TIDMNTEA
RNS Number : 1796M
Northern Electric PLC
21 August 2013
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 2013.
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 2013 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 2013
NORTHERN ELECTRIC plc:
CONTENTS OF THE HALF YEARLY REPORT FOR THE SIX MONTHS
ENDED 30 JUNE 2013
Page
Interim Management Report 1
Consolidated Income Statement 8
Consolidated Statement of Comprehensive Income 9
Consolidated Statement of Changes in Equity 10
Consolidated Statement of Financial Position 11
Consolidated Cash Flow Statement 12
Notes to the Financial Statements 13
NORTHERN ELECTRIC plc:
INTERIM MANAGEMENT REPORT
Registered Number: 2366942
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 (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.
Operations
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 2013 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
holds an electricity distribution licence and serves an area of
approximately 14,400 square kilometres in the northeast of England.
Northern Powergrid's distribution system of transformers,
switchgear and overhead and underground cables receives electricity
from generators connected to it and from the National Grid's
transmission system and distributes that electricity to
approximately 1.6 million customers at voltages of up to 132kV.
Northern Powergrid is an authorised distributor under the
Electricity Act 1989 and is subject to regulation by the Gas and
Electricity Markets Authority, which acts through the Office of Gas
and Electricity Markets ("Ofgem").IUS provides engineering
contracting services to various clients.
During the six months to 30 June 2013, Northern Powergrid
distributed electricity to customers in its distribution service
area and 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.
Northern Powergrid ended the regulatory year to 31 March 2013 (the
"Regulatory Year") having delivered the largest ever capital
expenditure programme, compared to other regulatory years,
investing GBP190.6 million in the distribution network. This
expenditure represented a GBP51.1 million (37%) increase on the
GBP139.5 million recorded in the regulatory year to 31 March 2012
and was a significant achievement in the context of the outputs
Northern Powergrid intends to deliver by the end of the
Distribution Price Control 5 period ("DPCR5").
Northern Powergrid's investment in its distribution network
includes activities to refurbish, replace and construct assets such
as substations, transformers, switchgear, overhead and underground
cables and associated equipment. That investment strategy is
targeted at delivering improvements in an efficient and
cost-effective manner in order to improve the network's resilience
by seeking to minimise the number of power cuts that occur,
reducing the average number of customers affected by a power cut
and providing a quicker restoration service in the event of a power
cut.
Northern Powergrid's priorities during the six-month period to
June 2013 continued to include improving customer service by
implementing initiatives to improve the quality of service provided
to customers, with the first year of the new regulatory incentive
known as the Broad Measure of Customer Satisfaction concluding on
31 March 2013.
NORTHERN ELECTRIC plc:
REGISTERED NUMBER: 2366942
INTERIM MANAGEMENT REPORT (CONTINUED)
Those improvements included the enhancement of the Northern
Powergrid Group's website and the continued development of
internet-based services, particularly in the area of new
connections to the network.
Operations
Although confirmation of certain adjustments due to
weather-related incidents is awaited as at the date of this
half-yearly report, Northern Powergrid's reported performance for
the Regulatory Year in respect of its key customer service
performance indicators of customer interruptions ("CI") and
customer minutes lost ("CML") was as follows:
Year to 31 March 2013 Year to 31 March 2012
Actual Target Actual Target
CML: 70.2 70.9 68.5 71.1
CI: 65.0 68.2 67.9 68.2
In respect of these key customer service performance indicators,
the goal is to achieve performance that is below Ofgem's target
number.
In respect 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. Those surveys are
undertaken with a number of customers who had contacted Northern
Powergrid regarding an unplanned or a planned power cut, had
requested a price quotation and a subsequent connection or had a
general enquiry where a service had been provided or a job
completed. Northern Powergrid recorded an overall satisfaction
score of 77.9% for the Regulatory Year and work, which began during
the Regulatory Year to develop the Company's customer service
improvement plan, continued in the six months to 30 June 2013. That
improvement plan includes a range of process and technology
initiatives in order to integrate Northern Powergrid's various
customer facing processes more effectively, with the aim of
improving the services provided to customers and so increase the
satisfaction rating year-on-year.
The Regulatory Year was the first year that a financial
incentive had been available under the Ofgem Discretionary Reward
for Stakeholder Engagement in the current price control period.
Building on the good performance in its stakeholder engagement over
the Regulatory Year, Northern Powergrid put forward a submission
for consideration by Ofgem's panel, which achieved a score of
78.5%. As a result, Northern Powergrid, together with its affiliate
Northern Powergrid (Yorkshire) plc, was rankedas the third
placedDNO group and secured a reward which totalled some GBP940,000
for the Northern Powergrid Group.
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. The
Group intends to build incrementally on its existing strong safety
record, remain a leading safety performer and ensure that safety
considerations are always a part of its investment decisions and
appraisals.
NORTHERN ELECTRIC plc:
REGISTERED NUMBER: 2366942
INTERIM MANAGEMENT REPORT (CONTINUED)
Operations (continued)
In this respect, during the first quarter of 2013, the Northern
Powergrid Group issued innovative protective work wear clothing to
its operational employees on conclusion of an extensive project to
research, design and produce clothing that provides protection for
those employees against the effects of events such as electrical
flashovers.
During the six months to 30 June 2013, the Group did not
experience any lost time accidents (six months to 30 June 2012: 2),
against an annual target of two for the Northern Powergrid Group,
but incurred seven preventable vehicle accidents (six months to 30
June 2012: 5) against an annual target of 26 for the Northern
Powergrid Group. The Group's performance in respect of lost time
accidents was encouraging and, although more preventable vehicle
accidents occurred than in the same period in 2012, none of those
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.
In 2013 Northern Powergrid received a President's Award from the
Royal Society for the Prevention of Accidents for achieving twelve
consecutive Gold Awards, which have been presented in recognition
of achievements in 2012 and continued or improving standards of
health and safety over a sustained period. Northern Powergrid also
continued to maintain its occupational health and safety management
system and retained its OHSAS 18001 certification.
IUS continued to operate its engineering contracting business,
including the provision of connections services to electricity
distribution networks.
Although IUS continued to experience challenging trading
conditions in the six-month period to June 2013 with the prevailing
economic environment meaning that there was strong competition for
the available opportunities, IUS successfully secured a number of
new contracts for the provision of engineering services and
continued to deliver on the largest such contract secured for a
number of years.
NORTHERN ELECTRIC plc:
REGISTERED NUMBER: 2366942
INTERIM MANAGEMENT REPORT (CONTINUED)
Results for the six months ended 30 June 2013
The half-yearly accounts for the six months ended 30 June 2013
consolidate the results of the Company and its subsidiaries 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 2013 to the Registrar
of Companies by 30 April 2014.
The Group delivered a satisfactory performance for the six
months ended 30 June 2013, 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:
Key financials
Revenue
Revenue at GBP177.2m was GBP15.1m higher than for the six months
ended 30 June 2012 mainly due to higher distribution tariffs.
Cash flow
Cash and cash equivalents as at 30 June 2013 were GBP127.3m,
representing a reduction of GBP22.7m when compared with the
position at 31 December 2012.
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 GBP75.0m provided by
Lloyds TSB Bank plc, Royal Bank of Scotland plc and Abbey National
Treasury Services plc. In addition, the Group has access to a
GBP22.0m committed overdraft facility provided by Lloyds TSB Bank
plc.
Financial position
Profit before tax at GBP82.0m was GBP8.5m higher than the six
months ended 30 June 2012 mainly as a result of increased
revenues.
Dividends
No ordinary dividends were paid in the period resulting in
GBP62.3m being transferred to reserves.
Related party transactions
The Company provides certain corporate functions to the Northern
Powergrid Group, including financial accounting, financial
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 4 to this half-yearly financial report.
NORTHERN ELECTRIC plc:
REGISTERED NUMBER: 2366942
INTERIM MANAGEMENT REPORT (CONTINUED)
Risks and uncertainties
Regulation
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 for the five-year period
ending on 31 March 2015. Given the regulatory environment in which
Northern Powergrid operates, the financial risks to Northern
Powergrid during DPCR5 are that changes in most categories of cost
incurred by Northern Powergrid will have a direct impact on its
financial results.
On 28 June 2013, Northern Powergrid submitted its well-justified
business plan required by Ofgem as part of the next price control
review process, which is known as RIIO-ED1 and will set the
distribution price control for the period of eight years through to
2023 as opposed to the five year periods previously used.
The well-justified business plan was based on a significant
stakeholder engagement exercise, during which Northern Powergrid
listened and responded to various customers and other stakeholders
in order to inform its content. The well-justified business plan
includes several proposed improvements such as the response to a
power cut being 20% quicker, the number of power cuts experienced
reducing by 8% and a reduction of 30% in the accident rate and in
the time it takes to make new connections to the network. Northern
Powergrid has proposed an average price reduction of 11% in real
terms to take effect immediately in the first year of the new price
control period to 31 March 2016, followed by flat prices for the
remainder of the period.
Northern Powergrid will work with Ofgem during the second half
of 2013 as part of the process of reviewing its well-justified
business plan and Ofgem's initial decision as to whether the
well-justified business plan is "fast-tracked" is expected in
November 2013. Achieving "fast-track" status for its well-justified
business plan would mean that Northern Powergrid would not have to
undertake any further substantive engagement with Ofgem during the
remainder of the RIIO-ED1 process in respect of that plan and will
be able to prepare for the new price control period well in advance
of its commencement on 1 April 2015.
Financial
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 associated trading
conditions. Consequently, demand for IUS' services has varied more
significantly recently than in previous years and 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 conditions will continue for the
remainder of 2013.
NORTHERN ELECTRIC plc:
REGISTERED NUMBER: 2366942
INTERIM MANAGEMENT REPORT (CONTINUED)
Risks and uncertainties (continued)
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 being financed by long-term
borrowings at fixed rates and having access to short-term borrowing
facilities at floating rates of interest.
As at 30 June 2013, 100% of the Group's long-term borrowings
were at fixed rates and the average maturity for these borrowings
was 16 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 report for the year to 31 December 2012,
which is available at www.northernpowergrid.com.
Going concern
In the Company's latest annual report and accounts for the year
to 31 December 2012 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 report and accounts
and would confirm that no events have occurred during the six
months to 30 June 2013 to alter the view expressed in the annual
report and accounts.
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.
Northern Powergrid's well-justified business plan is available
at www.yourpowergridplan.com
and sets out what are considered to be the priorities for and
the outputs it intends to deliver during the next price control
period, which will last for the eight years until March 2023. Those
priorities include Northern Powergrid's plans for investment and
where in the asset base that investment is likely to take place,
how it intends to deliver service improvements in a cost-effective
way and how it plans to approach adapting its network to support
the move towards a low-carbon economy. Building on that plan,
Northern Powergrid will continue to operate its business with the
goal of out-performing the allowances in the distribution price
control, while efficiently investing in its electricity
distribution system with the aim of improving the quality of supply
and service provided to its customers. The majority of Northern
Powergrid's distribution revenues for the period to 31 March 2015
have been set by Ofgem.
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.
NORTHERN ELECTRIC plc:
REGISTERED NUMBER: 2366942
INTERIM MANAGEMENT REPORT (CONTINUED)
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 2013;
(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
P A Jones
Director
16 August 2013
NORTHERN ELECTRIC plc
REGISTERED NUMBER: 2366942
CONDENSED FINANCIAL STATEMENTS - SIX MONTHS ENDED 30 JUNE
2013
CONSOLIDATED INCOME STATEMENT
6 Months 6 Months
ended 30 ended 30
June 2013 June 2012
Unaudited Unaudited
(Restated,
Note 1 )
GBPm GBPm
Revenue 177.2 162.1
Cost of sales (16.2) (12.4)
----------- ------------
Gross profit 161.0 149.7
Operating expenses (62.2) (58.7)
----------- ------------
Operating profit 98.8 91.0
Other gains 0.2 0.2
Finance income 0.8 0.9
Finance costs (17.8) (18.6)
----------- ------------
Profit before tax 82.0 73.5
Income tax expense (19.7) (15.1)
----------- ------------
Profit from ordinary activities after tax 62.3 58.4
----------- ------------
NORTHERN ELECTRIC plc
REGISTERED NUMBER: 2366942
CONDENSED FINANCIAL STATEMENTS - SIX MONTHS ENDED 30 JUNE
2013
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
6 Months 6 Months
ended 30 ended 30
June 2013 June 2012
Unaudited Unaudited
(Restated,
Note 1)
GBPm GBPm
Profit for the period 62.3 58.4
Actuarial (loss)/gain on defined benefit pension
schemes (39.6) 7.4
Tax relating to actuarial (loss)/gain on defined
benefit pension schemes 9.1 (1.3)
Total comprehensive income for the period 31.8 64.5
----------- ------------
NORTHERN ELECTRIC plc
REGISTERED NUMBER: 2366942
CONDENSED FINANCIAL STATEMENTS - SIX MONTHS ENDED 30 JUNE
2013
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share
Share Premium Other Retained Total
Capital Account Reserves Earnings Equity
GBPm GBPm GBPm GBPm GBPm
Balance at 1 January
2013 (restated) 72.2 158.8 6.2 429.5 666.7
Comprehensive income
for the period (unaudited) - - - 31.8 31.8
Balance at 30 June
2013 (unaudited) 72.2 158.8 6.2 461.3 698.5
-------- -------- --------- --------- -------
Share
Share Premium Other Retained Total
Capital Account Reserves Earnings Equity
GBPm GBPm GBPm GBPm GBPm
Balance at 1 January
2012 (restated) 72.2 158.8 6.2 377.9 615.1
Comprehensive income
for the period (restated) - - - 64.5 64.5
Balance at 30 June
2012 (restated) 72.2 158.8 6.2 442.4 679.6
-------- -------- --------- --------- ---------
Share
Share Premium Other Retained Total
Capital Account Reserves Earnings Equity
GBPm GBPm GBPm GBPm GBPm
Balance at 1 January
2012 (restated) 72.2 158.8 6.2 377.9 615.1
Dividends - - - (30.0) (30.0)
Comprehensive income
for the year (restated) - - - 81.6 81.6
Balance at 31 December
2012 (restated) 72.2 158.8 6.2 429.5 666.7
-------- -------- --------- --------- ----------
NORTHERN ELECTRIC plc
REGISTERED NUMBER: 2366942
CONDENSED FINANCIAL STATEMENTS - SIX MONTHS ENDED 30 JUNE
2013
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June 31 December
2013 2012
Unaudited Unaudited
(Restated,
Note 1)
GBPm GBPm
Non-current assets
Property, plant and equipment 1,706.1 1,647.8
Intangibles 10.9 7.4
Investments 3.6 3.3
Trade and other receivables 3.7 4.7
---------- ------------
1,724.3 1,663.2
---------- ------------
Current assets
Inventories 14.4 15.4
Trade and other receivables 54.8 61.9
Cash and cash equivalents 127.3 150.0
---------- ------------
196.5 227.3
---------- ------------
Total assets 1,920.8 1,890.5
---------- ------------
Equity
Share capital 72.2 72.2
Share premium account 158.8 158.8
Retained earnings 461.3 429.5
Other reserves 6.2 6.2
---------- ------------
Total equity 698.5 666.7
---------- ------------
Non-current liabilities
Borrowings 468.9 470.1
Deferred income tax liabilities 96.5 98.8
Retirement benefit obligations 52.6 38.2
Trade and other payables 478.0 473.4
Provisions 0.9 0.5
---------- ------------
1,096.9 1,081.0
---------- ------------
Current liabilities
Trade and other payables 107.9 122.8
Current income tax liabilities 4.4 7.2
Borrowings 12.1 11.4
Provisions 1.0 1.4
---------- ------------
125.4 142.8
---------- ------------
Total liabilities 1,222.3 1,223.8
---------- ------------
Total equity and liabilities 1,920.8 1,890.5
---------- ------------
The interim financial statements were approved by the board of
directors and authorised for issue on 16 August 2013 and were
signed on its behalf by:
P A Jones
Director
NORTHERN ELECTRIC plc
REGISTERED NUMBER: 2366942
CONDENSED FINANCIAL STATEMENTS - SIX MONTHS ENDED 30 JUNE
2013
CONSOLIDATED CASH FLOW STATEMENT
6 Months 6 Months
ended ended
30 June 30 June
2013 2012
Unaudited Unaudited
(Restated,
Note 1)
GBPm GBPm
Cash inflow from operating activities 95.2 85.4
Net interest paid (17.6) (17.2)
Tax paid (15.5) (11.2)
---------- ------------
Net cash from operating activities 62.1 57.0
---------- ------------
Investing activities
Proceeds from disposal of property, plant and equipment 0.2 0.1
Purchase of property, plant and equipment (96.1) (79.2)
Purchase of intangible assets (3.8) (1.7)
Receipt of customer contributions 14.9 28.4
---------- ------------
Net cash used in investing activities (84.8) (52.4)
---------- ------------
Financing activities
Movement in external loans - (10.0)
Net cash used in financing activities - (10.0)
---------- ------------
Net decrease in cash and cash equivalents (22.7) (5.4)
Cash and cash equivalents at beginning of period 150.0 229.6
---------- ------------
Cash and cash equivalents at end of period 127.3 224.2
---------- ------------
NORTHERN ELECTRIC plc
REGISTERED NUMBER: 2366942
CONDENSED FINANCIAL STATEMENTS - SIX MONTHS ENDED 30 JUNE
2013
NOTES TO THE FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
The Group's accounting policies are the same as the accounting
policies which are described in the Group's latest annual report
and accounts for the year to 31 December 2012, with the exception
of the adoption of the 2011 revision of IAS 19, Employee Benefits,
which came into force for all accounting periods beginning on or
after 1 January 2013.
Prior to the revision of this Standard, the Group had elected to
adopt the corridor approach for the purposes of accounting for its
defined benefit pension scheme, thereby deferring the recognition
of actuarial gains and losses.
The adoption of the revised IAS 19 removes the option to apply
the corridor approach and requires the recognition of changes in
the defined benefit obligation and in plan assets when those
changes occur.
The revised Standard is effective for periods beginning on or
after 1 January 2013 and is to be applied retrospectively.
Accordingly, comparative information within these interim financial
statements has been restated to reflect the accounting policy
change.
In the case of the Group, the revised accounting standard
increases pension costs chargeable to operating costs for the six
months ended June 2012 by GBP2.3m and by GBP4.6m for the year to 31
December 2012. In addition, the amount of capitalised pension costs
increases by GBP0.7m for the six months ended 30 June 2012 (GBP1.3m
for the year to 31 December 2012) and the Group's total equity
reduces by GBP215.3m to GBP666.7m as at 31 December 2012.
The following tables show the impact of the restatement on the
Group's consolidated income statement for the six months ended 30
June 2012 and on its consolidated statements of financial position
as at 1 January 2012 and 31 December 2102.
NORTHERN ELECTRIC plc
REGISTERED NUMBER: 2366942
CONDENSED FINANCIAL STATEMENTS - SIX MONTHS ENDED 30 JUNE
2013
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
1. ACCOUNTING POLICIES (CONTINUED)
Income Statement 6 Months 6 Months
ended 30 Ended 30
June 2012 IAS 19 Adjustment June 2012
Unaudited Unaudited Unaudited
(Restated)
GBPm GBPm GBPm
Revenue 162.1 - 162.1
Cost of sales (12.4) - (12.4)
----------- ------------------ ------------
Gross profit 149.7 - 149.7
Operating expenses (56.4) (2.3) (58.7)
----------- ------------------ ------------
Operating profit 93.3 (2.3) 91.0
Other gains 0.2 - 0.2
Finance income 0.9 - 0.9
Finance costs (18.6) - (18.6)
----------- ------------------ ------------
Profit before tax 75.8 (2.3) 73.5
Income tax expense (13.4) (1.7) (15.1)
----------- ------------------ ------------
Profit from ordinary activities
after tax 62.4 (4.0) 58.4
----------- ------------------ ------------
NORTHERN ELECTRIC plc
REGISTERED NUMBER: 2366942
CONDENSED FINANCIAL STATEMENTS - SIX MONTHS ENDED 30 JUNE
2013
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
1. ACCOUNTING POLICIES (CONTINUED)
31 December IAS 19 31 December
Statement of Financial Position 2012 Adjustment 2012
Audited Unaudited Unaudited
(Restated)
GBPm GBPm GBPm
Non-current assets
Property, plant and equipment 1,646.5 1.3 1,647.8
Intangibles 7.4 - 7.4
Investments 3.3 - 3.3
Retirement benefit asset 244.5 (244.5) -
Trade and other receivables 4.7 - 4.7
------------ ------------ -------------
1,906.4 (243.2) 1,663.2
------------ ------------ -------------
Current assets
Inventories 15.4 - 15.4
Trade and other receivables 61.9 - 61.9
Cash and cash equivalents 150.0 - 150.0
------------ ------------ -------------
227.3 - 227.3
------------ ------------ -------------
Total assets 2,133.7 (243.2) 1,890.5
------------ ------------ -------------
Equity
Share capital 72.2 - 72.2
Share premium account 158.8 - 158.8
Retained earnings 644.8 (215.3) 429.5
Other reserves 6.2 - 6.2
------------ ------------ -------------
Total equity 882.0 (215.3) 666.7
------------ ------------ -------------
Non-current liabilities
Borrowings 470.1 - 470.1
Deferred income tax liabilities 163.2 (64.4) 98.8
Retirement benefit obligations 1.7 36.5 38.2
Trade and other payables 473.4 - 473.4
Provisions 0.5 0.5
------------ ------------ -------------
1,108.9 (27.9) 1,081.0
------------ ------------ -------------
Current liabilities
Trade and other payables 122.8 - 122.8
Current income tax liabilities 7.2 - 7.2
Borrowings 11.4 - 11.4
Provisions 1.4 - 1.4
------------ ------------ -------------
142.8 - 142.8
------------ ------------ -------------
Total liabilities 1,251.7 (27.9) 1,223.8
------------ ------------ -------------
Total equity and liabilities 2,133.7 (243.2) 1,890.5
------------ ------------ -------------
NORTHERN ELECTRIC plc
REGISTERED NUMBER: 2366942
CONDENSED FINANCIAL STATEMENTS - SIX MONTHS ENDED 30 JUNE
2013
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
1. ACCOUNTING POLICIES (CONTINUED)
1 January 1 January
Opening Statement of Financial 2012 IAS 19 2012
Position Adjustment
Audited Unaudited Unaudited
(Restated)
GBPm GBPm GBPm
Non-current assets
Property, plant and equipment 1,515.9 - 1,515.9
Intangibles 4.2 - 4.2
Investments 3.3 - 3.3
Retirement benefit asset 201.8 (201.8) -
Trade and other receivables 3.8 - 3.8
---------- ------------ ------------
1,729.0 (201.8) 1,527.2
---------- ------------ ------------
Current assets
Inventories 13.4 - 13.4
Trade and other receivables 54.9 - 54.9
Cash and cash equivalents 229.6 - 229.6
---------- ------------ ------------
297.9 - 297.9
---------- ------------ ------------
Total assets 2,026.9 (201.8) 1,825.1
---------- ------------ ------------
Equity
Share capital 72.2 - 72.2
Share premium account 158.8 - 158.8
Retained earnings 539.4 (161.5) 377.9
Other reserves 6.2 - 6.2
---------- ------------ ------------
Total equity 776.6 (161.5) 615.1
---------- ------------ ------------
Non-current liabilities
Borrowings 468.6 - 468.6
Deferred income tax liabilities 172.1 (53.9) 118.2
Retirement benefit obligations 1.4 13.6 15.0
Trade and other payables 441.7 - 441.7
Provisions 1.2 1.2
---------- ------------ ------------
1,085.0 (40.3) 1,044.7
---------- ------------ ------------
Current liabilities
Trade and other payables 113.6 - 113.6
Current income tax liabilities 12.9 - 12.9
Borrowings 37.8 - 37.8
Provisions 1.0 - 1.0
---------- ------------ ------------
165.3 - 165.3
---------- ------------ ------------
Total liabilities 1,250.3 (40.3) 1,210.0
---------- ------------ ------------
Total equity and liabilities 2,026.9 (201.8) 1,825.1
---------- ------------ ------------
NORTHERN ELECTRIC plc
REGISTERED NUMBER: 2366942
CONDENSED FINANCIAL STATEMENTS - SIX MONTHS ENDED 30 JUNE
2013
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
2. 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 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 such as head office overheads.
Sales and purchases between the different segments are made at
commercial prices.
External sales to RWE Npower plc of GBP47.0m are included within
the Distribution Segment.
NORTHERN ELECTRIC plc
REGISTERED NUMBER: 2366942
CONDENSED FINANCIAL STATEMENTS - SIX MONTHS ENDED 30 JUNE
2013
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
2. SEGMENTAL ANALYSIS (CONTINUED)
Six Months Ended 30 June 2012 Restated
(Unaudited)
Consolidation
Distribution Other Adjustments Total
GBPm GBPm GBPm GBPm
REVENUE
External sales 147.7 14.4 - 162.1
Inter-segment sales 0.3 2.3 (2.6) -
------------ ------ -------------------- ------------
Total Revenue 148.0 16.7 (2.6) 162.1
------------ ------ -------------------- ------------
SEGMENT RESULTS
Operating profit 78.7 (3.0) 15.3 91.0
------------ ------ --------------------
Other gains 0.2
Finance income 0.9
Finance costs (18.6)
------------
Profit before
tax 73.5
------------
OTHER
INFORMATION
Capital additions 77.2 - (1.2) 76.0
Depreciation and
amortisation 26.6 - (0.7) 25.9
Amortisation of
deferred revenue (7.2) - - (7.2)
------------- ------ -------------------- ------------
"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 of GBP45.9m are included within
the Distribution Segment.
NORTHERN ELECTRIC plc
REGISTERED NUMBER: 2366942
CONDENSED FINANCIAL STATEMENTS - SIX MONTHS ENDED 30 JUNE
2013
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
2. SEGMENTAL ANALYSIS (CONTINUED)
Segment net assets
30 June 2013 31 December
Unaudited 2012 Unaudited
(Restated
Note 4)
GBPm GBPm
Distribution 1,221.0 1,184.0
Other 271.9 250.1
Consolidation adjustments (336.8) (329.9)
------------- ---------------------
Total net assets by segment 1,156.1 1,104.2
Unallocated net corporate liabilities (457.6) (437.5)
------------- ---------------------
Total net assets 698.5 666.7
------------- ---------------------
Segment assets in "Other" include investments held by Northern
Electric plc in its subsidiary companies totalling GBP203.1m
(December 2012: GBP203.1m), which are eliminated in Consolidation
Adjustments.
Consolidation Adjustments also include a GBP17.6m credit to
operating profit (December 2012: GBP44.0m), the recognition of the
GBP50.9m retirement benefit liability (December 2012: GBP36.5m
liability) and a GBP31.0m reduction in cumulative capitalised costs
(December 2012: GBP30.1m) as a consequence of the Distribution
segment accounting for retirement benefits on a cash accrued
basis.
Unallocated net corporate liabilities include cash and cash
equivalents, borrowings and taxation.
2. INCOME TAX EXPENSE
6 months 6 months
ended 30 ended 30
June June
2013 2012
Unaudited Unaudited
GBPm GBPm
Current tax 14.3 15.1
Deferred tax 5.4 -
Total income tax
expense 19.7 15.1
---------- ----------
The underlying tax for the interim period is calculated by
applying the effective average tax rate of 23.25% (2012: 24.50%) on
profit before preference dividends accrued.
NORTHERN ELECTRIC plc
REGISTERED NUMBER: 2366942
CONDENSED FINANCIAL STATEMENTS - SIX MONTHS ENDED 30 JUNE
2013
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
3. 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
2013 was GBP0.8m (six month ended 30 June 2012: GBP0.9m). Included
within cash and cash equivalents is GBP127.3m as at 30 June 2013
(31 December 2012: GBP150.0m) 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 2013
was GBP2.8m (six months ended 30 June 2012: GBP2.8m). Included
within borrowings is GBP101.5m as at 30 June 2013 (31 December
2012: GBP101.3m) 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 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 -
June 2012:
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 9.5 4.0 -
----------- -------------- ---------
Sales and purchases from related parties were made at commercial
prices.
NORTHERN ELECTRIC plc
REGISTERED NUMBER: 2366942
CONDENSED FINANCIAL STATEMENTS - SIX MONTHS ENDED 30 JUNE
2013
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
4. 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 2012, 3 directors (30 June 2012: 3) and 8 key personnel
(30 June 2012: 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 2012:
GBP0.1m) in respect of non-current receivables and GBP0.1m (31
December 2012: 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
2013 was GBP0.4m (six months ended 30 June 2012: GBP0.4m). Included
within cash and cash equivalents is GBP127.3m as at 30 June 2013
(31 December 2012: GBP150.0m) 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: 2366942
CONDENSED FINANCIAL STATEMENTS - SIX MONTHS ENDED 30 JUNE
2013
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
4. 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 2013:
CE UK Gas Holdings Limited 0.2 - -
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 - -
--------- ---------- ----------
June 2012:
CE UK Gas Holdings Limited 0.2 - -
Integrated Utility Services
Limited 0.2 - -
Northern Powergrid (Northeast)
Limited 2.5 0.1 -
Vehicle Lease and Service
Limited - - 0.4
Northern Powergrid (Yorkshire)
plc 2.3 - -
--------- ---------- ----------
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 PGUBCRUPWURG
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