TIDMNTEA
RNS Number : 0340Q
Northern Electric PLC
26 August 2014
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 2014.
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 2014 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 2014
NORTHERN ELECTRIC plc:
CONTENTS OF THE HALF YEARLY REPORT FOR THE SIX MONTHS
ENDED 30 JUNE 2014
Page
INTERIM MANAGEMENT REPORT 1
Condensed consolidated statement of profit
or loss 8
CONDENSED Consolidated Statement of OTHER
Comprehensive Income 9
CONDENSED Consolidated Statement of Changes
in Equity 10
CONDENSED Consolidated Statement of Financial
Position 11
CONDENSED Consolidated STATEMENT OF Cash FlowS 12
Notes to the Financial Statements 13
NORTHERN ELECTRIC plc
(REGISTERED NUMBER: 02366942)
INTERIM MANAGEMENT REPORT
Registered Number: 02366942
Registered Office: Lloyds Court, 78 Grey Street, Newcastle upon
Tyne, NE1 6AF
Cautionary Statement
This interim management report has been prepared solely to
provide additional information to shareholders to assess the
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 2014
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 2014 was to act
as a holding company, with its main operating subsidiaries being
Northern Powergrid (Northeast) Limited ("Northern Powergrid") and
Integrated Utility Services Limited ("IUS").
Northern Powergrid distributes electricity to approximately 1.6
million customers connected to its electricity distribution network
within its distribution services area in the northeast of England,
which extends from North Northumberland, south to York and west to
the Pennines, is an authorised distributor under the Electricity
Act 1989 and holds an electricity distribution licence granted by
the Secretary of State. IUS provides engineering contracting
services to various clients. 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 2013.
Financial strength
Results for the six months ended 30 June 2014
The half-yearly accounts for the six months ended 30 June 2014
consolidate the results of the Company and its subsidiaries (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 2014
to the Registrar of Companies by 30 June 2015.
The Group delivered a satisfactory performance for the six
months ended 30 June 2014, mainly due to increased revenue as a
result of higher distribution tariffs and continued good cost
control. A summary of the key financial results is set out
below:
NORTHERN ELECTRIC plc (REGISTERED NUMBER: 02366942)
INTERIM MANAGEMENT REPORT (CONTINUED)
Financial strength (continued)
Key financials
Revenue
Revenue at GBP199.1m was GBP21.9m higher than for the six months
ended 30 June 2013 mainly due to higher distribution tariffs and an
increase in contracting revenues.
Cash flow
Cash and cash equivalents as at 30 June 2014 were GBP113.7m,
representing an increase of GBP7.8m when compared with the position
at 31 December 2013.
The Group has access to short-term borrowing facilities provided
by Yorkshire Electricity Group plc, a related party, and to
committed revolving credit facilities of GBP75 million provided by
Lloyds Bank plc, Royal Bank of Scotland plc and Abbey National
Treasury Services plc. In addition, the Group has access to a GBP22
million committed overdraft facility provided by Lloyds Bank
plc.
Financial position
Profit before tax at GBP90.1m was GBP8.1m higher than the six
months ended 30 June 2013 mainly as a result of increased
distribution revenues offset by increased depreciation and
amortisation charges and other cost increases.
Dividends
No ordinary dividends were paid in the period resulting in
GBP69.5 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 5 to this half-yearly financial report.
NORTHERN ELECTRIC plc (REGISTERED NUMBER: 02366942)
INTERIM MANAGEMENT REPORT (CONTINUED)
Customer service
Although formal directions are awaited from Ofgem regarding the
impact of certain incidents, as at the date of this half-yearly
financial report, Northern Powergrid's reported performance for the
regulatory year to 31 March 2014 (the "Regulatory Year") in respect
of its key customer service performance indicators of customer
interruptions ("CI") and customer minutes lost ("CML") is as
follows:
Year to 31 March 2014 Year to 31 March 2013
Actual Target Actual Target
CML: 64.7 70.7 70.2 70.9
CI: 63.2 68.1 65.0 68.2
In respect of these key customer service performance indicators,
the goal is to achieve performance that is below Ofgem's target
number.
As part of the Broad Measure of Customer Satisfaction, an
independent market research company, Accent, carries out telephone
surveys with Northern Powergrid's customers to find out how
satisfied they are with the services provided. Northern Powergrid
recorded an overall satisfaction score of 81.8% for the Regulatory
Year and expects that its customer service improvement plan,
including the range of initiatives included in the well-justified
business plan submitted to Ofgem, will improve the services
provided to customers and so increase the satisfaction rating
year-on-year.
The Regulatory Year was the fourth year in which the Ofgem
discretionary reward for stakeholder engagement had been in
operation and the second year that a financial incentive had been
available and, on 30 May 2014, Northern Powergrid put forward a
submission to Ofgem in respect of its stakeholder engagement during
the Regulatory Year, which included initiatives with increased
focus on its social obligations, such as the partnership with the
Trussell Trust food banks and providing better on-line services for
its customers.
On 9 July 2014, Northern Powergrid presented that submission to
Ofgem's panel and improved its position from the previous year,
being ranked in second place and securing a reward totalling GBP0.7
million for the Northern Powergrid Group. Northern Powergrid
intends to reinvest its reward in its key initiatives and will
continue to build on this strong stakeholder engagement
performance.
Operational excellence
During the six months to 30 June 2014, Northern Powergrid
continued to target its investment strategy at delivering
improvements in the overall performance of its electricity
distribution network in an efficient and cost-effective manner.
Investment in the distribution network included the refurbishment,
replacement and construction of assets such as substations,
transformers, switchgear and overhead and underground cables and
was targeted at improving the network's resilience in an efficient
and cost-effective manner so that the number of power cuts that
occur and number of customers affected by those power cuts are
minimised as far as possible.
NORTHERN ELECTRIC plc (REGISTERED NUMBER: 02366942)
INTERIM MANAGEMENT REPORT (CONTINUED)
Operational excellence (continued)
Northern Powergrid invested GBP207.8 million in the distribution
network during the Regulatory Year, which represented a 9% increase
on the GBP190.1 million recorded in the regulatory year to 31 March
2013 such that Northern Powergrid remains well-placed in respect of
the outputs it intends to deliver by the end of the current
Distribution Price Control period to 31 March 2015 ("DPCR5").
IUS continued to operate its engineering contracting business
and saw an improvement in revenues in the six months to 30 June
2014, mainly due to increased activity in delivering contracts for
Network Rail and completing work on the largest contract secured
for a number of years. Although competition for business in the
sectors, within which IUS operates, remained strong, IUS continued
to perform well in its UK Contracting activities and began to see
some improvement in the multi-utility housing market.
Employee commitment - Health and safety
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 2014, the Group did not experience
any lost time accidents (six months to 30 June 2013: Nil) against
an annual target of one but incurred six preventable vehicle
accidents (six months to 30 June 2013: 7) against an annual target
of 13. The Group's performance in respect of both lost time and
preventable accidents was encouraging and none of the incidents
resulted in serious injuries to the employees concerned.
Nevertheless, work continues to reduce the accident rates, with the
lessons learned from such incidents being incorporated into the
Northern Powergrid Group's safety and health improvement plan and
road risk management programme.
Regulatory integrity
Following Ofgem's announcement in November 2013 that it had
decided that Northern Powergrid's well-justified business plan was
not to proceed on the "fast track", Northern Powergrid revisited
its plan and provided Ofgem with a revised version including
further justification of the associated costs on 17 March 2014.
Ofgem issued a draft determination containing its proposed price
control settlement for Northern Powergrid on 29 July 2014. These
proposals are under consultation until September 2014 and a final
decision is expected in November 2014. On conclusion of the
process, Northern Powergrid's base revenues will be set for the
price control period from 2015 to 2023, which is known as ED1.
On 21 March 2014, Ofgem published its decision on the
restatement of the 2009/2010 system losses data and closing out the
Distribution Price Control Review 4 losses incentive scheme,
together with details of the final sums to be returned by Northern
Powergrid during ED1. The financial effect of that decision will be
seen in future statutory accounting periods and, in accordance with
International Financial Reporting Standards, the Group has not
included any recognition of the issue in this half-yearly financial
report.
NORTHERN ELECTRIC plc (REGISTERED NUMBER: 02366942)
INTERIM MANAGEMENT REPORT (CONTINUED)
Regulatory integrity (continued)
In the first quarter of 2014, the Department of Energy and
Climate Change and Ofgem began reviews of the performance of the
Distribution Network Operators (the "DNOs") affected by the severe
weather experienced over the Christmas 2013 period so that future
responses to such incidents can be improved and, therefore, the
inconvenience to the affected customers can be minimised as far as
possible. Northern Powergrid is actively involved in both reviews
and is supporting the industry exercise to create a single,
national telephone number, which customers can use to contact their
DNO if their power supply is affected as a result of such an
incident.
Northern Powergrid also recognises the need to improve the ways
in which it communicates with its customers via both traditional
methods and social media and is playing a central role in taking
forward changes to the industry arrangements necessary for the DNOs
to have access to better customer contact information that can be
used to provide more proactive information during times of severe
weather.
Risks and uncertainties
Regulatory risk
Most of Northern Powergrid's revenue is controlled by the
distribution price control formula set out in the electricity
distribution licence. One of the principal risks facing Northern
Powergrid relates to possible changes in its allowed income as a
result of modifications to the price control formulae that are set
out within the special conditions of the electricity distribution
licence. However, all of the changes to those special conditions
required to give effect to Ofgem's final proposals in respect of
DPCR5 were agreed and implemented with effect from 1 April
2010.
The price control formula does not constrain profits from year
to year but sets a maximum permitted revenue for each regulatory
year and is a control on revenue that operates independently of
most of the electricity distribution licence holder's costs. Where
the Company recovers more, or less, than this maximum the
difference is carried forward, with interest. For amounts relating
to the Regulatory Year, the carry forward is into the entitlement
for the regulatory year ended 31 March 2015. For amounts relating
to the regulatory year ended 31 March 2015, the carry forward will
typically be into the entitlement for the regulatory year after the
following regulatory year.
During DPCR5, the rate of inflation, as measured by the Retail
Prices Index ("RPI"), is taken into account in setting Northern
Powergrid's allowed income in respect of each regulatory year.
Consequently, one of the risks faced by Northern Powergrid is that
its costs may increase by more than RPI. Any changes in costs
incurred will have a direct impact on Northern Powergrid's
financial results, as will changes in performance under incentive
schemes, such as in customer service, which can lead to adjustments
to allowed revenues.
NORTHERN ELECTRIC plc (REGISTERED NUMBER: 02366942)
INTERIM MANAGEMENT REPORT (CONTINUED)
Risks and uncertainties (continued)
Regulatory risk (continued)
Northern Powergrid revisited the well-justified business plan
that it submitted to Ofgem in 2013 and provided Ofgem with a
revised version including further justification of the associated
costs on 17 March 2014. Ofgem issued a draft determination
containing its proposed price control settlement for Northern
Powergrid on 29 July 2014. These proposals are under consultation
until September 2014 and a final decision is expected in November
2014. On conclusion of the process, Northern Powergrid's revenues
will be set for ED1.
Financial risk
The principal risks associated with the regulatory environment,
within which Northern Powergrid 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 variations 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.
It is anticpated that these risks will continue for the main
focus for the Group during the remainder of 2014.
The Group addresses interest rate risk by having a policy of
providing 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 2014, 100% of the Group's long-term borrowings
were at fixed rates and the average maturity for these borrowings
was 14 years. Despite this position, the Group remains mindful of
the current 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 2013, which is available at www.northernpowergrid.com.
Going concern
In the Company's latest annual reports and accounts for the year
to 31 December 2013 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
and confirm that no events have occurred during the six months to
30 June 2014 to alter the view expressed in the annual reports and
accounts to 31 December 2013.
NORTHERN ELECTRIC plc (REGISTERED NUMBER: 02366942)
INTERIM MANAGEMENT REPORT (CONTINUED)
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 core skills of
electricity distribution and engineering contracting.
The majority of Northern Powergrid's distribution revenues for
DPCR5 have been set by Ofgem and Ofgem is considering Northern
Powergrid's well-justified business plan, as part of the ED1 price
control review process. That plan set out Northern Powergrid's
priorities for and the challenges it expects to see during ED1,
which will last for the eight years until March 2023. Northern
Powergrid plans to provide its customers with more for less by
improving performance in respect of all of the outputs expected of
it, reducing prices in the first year of ED1 and then maintaining
those prices at a relatively consistent level over the remainder of
the period, delivering 20% shorter power cuts and providing a
connections service that is 30% faster, together with a range of
new and improved services.
Northern Powergrid resubmitted its well-justified business plan
for Ofgem's consideration on 17 March 2014 and the directors intend
to continue to develop the Group's business with the goal of
Northern Powergrid out-performing the allowances in the price
control, while efficiently investing in the network and improving
the quality of supply and service provided to its customers. Ofgem
issued its draft determination on 29 July 2014 and its final
determination is expected in November 2014.
IUS will look to develop further its engineering contracting
business by delivering a high standard of service to its existing
clients and pursuing opportunities in other sectors.
Responsibility Statement
We confirm that to the best of our knowledge:
(a) the condensed set of finanical statements has been prepared
in accordance with IAS 34, "Interim Financial Reporting", and gives
a true and fair view of the assets, liabilities, financial position
and profit of the Group for the six months to 30 June 2014;
(b) the interim management report contains a fair review of the
information required by DTR 4.2.7 (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 4.2.8R (disclosure of related parties'
transactions and changes therein).
By order of the board
T E Fielden
Director
21 August 2014
NORTHERN ELECTRIC plc (REGISTERED NUMBER: 02366942)
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS - SIX MONTHS
ENDED 30 JUNE 2014
6 Months 6 Months
ended 30 ended 30
June 2014 June 2013
Unaudited Unaudited
GBPm GBPm
Revenue 199.1 177.2
Cost of sales (26.5) (16.2)
----------- -----------
Gross profit 172.6 161.0
Operating expenses (66.2) (62.2)
----------- -----------
Operating profit 106.4 98.8
Other gains 0.4 0.2
Finance income 0.7 0.8
Finance costs (17.4) (17.8)
----------- -----------
Profit before tax 90.1 82.0
Income tax expense (20.6) (19.7)
----------- -----------
Profit from ordinary activities after tax 69.5 62.3
----------- -----------
NORTHERN ELECTRIC plc (REGISTERED NUMBER: 02366942)
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME - SIX MONTHS ENDED 30 JUNE 2014
6 Months 6 Months
ended 30 ended 30
June 2014 June 2013
Unaudited Unaudited
GBPm GBPm
PROFIT FOR THE PERIOD 69.5 62.3
OTHER COMPREHENSIVE INCOME
Items that will not be reclassified subsequently
to profit or loss
Employee benefit obligation 11.1 (39.6)
Income tax relating to items of other comprehensive
income (1.9) 9.1
OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET
OF INCOME TAX 9.2 (30.5)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 78.7 31.8
----------- -----------
NORTHERN ELECTRIC plc (REGISTERED NUMBER: 02366942)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - SIX
MONTHS ENDED 30 JUNE 2014
Share
Share Premium Other Retained Total
Capital Account Reserves Earnings Equity
GBPm GBPm GBPm GBPm GBPm
Balance at 1 January
2014 72.2 15 158.8 6.2 518.8 756.0
Total comprehensive
income for the period
(unaudited) - - - 78.7 78.7
Balance at 30 June
2014 72.2 158.8 6.2 597.5 834.7
-------- -------- --------- --------- -------
Share
Share Premium Other Retained Total
Capital Account Reserves Earnings Equity
GBPm GBPm GBPm GBPm GBPm
Balance at 1 January
2013 72.2 158.8 6.2 429.5 666.6
Total comprehensive
income for the period
(unaudited) - - - 31.8 31.8
Balance at 30 June
2013 72.2 158.8 6.2 461.3 698.4
-------- -------- --------- --------- ---------
Share
Share Premium Other Retained Total
Capital Account Reserves Earnings Equity
GBPm GBPm GBPm GBPm GBPm
Balance at 1 January
2013 72.2 158.8 6.2 429.4 666.6
Dividends - - - (30.0) (30.0)
Total comprehensive
income for the year - - - 119.4 119.4
Balance at 31 December
2013 72.2 158.8 6.2 518.8 756.0
-------- -------- --------- ----------- ----------
NORTHERN ELECTRIC plc (REGISTERED NUMBER: 02366942)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION - SIX
MONTHS ENDED 30 JUNE 2014
30 June 31 December
2014 2013
Unaudited
GBPm GBPm
ASSETS
NON-CURRENT ASSETS
Intangible assets 18.9 14.8
Property, plant and equipment 1,855.6 1,790.2
Investments 3.2 3.4
Pension asset 20.4 -
Trade and other receivables 6.2 6.1
---------- ------------
1,904.3 1,814.5
---------- ------------
CURRENT ASSETS
Inventories 9.5 10.4
Trade and other receivables 63.2 50.2
Cash and cash equivalents 113.7 105.9
---------- ------------
186.4 166.5
---------- ------------
TOTAL ASSETS 2,090.7 1,981.0
---------- ------------
EQUITY
SHAREHOLDERS' EQUITY
Share capital 72.2 72.2
Share premium account 158.8 158.8
Other reserves 6.2 6.2
Retained earnings 597.5 518.8
---------- ------------
TOTAL EQUITY 834.7 756.0
---------- ------------
LIABILITIES
NON-CURRENT LIABILITIES
Trade and other payables 496.0 484.5
Borrowings 466.8 466.8
Pension liability - 10.6
Deferred tax 100.6 93.2
Provisions 2.0 2.1
---------- ------------
1,065.4 1,057.1
---------- ------------
CURRENT LIABILITIES
Trade and other payables 117.5 119.7
Borrowings 63.2 44.5
Tax payable 8.1 2.0
Provisions 1.8 1.6
---------- ------------
190.6 167.9
---------- ------------
TOTAL LIABILITIES 1,256.0 1,225.0
---------- ------------
TOTAL EQUITY AND LIABILITIES 2,090.7 1,981.0
---------- ------------
The interim financial statements were approved by the board of
directors and authorised for issue on 21 August 2014 and were
signed on its behalf by:
T E Fielden
Director
NORTHERN ELECTRIC plc (REGISTERED NUMBER: 02366942)
CONDENSED FINANCIAL STATEMENTS - SIX MONTHS ENDED 30 JUNE
2014
CONSOLIDATED CASH FLOW STATEMENT
6 Months 6 Months
ended ended
30 June 30 June
2014 2013
Unaudited Unaudited
GBPm GBPm
Cash inflow from operating activities 126.2 95.2
Net interest paid (17.8) (17.6)
Tax paid (7.9) (15.5)
---------- ----------
Net cash from operating activities 100.5 62.1
---------- ----------
Investing activities
Proceeds from disposal of property, plant and equipment 0.2 0.2
Purchase of property, plant and equipment (115.1) (96.1)
Purchase of intangible assets (5.0) (3.8)
Receipt of customer contributions 18.5 14.9
---------- ----------
Net cash used in investing activities (101.4) (84.8)
---------- ----------
Financing activities
Movement in external loans 8.7 -
Net cash generated by financing activities 8.7 -
---------- ----------
Net increase/(decrease) in cash and cash equivalents 7.8 (22.7)
Cash and cash equivalents at beginning of period 105.9 150.0
---------- ----------
Cash and cash equivalents at end of period 113.7 127.3
---------- ----------
NORTHERN ELECTRIC plc (REGISTERED NUMBER: 02366942)
CONDENSED FINANCIAL STATEMENTS - SIX MONTHS ENDED 30 JUNE
2014
NOTES TO THE FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
These condensed interim financial statements for the six months
ended 30 June 2014 have been prepared in accordance with IAS 34,
'Interim financial reporting'. The condensed interim financial
statements should be read in conjunction with the annual financial
statements for the year ended 31 December 2013, which were prepared
in accordance with IFRSs.
2. ACCOUNTING POLICIES
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
2013.
Taxation
Taxes on income in the interim periods are accrued using the tax
rate that would be applicable to expected total annual profit or
loss.
Pensions
The cost of providing benefits is determined using the projected
unit credit method, with actuarial valuations being carried out at
each statement of financial position date. A separate valuation is
not carried out at interim periods. Pension costs in the interim
accounts are accrued based upon the assumptions applicable at the
actuarial valuation carried out for the year ended 31 December
2013.
Fair value measurements
For financial reporting purposes, fair value measurements are
categorised into Level 1, 2 or 3 based on the degree to which the
inputs to the fair value measurement are observable and the
significance of the inputs to the fair value measurement in its
entirety, which are described as follows:
- Level 1 inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities that the entity can
access at the measurement date;
- Level 2 inputs are inputs, other than quoted prices included
within Level 1, that are observable for the asset or liability,
either directly or indirectly;
- Level 3 inputs are unobservable inputs for the asset or liability.
The valuation of all financial assets and liabilities included
within these condensed interim financial statements are based on
Level 1 inputs.
NORTHERN ELECTRIC plc (REGISTERED NUMBER: 02366942)
CONDENSED FINANCIAL STATEMENTS - SIX MONTHS ENDED 30 JUNE
2014
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
3. SEGMENTAL ANALYSIS
The Group operates in the principal area of activity of the
distribution of electricity in the United Kingdom.
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, finance income and finance
costs and income tax expense.
Six Months Ended 30 June 2014 (Unaudited)
Consolidation
Distribution Other Adjustments Total
GBPm GBPm GBPm GBPm
REVENUE
External sales 175.0 24.1 - 199.1
Inter-segment
sales 0.3 2.6 (2.9) -
----------------------- ------------ ----------------- --------
Total Revenue 175.3 26.7 (2.9) 199.1
----------------------- ------------ ----------------- --------
SEGMENT RESULTS
Operating profit 90.2 (0.1) 16.3 106.4
----------------------- ------------ -----------------
Other gains 0.4
Finance income 0.7
Finance costs (17.4)
Profit before
tax 90.1
--------
OTHER
INFORMATION
Capital additions 103.7 0.1 (2.0) 101.8
Depreciation and
amortisation 32.7 - (0.8) 31.9
Amortisation of
deferred revenue (9.7) - - (9.7)
------------------------ ----------- ---------------------- --------
"Other" comprises Engineering Contracting and business support
units such as head office overheads.
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
2014 of GBP54.6m are included within the Distribution Segment.
NORTHERN ELECTRIC plc (REGISTERED NUMBER: 02366942)
CONDENSED FINANCIAL STATEMENTS - SIX MONTHS ENDED 30 JUNE
2014
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
3. SEGMENTAL ANALYSIS (CONTINUED)
Six Months Ended 30 June 2013 (Unaudited)
Consolidation
Distribution Other Adjustments Total
GBPm GBPm GBPm GBPm
REVENUE
External sales 161.0 16.2 - 177.2
Inter-segment sales 0.3 2.2 (2.5) -
------------ ------ -------------------- ------------
Total Revenue 161.3 18.4 (2.5) 177.2
------------ ------ -------------------- ------------
SEGMENT RESULTS
Operating profit 83.0 (2.8) 18.6 98.8
------------ ------ --------------------
Other gains 0.2
Finance income 0.8
Finance costs (17.8)
------------
Profit before
tax 82.0
------------
OTHER
INFORMATION
Capital additions 89.6 - (1.8) 87.8
Depreciation and
amortisation 30.2 - (0.7) 29.5
Amortisation of
deferred revenue (8.8) - - (8.8)
------------- ------ -------------------- ------------
"Other" comprises Engineering Contracting 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
2013 of GBP47.0m are included within the Distribution Segment.
NORTHERN ELECTRIC plc (REGISTERED NUMBER: 02366942)
CONDENSED FINANCIAL STATEMENTS - SIX MONTHS ENDED 30 JUNE
2014
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
3. SEGMENTAL ANALYSIS (CONTINUED)
Segment net assets
30 June 2014 31 December
Unaudited 2013
GBPm GBPm
Distribution 1,371.0 1,305.4
Other 11.5 15.4
Consolidation adjustments (60.9) (67.7)
------------- ------------------
Total net assets by segment 1,321.6 1,253.1
Unallocated net corporate liabilities (486.9) (497.1)
------------- ------------------
Total net assets 834.7 756.0
------------- ------------------
Consolidation Adjustments include the recognition of the
GBP20.4m retirement benefit asset (December 2013: GBP10.6m
liability).
Unallocated net corporate liabilities include cash and cash
equivalents of GBP113.7m (December 2013: GBP105.9m), borrowings of
GBP506.1m (December 2013: GBP511.3m) and taxation of GBP108.7m
(December 2013: GBP95.2m).
4. INCOME TAX EXPENSE
6 months 6 months
ended 30 ended 30
June June
2014 2013
Unaudited Unaudited
GBPm GBPm
Current tax 19.5 14.3
Deferred tax 1.1 5.4
Total income tax
expense 20.6 19.7
---------- ----------
The underlying tax for the interim period is calculated by
applying the effective average tax rate of 21.50% (2012: 23.25%) on
profit before preference dividends accrued.
NORTHERN ELECTRIC plc (REGISTERED NUMBER: 02366942)
CONDENSED FINANCIAL STATEMENTS - SIX MONTHS ENDED 30 JUNE
2014
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
5. RELATED PARTY TRANSACTIONS
GROUP
Details of transactions between the Group and other related
parties are disclosed below.
Loans
The Group has made loans repayable on demand to companies in the
Northern Powergrid Group. The total interest included in finance
income in the income statement for the six months ended 30 June
2014 was GBP0.5m (six month ended 30 June 2013: GBP0.8m). Included
within cash and cash equivalents is GBP113.7m as at 30 June 2014
(31 December 2013: GBP105.9m) in respect of these loans.
The Group has received loans from other companies in the
Northern Powergrid Group. The total interest included in finance
costs in the income statement for the six months ended 30 June 2014
was GBP3.1m (six months ended 30 June 2013: GBP2.8m). Included
within borrowings is GBP102.9m as at 30 June 2014 (31 December
2013: GBP105.9m) in respect of these loans.
Interest on loans to/from Group companies is charged at a
commercial rate of interest.
Trading transactions
During the year, Group entities entered into the following
trading transactions with related parties that are not members of
the Group:
Purchases Amounts
Sales to from Related Owed to
Related Party Related
Related Party Party Party
GBPm GBPm GBPm
June 2014:
CE Insurance Services Limited - 0.2 -
CE UK Gas Holdings Limited 0.1 - -
Integrated Utility Services
Limited (Registered in Eire) - 0.8 -
Vehicle Lease and Service
Limited - 1.9 0.1
Northern Powergrid (Yorkshire)
plc 7.7 4.4 -
June 2013:
CE Insurance Services Limited - 0.3 -
CE UK Gas Holdings Limited 0.1 - -
Integrated Utility Services
Limited (Registered in Eire) - 0.5 0.1
Vehicle Lease and Service
Limited - 1.7 0.1
Northern Powergrid (Yorkshire)
plc 8.7 3.6 -
----------- -------------- ---------
Sales and purchases from related parties were made at commercial
prices.
NORTHERN ELECTRIC plc (REGISTERED NUMBER: 02366942)
CONDENSED FINANCIAL STATEMENTS - SIX MONTHS ENDED 30 JUNE
2014
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
5. RELATED PARTY TRANSACTIONS (CONTINUED)
GROUP (CONTINUED)
The amounts outstanding are unsecured and will be settled in
cash. No guarantees have been given or received. No provisions have
been made for doubtful debts in respect of amounts owed by related
parties.
During 2013, 2 directors (30 June 2013: 3) and 6 key personnel
(30 June 2013: 8) utilised the services provided by Northern
Transport Finance Limited, a company in the Group.
The amounts included in finance lease receivables owed by these
directors and key personnel total GBP0.1m (31 December 2013:
GBP0.1m) in respect of non-current receivables and GBP0.1m (31
December 2013: GBP0.1m) in respect of current receivables.
COMPANY
Details of transactions between the Company and other related
parties are disclosed below.
Loans
The Company has made loans repayable on demand to companies in
the Northern Powergrid Group. The total interest included in
finance income in the income statement for the period ended 30 June
2014 was GBP0.1m (six months ended 30 June 2013: GBP0.4m). Included
within cash and cash equivalents is GBP20.6m as at 30 June 2014 (31
December 2013: GBP33.2m) in respect of these loans.
Interest on loans to/from Group companies is charged at a
commercial rate of interest.
NORTHERN ELECTRIC plc (REGISTERED NUMBER: 02366942)
CONDENSED FINANCIAL STATEMENTS - SIX MONTHS ENDED 30 JUNE
2014
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
5. RELATED PARTY TRANSACTIONS (CONTINUED)
COMPANY (CONTINUED)
Trading transactions
During the year, the Company entered into the following trading
transactions with other members of the Northern Powergrid
Group:
Dividends
Sales Purchases received
Related Party to from from
Related Related Related
Party Party Party
GBPm GBPm GBPm
June 2014:
CE UK Gas Holdings Limited 0.1 - -
Integrated Utility Services
Limited 0.2 - -
Northern Powergrid (Northeast)
Limited 2.2 0.3 -
Vehicle Lease and Service
Limited 0.1 - 0.4
Northern Powergrid (Yorkshire)
plc 1.9 - -
--------- ---------- ----------
June 2013:
CE UK Gas Holdings Limited 0.1 - -
Integrated Utility Services
Limited 0.2 - -
Northern Powergrid (Northeast)
Limited 2.3 0.1 -
Vehicle Lease and Service
Limited - - 0.4
Northern Powergrid (Yorkshire)
plc 2.0 - -
--------- ---------- ----------
Sales and purchases from related parties were made at commercial
prices.
There are no amounts outstanding to other members of the
Northern Powergrid Group.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PGUCPRUPCGWQ
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