TIDMBC39
RNS Number : 8326L
Northern Powergrid (Yorkshire) plc
10 September 2019
REGISTERED NUMBER: 04112320
NORTHERN POWERGRID (YORKSHIRE) plc
HALF-YEARLY FINANCIAL REPORT FOR THE
SIX MONTHSED 30 JUNE 2019
INTERIM MANAGEMENT REPORT
Cautionary Statement
This interim management report has been prepared solely to
provide additional information to shareholders to assess the
business 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 2019 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 2019
The Company made a profit after tax of GBP58.6 million was
GBP0.8 million higher than the 6 months ended 30 June 2018 due to
higher DUoS revenues offset by higher depreciation.
Revenue
Revenue at GBP217.8 million was GBP3.4 million higher than for
the six months ended 30 June 2018 mainly due to higher tariffs and
higher amortisation of customer contributions.
Cash flow
Cash and cash equivalents as at 30 June 2019 were GBP170.8
million, representing a decrease of GBP14.7 million when compared
with the position at 31 December 2018.
The Company has access to GBP75.0 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 GBP19.0 million overdraft facility provided by
Lloyds Bank plc.
Dividends
No ordinary dividends were paid in the period resulting in
GBP58.6 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 2018, 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 2019.
Going concern
In the Company's latest annual reports and accounts for the year
to 31 December 2018 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 2019, which alter the view expressed in the
annual reports and accounts to 31 December 2018.
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 the remainder of the ED1 period.
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 Disclosure and Transparency Rules ("DTR")
4.2.4R for the six months to 30 June 2019; 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
5 September 2019
6 Months 6 Months
ended 30 ended 30
June 2019 June 2018
(unaudited) (unaudited)
GBPm GBPm
Revenue 217.8 214.4
Cost of sales (10.2) (9.0)
------------ ------------
Gross profit 207.6 205.4
Operating expenses (110.8) (109.3)
------------ ------------
Operating profit 96.8 96.1
Other gains - -
Finance income 0.7 0.5
Finance costs (25.0) (25.4)
------------ ------------
Profit before tax 72.5 71.2
Income tax expense (13.9) (13.4)
------------ ------------
Profit from ordinary activities after tax 58.6 57.8
------------ ------------
CONDENSED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME - SIX MONTHSED 30 JUNE 2019
There is no other comprehensive income for the Company for the
six months to 30 June 2019 or the comparative six month period in
2018 other than the profits reported above.
30 June 2019 31 December
2018
(unaudited)
GBPm GBPm
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 3,345.8 3,278.1
Right of use asset 8.0 -
Intangible assets - -
------------- ------------
3,353.8 3,278.1
------------- ------------
CURRENT ASSETS
Inventories 0.2 0.9
Trade and other receivables 58.9 68.0
Cash and cash equivalents 170.8 185.5
------------- ------------
229.9 254.4
------------- ------------
TOTAL ASSETS 3,583.7 3,532.5
------------- ------------
EQUITY
SHAREHOLDERS' EQUITY
Share capital 290.0 290.0
Retained earnings 1,173.7 1,115.1
------------- ------------
TOTAL EQUITY 1,463.7 1,405.1
------------- ------------
LIABILITIES
NON-CURRENT LIABILITIES
Deferred revenue 795.0 789.6
Borrowings 824.5 1,024.1
Lease liabilities 2.0 -
Deferred tax 127.1 127.2
Provisions 0.6 0.7
------------- ------------
1,749.2 1,941.6
------------- ------------
CURRENT LIABILITIES
Trade and other payables 90.2 90.1
Deferred revenue 29.9 29.3
Borrowings 225.3 48.3
Lease liabilities 6.4 -
Tax payable 17.9 17.1
Provisions 1.1 1.0
------------- ------------
370.8 185.8
------------- ------------
TOTAL LIABILITIES 2,120.0 2,127.4
------------- ------------
TOTAL EQUITY AND LIABILITIES 3,583.7 3,532.5
------------- ------------
The interim financial statements were approved by the board of
directors and authorised for issue on 5 September 2019 and were
signed on its behalf by:
P A Jones
Director
Share Retained
Capital Earnings Total
GBPm GBPm GBPm
Balance at 1 January 2019 290.0 1,115.1 1,405.1
Profit for the period (unaudited) - 58.6 58.6
Balance at 30 June 2019 290.0 1,173.7 1,463.7
-------- --------- --------
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 2018 290.0 1,032.7 1,322.7
Profit for the year - 113.6 113.6
Equity dividends paid - (31.2) (31.2)
Balance at 31 December 2018 290.0 1,115.1 1,405.1
-------- --------- --------
6 Months 6 Months
ended 30 ended 30
June 2019 June 2018
(unaudited) (unaudited)
GBPm GBPm
Profit for the year 58.6 57.8
Depreciation and amortisation 53.5 53.0
Amortisation of deferred revenue (14.6) (14.0)
Net finance costs 24.3 24.9
Income tax expense 13.9 13.4
------------ ------------
Cash flow before working capital movements 135.7 135.1
Decrease in inventory 0.7 0.4
Decrease in trade receivables 8.9 11.0
Increase in trade and other payables 1.7 3.7
Increase in provisions - 0.1
------------ ------------
Cash generated from operations 147.0 150.3
------------ ------------
Net interest paid (32.6) (32.6)
Tax paid (13.2) (12.6)
------------ ------------
Net cash from operating activities 101.2 105.1
------------ ------------
Investing activities
Proceeds from disposal of property, plant - -
and equipment
Purchase of property, plant and equipment (119.1) (109.6)
Receipt of customer contributions 18.2 15.7
------------ ------------
Net cash used in investing activities (100.9) (93.9)
------------ ------------
Financing activities
Repayment of short-term borrowings (15.0) -
Net cash used in financing activities (15.0) -
------------ ------------
Net (decrease)/increase in cash and cash
equivalents (14.7) 11.2
Cash and cash equivalents at beginning of
period 185.5 186.7
------------ ------------
Cash and cash equivalents at end of period 170.8 197.9
------------ ------------
1. GENERAL INFORMATION
The information included within these condensed financial
statements that refer to the year ended 31 December 2018 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 2018 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 2019, which alter the view expressed in the
annual reports and accounts to 31 December 2018.
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 2018,
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 2019:
IFRS 16 - Leases
IFRS 16 supersedes the current lease guidance including IAS 17
Leases and the related interpretations. 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.
On adoption of IFRS 16, the Company recognised lease liabilities
in relation to leases which had previously been classified as
'operating leases' under the principles of IAS 17 Leases. These
liabilities were measured at the present value of the remaining
lease payments, discounted using the lessee's incremental borrowing
rate as of 1 January 2019. The weighted average lessee's
incremental borrowing rate applied to the lease liabilities on 1
January 2019 was 3.48%.
The Company did not have any leases previously classified as
finance leases.
The recognition of right of use assets relate to the following
types of assets:
30 June 1 January
2019 2019
GBPm GBPm
Fleet vehicles 7.5 6.3
Properties 0.5 0.5
Right of use assets 8.0 6.8
-------- ----------
The lease liability recognised as at 1 January 2019 is as
follows:
1 January
2019
GBPm
Operating lease commitments as at 31 December
2018 11.1
Discounted using the lessee's incremental
cost of borrowing 9.8
Less short-term leases recognised on a straight-line
basis (3.0)
----------
Lease liability recognised as at 1 January
2019 6.8
Of which:
Current lease liabilities 1.6
Non-current lease liabilities 5.2
----------
Right-of use assets were measured at the amount equal to the
lease liability, adjusted by the amount of any prepaid or accrued
lease payments relating to that lease recognised in the balance
sheet as at 31 December 2018. There were no onerous lease contracts
that would have required an adjustment to the right-of-use assets
at the date of initial application.
None of the other standards, interpretations and amendments
which are effective for periods beginning 1 January 2019 has had a
material effect on the financial statements:
-- Amendments to IAS 28 - Long-term interests in associates and
joint ventures;
-- Amendments to IAS 19 - Plan amendment, curtailment or
settlement; and
-- Annual improvements to IFRS 2015-2017 cycle.
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 2019 is charged at
19.17% (six months ended 30 June 2018: 18.82%), 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
2019 2018
(unaudited) (unaudited)
GBPm GBPm
Current tax 14.0 13.9
Deferred tax (0.1) (0.5)
Total income tax expense 13.9 13.4
------------ ------------
The Finance No2 Act 2015 reduced the rate of corporation tax to
19% effective from 1 April 2018 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. 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
2019 (unaudited) 2018 2019 (unaudited) 2018
GBPm GBPm GBPm GBPm
Financial liabilities
Short-term loan - 15.0 - 15.0
Bond 2020 - 9.25% 208.3 217.5 208.4 233.2
Bond 2025 - 2.5% 149.3 204.1 157.5 262.9
Bond 2032 - 4.375% 154.1 150.8 192.7 179.1
Bond 2035 - 5.125% 198.8 153.7 274.2 168.2
EIB Loan - 4.133% 156.9 151.0 169.2 155.2
EIB Loan - 2.564% 131.8 130.2 139.8 137.3
EIB Loan - 2.073% 50.6 50.1 51.7 49.6
1,049.8 1,072.4 1,193.4 1,200.5
6. 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 2019:
Integrated Utility
Services Limited - 1.0 - - -
Integrated Utility
Services Limited
(registered in Eire) - 0.2 - - -
Northern Electric
plc - 1.8 - - -
Northern Powergrid
Metering Limited 0.3 - - - -
Northern Powergrid
(Northeast) Limited 5.9 10.6 - - -
Vehicle Lease and
Service Limited - 2.4 - - -
Yorkshire Electricity
Group plc - - - 170.8 0.7
------------ -------------- ----------- ------------ --------------
6.2 16.0 0.3 170.8 0.7
============ ============== =========== ============ ==============
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
------------ -------------- ----------- ------------ --------------
7.2 16.0 0.3 197.9 0.5
============ ============== =========== ============ ==============
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
2018:
Integrated Utility
Services Limited 0.1 2.1 - - -
Integrated Utility
Services Limited
(registered in Eire) - 0.3 0.3 - -
Northern Electric
plc - 3.6 - - -
Northern Powergrid
Metering Limited 0.5 - - - -
Northern Powergrid
(Northeast) Limited 11.5 21.5 - -
Vehicle Lease and
Service Limited - 4.7 - - -
Yorkshire Electricity
Group plc - - - 185.5 1.2
------------ -------------- --------- ------------ --------------
12.1 32.2 0.3 185.5 1.2
============ ============== ========= ============ ==============
Sales and purchases from related parties were made at commercial
prices.
Interest on loans to/from Group companies is charged at a
commercial rate.
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 LLFIIADIILIA
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