ========= ============ ==============
Sales and purchases from related parties were made at commercial
prices.
Interest on loans to/from Group companies is charged at a
commercial rate.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR LLFEFALILFIT
(END) Dow Jones Newswires
September 21, 2018 08:57 ET (12:57 GMT)
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