TIDM76FN
RNS Number : 0765Z
Northern Powergrid (Yorkshire) plc
15 September 2020
REGISTERED NUMBER: 04112320
NORTHERN POWERGRID (YORKSHIRE) plc
HALF-YEARLY FINANCIAL REPORT FOR THE SIX MONTHSED 30 JUNE
2020
INTERIM MANAGEMENT REPORT
Cautionary Statement
This interim management report has been prepared solely to
provide additional information to shareholders to assess the
business and strategies of Northern Powergrid (Yorkshire) plc (the
"Company") and should not be relied on by any other party or for
any other purpose.
Business Model
The Company is part of the Northern Powergrid Holdings Company
group of companies (the "Northern Powergrid Group") and its
principal activity during the six months to 30 June 2020 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 2020
The Company made a profit after tax of GBP42.1 million, a
decrease of GBP16.5 million when compared to the six months ended
30 June 2019 due to lower revenues, higher operating expenses and
the impact of change in tax legislation.
Revenue
Revenue at GBP213.5 million was GBP5.3 million lower than for
the six months ended 30 June 2019 mainly due to impact of COVID-19
offset by higher tariffs.
Cash flow
Cash and cash equivalents as at 30 June 2020 were GBP206.6
million, representing a decrease of GBP207.1 million when compared
with the position at 31 December 2019, primarily due to the
repayment of a GBP200 million bond.
Dividends
No ordinary dividends were paid in the period resulting in
GBP42.1 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 2019, 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 2020.
Going concern
In the Company's latest annual reports and accounts for the year
to 31 December 2019 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 2020, which alter the view expressed in the
annual reports and accounts to 31 December 2019.
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 2020; and
(b) the interim management report contains a fair review of the
information required by DTR 4.2.7R.
By order of the board
T E Fielden
Director
10 September 2020
6 Months 6 Months
ended 30 ended 30
June 2020 June 2019
(Restated)
(unaudited) (unaudited)
GBPm GBPm
Revenue 213.5 218.8
Cost of sales (9.6) (10.2)
------------ ------------
Gross profit 203.9 208.6
Operating expenses (114.9) (111.8)
------------ ------------
Operating profit 89.0 96.8
Other gains 0.4 -
Finance income 0.6 0.7
Finance costs (19.8) (25.0)
------------ ------------
Profit before tax 70.2 72.5
Income tax expense (28.1) (13.9)
------------ ------------
Profit from ordinary activities after tax 42.1 58.6
------------ ------------
CONDENSED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME - SIX MONTHSED 30 JUNE 2020
There is no other comprehensive income for the Company for the
six months to 30 June 2020 or the comparative six month period in
2019 other than the profits reported above.
30 June 2020 31 December 30 June 2019
2019 (unaudited)
(unaudited) (Restated)
GBPm GBPm
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 3,506.4 3,443.9 3,366.2
Right of use asset 7.6 7.1 8.0
Intangible assets - 0.1 0.2
------------- ------------ -------------
3,514.0 3,451.1 3,374.4
------------- ------------ -------------
CURRENT ASSETS
Inventories 0.6 0.5 0.2
Trade and other receivables 59.0 69.6 58.9
Cash and cash equivalents 206.6 413.7 170.8
------------- ------------ -------------
266.2 483.8 229.9
------------- ------------ -------------
TOTAL ASSETS 3,780.2 3,934.9 3,604.3
------------- ------------ --- -------------
EQUITY
SHAREHOLDERS' EQUITY
Share capital 290.0 290.0 290.0
Retained earnings 1,241.9 1,199.8 1,173.7
------------- ------------ --- -------------
TOTAL EQUITY 1,531.9 1,489.8 1,463.7
------------- ------------ --- -------------
LIABILITIES
NON-CURRENT LIABILITIES
Deferred revenue 819.2 821.1 813.6
Borrowings 1,118.6 1,118.4 824.5
Lease liabilities 5.7 5.3 6.4
Deferred tax 140.0 125.5 127.1
Provisions 0.6 0.6 0.6
------------- ------------ --- -------------
2,084.1 2,070.9 1,767.8
------------- ------------ --- -------------
CURRENT LIABILITIES
Trade and other payables 100.4 84.9 90.2
Deferred revenue 33.3 32.0 31.9
Borrowings 21.8 234.9 225.3
Lease liabilities 2.0 1.9 2.0
Tax payable 5.6 19.3 17.9
Provisions 1.1 1.2 1.1
------------- ------------ -------------
164.2 374.2 372.8
------------- ------------ -------------
TOTAL LIABILITIES 2,248.3 2,445,1 2,140.6
------------- ------------ -------------
TOTAL EQUITY AND LIABILTIES 3,780.2 3,934.9 3,604.3
------------- ------------ --- -------------
The interim financial statements were approved by the board of
directors and authorised for issue on 10 September 2020 and were
signed on its behalf by:
T E Fielden
Director
Share Retained
Capital Earnings Total
GBPm GBPm GBPm
Balance at 1 January 2020 290.0 1,199.8 1,489.8
Profit for the period (unaudited) - 42.1 42.1
Balance at 30 June 2020 290.0 1,241.9 1,531.9
-------- --------- --------
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 2019 290.0 1,115.1 1,405.1
Profit for the year - 117.2 117.2
Equity dividends paid - (32.5) (32.5)
Balance at 31 December 2019 290.0 1,199.8 1,489.8
-------- --------- --------
6 Months 6 Months
ended 30 ended 30
June 2020 June 2019
(unaudited) (unaudited)
(Restated)
GBPm GBPm
Profit for the year 42.1 58.6
Depreciation and amortisation 57.1 54.5
Amortisation of deferred revenue (16.2) (15.6)
Net finance costs 19.2 24.3
Income tax expense 28.1 13.9
------------ ------------
Cash flow before working capital movements 130.3 135.7
Decrease in inventory 0.1 0.7
Decrease in trade receivables 10.7 8.9
Increase in trade and other payables 15.4 1.7
Cash generated from operations 156.5 147.0
Net interest paid (32.6) (32.6)
Tax paid (27.3) (13.2)
------------ ------------
Net cash from operating activities 96.6 101.2
------------ ------------
Investing activities
Proceeds from disposal of property, plant 0.4 -
and equipment
Purchase of property, plant and equipment (121.1) (119.1)
Acquisition of intangible assets - -
Receipt of customer contributions 17.8 18.2
------------ ------------
Net cash used in investing activities (102.9) (100.9)
------------ ------------
Financing activities
Repayment of short-term borrowings - (15.0)
Repayment of long-term borrowing (200.0)
Lease payment (0.8)
Net cash used in financing activities (200.8) (15.0)
------------ ------------
Net decrease in cash and cash equivalents (207.1) (14.7)
Cash and cash equivalents at beginning of
period 413.7 185.5
------------ ------------
Cash and cash equivalents at end of period 206.6 170.8
------------ ------------
1. GENERAL INFORMATION
The information included within these condensed financial
statements that refer to the year ended 31 December 2019 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 2019 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 2020, which alter the view expressed in the
annual reports and accounts to 31 December 2019.
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 2019,
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 2020:
None of the standards, interpretations and amendments which are
effective for periods beginning 1 January 2020 has had a material
effect on the financial statements:
-- Amendments to IFRS 3- Definition of a Business;
-- Amendments to IAS 1 and IAS 8- Definition of Material;
-- Amendments to References to the Conceptual Framework in IFRS
Standards; and
-- Amendments to IFRS 9 Financial instruments- Hedging
3. PRIOR PERIOD ADJUSTMENT
Adopted assets and intangible assets
The Financial Statements have been restated to incorporate the
impact of under reporting of the value of distributions network
assets adopted from other parties and the reclassification of IT
software assets from property, plant and machinery to intangible
assets.
Distribution network assets are on occasions constructed by
other parties who then transfer them to the group. At the date of
transfer the value of property, plant and equipment is increased
with an equal increase in the value of deferred revenue. The assets
are depreciated in line with the depreciation policy for those
assets with a similar amortisation of the deferred revenue. It was
discovered during 2019 that not all adopted assets had been
captured in the Financial Statements. A new process has been
introduced during the 6 month period to June 2020.
In previous years certain operational IT software assets had
been included in property plant and equipment rather than
intangible assets.
These had no impact on prior years' profits or net assets,
however impacted the constituent parts of the previously reported
figures in the Income Statement, the Statement of Financial
Position and Statement of Cash Flows as shown below.
Statement of Profit or Loss:
June
2019
(unaudited)
GBPm
Revenue 1.0
Operating expenses (1.0)
Profit for the year -
------------
Statement of Financial Position:
June
2019
(unaudited)
GBPm
Property, plant and equipment 20.4
Intangibles 0.2
Deferred revenue non-current (18.6)
Deferred revenue current (2.0)
------------
Total equity and liabilities -
------------
3. PRIOR PERIOD ADJUSTMENT (CONTINUED)
Statement of Cash Flows:
June
2019
(unaudited)
GBPm
Depreciation and amortisation 1.0
Amortisation of deferred revenue (1.0)
Cash flows from operating activities -
------------
4. 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.
5. INCOME TAX EXPENSE
Tax for the six month period ended 30 June 2020 is charged at
19.08% (six months ended 30 June 2019: 19.07%), 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. However, due to the tax rate change discussed below,
the effective tax rate for the six month period to June 2020 is
40%.
6 months 6 months
ended 30 ended 30
June June
2020 2019
(unaudited) (unaudited)
GBPm GBPm
Current tax 13.6 14.0
Deferred tax 14.5 (0.1)
Total income tax expense 28.1 13.9
------------ ------------
Finance Bill 2016 included provisions to reduce the main rate of
corporation tax to 17% from 1 April 2020. However, in the March
2020 Budget it was announced that the cut in the rate to 17% will
now not occur and the Corporation Tax Rate will be held at 19%.
This was substantively enacted through the Provisional Collection
of Taxes Act on 17 March 2020. This has led to a one off deferred
tax adjustment of GBP14.7m which is included within the GBP14.5m
deferred tax charge in the income statement.
6. FINANCIAL INSTRUMENTS
Except as detailed in the following table, the directors
consider that the carrying value amounts of financial assets and
financial liabilities recorded at amortised cost are approximately
equal to their fair values:
Carrying value Fair value
30 June 31 December 30 June 31 December
2020 (unaudited) 2019 2020 (unaudited) 2019
GBPm GBPm GBPm GBPm
Financial liabilities
Bond 2020 - 9.25% - 217.7 - 217.7
Bond 2025 - 2.5% 149.5 151.3 159.7 160.0
Bond 2032 - 4.375% 154.2 150.9 201.2 191.4
Bond 2035 - 5.125% 198.9 204.3 288.3 284.8
Bond 2059- 2.25% 298.5 295.2 335.4 295.9
EIB Loan - 4.133% 156.9 153.7 165.8 164.5
EIB Loan - 2.564% 131.8 130.1 143.4 139.5
EIB Loan - 2.073% 50.6 50.1 52.9 51.7
1,140.4 1,353.3 1,346.7 1,505.5
7. RELATED PARTY TRANSACTIONS
Transactions entered into with related parties and balances
outstanding were as follows:
Sales Purchases Borrowings Interest
to related from related to related from related
parties parties parties parties
GBPm GBPm GBPm GBPm
Related party
Six months ended
30 June 2020:
Integrated Utility
Services Limited 0.1 0.9 - -
Integrated Utility
Services Limited
(registered in Eire) - 0.2 - -
Northern Electric
plc - 1.3 - -
Northern Powergrid
Metering Limited 0.3 - - -
Northern Powergrid
(Northeast) plc 5.1 11.9 - -
Vehicle Lease and
Service Limited - 3.0 - -
Yorkshire Electricity
Group plc - - 206.6 0.6
------------ -------------- ------------ --------------
5.5 17.3 206.6 0.6
============ ============== ============ ==============
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) plc 5.9 10.6 - -
Vehicle Lease and
Service Limited - 2.4 - -
Yorkshire Electricity
Group plc - - 170.8 0.7
------------ -------------- ------------ --------------
6.2 16.0 170.8 0.7
============ ============== ============ ==============
Sales Purchases Borrowings Interest
to related from related to related from related
parties parties parties parties
GBPm GBPm GBPm GBPm
Year ended 31 December
2019:
Integrated Utility
Services Limited 0.1 3.2 - -
Integrated Utility
Services Limited
(registered in Eire) - 0.4 - -
Northern Electric
plc - 2.5 - -
Northern Powergrid
Metering Limited 0.5 - - -
Northern Powergrid
(Northeast) plc 10.7 22.7 - -
Vehicle Lease and
Service Limited 0.1 4.9 - -
Yorkshire Electricity
Group plc - - 413.7 1.6
------------ -------------- ------------ --------------
11.4 33.6 413.7 1.6
============ ============== ============ ==============
Sales and purchases from related parties were made at commercial
prices.
Interest on loans to/from Group companies is charged at a
commercial rate.
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END
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