TIDMBC39
RNS Number : 0636Q
Yorkshire Electricity Distribution
02 April 2009
The following regulated information, disseminated pursuant to DTR 6.3.5,
comprises the Annual Report and Accounts of Yorkshire Electricity Distribution
plc for the year ended 31 December 2008.
Pursuant to LR 9.6.1, two copies of the document have been submitted to the UK
Listing Authority and will shortly be available for inspection at the UK Listing
Authority's Document Viewing Facility, which is situated at:
Financial Services Authority
25 The North Colonnade
Canary Wharf
London
E14 5HS
Tel. No. 020 7066 8333
The 2008 Annual Report and Accounts are also available on the website
www.ce-electricuk.com
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
REPORT & ACCOUNTS
TO 31 DECEMBER 2008
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
REPORT AND ACCOUNTS TO 31 DECEMBER 2008
CONTENTS
+------------------------------------+--------------------------------------+-----+
| Directors' Report | | 1 |
+------------------------------------+--------------------------------------+-----+
| | | |
+------------------------------------+--------------------------------------+-----+
| Business Review | | 2 |
+------------------------------------+--------------------------------------+-----+
| | | |
+------------------------------------+--------------------------------------+-----+
| Review of the Year | 2 |
+---------------------------------------------------------------------------+-----+
| Strategic Objectives | | 2 |
+------------------------------------+--------------------------------------+-----+
| Principal Risks and Uncertainties | 3 |
+---------------------------------------------------------------------------+-----+
| Internal Control | 6 |
+---------------------------------------------------------------------------+-----+
| Financial Strength | | 7 |
+------------------------------------+--------------------------------------+-----+
| Customer Service | | 9 |
+------------------------------------+--------------------------------------+-----+
| Operational Excellence | | 10 |
+------------------------------------+--------------------------------------+-----+
| Employee Commitment | | 12 |
+------------------------------------+--------------------------------------+-----+
| Environmental Respect | | 13 |
+------------------------------------+--------------------------------------+-----+
| Regulatory Integrity | | 15 |
+------------------------------------+--------------------------------------+-----+
| | | |
+------------------------------------+--------------------------------------+-----+
| Responsibility Statement of the | | 19 |
| Directors in respect of the Annual | | |
| Report and Accounts | | |
+------------------------------------+--------------------------------------+-----+
| | | |
+------------------------------------+--------------------------------------+-----+
| Independent Auditors' Report to | | 20 |
| the Members of Yorkshire | | |
| Electricity Distribution plc | | |
+------------------------------------+--------------------------------------+-----+
| | | |
+------------------------------------+--------------------------------------+-----+
| Income Statement | | 22 |
+------------------------------------+--------------------------------------+-----+
| | | |
+------------------------------------+--------------------------------------+-----+
| Statement of Recognised Income and | | 22 |
| Expense | | |
+------------------------------------+--------------------------------------+-----+
| | | |
+------------------------------------+--------------------------------------+-----+
| Balance Sheet | | 23 |
+------------------------------------+--------------------------------------+-----+
| | | |
+------------------------------------+--------------------------------------+-----+
| Cash Flow Statement | | 24 |
+------------------------------------+--------------------------------------+-----+
| | | |
+------------------------------------+--------------------------------------+-----+
| Notes to the Accounts | | 25 |
+------------------------------------+--------------------------------------+-----+
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
Registered Office: Lloyds Court, 78 Grey Street, Newcastle upon Tyne, NE1 6AF
DIRECTORS' REPORT
Cautionary statement regarding forward-looking statements
This annual report has been prepared for the members of the Company only. The
Company, its directors, employees or agents do not accept or assume
responsibility to any other person in connection with this document and any such
responsibility or liability is expressly disclaimed. This annual report contains
certain forward-looking statements, which can be identified by the fact that
they do not relate only to historical or current facts. In particular, all
statements that express forecasts, expectations and projections with respect to
future matters, including trends in results of operations, business prospects,
the availability of financing to the Company and anticipated cost savings are
forward-looking statements.
By their nature, these statements and forecasts involve risk and uncertainty
because they relate to events and depend on circumstances that may or may not
occur in the future. There are a number of factors that could cause actual
results or developments to differ materially from those expressed or implied by
these forward-looking statements and forecasts. The forward-looking statements
reflect the knowledge and information available at the date of preparation of
this annual report, and will not be updated during the year. Nothing in this
annual report should be construed as a profit forecast.
The directors present the annual report and accounts of Yorkshire Electricity
Distribution plc (the "Company") for the year ended 31 December 2008, which
includes the business review and audited financial statements for that year.
Pages 1 to 18 inclusive of this annual report comprise a directors' report that
has been drawn up and presented in accordance with the Companies Act 1985.
PRINCIPAL ACTIVITIES
The Company is part of the CE Electric UK Funding Company group of companies
(the "CE Group") and its principal activity during the year was to distribute
electricity to customers connected to its electricity distribution network.
The Company serves an area of approximately 10,700 sq. km encompassing the
counties of West Yorkshire, East Yorkshire and almost all of South Yorkshire,
together with parts of North Yorkshire, Derbyshire, Nottinghamshire,
Lincolnshire and Lancashire, receives electricity from the National Grid's
transmission system and distributes it to the 2.2 million customers connected to
its electricity distribution network of transformers, switchgear and overhead
and underground cables, at voltages of up to 132kV. The Company is an authorised
distributor under the Electricity Act 1989 and holds an electricity distribution
licence granted by the Secretary of State. During the year, the Company
distributed electricity to customers in its distribution services area and
continued to improve the overall performance of its distribution network through
its investment strategy being targeted at delivering improvements in an
efficient and cost-effective manner.
In common with the CE Group, the Company operates a business model and strategy
based on its six core principles, which are:
+-------------------------+--------------------------------------------+-----------------------------------+
| Principle | Strategy | Indicator |
| | | |
+-------------------------+--------------------------------------------+-----------------------------------+
| Financial strength | Effective stewardship of the Company's | Profitability. |
| | financial resources and investing in | Cash flow. |
| | assets and focusing on long term | Maintenance of investment grade |
| | opportunities, which contribute to the | credit ratings. |
| | Company's future strength. | |
| | | |
+-------------------------+--------------------------------------------+-----------------------------------+
| Customer service | Delivering reliability, fair prices and | Improving network resilience and |
| | exceptional service. | performance, measured by: |
| | | Customer minutes lost; |
| | | Customer interruptions; and |
| | | Customer satisfaction. |
+-------------------------+--------------------------------------------+-----------------------------------+
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
DIRECTORS' REPORT (CONTINUED)
PRINCIPAL ACTIVITIES (continued)
+-------------------------+--------------------------------------------+-----------------------------------+
| Operational excellence | Setting high standards for the Company's | Effective asset management. |
| | operations and system investment, | Managing commercial risk. |
| | operation and maintenance. | Improving network resilience and |
| | | performance. |
| | | |
+-------------------------+--------------------------------------------+-----------------------------------+
| Employee commitment | Equipping employees with the resources and | Leading safety performer. |
| | skills they need to operate successfully | Engaging employees. |
| | and in a safe and rewarding environment. | Effective leadership. |
| | | |
+-------------------------+--------------------------------------------+-----------------------------------+
| Environmental respect | Using natural resources wisely and | Reducing environmental impact. |
| | effectively protecting the environment, | Promoting and pursuing long term |
| | where it is impacted by the Company's | sustainability. |
| | operations. | |
| | | |
+-------------------------+--------------------------------------------+-----------------------------------+
| Regulatory integrity | Adhering to a policy of strict compliance | Strong internal controls. |
| | with appropriate standards, policies and | Regulatory engagement. |
| | legislation. | Industry influence. |
+-------------------------+--------------------------------------------+-----------------------------------+
The Company continually puts plans in place to deliver its objectives against
the strategy based on its core principles. The Company executes on those plans
across a range of activities, measures its progress against those plans and
introduces corrective action wherever required. Adherence to its strategy and
core principles enabled the Company to deliver a high standard of performance
against the challenges faced during 2008.
BUSINESS REVIEW
Review of the year
The Company's progress during the year was pleasing, with the highlights being a
strong financial performance, improved customer service performance in the call
centre and a significant improvement in the lead times for producing high volume
quotations for connections to the distribution network. There were also general
reductions in accident rates, oil leakages from fluid-filled cables and
guaranteed standards of performance failures. These highlights were achieved
while managing a sustained period of industrial action.
Issues identified as being central to delivery of the core principles in the
future include further improvements in safety performance, network availability
and reliability and the usefulness and accuracy of information provided to
customers during network outages. In addition, the process of negotiating
Distribution Price Control Review 5 ("DPCR5") will be a critical area of focus
during 2009 as the outcome will set the Company's income through to March 2015.
Strategic objectives
As part of the CE Group, the Company's strategic objectives, based on its core
principles, are to build a business, which:
* continues to generate value over the long-term, in keeping with the nature of
that business;
* invests in and manages its electricity distribution network in an efficient and
effective manner;
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
DIRECTORS' REPORT (CONTINUED)
Review of the year (continued)
Strategic objectives (continued)
* provides its customers with an excellent standard of service;
* engages with its employees so that they feel rewarded and recognised as part of
a team that sets and achieves increasingly high standards of performance; and
* is viewed as being a leader in terms of shaping the future direction of the
electricity distribution network sector in the United Kingdom.
As part of its strategy, the Company is committed to putting safety first,
respecting its customers, their time and property, doing a quality job,
responding effectively in times of severe weather, (when it is needed most), and
caring for its local environment.
Principal risks and uncertainties
There are a number of potential risks and uncertainties, which could have a
material impact on the Company and its strategy and may cause actual results to
vary materially from those expected or historically experienced. The principal
risks are outlined as follows:
Financial strength:
The main financial risks facing the Company are outlined in the Treasury section
on page 8 below.
As a holder of an electricity distribution licence, the Company is subject to
regulation by the Gas and Electricity Markets Authority, which acts through the
Office of Gas and Electricity Markets ("Ofgem").
Most of the revenue of the electricity distribution licence holders is
controlled by a distribution price control formula set out in the electricity
distribution licence. The price control formula does not constrain profits from
year to year but is a control on revenue that operates independently of most of
the electricity distribution licence holder's costs.
It has been the practice of Ofgem to review and reset the formula at five-year
intervals, although the formula has been, and may be, reviewed at other times at
the discretion of Ofgem. The current five-year price control period became
effective on 1 April 2005 and has set the Company's revenue through to 31 March
2010. A resetting of the formula requires the consent of the electricity
distribution licence holder but licence modifications may be unilaterally
imposed by Ofgem without such consent following review by the Competition
Commission. During the term of the price control, changes in costs incurred will
have a direct impact on the financial results of the Company.
During 2009, the Company will be fully engaged with Ofgem in the DPCR5 process,
which will culminate in Ofgem making its final proposals in respect of the price
control formula that will take effect for the five-year period commencing 1
April 2010. That process involved submission of the Company's detailed business
plans in February 2009 triggering an assessment by Ofgem that will result in an
initial set of proposals to be published in mid-2009. Dialogue between the
Company and Ofgem will take place throughout the second half of 2009 such that
the final proposals are then expected prior to the end of the year.
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
DIRECTORS' REPORT (CONTINUED)
Principal risks and uncertainties (continued)
Other:
The principal risks facing the Company in respect of the other core principles
include:
+-----------------------------------+------------------------------------+------------------------------------+
| Risk | Issue | Mitigation |
+-----------------------------------+------------------------------------+------------------------------------+
| Counter-party security | A counter-party with which the | The treasury function has strict |
| | Company trades may go bankrupt | controls in respect of the |
| | causing loss of invested funds or | counter-parties with which it |
| | amounts owing. | deals, including the use of credit |
| | | ratings and appropriate limits. |
| | | Credit cover arrangements are in |
| | | place with the electricity |
| | | suppliers, which would allow |
| | | recovery of defaulted payments |
| | | through the price control |
| | | mechanism, if good debt control |
| | | practices continue to be followed. |
| | | |
+-----------------------------------+------------------------------------+------------------------------------+
| Potential flooding and other | Recent weather patterns suggest a | A robust major incident management |
| weather related events. | heightened risk of flooding of 'at | plan is in place.The Company's |
| | risk areas' and the potential for | critical property unit plan |
| | increased occurrence of damage to | assesses those properties most at |
| | the overhead network. | risk and a flood mitigation plan |
| | | is in place, including the |
| | | erection of permanent and |
| | | temporary defences. |
| | | |
+-----------------------------------+------------------------------------+------------------------------------+
| Supply chain interfaces | The various operational areas of | Roles and responsibilities of the |
| | the Company may overlap or have | interfacing departments are being |
| | gaps in the supply chain. Current | better defined. Payment for goods |
| | economic conditions are placing | and services provided is within |
| | suppliers under pressure. | agreed terms, after due scrutiny. |
| | | |
+-----------------------------------+------------------------------------+------------------------------------+
| BT ESP Analogue Circuits | Potential withdrawal of service | Options include retaining the |
| | puts existing communication | equivalent service, potentially at |
| | arrangements at risk. | higher than current cost or |
| | | utilising an alternative solution. |
| | | |
+-----------------------------------+------------------------------------+------------------------------------+
| Network risk in the Bradford area | Should the 132kV infeeds fail, the | Completion of a number of the key |
| | main supply point would be lost | deliverables has gone some way |
| | and result in substantial cost | towards reducing the overall risk |
| | impact to restore the customers | but other deliverables are |
| | via the use of generating units or | required to ensure completion and |
| | through potential guaranteed | elimination of the risk. |
| | standards failures and incentive | |
| | penalties. | |
| | | |
+-----------------------------------+------------------------------------+------------------------------------+
| Motor accident management | Any significant road traffic | The Safety Improvement Plan has a |
| | accident involving a Company | substantial focus on road risk and |
| | vehicle may create a liability, | the reduction of preventable |
| | which the Company has to meet, and | vehicle accidents. A dedicated |
| | involve injury to employees and/or | road risk manager has been |
| | third parties. | appointed. |
| | | |
+-----------------------------------+------------------------------------+------------------------------------+
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
DIRECTORS' REPORT (CONTINUED)
Principal risks and uncertainties (continued)
Other (continued):
+-----------------------------------+------------------------------------+------------------------------------+
| Electricity, Safety, Quality and | The regulations impose various | A full site inspection and risk |
| Continuity Regulations 2002 | statutory obligations, | assessment regime is in place |
| | non-compliance with which could | designed to ensure compliance. |
| | lead to incidents, prosecution and | |
| | claims. | |
| | | |
+-----------------------------------+------------------------------------+------------------------------------+
| Shortage of supply and increased | The global demand for copper has | Improved and more efficient |
| demand for copper | impacted the availability and cost | procurement processes have been |
| | of a number of core products and | introduced and security at all |
| | increased the risk of theft. | sites where copper products are |
| | | stored has been reviewed and |
| | | enhanced where required. |
+-----------------------------------+------------------------------------+------------------------------------+
A Compliance Assurance Programme Steering Group ("CAPSG") is in
place, consisting of certain directors and senior managers of the CE Group in
order to provide oversight at a strategic level and steering of the CE Group's
performance in respect of governance and its key facets of compliance and risk
management.
The Company operates a structured and disciplined approach to the management of
risk, as part of the overall risk management approach of the CE Group. Those
risks assessed to be significantly high are logged within a risk register that
is reviewed regularly by the CAPSG and key indicators track the number of
significant risks actively monitored by the CAPSG at any one time.
Risks are assessed with due regard to probability and impact and the risk
environment is reviewed continually in order that new or emerging potential
risks are identified. Risk mitigation and loss control plans are prepared in
response to strategic risks in order that the directors can be assured that
appropriate mitigating actions are in place and being implemented. These plans
are monitored through to implementation and reviewed to determine whether the
level of residual, mitigated risk is within an acceptable level of tolerance.
The CE Group's strategy is to follow an appropriate risk policy, which is
intended to effectively manage exposures related to the achievement of business
objectives. The CE Group identifies and assesses risks associated with the
achievement of its strategic objectives, including those of an environmental and
social nature. Any key actions needed to further enhance the control environment
are identified, along with the person responsible for the management of the
specific risk. A quarterly review of the key risks, controls and action plans is
undertaken. The Governance and Risk Section oversees all aspects of risk and
compliance, emphasising the CE Group's commitment to maintaining an appropriate
risk and governance framework across the business.
The use of a well-defined risk management methodology allows a consistent and
co-ordinated approach to risk reporting and mitigation.
A key element and requirement of the risk management process is that a written
certificate is provided by the President and Chief Operating Officer of the CE
Group confirming that the effectiveness of the system of internal controls has
been reviewed during the year. A self-certification process is in place, in
support of this review, whereby senior managers are required to confirm that the
system of internal control in their area of the business is operating
effectively.
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
DIRECTORS' REPORT (CONTINUED)
Internal control
A rigorous internal control environment exists within the CE Group based on
regular reporting, a series of operational and financial policy statements,
investigations undertaken by internal audit and a stringent process for ensuring
the implementation of any recommendations. MidAmerican Energy Holdings Company
("MidAmerican"), a parent company of the Company, requires a quarterly control
risk self-assessment to be undertaken by all senior managers as part of its
programme for compliance with the requirements of the Sarbanes-Oxley Act. During
the year, an extensive programme to review the company-wide controls was
completed and opportunities to enhance control arrangements, identified by that
review, have been implemented.
The CE Group is committed to proper business conduct and, in common with the
other affiliates of MidAmerican, has adopted a code of business ethics that
emphasises the requirement for all staff to manage their activities to achieve
the highest level of ethical conduct.
The CE Group has a "speaking up" policy in place for staff to raise any
instances of unethical acts, malpractice or impropriety. An additional process
is also available to all staff via an international, anonymous help line
operated by an independent company.
Human resource policies focus on skills, motivation and excellence and the
promotion of high standards of probity among staff. In addition, the appropriate
organisational structure has been developed to control business units and to
delegate authority and accountability, having regard to acceptable levels of
risk.
The Company has appropriate controls in place directed at ensuring compliance
with the conditions in its licence requiring any payments made to, or received
from, affiliates or related undertakings in respect of goods and services
provided or supplied to be on an arm's length basis and on normal commercial
terms.
Other key features of the internal control system are:
* Comprehensive business planning and financial reporting procedures, including
the annual preparation of detailed operational budgets for the year ahead and
projections for subsequent years;
* Regular review of key performance indicators to assess progress towards
objectives;
* A range of policies, codes of practice and more detailed instructions that
define the processes to be followed;
* A strong internal audit function to provide independent scrutiny of internal
control systems and risk management procedures, including standards required by
the Sarbanes-Oxley Act;
* On-going health and safety performance reviews carried out by in-house safety
professionals in addition to the regime of routine health and safety risk
assessment and management processes carried out within each of the operating
units;
* Processes and procedures to operate under the Occupational Health and Safety
Assessment Series ("OHSAS") standard OHSAS 18001, which is subject to external
certification and regular assessment;
* An external obligations programme, which provides a robust approach to, and
compliance with, financial, legal and regulatory obligations; and
* Centralised treasury operations that operate within defined limits and are
subject to regular reporting requirements and audit reviews.
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
DIRECTORS' REPORT (CONTINUED)
Financial strength
During 2008, the Company introduced improvements in its management of routine
financial performance by indentifying clearer lines of accountability,
implementing tighter expenditure controls, improving management information and
emphasisng the culture of continuous financial improvement in all areas of
operation.
In addition, representations were made to Ofgem, in accordance with the
provisions set out in the electricity distribution licence, regarding certain
categories of cost not fully taken into account when the current price control
was set, effective from 1 April 2005, due to uncertainties at that time
regarding the amount and materiality of those costs. After a due process of
review Ofgem generally accepted those representations and agreed that the
Company was able to recover approximately GBP34m, in addition to the otherwise
agreed principles for calculating its allowed revenue, over the three regulatory
years starting on 1 April 2009 and ending on 31 March 2012. The price control
was adjusted accordingly.
The Company is keenly aware of the impact that the general economic climate is
having and may continue to have in the forseeable future on it and its
customers. In that respect, procedures are in place to more closely monitor and
manage the issues that may impact on the Company's business more significantly
than others, including a reduction in overall demand for electricity leading to
less units being distributed through the Company's network, lower activity in
terms of new connections required to the network and the potential for higher
debt write-off as the economic downturn further affects the Company's customers.
Revenue
Key aspects of financial performance for the year were as follows:
Revenue at GBP287.0m was GBP5.1m lower than the prior year reflecting a GBP6.5m
reduction in Use of System ("UoS") income in respect of use of the Company's
electricity distribution network partly offset by increases in amortisation of
deferred revenue and sales to affiliate companies.
Operating profit
Operating profit at GBP140.7m was GBP8.8m lower than the prior year mainly due
to a reduction in UoS income (GBP6.5m) and higher pension deficit repair
contributions (GBP2.5m).
Finance costs
Finance costs at GBP38.6m were GBP9.6m lower than the prior year mainly due to
the repayment of GBP200m of loans during the year.
Taxation
The Company's taxation charge in 2008 and 2007 has been affected by changes in
tax rates and legislation. Full details are provided in Note 9 to the accounts.
Results and dividends
The Company made a profit after tax for the year of GBP63.0m. An interim
dividend totalling GBP40.0m was paid during the year and the directors recommend
that no final dividend be paid in respect of the year.
Share capital and debt structures
There were no changes to the Company's share capital during the year. On
29 February 2008, the Company repaid GBP200.0m of the loan with Yorkshire
Electricity Group plc ("YEG"), a fellow company in the CE Group, leaving a
balance of GBP54.2m at a rate of 6.50%.
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
DIRECTORS' REPORT (CONTINUED)
Financial strength (continued)
Dividend policy
The Company's dividend policy is that dividends will be paid only after having
due regard to available distributable reserves, available liquid funds and the
financial resources and facilities needed to enable the Company to carry on its
business for at least the next year. In addition, the level of dividends is set
to maintain sufficient equity in the Company so as not to jeopardise its
investment grade issuer credit rating.
Cash flow
The Company aims to collect from customers and pay suppliers within contracted
terms. Any surplus cash is remitted to YEG, and invested accordingly, generating
a market rate of return for the Company.
Movements in cash flows were as follows:
* Operating activities: Cash flow from operating activities at GBP128.5m was
GBP2.6m higher than the prior year. Favourable working capital movements
(GBP7.2m) and a reduction in net interest paid (GBP4.4m) were offset by lower
cash profits (GBP8.8m).
* Investing activities: Movements in cash used in investing activities reflect the
incidence of net payments associated with the Company's capital expenditure
programme (GBP136.6m), offset by the sale of short-term securities during the
year (GBP200.0m)
* Financing activities: The cash outflow from financing activities mainly reflects
the repayment of loans from Group undertakings (GBP158.9) and equity dividends
paid during the year (GBP40.0m).
Treasury
The Company's short-term financial objective is to ensure that it has access to
sufficient liquidity to enable it to meet its obligations as they fall due and
to provide adequately for contingencies. The long-term objective is to provide a
stable, low cost of financing over time whilst observing approved risk
parameters.
The main risks are liquidity and interest rate risk.
Liquidity risk
The Company has access to short-term borrowing facilities provided by
YEG, GBP50m in committed revolving credit facilities provided by Lloyds TSB Bank
plc and Royal Bank of Scotland plc and an additional overdraft facility of GBP3m
provided by Lloyds TSB Bank plc, which is renewed on an annual basis. The
revolving credit facilities are due to expire in April 2010, at which point, the
Company expects to raise further facilities as required. The directors do not
consider there to be any doubt over the Company's ability to raise such finance
given its investment grade issuer credit rating and the fundamental financial
strength and nature of its business.
Interest rate risk
The Company is financed by long-term borrowings at fixed rates and has access to
short-term borrowing facilities at floating rates of interest. As at 31 December
2008, 79% of the Company's borrowings were at fixed rates and the average
maturity for these borrowings was 24 years.
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
DIRECTORS' REPORT (CONTINUED)
Financial strength (continued)
Treasury (continued)
Currency risk
No material currency risks are faced by the Company.
Trading risk
Throughout the year under review, the Company's policy was that no trading in
financial instruments should be undertaken.
Financial derivatives
As at 31 December 2008 and during the year it was the Company's policy not to
hold any derivative financial instruments.
Pensions
The Company is a participating company in the Northern Electric Group of the
Electricity Supply Pension Scheme (the "Scheme"), a defined benefit scheme. Full
details of the Company's commitments to the Scheme and the associated deficit
repair payments are provided in Note 24 to the accounts. The Company also
participates in the Yorkshire Electricity Pension Plan and the Northern Electric
Money Purchase Scheme, which are defined contribution schemes.
Insurance
As part of its insurance and risk strategy, the CE Group has put in place a
range of insurance policies covering it against risks, including damage to
property and employer's, third party motor and public liability. The CE Group
carries appropriate excesses on those policies and is effectively self-insured
up to the level of those excesses. Consequently, the risk management and health
and safety programmes in place are viewed as extremely important elements of the
business, given the contribution they make to the elimination or reduction of
exposure to such risks.
Customer service
During the year, the Company distributed electricity to customers in its
distribution services area and continued to improve the overall performance of
its distribution network through its investment strategy being targeted at
delivering improvements in an efficient and cost-effective manner. The Company
is focused on delivering a reliable and dependable supply of electricity and a
high standard of service to its customers and, in the first full year of
operation since the launch of the "customer promises", a significant number of
tangible improvements have been identified and delivered, as part of the overall
goal to improve customer satisfaction with the service provided, including:
* improving under-performing parts of the distribution system by identifying "hot
spots" and taking specific action to address the issues in those areas;
* undertaking a programme to reduce the number of instances by one third, in which
the Company fails to meet an electricity guaranteed standard of performance;
* advancing the community care programme for the most vulnerable customers by
ensuring that the needs of those customers are understood and responded to as
effectively as possible, making available dedicated customer support vehicles
and providing a 'language line' to facilitate conversations between customers
and staff; and
* taking action to reduce the average length of time taken to restore supplies in
fault situations.
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
DIRECTORS' REPORT (CONTINUED)
Customer service (continued)
The Company continued with its initiatives to reduce the time taken to restore
supplies following faults on the network. Those initiatives include "Power in an
Hour", which aims to restore the supplies of as many customers as possible
within an hour of the start of an interruption, and the use of the latest mobile
phone technology to locate and contact the nearest persons able to deal with
faults.
The main achievements in 2008 were the overall reduction in failures against the
guaranteed standards of performance, significant improvement in the quotation
performance of the connections business and the naming of the customer relations
centre as North East Contact Centre of the Year in its class. However, it is
recognised that further effort is required to bring the Company's customer
satisfaction scores to greater than 90% and the installation of a replacement
telephone system that takes advantage of the latest developments in automatic
messaging is expected to improve performance in this respect.
Ofgem has established an incentive scheme for quality of service, by which
distribution network operators ("DNOs"), such as the Company, are provided with
financial incentives based upon targets set by Ofgem for each of the DNOs with
regard to their performance in the following areas:
* The number of interruptions to supply;
* The duration of interruptions to supply; and
* Customer satisfaction.
Customer minutes lost ("CML") and customer interruptions ("CI") are the key
performance indicators used by the Company to measure the quality of supply and
system performance. CML measure the average number of supply minutes lost for
every connected customer due to faults and planned outages that last for three
minutes or longer. CI measure the average number of supply interruptions for
every 100 connected customers due to faults and planned outages that last for
three minutes or longer. DNOs' performance against guaranteed standards, set for
activities such as restoring supplies after unplanned interruptions, provides a
measure of the level of customer service. Performance against these measures
forms part of the Company's regular reporting to Ofgem.
In respect of the key customer service performance indicators, the Company's
performance for the year ended 31 March 2008 showed that it missed the CI, CML
and customer satisfaction targets, as follows:
+-------------------------+--------------------------------+--------------------------------+
| | Actual | Target |
+-------------------------+--------------------------------+--------------------------------+
| CML: | 75.0 (2007: 81.7) | 65.1 (2007: 66.8) |
+-------------------------+--------------------------------+--------------------------------+
| CI: | 75.7 (2007: 84.8) | 68.5 (2007: 68.6) |
+-------------------------+--------------------------------+--------------------------------+
| Customer satisfaction: | 86.8% (2007: 87.6%) | 90% (2007: 90%) |
+-------------------------+--------------------------------+--------------------------------+
Operational excellence
The Company's core service continues to be providing and maintaining an
efficient distribution network that delivers electricity effectively. During the
year, GBP193.0m was invested in the improvement of the distribution system,
including the replacement of assets and continuing network improvements intended
to increase the quality of the electricity supply provided to customers.
The investment strategy is designed to deliver improvements in an efficient and
cost-effective manner by minimising the number of faults that occur, reducing
the average number of customers affected by a fault and providing a quicker
restoration service in the event of a fault. Such actions are expected to have a
positive impact on future CI and CML performance. The focus in 2008 was on
delivering the core operational programmes, in particular the installation of
remote control units, and improving the lead times for fault repair
work-in-progress. The major projects undertaken as part of the investment
strategy included:
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
DIRECTORS' REPORT (CONTINUED)
Operational excellence (continued)
* Completion of a major reinforcement scheme for the Leeds city area;
* Completion of major replacement of 33kV oil-filled cables in the Bradford area;
* Continuation of major replacement of 33kV oil-filled cables in the Hull area;
* Continuation of reinforcement of the Kirkstall - Horsforth 132kV & 33kV
infrastructure;
* Continuation of the construction of 33/11kV substations to provide increased
capacity to the Scunthorpe, Knottingley, Snaith and Rawmarsh areas;
* Commencement of a major 66kV asset replacement scheme at Ferrybridge;
* Continuation of a major protection upgrade scheme in the Bradford area;
* Refurbishment of 5km of 132kV overhead line;
* Replacement of 12 units of high voltage outdoor switchgear;
* Replacement of 56 units of high voltage indoor switchgear;
* Replacement of 76 high voltage distribution substations;
* Refurbishment or rebuilding of 92km of high voltage overhead line;
* Refurbishment or rebuilding of 26km of low voltage overhead line;
* The upgrade and reinforcement of 15km of overhead line to address the quality of
supply performance issues relating to those circuits; and
* The installation and commissioning of 465 new sites with remote control
facilities.
In order to deliver its investment strategy, the Company used a mix of its own
staff and contractors to undertake its activities.
In order to help it decide on the priorities for its investment plan, the
Company consulted with a wide range of interested parties during the year about
its proposals through the publication of a consultation document, which included
information about the Company's activities and current priorities and posed a
range of questions about its options for the future. The results of that
consultation exercise will be considered as part of the discussions regarding
the DPCR5 process, which the Company will be conducting with Ofgem throughout
2009.
Managing commercial risk in the context of the difficult economic and financial
trading conditions was and will continue to be of key importance and has seen
increased attention being paid by the Company in ensuring that the CE Group's
policies for credit checking, payment terms, payment performance tracking and
debt management are strictly adhered to.
The Company's main customers are the electricity suppliers who pay UoS charges
for the use of the distribution network, in respect of which it is necessary to
ensure that the credit cover arrangements in line with Ofgem's guidance remain
in place. The principal electricity suppliers that use the Company's network are
RWE Npower, British Gas, EdF Energy, E.on, Scottish and Southern Energy and
Scottish Power.
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
DIRECTORS' REPORT (CONTINUED)
Employee commitment
Health and safety
During the year, the focus on health and safety continued to be of paramount
importance for the directors, as it is for all employees. Providing and
maintaining a safe working environment is the first objective of the Company.
There is a continuous drive for improvement in safety performance through the
setting of challenging goals and the pursuit of a programme of on-site safety
audits, which reflect the Company's fundamental objectives that none of its
staff should go home injured and all employees should commit to behaving safely
all of the time. The Company makes no compromise in respect of its health and
safety obligations and centres its safety plans and systems on the principles
found in companies with world class safety performance.
The Company received a fourth successive gold award from the Royal Society for
the Prevention of Accidents, for occupational health and safety performance and
provision, to recognise the achievement of continued or improving standards of
health and safety over a sustained period and continued to maintain its OHSAS
18001 certification.
The main key performance indicators used by the CE Group to monitor safety
performance are as follows:
+-------------------------+-------------+--------------+--------------+--------------+
| | 2008 | 2007 |
+-------------------------+----------------------------+-----------------------------+
| | Target | Actual | Target | Actual |
+-------------------------+-------------+--------------+--------------+--------------+
| Lost time accidents | 1 | 4 | 0 | 1 |
+-------------------------+-------------+--------------+--------------+--------------+
| Medical treatment | 4 | 1 | 1 | 4 |
| accidents | | | | |
+-------------------------+-------------+--------------+--------------+--------------+
| Operational incidents | 4 | 7 | 4 | 12 |
+-------------------------+-------------+--------------+--------------+--------------+
| Preventable vehicle | 12 | 17 | 12 | 18 |
| accidents | | | | |
+-------------------------+-------------+--------------+--------------+--------------+
Safety performance against target was reasonable in certain areas during 2008
but continued to be somewhat disappointing in others and, following certain
events at other platforms in the MidAmerican group, a wide-ranging audit of
operational activity was undertaken, aimed at identifying any underlying
procedural concerns in respect of operational performance. A number of
initiatives arising from that exercise and the continuing evaluation of the
lessons to be learned from all safety related incidents have been incorporated
into the annual safety improvement plan for 2009, together with an enhanced
number of site audits aimed at increasing the focus on operating a safe
environment in both the workplace and on the road.
Management structure
The CE Group has a clearly defined leadership team, in which specific roles are
identified, so allowing more effective management of the CE Group's business and
response to any control weaknesses that may become apparent, with single units
being in place for field operations, customer operations, asset management and
performance analysis and innovation. The information technology, human
resources, procurement and finance functions are centralised in order to provide
those services across the CE Group.
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
DIRECTORS' REPORT (CONTINUED)
Employee commitment (continued)
Employees
2008 was a particularly challenging year due to the significant industrial
relations issues, with which the Company had to deal. Having come through that
period with new agreements and understandings in place, the priority for 2009
and beyond will be to constructively engage with the Company's employees through
the existing trade union relationships and management structures. The Company
will also continue to emphasise the importance of the application of high
standards of performance in pursuit of its core principles and will ensure that
a level of consistency is adopted in doing so.
The Company employed 1,116 staff at the end of December 2008 at various
locations throughout its distribution services area (2007: 1,110).
Disabled employees
The Company is an equal opportunities employer and is committed to the criteria
underpinning the Employment Service disability symbol. It is the Company's
policy to provide disabled people with equal opportunities for employment,
training, career development and promotion, having regard to their aptitudes and
abilities. Should any member of staff become disabled during their employment,
that member of staff would be retrained and redeployed, wherever possible.
Employee consultation
The Company has a constitutional framework in place and has agreed that
framework with trade union representatives. In addition, the Company
communicates directly, and through the management structure, with personal
contract holders and keeps them informed and involved as appropriate in any
developments that may impact on them now or in the future.
The Company is committed to maintaining and improving effective communication
with employees, principally through regular staff briefs on current issues,
meetings with staff and their representatives and the issue of newsletters and a
quarterly employee magazine.
Environmental respect
The CE Group's approach to environmental compliance is governed by its RESPECT
policy of Responsibility, Efficiency, Stewardship, Performance, Evaluation,
Communication and Training, which includes the promotion of environmental
awareness, best practice and legal compliance amongst its staff and contractors.
The CE Group has operated a scheme under the environmental management systems
("EMS") standard ISO 14001 since the late 1990s and is subject to regular
six-monthly assessments by an external certification body in order to retain
that status. Lloyd's Register for Quality Assurance visited the CE Group in
September 2008.
That visit concluded that the four minor non-conformances identified in February
2008 could be closed and raised one new minor non-conformance in respect of
depot related operational control issues and noted a minor finding regarding the
oil testing programme to verify the polychlorinated byphenyls content of oil in
certain categories of transformer assets. The report in respect of the visit
concluded that "based on the evidence presented,... the company is able to
demonstrate a sound approach to the implementation, maintenance and improvement
of a mature EMS conforming to ISO 14001".
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
DIRECTORS' REPORT (CONTINUED)
Environmental respect (continued)
Improvements in support of the CE Group's environmental policy objectives during
the year included:
* A programme to enhance secondary containment provision for primary transformer
sites to prevent oil leakage;
* A programme to enhance emergency response provision for primary transformer
sites to mitigate oil leakage;
* Replacement of oil-filled circuit breakers with vacuum and SF6 units at outdoor
substations;
* Improved monitoring and response measures with regard to the management of
fluid-filled underground cable networks;
* Installation of additional engineering controls where required to improve
pollution prevention in strategic sites; and
* Installation of underground cables using trenchless technology as opposed to
open-cut excavations.
Measurements used to monitor environmental performance include the following
categories:
* An annual internal environmental management systems audit programme: 29 audits
completed (2007: 33);
* Continual improvement programmes: (9 underway and performing to target) (2007: 7
underway with 6 performing to target and 1 delayed);
* Environmental incidents log: (33 investigated and remedial action taken,
including 14 reported to the Environment Agency) (2007: 49 investigated and
remedial action taken, including 29 reported to the Environment Agency);
* Cable fluid losses: (an average annual rate of 70.8 litres per kilometre) (2007:
100.0 litres per kilometre);
* Primary transformer oil losses: (zero litres lost) (2007: 272 litres lost);
* Secondary transformer oil losses: (3,559 litres lost) (2007: 11,626 litres
lost);
* All other oil losses: (30 litres lost) (2007: zero litres lost);
* SF6 switch-gear losses: (1.8 kg lost) (2007: 6.8 kg); and
* Environmental customer communications: (310, mainly substation related,
regarding graffiti, weeds and fly-tipping) (2007: 428).
The environmental key performance indicators are made available for scrutiny
during the six-monthly external assessments and used by senior management to
determine how the system is performing. They measure the delivery of system
evaluation and continual improvement programmes, as well as detected
non-conformances, reported incidents and the significance of environmental
impacts and are subject to on-going monitoring as part of the CE Group's
continual improvement programme.
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
DIRECTORS' REPORT (CONTINUED)
Regulatory integrity
The Company manages its business to the highest behavioural standards and
adheres to a policy of strict compliance with all relevant standards,
legislation and regulatory conditions. The CAPSG continued to monitor and manage
performance in risk-related and compliance areas and met on four occasions
throughout the year.
The benefits associated with upgrading the Company's financial systems continued
to be seen in terms of improvements in financial reporting and the controls in
respect of the UoS process were subject to scrutiny by an internal audit. In
addition, the regulatory compliance process was embedded across the Company and
includes the provision of quarterly reports to the board. Focus on the accuracy
of regulatory returns has continued and positive comments were received from the
external consultants who reviewed the systems for PAS 55 accreditation.
The regulatory framework across the energy industry in the UK is undergoing a
wholesale review, which could result in fundamental changes to the way the
industry is regulated in the future. A sigificant part of that process is
Ofgem's "RPI-X@20" project, which is specifically considering the way in which
energy networks are regulated. This review is running alongside the DPCR5
process and the Company has and will continue to take an active part in the
debate, which is ranging from the potential for new technologies, such as
"smart" metering, and the increased use of micro and distributed generation to
the low carbon agenda insofar as it applies to electricity distribution
networks.
OTHER DIRECTORS' REPORT REQUIREMENTS
Corporate social responsibility
The Company values its relationship with its customers and their communities,
recognising the importance of a secure power supply to the local communities and
economy and aims to enhance its relationship through a wider involvement in the
activities of and dialogue with the communities it serves.
As part of its customer service strategy, the Company engages directly with the
communities it serves to create a dialogue on quality of supply issues, actions
and investment planned to improve quality of supply, environmental and social
implications of its operations and other opportunities to assist and engage in
the life of the community. Where appropriate, this may include financial support
for community projects. The Company has a targeted donations programme, focusing
on its key priorities of support for youth, education and the environment.
The CE Group is an active member of Business in the Community.
Charitable and political donations
During the year, charitable donations of GBP34,649 were made (2007: GBP65,119),
principally to local charities serving the communities in which the Company
operates. No contributions were made to political organisations (2007: GBPnil).
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
DIRECTORS' REPORT (CONTINUED)
Research and development
The Company supports a programme of research that is expected to contribute to
higher standards of performance and a more cost-effective operation of its
business. The main areas of activity during the year were:
* Active participation in programmes of national significance in collaboration
with other DNOs and academic institutions to make significant technological
progress for utilisation by the industry as a whole;
* Continuing to support collaboration with other DNOs, both through industry
associations and on a multilateral basis, on a range of incremental improvements
to tools and equipment that, if successful, will further add to overall
efficiency improvements;
* Continuing to support the development of a novel (super-conducting) fault
current limiter, to reduce prospective short-circuit currents. The resultant
lower stress on switchgear, if the project succeeds, will permit the connection
of more rotating plant (including generation) with lower levels of reinforcement
and/or replacement;
* Taking a key role in the set-up and successful start up of the Energy Innovation
Centre to provide a portal for technologies and suppliers new to the DNO
industry;
* The development of a technology roadmap to provide a fund of potential technical
improvement projects that represent state of the art thinking and technology;
* Continuing to support a project at Durham University to assess electrical
network risk with the objective of improving decision making on network
reinforcement and operation;
* The development of options for automatic voltage control on the LV network; and
* The development of several different fault passage indicator systems to improve
reaction time to network faults and minimise customer impact.
Supplier payment policy
The Company complies with the Better Payment Practice Code for the prompt
payment of suppliers in accordance with the normal terms of trade. It is CE
Group policy with respect to its suppliers to settle the terms of payment with
those suppliers when agreeing the terms of each transaction, to ensure that
those suppliers are aware of the terms of payment and to pay in accordance with
the CE Group's contractual and other legal obligations. The number of days
purchases in trade creditors for the Company at 31 December 2008 was 8 (2007:
9).
Future developments
The financial position of the Company, as at the year end, is shown in the
balance sheet on page 22, there have been no significant events since the year
end and the directors intend to develop the business in a manner that
concentrates on its core skills of electricity distribution by continuing 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 provided to
its customers.
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
DIRECTORS' REPORT (CONTINUED)
Directors
The directors who served during the year and since the year end were as follows:
+---------------+-----------------------------------------------------------------------------------+
| G E Abel | President, MidAmerican Energy Holdings Company |
+---------------+-----------------------------------------------------------------------------------+
| P E Connor | Senior Vice President & Chief Procurement Officer, MidAmerican Energy Holdings |
| | Company |
+---------------+-----------------------------------------------------------------------------------+
| J M France | Regulation Director, CE Electric UK |
+---------------+-----------------------------------------------------------------------------------+
| N M Gill | Field Operations Director |
+---------------+-----------------------------------------------------------------------------------+
| P A Jones | President and Chief Operating Officer, CE Electric UK |
+---------------+-----------------------------------------------------------------------------------+
| K Linge | Finance Director, CE Electric UK |
+---------------+-----------------------------------------------------------------------------------+
Details of the directors' emoluments are included in note 8 to the accounts.
Auditors
On 1 December 2008, Deloitte & Touche LLP changed its name to Deloitte LLP. A
resolution to reappoint Deloitte LLP, as auditors, and to authorise the
directors to determine their remuneration will be proposed at the Annual General
Meeting.
Going concern
The Company's business activities, together with details regarding its future
development, performance and position are set out in the Business Review in the
Directors' Report. In addition, the Company's objectives, policies and processes
for managing its capital, its financial risk management objectives, details of
its financial instruments and hedging activities and its exposures to credit
risk and liquidity risk are included in the Directors' Report and the
appropriate notes to the accounts.
When considering continuing to adopt the going concern basis in preparing the
annual report and accounts, the directors have taken into account a number of
factors, including the following:
a) In accordance with standard condition 31 of the Company's electricity
distribution licence, Berkshire Hathaway, Inc., the ultimate controlling party
of the Company, has provided an undertaking that it will procure that any person
(including a corporate body), which is a subsidiary of or is controlled by it,
will refrain from any action, which would cause the Company to breach any of its
obligations under the Electricity Act 1989 or under its electricity distribution
licence. The Company's electricity distribution licence includes the obligation
in standard condition 40 to maintain an investment grade issuer credit rating;
b) Explicit support has been made available to MidAmerican by Berkshire
Hathaway Inc., which consists of a $3.5 billion equity commitment that expires
on 28 February 2011 and to which the Company has access, if necessary. No
amounts were outstanding on that facility as of the date of approval of the
Company's accounts to 31 December 2008;
c) As part of a review of licensees' financing requirements, on 15
January 2009 Ofgem issued an information request to all DNOs under standard
licence condition 6 relating to the financial resources each DNO has available
in the 24 months ended 31 December 2009. After making enquiries and taking
account of several factors, the directors approved the submission to Ofgem of a
certificate confirming their reasonable expectation that the Company has, or
will have available to it, sufficient financial resources and/or financial
facilities to enable the Company to carry on its regulated business for a period
of two years since the date of the last statutory accounts;
d) Under section 3A of the Electricity Act 1989, the Gas and Electricity
Markets Authority has a duty, in carrying out its functions, to have regard to
the need to secure that licence holders are able to finance the activities,
which are the subject of obligations imposed by or under Part 1 of the
Electricity Act 1989 or the Utilities Act 2000; and
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
DIRECTORS' REPORT (CONTINUED)
Going concern (continued)
e) The Company has considerable financial resources, in the form of
short-term borrowings made available by YEG and committed revolving credit
facilities from Lloyds TSB Bank plc and Royal Bank of Scotland plc. These credit
facilities are due to expire in April 2010, at which point the Company expects
to raise further finance as required. The directors do not consider there to be
any doubt over the Company's ability to raise such finance, given the investment
grade issuer credit ratings held by the Company and due to the fact that the
Company operates within a stable and traditionally low risk industry. As a
consequence, the directors believe that the Company is well placed to manage its
business risks successfully despite the current uncertain economic outlook.
Consequently, after making enquiries, the directors have a reasonable
expectation that the Company has adequate resources to continue in operational
existence for the foreseeable future. Accordingly, they continue to adopt the
going concern basis in preparing the annual report and accounts.
Audit of the accounts
Each of the directors, who is a director of the Company as at the date of this
report, confirms that:
a) so far as he is aware, there is no relevant audit information of which
the Company's auditors are unaware; and
b) he has taken all the steps he ought to have taken as a director in
order to make himself aware of any relevant audit information and to establish
that the auditors are aware of that information.
This confirmation is given and should be interpreted in accordance with the
provisions of S234ZA of the Companies Act 1985.
By order of the board
John Elliott
Company Secretary
31 March 2009
RESPONSIBILITY OF DIRECTORS FOR THE PREPARATION OF THE REPORT AND ACCOUNTS
The directors are responsible for preparing the Annual Report and the financial
statements. The directors are required to prepare financial statements for the
Company in accordance with International Financial Reporting Standards ("IFRS")
and have also elected to prepare financial statements for the Company in
accordance with IFRS. Company law requires the directors to prepare such
financial statements in accordance with IFRS, the Companies Act 1985 and Article
4 of the IAS Regulation.
International Accounting Standard 1 requires that financial statements present
fairly for each financial year the Company's financial position, financial
performance and cash flows. This requires the faithful representation of the
effects of transactions, other events and conditions in accordance with the
definitions and recognition criteria for assets, liabilities, income and
expenses set out in the International Accounting Standards Board's 'Framework
for the Preparation and Presentation of Financial Statements'. In virtually all
circumstances, a fair presentation will be achieved by compliance with all
applicable International Financial Reporting Standards.
Directors are also required to:
* Properly select and apply accounting policies;
* Present information, including accounting policies, in a manner that provides
relevant, reliable, comparable and understandable information; and
* Provide additional disclosures when compliance with the specific requirements in
IFRS is insufficient to enable users to understand the impact of particular
transactions, other events and conditions on the entity's financial position and
financial performance.
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
Company, for safeguarding the assets, for taking reasonable steps for the
prevention and detection of fraud and other irregularities and for the
preparation of a directors' report which complies with the requirements of the
Companies Act 1985. The directors are responsible for the maintenance and
integrity of the Company website. Legislation in the United Kingdom governing
the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE ANNUAL REPORT AND
ACCOUNTS
Each of the directors as at the date of the Annual Report, whose names and
functions are set out on page 17 of the Directors' Report confirms that, to the
best of their knowledge:
a) the Company accounts, prepared in accordance with applicable UK law
and in conformity with IFRS, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company and the
undertakings included in the consolidation taken as a whole; and
b) the Management Report (which is comprised of the Directors' Report and
the Business Review) includes a fair review of the development and performance
of the business and the position of the Company, together with a description of
the principal risks and uncertainties it faces.
This responsibility statement was approved by the Board of Directors on 31 March
2009 and signed on its behalf by:
J M France
Regulation Director
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF YORKSHIRE ELECTRICITY
DISTRIBUTION plc
We have audited the financial statements of Yorkshire Electricity Distribution
plc (the "Company") for the year ended 31 December 2008 which comprise the
Income Statement, the Statement of Recognised Income and Expense, the Balance
Sheet and the Cash Flow Statement and the related notes 1 to 27. These financial
statements have been prepared under the accounting policies set out
therein.
This report is made solely to the Company's members, as a body,
in accordance with section 235 of the Companies Act 1985. Our audit work has
been undertaken so that we might state to the Company's members those matters we
are required to state to them in an auditors' report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's members as a
body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
The directors' responsibilities for preparing the Annual Report and the
financial statements in accordance with applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European Union are set
out in the Statement of Directors' Responsibilities.
Our responsibility is to audit the financial statements in accordance with
relevant legal and regulatory requirements and International Standards on
Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true
and fair view and are properly prepared in accordance with the Companies Act
1985. We also report to you whether in our opinion the information given in the
Directors' Report is consistent with the financial statements.
In addition we report to you if, in our opinion, the Company has not kept proper
accounting records, if we have not received all the information and explanations
we require for our audit, or if information specified by law regarding
directors' remuneration and other transactions is not disclosed.
We read the other information contained in the Annual Report and consider
whether it is consistent with the audited financial statements. We consider the
implications for our report if we become aware of any apparent misstatements or
material inconsistencies with the financial statements. Our responsibilities do
not extend to any further information outside the Annual Report.
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing
(UK and Ireland) issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts and
disclosures in the financial statements. It also includes an assessment of the
significant estimates and judgments made by the directors in the preparation of
the financial statements, and of whether the accounting policies are appropriate
to the company's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF YORKSHIRE ELECTRICITY
DISTRIBUTION plc (CONTINUED)
Opinion
In our opinion:
the financial statements give a true and fair view, in accordance with IFRSs as
adopted by the European Union, of the state of the Company's affairs as at 31
December 2008 and of its profit for the year then ended;
the financial statements have been properly prepared in accordance with the
Companies Act 1985; and
the information given in the Directors' Report is consistent with the financial
statements.
Deloitte LLP
Chartered Accountants and Registered Auditors
Newcastle, United Kingdom
31 March 2009
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2008
+-----------------------------------------------------+-------+--+---------+--+----------+
| |Notes | | 2008 | | 2007 |
+-----------------------------------------------------+-------+--+---------+--+----------+
| | | | GBPm | | GBPm |
+-----------------------------------------------------+-------+--+---------+--+----------+
| | | | | | |
+-----------------------------------------------------+-------+--+---------+--+----------+
| Revenue | 3 | | 287.0 | | 292.1 |
+-----------------------------------------------------+-------+--+---------+--+----------+
| Cost of sales | | | (11.5) | | (11.6) |
+-----------------------------------------------------+-------+--+---------+--+----------+
| | | | | | |
+-----------------------------------------------------+-------+--+---------+--+----------+
| Gross profit | | | 275.5 | | 280.5 |
+-----------------------------------------------------+-------+--+---------+--+----------+
| | | | | | |
+-----------------------------------------------------+-------+--+---------+--+----------+
| Distribution costs | | | (91.4) | | (92.6) |
+-----------------------------------------------------+-------+--+---------+--+----------+
| Administrative expenses | | | (43.4) | | (38.4) |
+-----------------------------------------------------+-------+--+---------+--+----------+
| | | | | | |
+-----------------------------------------------------+-------+--+---------+--+----------+
| Operating profit | 6 | | 140.7 | | 149.5 |
+-----------------------------------------------------+-------+--+---------+--+----------+
| | | | | | |
+-----------------------------------------------------+-------+--+---------+--+----------+
| Profit on disposal of property, plant and equipment | | | 0.2 | | 5.2 |
+-----------------------------------------------------+-------+--+---------+--+----------+
| Investment income | 4 | | 1.8 | | 9.5 |
+-----------------------------------------------------+-------+--+---------+--+----------+
| Finance costs | 5 | | (38.6) | | (48.2) |
+-----------------------------------------------------+-------+--+---------+--+----------+
| | | | | | |
+-----------------------------------------------------+-------+--+---------+--+----------+
| Profit before tax | | | 104.1 | | 116.0 |
+-----------------------------------------------------+-------+--+---------+--+----------+
| | | | | | |
+-----------------------------------------------------+-------+--+---------+--+----------+
| Income tax expense | 9 | | (41.1) | | (19.4) |
+-----------------------------------------------------+-------+--+---------+--+----------+
| | | | | | |
+-----------------------------------------------------+-------+--+---------+--+----------+
| Profit for the financial year | 22 | | 63.0 | | 96.6 |
+-----------------------------------------------------+-------+--+---------+--+----------+
| | | | | | |
+-----------------------------------------------------+-------+--+---------+--+----------+
All activities relate to continuing operations.
STATEMENT OF RECOGNISED INCOME AND EXPENSE FOR THE YEAR ENDED 31 DECEMBER 2008
There has been no other income or expense for the Company other than the profits
reported above in the current or the prior year.
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
BALANCE SHEET AS AT 31 DECEMBER 2008
+--------------------------------------------------------+-------+-----------+--+-----------+
| |Notes | 2008 | | 2007 |
+--------------------------------------------------------+-------+-----------+--+-----------+
| | | | | As |
| | | | | restated |
| | | | | (note 2) |
+--------------------------------------------------------+-------+-----------+--+-----------+
| | | GBPm | | GBPm |
+--------------------------------------------------------+-------+-----------+--+-----------+
| Non-current assets | | | | |
+--------------------------------------------------------+-------+-----------+--+-----------+
| Property, plant and equipment | 11 | 1,897.4 | | 1,761.3 |
+--------------------------------------------------------+-------+-----------+--+-----------+
| Intangibles | 12 | 8.3 | | 10.6 |
+--------------------------------------------------------+-------+-----------+--+-----------+
| | | | | |
+--------------------------------------------------------+-------+-----------+--+-----------+
| | | 1,905.7 | | 1,771.9 |
+--------------------------------------------------------+-------+-----------+--+-----------+
| | | | | |
+--------------------------------------------------------+-------+-----------+--+-----------+
| Current assets | | | | |
+--------------------------------------------------------+-------+-----------+--+-----------+
| Inventories | 14 | 0.5 | | 1.0 |
+--------------------------------------------------------+-------+-----------+--+-----------+
| Short-term securities | 15 | - | | 206.2 |
+--------------------------------------------------------+-------+-----------+--+-----------+
| Trade and other receivables | 15 | 49.1 | | 67.0 |
+--------------------------------------------------------+-------+-----------+--+-----------+
| Cash and cash equivalents | 15 | 7.0 | | - |
+--------------------------------------------------------+-------+-----------+--+-----------+
| | | | | |
+--------------------------------------------------------+-------+-----------+--+-----------+
| | | 56.6 | | 274.2 |
+--------------------------------------------------------+-------+-----------+--+-----------+
| | | | | |
+--------------------------------------------------------+-------+-----------+--+-----------+
| Total assets | | 1,962.3 | | 2,046.1 |
+--------------------------------------------------------+-------+-----------+--+-----------+
| | | | | |
+--------------------------------------------------------+-------+-----------+--+-----------+
| Current liabilities | | | | |
+--------------------------------------------------------+-------+-----------+--+-----------+
| Trade and other payables | 16 | (44.4) | | (51.4) |
+--------------------------------------------------------+-------+-----------+--+-----------+
| Current income tax liabilities | 16 | (11.6) | | (16.1) |
+--------------------------------------------------------+-------+-----------+--+-----------+
| Deferred revenue | 19 | (16.9) | | (16.0) |
+--------------------------------------------------------+-------+-----------+--+-----------+
| Borrowings | 17 | (145.4) | | (93.8) |
+--------------------------------------------------------+-------+-----------+--+-----------+
| Provisions | 20 | (1.2) | | (1.3) |
+--------------------------------------------------------+-------+-----------+--+-----------+
| | | | | |
+--------------------------------------------------------+-------+-----------+--+-----------+
| | | (219.5) | | (178.6) |
+--------------------------------------------------------+-------+-----------+--+-----------+
| | | | | |
+--------------------------------------------------------+-------+-----------+--+-----------+
| Net current liabilities | | (162.9) | | (95.6) |
+--------------------------------------------------------+-------+-----------+--+-----------+
| | | | | |
+--------------------------------------------------------+-------+-----------+--+-----------+
| Non-current liabilities | | | | |
+--------------------------------------------------------+-------+-----------+--+-----------+
| Borrowings | 17 | (449.2) | | (649.0) |
+--------------------------------------------------------+-------+-----------+--+-----------+
| Deferred income tax liabilities | 18 | (218.6) | | (207.9) |
+--------------------------------------------------------+-------+-----------+--+-----------+
| Deferred revenue | 19 | (578.6) | | (537.0) |
+--------------------------------------------------------+-------+-----------+--+-----------+
| Provisions | 20 | (0.7) | | (0.9) |
+--------------------------------------------------------+-------+-----------+--+-----------+
| | | | | |
+--------------------------------------------------------+-------+-----------+--+-----------+
| | |(1,247.1) | |(,1394.8) |
+--------------------------------------------------------+-------+-----------+--+-----------+
| | | | | |
+--------------------------------------------------------+-------+-----------+--+-----------+
| Total liabilities | |(1,466.6) | |(1,573.4) |
+--------------------------------------------------------+-------+-----------+--+-----------+
| | | | | |
+--------------------------------------------------------+-------+-----------+--+-----------+
| Net assets | | 495.7 | | 472.7 |
+--------------------------------------------------------+-------+-----------+--+-----------+
| | | | | |
+--------------------------------------------------------+-------+-----------+--+-----------+
| Equity | | | | |
+--------------------------------------------------------+-------+-----------+--+-----------+
| Share capital | 21 | 290.0 | | 290.0 |
+--------------------------------------------------------+-------+-----------+--+-----------+
| Retained earnings | 22 | 205.7 | | 182.7 |
+--------------------------------------------------------+-------+-----------+--+-----------+
| | | | | |
+--------------------------------------------------------+-------+-----------+--+-----------+
| Total equity | 22 | 495.7 | | 472.7 |
+--------------------------------------------------------+-------+-----------+--+-----------+
| | | | | |
+--------------------------------------------------------+-------+-----------+--+-----------+
The financial statements were approved by the board of directors and authorised
for issue on 31 March 2009 and were signed on its behalf by:
J M France
Director
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2008
+-------------------------------------------------------+-------+---------+--+---------+
| |Notes | 2008 | | 2007 |
+-------------------------------------------------------+-------+---------+--+---------+
| | | GBPm | | GBPm |
+-------------------------------------------------------+-------+---------+--+---------+
| | | | | |
+-------------------------------------------------------+-------+---------+--+---------+
| Net cash from operating activities | 23 | 128.5 | | 125.9 |
+-------------------------------------------------------+-------+---------+--+---------+
| | | | | |
+-------------------------------------------------------+-------+---------+--+---------+
| Investing activities | | | | |
+-------------------------------------------------------+-------+---------+--+---------+
| Proceeds from disposal of property, plant and | | 2.8 | | 0.9 |
| equipment | | | | |
+-------------------------------------------------------+-------+---------+--+---------+
| Purchases of property, plant and equipment | |(195.3) | |(185.6) |
+-------------------------------------------------------+-------+---------+--+---------+
| Purchases of intangible assets | | - | | (0.1) |
+-------------------------------------------------------+-------+---------+--+---------+
| Receipt of customer contributions | | 55.9 | | 58.1 |
+-------------------------------------------------------+-------+---------+--+---------+
| Sale of short-term securities | | 200.0 | | - |
+-------------------------------------------------------+-------+---------+--+---------+
| | | | | |
+-------------------------------------------------------+-------+---------+--+---------+
| Net cash generated by/(used in) investing activities | | 63.4 | |(126.7) |
+-------------------------------------------------------+-------+---------+--+---------+
| | | | | |
+-------------------------------------------------------+-------+---------+--+---------+
| Financing activities | | | | |
+-------------------------------------------------------+-------+---------+--+---------+
| Equity dividends paid | | (40.0) | | (40.0) |
+-------------------------------------------------------+-------+---------+--+---------+
| Movement in loans from Group undertaking | |(158.9) | | 29.8 |
+-------------------------------------------------------+-------+---------+--+---------+
| New borrowings | | 14.0 | | 11.0 |
+-------------------------------------------------------+-------+---------+--+---------+
| | | | | |
+-------------------------------------------------------+-------+---------+--+---------+
| Net cash (used in)/generated by financing activities | |(184.9) | | 0.8 |
+-------------------------------------------------------+-------+---------+--+---------+
| | | | | |
+-------------------------------------------------------+-------+---------+--+---------+
| Net increase in cash and cash equivalents | | 7.0 | | - |
+-------------------------------------------------------+-------+---------+--+---------+
| | | | | |
+-------------------------------------------------------+-------+---------+--+---------+
| Cash and cash equivalents at beginning of year | | - | | - |
+-------------------------------------------------------+-------+---------+--+---------+
| | | | | |
+-------------------------------------------------------+-------+---------+--+---------+
| Cash and cash equivalents at end of year | | 7.0 | | - |
+-------------------------------------------------------+-------+---------+--+---------+
| | | | | |
+-------------------------------------------------------+-------+---------+--+---------+
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
NOTES TO THE ACCOUNTS - 31 DECEMBER 2008
1. GENERAL INFORMATION
Yorkshire Electricity Distribution plc is a company incorporated in England and
Wales under the Companies Act 1985 (the "Act"). The address of the registered
office is Lloyds Court, 78 Grey Street, Newcastle-upon-Tyne, NE1 6AF.
The nature of the Company's operations and its principal activities are set out
in the Business Review, in the Director's Report and in Note 3.
2 ACCOUNTING POLICIES
Accounting convention and basis of preparation
The financial statements have been prepared in accordance with International
Financial Reporting Standards ("IFRS"). The financial statements have also been
prepared in accordance with IFRSs adopted by the European Union and therefore
comply with Article 4 of the EU IAS Regulation and with those parts of the Act
that are applicable to companies reporting under IFRS.
The accounts have been prepared under the historical cost convention.
Going Concern
The Company's business activities, together with details regarding its future
development, performance and position are set out in the Business Review in the
Directors' Report. In addition, the Company's objectives, policies and processes
for managing its capital, its financial risk management objectives, details of
its financial instruments and its exposure to credit risk and liquidity risk are
included in the Directors' Report and the appropriate notes to the accounts.
When considering continuing to adopt the going concern basis in preparing the
annual report and accounts, the directors have taken into account a number of
factors, including the following:
* In accordance with standard condition 31 of the Company's electricity
distribution licence, Berkshire Hathaway, Inc., the ultimate controlling party
of the Company, has provided an undertaking that it will and it will procure
that any person (including a corporate body), which is a subsidiary of or is
controlled by it, will refrain from any action, which would cause the Company to
breach any of its obligations under the Electricity Act 1989 or under its
electricity distribution licence. The Company's electricity distribution licence
includes the obligation in standard condition 40 to maintain an investment grade
issuer credit rating;
* Explicit support has been made available to MidAmerican by Berkshire Hathaway
Inc., which consists of a $3.5 billion equity commitment that expires on 28
February 2011 and to which the Company has access, if necessary. No amounts were
outstanding on that facility as of the date of approval of the Company's
accounts to 31 December 2008;
* As part of a review of licensees' financing requirements, on 15 January 2009
Ofgem issued an information request to all DNOs under standard licence condition
6 relating to the financial resources each DNO has available in the 24 months
ended 31 December 2009. After making enquiries and taking account of several
factors, the directors approved the submission to Ofgem of a certificate
confirming their reasonable expectation that the Company has, or will have
available to it, sufficient financial resources and/or financial facilities to
enable the Company to carry on its regulated business for a period of two years
since the date of the last statutory accounts;
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
NOTES TO THE ACCOUNTS - 31 DECEMBER 2008
2. ACCOUNTING POLICIES (CONTINUED)
Going Concern (continued)
* Under section 3A of the Electricity Act 1989, the Gas and Electricity Markets
Authority has a duty, in carrying out its functions, to have regard to the need
to secure that licence holders are able to finance the activities, which are the
subject of obligations imposed by or under Part 1 of the Electricity Act 1989 or
the Utilities Act 2000; and
* The Company has considerable financial resources, in the form of short-term
borrowings made available by YEG and committed revolving credit facilities from
Lloyds TSB Bank plc and Royal Bank of Scotland plc. These credit facilities are
due to expire in April 2010, at which point the Company expects to raise further
finance as required. The directors do not consider there to be any doubt over
the Company's ability to raise such finance, given the investment grade issuer
credit ratings held by the Company and due to the fact that the Company operates
within a stable and traditionally low risk industry. As a consequence, the
directors believe that the Company is well placed to manage its business risks
successfully despite the current uncertain economic outlook.
Consequently, after making enquiries, the directors have a reasonable
expectation that the Company has adequate resources to continue in operational
existence for the foreseeable future. Accordingly, they continue to adopt the
going concern basis in preparing the annual report and accounts.
Judgments in applying accounting policies and key sources of estimation
uncertainty
Many of the amounts included in the financial statements involve the use of
judgment and/or estimation. These judgments and estimates are based on
management's best knowledge of the relevant facts and circumstances, having
regard to previous experience, but actual results may differ from the amounts
included in the financial statements. Information about such judgments and
estimates is contained in the accounting policies and/or the notes to the
financial statements, and the key areas are summarised below.
Areas of judgment and estimation which have the most significant effect on the
amounts recognised in the financial statements are:
* The estimation of useful economic lives for property, plant and equipment;
* The split of operating and capital expenditure and the allocation of overheads
to capital projects; and
* Impairment reviews carried out to evaluate the carrying value of assets held at
the balance sheet date.
Critical accounting policies
The critical accounting policies adopted by the directors relate to property,
plant and equipment, taxation, pensions and revenue and are described below. The
accounting policies have been applied consistently throughout the year and the
preceding year, with the exception of the presentation of interest on borrowings
as highlighted below.
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
NOTES TO THE ACCOUNTS - 31 DECEMBER 2008 (CONTINUED)
2ACCOUNTING POLICIES (CONTINUED)
Prior year restatement
A prior year restatement has been made in respect of accrued and prepaid
interest on borrowings. These balances have been reclassified from trade and
other payables and trade and other receivables to short-term borrowings and
short term securities on the face of the balance sheet and in the related notes
to the accounts in line with IAS 39 Financial Instruments: Recognition and
Measurement. The effect of this adjustment is to increase borrowings in the
prior year by GBP28.7m and to decrease trade and other payables by GBP28.7m.
Trade and other receivables have decreased by GBP6.2m and short term securities
have increased by GBP6.2m. The adjustment has no impact on the prior year
profit.
Adoption of new or revised standards
In the current year, the Company has adopted the following interpretation:
IFRIC 12 Service Concession Arrangements
The adoption of IFRIC 12, which is effective for annual periods beginning on or
after 1 January 2008,has had no material impact on the financial statements of
the Company.
At the date of authorisation of these financial statements there were standards
and interpretations in issue but not yet effective, which have not yet been
applied in these financial statements. The directors consider that the following
may be relevant to the Company in future periods.
IAS 1 Presentation of Financial Statements - "Amendments to IAS 1"
IAS 23 Borrowing Costs - "Amendments to IAS 23"
IFRIC 18 Capital Contributions
IFRS 7 Financial Instruments: Disclosures - "Amendments to IFRS 7"
The directors anticipate that the adoption of the amendments to IAS 1 and IFRIC
18 in future periods will have no material impact on the financial statements of
the Company. The amendments to IFRS 7 will require enhanced disclosures about
fair value measurement and liquidity risk. The amendments to IAS 23, Borrowing
Costs, will be adopted from its effective date of 1 January 2009. From this
date, borrowing costs will be capitalised in line with the revised standard. The
impact of the adoption of IAS 23 in the Company's 2009 financial statements is
expected to be approximately GBP1m.
The IASB project "2008 Annual Amendments to IFRSs" was published on 22 May 2008.
This project will require presentational changes in the financial statements of
the Company for annual periods beginning on or after 1 January 2009.
The directors anticipate the Company will adopt these standards and
interpretations on their effective dates.
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
NOTES TO THE ACCOUNTS - 31 DECEMBER 2008 (CONTINUED)
2ACCOUNTING POLICIES (CONTINUED)
Revenue
Revenue is only recognised when the risks and rewards of ownership have been
transferred to a third party. No revenue is recognised where there are
significant uncertainties regarding the consideration to be received or the
costs associated with the transaction.
Revenue represents charges for the use of the Company's distribution network,
amortisation of customer contributions, recharge of costs incurred on behalf of
related parties and the invoiced value of other goods sold and services
provided, exclusive of value added tax.
Revenues from charges to end customers for the use of the Company's distribution
network include estimates of the units distributed. The estimated usage is based
on historic data, judgment and assumptions. Revenues are gradually adjusted to
reflect actual usage in the period during which actual meter readings are
obtained.
Any under or over recovery of allowed distribution network revenues as
prescribed by Ofgem is not provided for in the financial statements and will be
recovered/repaid through future tariffs.
Customer contributions towards distribution system assets are included in
deferred revenue. The Company's policy is to credit the customer contribution to
revenue over 45 years on a straight-line basis, in line with the useful life of
the distribution system assets.
Interest income is accrued on a time basis, by reference to the principal
outstanding and at the effective interest rate applicable.
Dividend income from investments is recognised when the shareholders' rights to
receive payment have been established.
Research costs
Expenditure on research activities is written off to the income statement in the
year in which it is incurred.
Operating profit
Operating profit is stated before investment income and finance costs.
Taxation
Income tax expense represents the sum of the tax currently payable and deferred
tax.
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from profit as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
Company's liability for current tax is calculated using tax rates that have been
enacted or substantively enacted at the balance sheet date.
Deferred tax is recognised on differences between the carrying amounts of assets
and liabilities in the financial statements and the corresponding tax bases used
in the computation of taxable profit, and is accounted for using the balance
sheet liability method. Deferred tax liabilities are generally recognised for
all taxable temporary differences and deferred tax assets are recognised to the
extent that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised.
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
NOTES TO THE ACCOUNTS - 31 DECEMBER 2008 (CONTINUED)
2ACCOUNTING POLICIES (CONTINUED)
Taxation (continued)
The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
year when the liability is settled or asset realised, based on tax rates and tax
legislation enacted or substantively enacted at the balance sheet date.
Property, plant and equipment and depreciation
Property, plant and equipment is stated at cost. Cost includes the purchase
price of the asset and any costs, including internal employee and other costs,
directly attributable to bringing the asset to the location and condition
necessary for it to be capable of operating in the manner intended by
management.
The charge for depreciation is calculated to write off assets to their residual
values over their estimated useful lives using the straight-line basis:
Distribution system assets......................................................................45 years
Metering equipment included in distribution system assets...........................up to 15
years
Information Technology equipment included in distribution system
assets........up to 10 years
Non-operational assets:
Buildings - freehold............................................................................ ...up to 60 years
Buildings - leasehold.....................................................lower of lease period or 60 years
Fixtures and equipment...... ....................................................................up to 10 years
Software development costs ........................................................................up to 15 years
Freehold land is not depreciated.
Assets in the course of construction are carried at cost. Depreciation on these
assets, on the same basis as other assets, commences when the assets are
commissioned.
The estimated useful economic lives of property, plant and equipment are based
on management's judgment and experience. When management identifies that actual
useful lives differ materially from the estimates used to calculate
depreciation, that charge is adjusted prospectively. Due to the significance of
the Company's investment in property, plant and equipment, variations between
actual and estimated useful lives could impact operating results both positively
and negatively.
The Company is required to evaluate the carrying values of property, plant and
equipment for impairment whenever circumstances indicate, in management's
judgment, that the carrying value of such assets may not be recoverable. An
impairment review requires management to make judgments concerning the cash
flows, growth rates and discount rates for the cash-generating units under
review.
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
NOTES TO THE ACCOUNTS - 31 DECEMBER 2008 (CONTINUED)
2ACCOUNTING POLICIES (CONTINUED)
Software development costs
Costs in respect of major developments are capitalised and amortised over the
expected life of the software. Capitalised software costs that are not an
integral part of the related hardware are included in intangible assets on the
balance sheet and amortised over the expected life of the software of up to 15
years.
Investments
Fixed asset investments are stated at cost less provision for impairment in
value.
Inventories
Inventories are stated at the lower of cost and net realisable value as follows:
Work in progress is valued at the cost of direct materials and labour plus
attributable overheads based on the normal level of activity less progress
payments.
Net realisable value is based on estimated selling price less further costs
expected to be incurred to completion and disposal.
Provisions
Provisions are recognised when the Company has a present obligation as a result
of a past event and it is probable that the Company will be required to settle
that obligation. Provisions are measured at the directors' best estimate of the
expenditure required to settle the obligation at the balance sheet date.
Reasonable estimates involve judgments made by management after considering
information including notifications, settlements, estimates performed by
independent parties and legal counsel, available facts, identification of other
potentially responsible parties and their ability to contribute and prior
experience.
Where the effect is significant, provisions in respect of material future
liabilities are stated at their net present value and arrived at by discounting
the anticipated future costs, at the market rate at the balance sheet date.
Leases
Leases are classified as finance leases wherever the terms of the lease transfer
substantially all the risks and rewards of ownership to the lessee. All other
leases are classified as operating leases.
Operating lease rentals are charged to the income statement in equal annual
amounts over the lease term.
Trade receivables
Trade receivables are measured at initial recognition at fair value. Appropriate
allowances for estimated irrecoverable amounts are recognised in the income
statement when there is objective evidence that the asset is impaired.
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
NOTES TO THE ACCOUNTS - 31 DECEMBER 2008 (CONTINUED)
2ACCOUNTING POLICIES (CONTINUED)
Trade payables
Trade payables are not interest bearing and are stated at their nominal value.
Borrowings
Borrowings are classified as other financial liabilities at amortised cost. They
are recorded at the proceeds received, net of direct issue costs. Finance
charges, including premiums payable on settlement for redemption and direct
issue costs, are accounted for on an accruals basis in the income statement
using the effective interest rate method. They are added to the carrying amount
of the instruments to the extent that they are not settled in the period in
which they arise.
Financial instruments
Financial assets and financial liabilities are recognised on the balance sheet
when the Company becomes a party to the contractual provisions on the
instrument.
Financial assets are assessed for indicators of impairment at each balance sheet
date. Financial assets are impaired where there is objective evidence that, as a
result of one or more events that occurred after the initial recognition of the
financial asset, the estimated future cash flows of the investment have been
impacted.
For certain categories of financial assets, such as trade receivables, assets
that are assessed not to be impaired individually are subsequently assessed for
impairment on a collective basis. Objective evidence of impairment for a
portfolio of receivables could include the Company's past experience of
collecting payments, an increase in the number of delayed payments in the
portfolio past the average credit period of 30 days, as well as observable
changes in national or local economic conditions that correlate with default on
receivables.
The carrying amount of the financial asset is reduced by the impairment loss
directly for all financial assets with the exception of trade receivables, where
the carrying amount is reduced through the use of an allowance account. When a
trade receivable is considered uncollectable, it is written off against the
allowance account. Subsequent recoveries of amounts previously written off are
credited against the allowance account. Changes in the carrying amount of the
allowance account are recognised in the income statement.
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
NOTES TO THE ACCOUNTS - 31 DECEMBER 2008 (CONTINUED)
2ACCOUNTING POLICIES (CONTINUED)
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangement entered into. An equity instrument is
any contract that evidences a residual interest in the assets of the Company
after deducting all of its liabilities.
Pensions
The Company contributes to the Northern Electric Group of the Electricity Supply
Pension Scheme ("the Northern Electric Group of the ESPS"). The Northern
Electric Group of the ESPS is a defined benefit plan that shares risk between
various entities under common control. There is no contractual agreement or
stated policy for charging the net defined benefit cost for the plan as a whole
to individual group entities and accordingly the Company accounts for the
Northern Electric Group of the ESPS as if it were a defined contribution
scheme. Contributions to the Northern Electric Group of the ESPS are charged to
the income statement or capitalised as appropriate. The capital costs of
ex-gratia and supplementary pensions are normally charged to the income
statement in the period in which they are granted.
The Company also participates in the Northern Electric Money Purchase Scheme
("NEMPS") and contributes to the Yorkshire Electricity Group Personal Pension
Plan ("YEPP"), which are defined contribution schemes. Contributions payable to
the defined contribution schemes are charged to the income statement in the
year. Differences between contributions payable in the year and contributions
actually paid are shown as either accruals or prepayments in the balance sheet.
3REVENUE
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,
the recharge of costs incurred on behalf of related parties, amortisation of
customer contributions and other services and is included net of value added
tax.
4INVESTMENT INCOME
+--------------------------------------------------------+--------+--+---------+
| | 2008 | | 2007 |
+--------------------------------------------------------+--------+--+---------+
| | GBPm | | GBPm |
+--------------------------------------------------------+--------+--+---------+
| | | | |
+--------------------------------------------------------+--------+--+---------+
| Interest receivable on loans to Group undertaking | 0.4 | | 0.1 |
+--------------------------------------------------------+--------+--+---------+
| Dividends receivable | 0.1 | | - |
+--------------------------------------------------------+--------+--+---------+
| Interest receivable on non-current investments | 1.3 | | 9.4 |
+--------------------------------------------------------+--------+--+---------+
| | | | |
+--------------------------------------------------------+--------+--+---------+
| Total investment income | 1.8 | | 9.5 |
+--------------------------------------------------------+--------+--+---------+
5 FINANCE COSTS
+--------------------------------------------------------+--------+--+---------+
| | 2008 | | 2007 |
+--------------------------------------------------------+--------+--+---------+
| | GBPm | | GBPm |
+--------------------------------------------------------+--------+--+---------+
| | | | |
+--------------------------------------------------------+--------+--+---------+
| Interest payable on loans from Group undertakings | 8.5 | | 18.8 |
+--------------------------------------------------------+--------+--+---------+
| Interest payable on other loans | 30.1 | | 29.4 |
+--------------------------------------------------------+--------+--+---------+
| | | | |
+--------------------------------------------------------+--------+--+---------+
| Total finance costs | 38.6 | | 48.2 |
+--------------------------------------------------------+--------+--+---------+
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
NOTES TO THE ACCOUNTS - 31 DECEMBER 2008 (CONTINUED)
6OPERATING PROFIT
+--------------------------------------------------------+--------+--+---------+
| | 2008 | | 2007 |
+--------------------------------------------------------+--------+--+---------+
| | GBPm | | GBPm |
+--------------------------------------------------------+--------+--+---------+
| This is stated after charging/(crediting): | | | |
+--------------------------------------------------------+--------+--+---------+
| Staff costs (Note 7) | 26.1 | | 23.3 |
+--------------------------------------------------------+--------+--+---------+
| Research costs | 0.5 | | 0.4 |
+--------------------------------------------------------+--------+--+---------+
| Depreciation of property, plant and | 58.9 | | 58.3 |
| equipment | | | |
+--------------------------------------------------------+--------+--+---------+
| Amortisation of deferred revenue |(15.3) | | (14.4) |
+--------------------------------------------------------+--------+--+---------+
| Amortisation of intangibles | 2.3 | | 2.0 |
+--------------------------------------------------------+--------+--+---------+
| Impairment loss/(gain) on trade and | 0.3 | | (0.5) |
| other receivables | | | |
+--------------------------------------------------------+--------+--+---------+
| | | | |
+--------------------------------------------------------+--------+--+---------+
| Analysis of auditors' remuneration is | | | |
| as follows: | | | |
+--------------------------------------------------------+--------+--+---------+
| | 2008 | | 2007 |
+--------------------------------------------------------+--------+--+---------+
| |GBP000 | | GBP000 |
+--------------------------------------------------------+--------+--+---------+
| | | | |
+--------------------------------------------------------+--------+--+---------+
| Fees payable to the Company's | 111 | | 96 |
| auditors for the audit of the | | | |
| Company's annual accounts | | | |
+--------------------------------------------------------+--------+--+---------+
There were no fees payable in relation to non-audit services in 2008 or 2007.
7STAFF COSTS
+--------------------------------------------------------+--------+---+--------+
| | 2008 | | 2007 |
+--------------------------------------------------------+--------+---+--------+
| | GBPm | | GBPm |
+--------------------------------------------------------+--------+---+--------+
| | | | |
+--------------------------------------------------------+--------+---+--------+
| Salaries | 44.4 | | 41.9 |
+--------------------------------------------------------+--------+---+--------+
| Social security costs | 3.9 | | 4.0 |
+--------------------------------------------------------+--------+---+--------+
| Defined contribution pension costs | 0.1 | | 0.1 |
+--------------------------------------------------------+--------+---+--------+
| Defined benefit pension costs | 13.8 | | 10.0 |
+--------------------------------------------------------+--------+---+--------+
| | | | |
+--------------------------------------------------------+--------+---+--------+
| | 62.2 | | 56.0 |
+--------------------------------------------------------+--------+---+--------+
| Less charged as to property, plant and equipment |(36.1) | |(32.7) |
+--------------------------------------------------------+--------+---+--------+
| | | | |
+--------------------------------------------------------+--------+---+--------+
| | 26.1 | | 23.3 |
+--------------------------------------------------------+--------+---+--------+
The 2007 split of total costs between salaries and other has been revised with
no impact on prior year results.
The majority of the Company's employees are members of the Northern Electric
Group of the ESPS, details of which are given in Note 24.
+--------------------------------------------------------+--------+--+--------+
| The average monthly number of employees during the | | | |
| year was: | | | |
+--------------------------------------------------------+--------+--+--------+
| | 2008 | | 2007 |
+--------------------------------------------------------+--------+--+--------+
| | No. | | No. |
+--------------------------------------------------------+--------+--+--------+
| | | | |
+--------------------------------------------------------+--------+--+--------+
| Technical | 271 | | 256 |
+--------------------------------------------------------+--------+--+--------+
| Industrial | 633 | | 623 |
+--------------------------------------------------------+--------+--+--------+
| Administration | 130 | | 135 |
+--------------------------------------------------------+--------+--+--------+
| Other | 86 | | 102 |
+--------------------------------------------------------+--------+--+--------+
| | | | |
+--------------------------------------------------------+--------+--+--------+
| | 1,120 | | 1,116 |
+--------------------------------------------------------+--------+--+--------+
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
NOTES TO THE ACCOUNTS - 31 DECEMBER 2008 (CONTINUED)
8DIRECTORS' & KEY PERSONNEL REMUNERATION
+---------------------------------------------------------+----------+--+---------+
| DIRECTORS' REMUNERATION | 2008 | | 2007 |
+---------------------------------------------------------+----------+--+---------+
| | GBP | | GBP |
+---------------------------------------------------------+----------+--+---------+
| Highest Paid | | | |
+---------------------------------------------------------+----------+--+---------+
| Short-term employee benefits | 103,612 | |127,580 |
+---------------------------------------------------------+----------+--+---------+
| Post employment benefits | 9,767 | | 6,092 |
+---------------------------------------------------------+----------+--+---------+
| Other long-term benefits | 101,707 | | 91,952 |
+---------------------------------------------------------+----------+--+---------+
| | 215,086 | |225,624 |
+---------------------------------------------------------+----------+--+---------+
| | | | |
+---------------------------------------------------------+----------+--+---------+
| Total | | | |
+---------------------------------------------------------+----------+--+---------+
| Short-term employee benefits | 396,464 | |359,189 |
+---------------------------------------------------------+----------+--+---------+
| Post employment benefits | 117,051 | | 98,168 |
+---------------------------------------------------------+----------+--+---------+
| Other long-term benefits | 325,208 | |254,914 |
+---------------------------------------------------------+----------+--+---------+
| | 838,723 | |712,271 |
+---------------------------------------------------------+----------+--+---------+
| | | | |
+---------------------------------------------------------+----------+--+---------+
| Directors who are members of the defined benefit scheme | 5 | | 5 |
+---------------------------------------------------------+----------+--+---------+
| | | | |
+---------------------------------------------------------+----------+--+---------+
| Accrued pension benefit relating to highest paid | - | | - |
| director | | | |
+---------------------------------------------------------+----------+--+---------+
+---------------------------------------------------------+----------+--+---------+
| OTHER KEY PERSONNEL REMUNERATION | 2008 | | 2007 |
+---------------------------------------------------------+----------+--+---------+
| | GBP | | GBP |
+---------------------------------------------------------+----------+--+---------+
| Total | | | |
+---------------------------------------------------------+----------+--+---------+
| Short-term employee benefits | 293,907 | |288,992 |
+---------------------------------------------------------+----------+--+---------+
| Post employment benefits | 72,182 | | 57,559 |
+---------------------------------------------------------+----------+--+---------+
| Other long-term benefits | 91,917 | | 93,755 |
+---------------------------------------------------------+----------+--+---------+
| | | | |
+---------------------------------------------------------+----------+--+---------+
| | 458,006 | |440,306 |
+---------------------------------------------------------+----------+--+---------+
Other key personnel includes a number of senior functional managers who, whilst
not board directors, have authority and responsibility for planning, directing
and controlling the activities of the Company.
The directors and key personnel are remunerated for their services to the CE
Group, of which the Company is a subsidiary. The figures above represent the
share of the costs borne by the Company.
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
NOTES TO THE ACCOUNTS - 31 DECEMBER 2008 (CONTINUED)
9INCOME TAX EXPENSE
+--------------------------------------+--------+--+-------+--+---------+--+---------+
| | 2008 | | 2007 |
+--------------------------------------+-------------------+--+----------------------+
| | GBPm | | GBPm | | GBPm | | GBPm |
+--------------------------------------+--------+--+-------+--+---------+--+---------+
| Tax expense comprises: | | | | | | | |
+--------------------------------------+--------+--+-------+--+---------+--+---------+
| | | | | | | | |
+--------------------------------------+--------+--+-------+--+---------+--+---------+
| Current tax expense: | | | | | | | |
+--------------------------------------+--------+--+-------+--+---------+--+---------+
| Corporation tax charge for the year | 30.3 | | | | 36.2 | | |
+--------------------------------------+--------+--+-------+--+---------+--+---------+
| Under/(over) provision for prior | 0.1 | | | | (0.5) | | |
| years | | | | | | | |
+--------------------------------------+--------+--+-------+--+---------+--+---------+
| | | | | | | | |
+--------------------------------------+--------+--+-------+--+---------+--+---------+
| Total current tax charge | | | 30.4 | | | | 35.7 |
+--------------------------------------+--------+--+-------+--+---------+--+---------+
| | | | | | | | |
+--------------------------------------+--------+--+-------+--+---------+--+---------+
| Deferred tax: | | | | | | | |
+--------------------------------------+--------+--+-------+--+---------+--+---------+
| Deferred tax expense relating to the | (1.0) | | | | (1.5) | | |
| origination and reversal of | | | | | | | |
| temporary differences | | | | | | | |
+--------------------------------------+--------+--+-------+--+---------+--+---------+
| Effect of changes in tax rates | - | | | | (14.8) | | |
+--------------------------------------+--------+--+-------+--+---------+--+---------+
| Effect of changes in legislation | 11.7 | | | | - | | |
+--------------------------------------+--------+--+-------+--+---------+--+---------+
| | | | | | | | |
+--------------------------------------+--------+--+-------+--+---------+--+---------+
| Total deferred tax charge/(credit) | | | 10.7 | | | | (16.3) |
+--------------------------------------+--------+--+-------+--+---------+--+---------+
| | | | | | | | |
+--------------------------------------+--------+--+-------+--+---------+--+---------+
| Tax on profit before tax | | | 41.1 | | | | 19.4 |
+--------------------------------------+--------+--+-------+--+---------+--+---------+
| | | | | | | | |
+--------------------------------------+--------+--+-------+--+---------+--+---------+
| The total charge can be reconciled | | | | | | | |
| to the accounting profit as follows: | | | | | | | |
+--------------------------------------+--------+--+-------+--+---------+--+---------+
| | | | | | | | |
+--------------------------------------+--------+--+-------+--+---------+--+---------+
| Profit before tax | | |104.1 | | | | 116.0 |
+--------------------------------------+--------+--+-------+--+---------+--+---------+
| | | | | | | | |
+--------------------------------------+--------+--+-------+--+---------+--+---------+
| Tax on profit before tax at standard | | | 29.7 | | | | 34.8 |
| rate of corporation tax in United | | | | | | | |
| Kingdom of 28.5% (2007: 30%) | | | | | | | |
+--------------------------------------+--------+--+-------+--+---------+--+---------+
| | | | | | | | |
+--------------------------------------+--------+--+-------+--+---------+--+---------+
| Effect of changes in tax rates | | | - | | | | (14.8) |
+--------------------------------------+--------+--+-------+--+---------+--+---------+
| Effect of changes in legislation | | | 11.7 | | | | - |
+--------------------------------------+--------+--+-------+--+---------+--+---------+
| Over provision for prior years | | |(0.3) | | | | (0.6) |
+--------------------------------------+--------+--+-------+--+---------+--+---------+
| | | | | | | | |
+--------------------------------------+--------+--+-------+--+---------+--+---------+
| Tax on profit before tax | | | 41.1 | | | | 19.4 |
+--------------------------------------+--------+--+-------+--+---------+--+---------+
The tax rates used are the UK corporate rate of 30% until 31 March 2008 and 28%
from 1 April 2008, time apportioned for 2008.
Under IFRS, there is an increase in the year in the deferred tax liability
provided on Industrial Buildings. This is due to the change in legislation
introduced by the Finance Act 2008.
10DIVIDENDS
+----------------------------------+----------+--+----------+--+--------+--+----------+
| | 2008 | | 2007 | | 2008 | | 2007 |
+----------------------------------+----------+--+----------+--+--------+--+----------+
| | Pence | | Pence | | GBPm | | GBPm |
| | per | | per | | | | |
| | share | | share | | | | |
+----------------------------------+----------+--+----------+--+--------+--+----------+
| | | | | | | | |
+----------------------------------+----------+--+----------+--+--------+--+----------+
| Dividend paid | 13.79 | | 13.79 | | 40.0 | | 40.0 |
+----------------------------------+----------+--+----------+--+--------+--+----------+
| | | | | | | | |
+----------------------------------+----------+--+----------+--+--------+--+----------+
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
NOTES TO THE ACCOUNTS - 31 DECEMBER 2008 (CONTINUED)
11PROPERTY, PLANT AND EQUIPMENT
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| | | | Non-operational | | | | |
| | | | land & | | Fixtures and | | |
| | Distribution | | buildings | | Equipment | | |
| | System | | | | | | Total |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| | GBPm | | GBPm | | GBPm | | GBPm |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| COST | | | | | | | |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| At 1 January 2007 | 1,845.1 | | 6.0 | | 9.8 | | 1,860.9 |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| Additions | 170.9 | | - | | 1.5 | | 172.4 |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| Disposals | (11.1) | | - | | - | | (11.1) |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| | | | | | | | |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| At 31 December 2008 | 2,004.9 | | 6.0 | | 11.3 | | 2,022.2 |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| Additions | 193.0 | | - | | 2.0 | | 195.0 |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| Disposals | (6.3) | | - | | (0.2) | | (6.5) |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| | | | | | | | |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| At 31 December 2008 | 2,191.6 | | 6.0 | | 13.1 | | 2,210.7 |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| | | | | | | | |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| ACCUMULATED DEPRECIATION | | | | | | |
+------------------------------------------------+---+-----------------+---+--------------+---+--------------+
| At 1 January 2007 | 206.3 | | 2.4 | | 5.0 | | 213.7 |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| Charge for the year | 56.4 | | 0.2 | | 1.7 | | 58.3 |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| Disposals | (11.1) | | - | | - | | (11.1) |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| | | | | | | | |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| At 31 December 2008 | 251.6 | | 2.6 | | 6.7 | | 260.9 |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| Charge for the year | 55.1 | | 0.2 | | 3.6 | | 58.9 |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| Disposals | (6.3) | | - | | (0.2) | | (6.5) |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| | | | | | | | |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| At 31 December 2008 | 300.4 | | 2.8 | | 10.1 | | 313.3 |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| | | | | | | | |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| Net book value at 31 | 1,891.2 | | 3.2 | | 3.0 | | 1,897.4 |
| December 2008 | | | | | | | |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| Net book value at 31 | | | 3.4 | | 4.6 | | 1,761.3 |
| December 2007 | 1,753.3 | | | | | | |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| | | | | | | | |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| Assets in the course of | | | | | | | |
| construction included above: | | | | | | | |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| | | | | | | | |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| At 1 January 2007 | 91.4 | | - | | - | | 91.4 |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| Additions | 170.9 | | - | | 1.5 | | 172.4 |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| Available for use | (127.7) | | - | | (1.5) | | (129.2) |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| | | | | | | | |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| At 31 December 2007 | 134.6 | | - | | - | | 134.6 |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| Additions | 193.0 | | - | | - | | 193.0 |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| Available for use | (207.4) | | - | | - | | (207.4) |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| | | | | | | | |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| At 31 December 2008 | 120.2 | | - | | - | | 120.2 |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
| | | | | | | | |
+------------------------------+-----------------+---+-----------------+---+--------------+---+--------------+
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
NOTES TO THE ACCOUNTS - 31 DECEMBER 2008 (CONTINUED)
11PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
The net book value of non-operational land and buildings comprises:
+--------------------------------------------------------+--------+--+--------+
| | 2008 | | 2007 |
+--------------------------------------------------------+--------+--+--------+
| | GBPm | | GBPm |
+--------------------------------------------------------+--------+--+--------+
| | | | |
+--------------------------------------------------------+--------+--+--------+
| Freehold | 1.6 | | 1.7 |
+--------------------------------------------------------+--------+--+--------+
| Long leasehold | 1.6 | | 1.7 |
+--------------------------------------------------------+--------+--+--------+
| | | | |
+--------------------------------------------------------+--------+--+--------+
| | 3.2 | | 3.4 |
+--------------------------------------------------------+--------+--+--------+
The Company has entered into contractual commitments in relation to the future
acquisition of property, plant and equipment of GBP10.0m (2007: GBP6.9m).
12INTANGIBLES
+----------------------------------------------------------------+-------------+
| | Software |
| |Development |
| | Costs |
+----------------------------------------------------------------+-------------+
| | GBPm |
+----------------------------------------------------------------+-------------+
| COST | |
+----------------------------------------------------------------+-------------+
| At 1 January 2007 | 29.4 |
+----------------------------------------------------------------+-------------+
| Additions | 0.1 |
+----------------------------------------------------------------+-------------+
| | |
+----------------------------------------------------------------+-------------+
| At 31 December 2007 and 31 December 2008 | 29.5 |
+----------------------------------------------------------------+-------------+
| | |
+----------------------------------------------------------------+-------------+
| AMORTISATION | |
+----------------------------------------------------------------+-------------+
| At 1 January 2006 | 16.9 |
+----------------------------------------------------------------+-------------+
| Charge for the year | 2.0 |
+----------------------------------------------------------------+-------------+
| | |
+----------------------------------------------------------------+-------------+
| At 31 December 2007 | 18.9 |
+----------------------------------------------------------------+-------------+
| Charge for the year | 2.3 |
+----------------------------------------------------------------+-------------+
| | |
+----------------------------------------------------------------+-------------+
| At 31 December 2007 | 21.2 |
+----------------------------------------------------------------+-------------+
| | |
+----------------------------------------------------------------+-------------+
| Net book value at 31 December 2008 | 8.3 |
+----------------------------------------------------------------+-------------+
| | |
+----------------------------------------------------------------+-------------+
| Net book value at 31 December 2007 | 10.6 |
+----------------------------------------------------------------+-------------+
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
NOTES TO THE ACCOUNTS - 31 DECEMBER 2008 (CONTINUED)
13INVESTMENTS
Details of the principal investments of the Company at 31 December 2008 are
listed below:
+---------------+---------------+--------------+------------+--------------------+
| Name of | Country of | Holding of |Proportion | Nature of |
| Company | Registration | Ordinary | | Business |
| | | Shares | | |
+---------------+---------------+--------------+------------+--------------------+
| Electralink | England and | 717 at 10p | 7.8% | Data transfer |
| Limited | Wales | | | network operator |
+---------------+---------------+--------------+------------+--------------------+
| Gemserv | England and | 1 at GBP1 | 0.0004% | Meter point |
| Limited | Wales | | | registration |
+---------------+---------------+--------------+------------+--------------------+
| MRA Service | England and | 1 at GBP1 | 1.0% | Governance of the |
| Company | Wales | | | electricity |
| Limited | | | | industry's Master |
| | | | | Registration |
| | | | | Agreement |
+---------------+---------------+--------------+------------+--------------------+
| DCUSA Limited | England and | 1 at GBP1 | 2.0% | Management and |
| | Wales | | | governance of the |
| | | | | Distribution |
| | | | | Connection and Use |
| | | | | of System |
| | | | | Agreement |
+---------------+---------------+--------------+------------+--------------------+
The above investments are unlisted. The cost and net book value of the
investments are Electralink Limited GBP72 (2007: GBP72), Gemserv Limited GBP1
(2007: GBP1), MRA Service Company Limited GBP1 (2007: GBP1) and DCUSA Limited
GBP1 (2007: GBP1).
14INVENTORIES
+---------------------------------------------------------+--------+--+--------+
| | 2008 | | 2007 |
+---------------------------------------------------------+--------+--+--------+
| | GBPm | | GBPm |
+---------------------------------------------------------+--------+--+--------+
| | | | |
+---------------------------------------------------------+--------+--+--------+
| Work in progress | 0.5 | | 1.0 |
+---------------------------------------------------------+--------+--+--------+
15OTHER FINANCIAL ASSETS
Short-term securities
+------------------------------------+-------+--+----------+--+--------+--+----------+
| | Book value | | Fair value |
+------------------------------------+---------------------+--+----------------------+
| | 2008 | | 2007 | | 2008 | | 2007 |
+------------------------------------+-------+--+----------+--+--------+--+----------+
| | | | As | | | | As |
| | | |restated | | | |restated |
| | | |(note 2) | | | |(note 2) |
+------------------------------------+-------+--+----------+--+--------+--+----------+
| | GBPm | | GBPm | | GBPm | | GBPm |
+------------------------------------+-------+--+----------+--+--------+--+----------+
| | | | | | | | |
+------------------------------------+-------+--+----------+--+--------+--+----------+
| Guaranteed investment contract | - | | 206.2 | | - | | 206.0 |
| maturity 21 February 2008 (4.73%) | | | | | | | |
+------------------------------------+-------+--+----------+--+--------+--+----------+
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
NOTES TO THE ACCOUNTS - 31 DECEMBER 2008 (CONTINUED)
15OTHER FINANCIAL ASSETS (CONTINUED)
Trade and other receivables
+---------------------------------------------------------+--------+--+----------+
| | 2008 | | 2007 |
+---------------------------------------------------------+--------+--+----------+
| | | | As |
| | | |restated |
| | | |(note 2) |
+---------------------------------------------------------+--------+--+----------+
| | GBPm | | GBPm |
+---------------------------------------------------------+--------+--+----------+
| | | | |
+---------------------------------------------------------+--------+--+----------+
| Distribution use of system receivables | 35.6 | | 46.8 |
+---------------------------------------------------------+--------+--+----------+
| Amounts receivable from sale of goods | 7.9 | | 9.5 |
| and services | | | |
+---------------------------------------------------------+--------+--+----------+
| Amounts receivable from Group | - | | 4.2 |
| undertakings | | | |
+---------------------------------------------------------+--------+--+----------+
| Prepayments and accrued income | 5.6 | | 6.5 |
+---------------------------------------------------------+--------+--+----------+
| | | | |
+---------------------------------------------------------+--------+--+----------+
| | 49.1 | | 67.0 |
+---------------------------------------------------------+--------+--+----------+
The directors consider that the carrying amount of trade and other receivables
approximate their fair value calculated by discounting the future cash flows at
the market rate at the balance sheet date. The maximum exposure to risk to the
Company is the book value of these receivables less any provisions for
impairment.
Distribution use of system receivables
The Company's distribution customers are concentrated in a small number of
electricity supply businesses with RWE NPower plc accounting for approximately
36% of distribution revenues in 2008 (2007: 40%). Ofgem has determined a
framework which sets credit limits for each supply business based on its credit
rating or payment history and requires them to provide credit cover if their
value at risk (measured as being equivalent to 45 days usage) exceeds the credit
limit. Acceptable credit typically is provided in the form of a parent company
guarantee, letter of credit or an escrow account. Included within other payables
are customer deposits of GBP1.8m as at December 2008 (2007: GBP2.0m).
Ofgem has indicated that, provided the Company has implemented credit control,
billing and collection processes in line with best practice guidelines and can
demonstrate compliance with the guidelines or is able to satisfactorily explain
departure from the guidelines, any bad debt losses arising from supplier default
will be recovered through an increase in future allowed income. Losses incurred
to date have not been material. Included within the Company's use of system
("UoS") receivables are debtors with a carrying value of GBP0.4m, which have
been placed into administration and have therefore been provided for in full at
the year end.
Amounts receivable from sale of goods and services
Sales of goods and services comprise all income streams which are not classified
as UoS income. Examples of non-UoS income streams would be customer
contributions in relation to distribution system assets and recovery of amounts
for damage caused by third parties to the distribution system.
The average credit period on sales of goods and services is 30 days. Interest is
not generally charged on the trade receivables paid after the due date. An
allowance for doubtful debts is made for debts past their due date based on
estimated irrecoverable amounts from the sale of goods and services, determined
by reference to past default experience.
Included in the Company's amounts receivable for goods and services balance are
debtors with a carrying amount of GBP0.7m (2007: GBP1.0m) which are past due at
the reporting date and for which the Company has provided an irrecoverable
amount of GBP0.3m (2007: GBP0.4m) based on past experience. The Company does not
hold any collateral over these balances. The average age of these receivables is
566 days (2007: 578 days).
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
NOTES TO THE ACCOUNTS - 31 DECEMBER 2008 (CONTINUED)
15OTHER FINANCIAL ASSETS (CONTINUED)
Amounts receivable from sale of goods and services (continued)
Included in the Company's amounts receivable for goods and services balance are
debtors with a carrying amount of GBP1.8m (2007: GBP2.1m). These amounts are
past due at the reporting date and the Company has not provided for any amounts
as not being recoverable because there has not been a significant change in
credit quality and the amounts are still considered recoverable. The Company
does not hold any collateral over these balances. The average age of these
receivables is 99 days (2007: 87).
Ageing of past due but not impaired receivables
+---------------------------------------------------------+--------+--+--------+
| | 2008 | | 2007 |
+---------------------------------------------------------+--------+--+--------+
| | GBPm | | GBPm |
+---------------------------------------------------------+--------+--+--------+
| | | | |
+---------------------------------------------------------+--------+--+--------+
| 30-60 days | 0.6 | | 0.7 |
+---------------------------------------------------------+--------+--+--------+
| 60-120 days | 0.6 | | 1.1 |
+---------------------------------------------------------+--------+--+--------+
| 120-210 days | 0.6 | | 0.3 |
+---------------------------------------------------------+--------+--+--------+
| | | | |
+---------------------------------------------------------+--------+--+--------+
| Total | 1.8 | | 2.1 |
+---------------------------------------------------------+--------+--+--------+
Movement in the allowance for doubtful debts
+---------------------------------------------------------+--------+--+--------+
| | | | GBPm |
+---------------------------------------------------------+--------+--+--------+
| | | | |
+---------------------------------------------------------+--------+--+--------+
| At 1 January 2008 | | | 0.4 |
+---------------------------------------------------------+--------+--+--------+
| Amounts recognised in income statement | | | 0.3 |
+---------------------------------------------------------+--------+--+--------+
| Amounts utilised/written off in the | | | - |
| period | | | |
+---------------------------------------------------------+--------+--+--------+
| | | | |
+---------------------------------------------------------+--------+--+--------+
| At 31 December 2008 | | | 0.7 |
+---------------------------------------------------------+--------+--+--------+
In determining the recoverability of the trade and other receivables, the
Company considers any change in the credit quality of the trade and other
receivable from the date credit was initially granted up to the reporting date.
The concentration of credit risk, other than in relation to UoS receivables, is
limited due to the customer base being large and unrelated. Accordingly, the
directors believe that there is no further credit provision required in excess
of the allowance for doubtful debts.
Included in the allowance for doubtful debts are specific trade receivables with
a balance of GBP0.4m (2007: GBPnil) for the Company, which have been placed into
administration. The impairment represents the difference between the carrying
amount of the specific trade receivable and the present value of the expected
liquidation dividend.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances held at bank. The fair value of
cash and cash equivalents is equal to their book value.
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
NOTES TO THE ACCOUNTS - 31 DECEMBER 2008 (CONTINUED)
16OTHER FINANCIAL LIABILITIES
Trade and other payables
+--------------------------------------------------------+--------+--+----------+
| | 2008 | | 2007 |
+--------------------------------------------------------+--------+--+----------+
| | | | As |
| | | |restated |
| | | | (note2) |
+--------------------------------------------------------+--------+--+----------+
| | GBPm | | GBPm |
+--------------------------------------------------------+--------+--+----------+
| | | | |
+--------------------------------------------------------+--------+--+----------+
| Payments received on account | 12.8 | | 15.8 |
+--------------------------------------------------------+--------+--+----------+
| Trade payables | 3.1 | | 5.1 |
+--------------------------------------------------------+--------+--+----------+
| Amounts owed to Group undertakings | 0.2 | | 0.3 |
+--------------------------------------------------------+--------+--+----------+
| Other taxes and social security costs | 3.5 | | 6.3 |
+--------------------------------------------------------+--------+--+----------+
| Other payables | 2.8 | | 3.8 |
+--------------------------------------------------------+--------+--+----------+
| Accruals | 22.0 | | 20.1 |
+--------------------------------------------------------+--------+--+----------+
| | | | |
+--------------------------------------------------------+--------+--+----------+
| | 44.4 | | 51.4 |
+--------------------------------------------------------+--------+--+----------+
Current income tax liabilities
+--------------------------------------------------------+--------+--+--------+
| | 2008 | | 2007 |
+--------------------------------------------------------+--------+--+--------+
| | GBPm | | GBPm |
+--------------------------------------------------------+--------+--+--------+
| | | | |
+--------------------------------------------------------+--------+--+--------+
| Corporation tax | 9.4 | | 16.1 |
+--------------------------------------------------------+--------+--+--------+
| Group relief | 2.2 | | - |
+--------------------------------------------------------+--------+--+--------+
| | | | |
+--------------------------------------------------------+--------+--+--------+
| | 11.6 | | 16.1 |
+--------------------------------------------------------+--------+--+--------+
The directors consider that the carrying amount of other financial liabilities
approximates their fair value, calculated by discounting future cash flows at
market rate at the balance sheet date. Trade creditors and accruals principally
comprise amounts outstanding for trade purchases and ongoing costs. Invoices are
paid at the end of the month following the date of the invoice. The Company has
financial risk management policies in place to ensure that all payables are paid
within the credit timeframe.
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
NOTES TO THE ACCOUNTS - 31 DECEMBER 2008 (CONTINUED)
16OTHER FINANCIAL LIABILITIES (CONTINUED)
The following tables detail the remaining contractual maturities for the
non-derivative financial liabilities included in Notes 16 and 17. The tables
have been drawn up based on the undiscounted cash flows of financial liabilities
based on the earliest possible date on which the Company can be required to pay.
The tables include both interest and principal cash flows.
+----------------------------+------------+---+--------------+----+----------+---+-------------+---+------------+
| | Less than | | 3 months | | 1 to 5 | | 5+ | | |
+----------------------------+------------+---+--------------+----+----------+---+-------------+---+------------+
| | 3 months | | To 1 year | | years | | Years | | Total |
+----------------------------+------------+---+--------------+----+----------+---+-------------+---+------------+
| | GBPm | | GBPm | | GBPm | | GBPm | | GBPm |
+----------------------------+------------+---+--------------+----+----------+---+-------------+---+------------+
| | | | | | | | | | |
+----------------------------+------------+---+--------------+----+----------+---+-------------+---+------------+
| 2008: | | | | | | | | | |
+----------------------------+------------+---+--------------+----+----------+---+-------------+---+------------+
| Non-interest bearing | 32.4 | | - | | - | | - | | 32.4 |
+----------------------------+------------+---+--------------+----+----------+---+-------------+---+------------+
| Variable interest rate | | | | | | | | | |
| liability | 120.2 | | - | | - | | - | | 120.2 |
+----------------------------+------------+---+--------------+----+----------+---+-------------+---+------------+
| Fixed interest rate | 13.8 | | 18.5 | | 129.1 | | 819.8 | | 981.2 |
| liability | | | | | | | | | |
+----------------------------+------------+---+--------------+----+----------+---+-------------+---+------------+
| | | | | | | | | | |
+----------------------------+------------+---+--------------+----+----------+---+-------------+---+------------+
| | 166.4 | | 18.5 | | 129.1 | | 819.8 | | 1,133.8 |
+----------------------------+------------+---+--------------+----+----------+---+-------------+---+------------+
| | | | | | | | | | |
+----------------------------+------------+---+--------------+----+----------+---+-------------+---+------------+
| 2007: | | | | | | | | | |
+----------------------------+------------+---+--------------+----+----------+---+-------------+---+------------+
| Non-interest bearing | 37.7 | | 2.3 | | 2.5 | | - | | 42.5 |
+----------------------------+------------+---+--------------+----+----------+---+-------------+---+------------+
| Variable interest rate | | | | | | | | | |
| liability | 65.1 | | - | | - | | - | | 65.1 |
+----------------------------+------------+---+--------------+----+----------+---+-------------+---+------------+
| Fixed interest rate | 26.8 | | 18.6 | | 181.1 | | 1,104.0 | | 1,330.5 |
| liability | | | | | | | | | |
+----------------------------+------------+---+--------------+----+----------+---+-------------+---+------------+
| | | | | | | | | | |
+----------------------------+------------+---+--------------+----+----------+---+-------------+---+------------+
| | 129.6 | | 20.9 | | 183.6 | | 1,104.0 | | 1,438.1 |
+----------------------------+------------+---+--------------+----+----------+---+-------------+---+------------+
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
NOTES TO THE ACCOUNTS - 31 DECEMBER 2008 (CONTINUED)
17BORROWINGS
+---------------------------------+--------+--+----------+--+----------+--+----------+
| | Book value | | Fair value |
+---------------------------------+----------------------+--+------------------------+
| | 2008 | | 2007 | | 2008 | | 2007 |
+---------------------------------+--------+--+----------+--+----------+--+----------+
| | | | As | | | | As |
| | | |restated | | | |restated |
| | | |(note 2) | | | |(note 2) |
+---------------------------------+--------+--+----------+--+----------+--+----------+
| | GBPm | | GBPm | | GBPm | | GBPm |
+---------------------------------+--------+--+----------+--+----------+--+----------+
| Loans | 444.4 | | 430.4 | | 456.5 | | 461.1 |
+---------------------------------+--------+--+----------+--+----------+--+----------+
| Amounts owed to Group | 150.2 | | 312.4 | | 152.5 | | 322.5 |
| undertakings | | | | | | | |
+---------------------------------+--------+--+----------+--+----------+--+----------+
| | | | | | | | |
+---------------------------------+--------+--+----------+--+----------+--+----------+
| | 594.6 | | 742.8 | | 609.0 | | 783.6 |
+---------------------------------+--------+--+----------+--+----------+--+----------+
| | | | | | | | |
+---------------------------------+--------+--+----------+--+----------+--+----------+
| The borrowings are repayable as follows: |
+------------------------------------------------------------------------------------+
| On demand or within one year | 145.4 | | 93.8 | | 145.4 | | 93.8 |
+---------------------------------+--------+--+----------+--+----------+--+----------+
| After five years | 449.2 | | 649.0 | | 463.6 | | 689.8 |
+---------------------------------+--------+--+----------+--+----------+--+----------+
| | | | | | | | |
+---------------------------------+--------+--+----------+--+----------+--+----------+
| | 594.6 | | 742.8 | | 609.0 | | 783.6 |
+---------------------------------+--------+--+----------+--+----------+--+----------+
| | | | | | | | |
+---------------------------------+--------+--+----------+--+----------+--+----------+
| Analysis of borrowings: |
+------------------------------------------------------------------------------------+
| | | | | | | | |
+---------------------------------+--------+--+----------+--+----------+--+----------+
| Short term loan | 25.2 | | 11.3 | | 25.2 | | 11.0 |
+---------------------------------+--------+--+----------+--+----------+--+----------+
| Inter company working capital | 95.2 | | 54.1 | | 95.2 | | 54.1 |
| loan | | | | | | | |
+---------------------------------+--------+--+----------+--+----------+--+----------+
| Yorkshire Electricity Group | 55.0 | | 258.3 | | 57.3 | | 268.4 |
| plc 2016 (6.5%) | | | | | | | |
+---------------------------------+--------+--+----------+--+----------+--+----------+
| Eurobond due 2020 (9.25%) | 215.9 | | 215.8 | | 261.8 | | 259.7 |
+---------------------------------+--------+--+----------+--+----------+--+----------+
| Bond due 2035 (5.125%) | 203.3 | | 203.3 | | 169.5 | | 190.4 |
+---------------------------------+--------+--+----------+--+----------+--+----------+
| | | | | | | | |
+---------------------------------+--------+--+----------+--+----------+--+----------+
| | 594.6 | | 742.8 | | 609.0 | | 783.6 |
+---------------------------------+--------+--+----------+--+----------+--+----------+
The directors' estimates of the fair value of the Company's borrowings are
calculated by discounting their future cash flows at the market rate at the
balance sheet date. The fair value of short-term borrowings is equal to their
book value. All loans are non-secured and are denominated in sterling.
Interest on the inter company working capital and short term loans is charged at
a floating rate of interest at LIBOR plus 0.25%, thus exposing the Company to
cash flow interest rate risk. A 1% movement in interest rates would subject the
Company to an approximate change in interest costs of GBP1.2m per year. This is
considered to be an acceptable level of risk. All other loans are at fixed
interest rates and expose the Company to fair value interest rate risk.
The covenants associated with the 2035 bonds issued by the Company include
restrictions on the issuance of new indebtedness and the making of distributions
dependent on the scale of the ratio of Senior Total Net Debt to Regulatory Asset
Value ("RAV"). The definition of Senior Total Net Debt excludes any subordinated
debt and any debt incurred on a non-recourse basis. In addition, it excludes
interest payable, any fair value adjustments and unamortised issue costs.
The Company's Senior Total Net Debt as at 31 December 2008 totalled GBP567.4m.
Using the RAV value as at March 2009, as outlined by Ofgem in its Final
Proposals for Distribution Prices published in November 2004, and up rating for
the effects of movements in the value of the Retail Price Index gives an
approximation for the RAV value as at December 2008 of GBP1,070.4m. The Senior
Total Net Debt to RAV ratio for the Company is therefore estimated at 53%.
At 31 December 2008, the Company had available GBP28.0m (2007: GBP42.0m) of
undrawn committed borrowing facilities in respect of which all conditions
precedent had been met.
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
NOTES TO THE ACCOUNTS - 31 DECEMBER 2008 (CONTINUED)
18DEFERRED TAX
+----------------------+--------------+--+-----------+--+--------+--+----------+
| | Accelerated | | Holdover | | Other | | Total |
| | Tax | | Relief | | | | |
| |Depreciation | | | | | | |
+----------------------+--------------+--+-----------+--+--------+--+----------+
| | GBPm | | GBPm | | GBPm | | GBPm |
+----------------------+--------------+--+-----------+--+--------+--+----------+
| | | | | | | | |
+----------------------+--------------+--+-----------+--+--------+--+----------+
| At 1 January 2007 | 224.6 | | 0.5 | | (0.9) | | 224.2 |
+----------------------+--------------+--+-----------+--+--------+--+----------+
| (Credit)/charge to | (17.6) | | 1.3 | | - | | (16.3) |
| income statement | | | | | | | |
+----------------------+--------------+--+-----------+--+--------+--+----------+
| | | | | | | | |
+----------------------+--------------+--+-----------+--+--------+--+----------+
| At 31 December 2007 | 207.0 | | 1.8 | | (0.9) | | 207.9 |
+----------------------+--------------+--+-----------+--+--------+--+----------+
| Charge/(credit) to | 12.1 | | (1.4) | | - | | 10.7 |
| income statement | | | | | | | |
+----------------------+--------------+--+-----------+--+--------+--+----------+
| | | | | | | | |
+----------------------+--------------+--+-----------+--+--------+--+----------+
| At 31 December 2008 | 219.1 | | 0.4 | | (0.9) | | 218.6 |
+----------------------+--------------+--+-----------+--+--------+--+----------+
| | | | | | | | |
+----------------------+--------------+--+-----------+--+--------+--+----------+
Other comprises provisions and employee expenses deductible for tax on a paid
basis.
19. DEFERRED REVENUE
+-----------------------------------------------------------+------------+
| | |
+-----------------------------------------------------------+------------+
| | GBPm |
+-----------------------------------------------------------+------------+
| | |
+-----------------------------------------------------------+------------+
| At 1 January 2007 | 511.4 |
+-----------------------------------------------------------+------------+
| Additions | 56.0 |
+-----------------------------------------------------------+------------+
| Amortisation | (14.4) |
+-----------------------------------------------------------+------------+
| | |
+-----------------------------------------------------------+------------+
| At 31 December 2007 | 553.0 |
+-----------------------------------------------------------+------------+
| Additions | 57.8 |
+-----------------------------------------------------------+------------+
| Amortisation | (15.3) |
+-----------------------------------------------------------+------------+
| | |
+-----------------------------------------------------------+------------+
| At 31 December 2008 | 595.5 |
+-----------------------------------------------------------+------------+
+--------------------------------------------+-------------+--+------------+
| | 2008 | | 2007 |
+--------------------------------------------+-------------+--+------------+
| | GBPm | | GBPm |
+--------------------------------------------+-------------+--+------------+
| | | | |
+--------------------------------------------+-------------+--+------------+
| Included in current liabilities | 16.9 | | 16.0 |
+--------------------------------------------+-------------+--+------------+
| Included in non-current liabilities | 578.6 | | 537.0 |
+--------------------------------------------+-------------+--+------------+
| | | | |
+--------------------------------------------+-------------+--+------------+
| | 595.5 | | 553.0 |
+--------------------------------------------+-------------+--+------------+
Deferred revenue represents contributions from customers made in advance towards
distribution system assets. This income is released to the income statement over
45 years on a straight line basis, in line with the useful economic life of the
distribution system assets.
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
NOTES TO THE ACCOUNTS - 31 DECEMBER 2008 (CONTINUED)
20PROVISIONS
+---------------------------------------+----------+--+----------+--+--------+
| | Claims | | Other | | Total |
+---------------------------------------+----------+--+----------+--+--------+
| | GBPm | | GBPm | | GBPm |
+---------------------------------------+----------+--+----------+--+--------+
| | | | | | |
+---------------------------------------+----------+--+----------+--+--------+
| At 1 January 2008 | 1.3 | | 0.9 | | 2.2 |
+---------------------------------------+----------+--+----------+--+--------+
| Utilised/paid in the year | (1.0) | | (0.4) | | (1.4) |
+---------------------------------------+----------+--+----------+--+--------+
| Charged to the income statement | 0.5 | | 0.6 | | 1.1 |
+---------------------------------------+----------+--+----------+--+--------+
| | | | | | |
+---------------------------------------+----------+--+----------+--+--------+
| At 31 December 2008 | 0.8 | | 1.1 | | 1.9 |
+---------------------------------------+----------+--+----------+--+--------+
+---------------------------------------------------+----------+--+--------+
| | 2008 | | 2007 |
+---------------------------------------------------+----------+--+--------+
| | GBPm | | GBPm |
+---------------------------------------------------+----------+--+--------+
| | | | |
+---------------------------------------------------+----------+--+--------+
| Included in current liabilities | 1.2 | | 1.3 |
+---------------------------------------------------+----------+--+--------+
| Included in non-current liabilities | 0.7 | | 0.9 |
+---------------------------------------------------+----------+--+--------+
| | | | |
+---------------------------------------------------+----------+--+--------+
| | 1.9 | | 2.2 |
+---------------------------------------------------+----------+--+--------+
Claims: Provision has been made to cover costs arising from actual claims,
which are not externally insured. Settlement is expected substantially within
12 months.
Other:Primarily consists of a provision for future safe disposal of transformers
which contain oil contaminated with Polychlorinated Biphenyls (PCBs) and for an
amount to cover claims made under Section 74 of the New Road and Street Works
Act 1991.
21SHARE CAPITAL
+--------------------------------------------+-------------+--+-------------+
| | 2008 | | 2007 |
+--------------------------------------------+-------------+--+-------------+
| | No./GBP | | No./GBP |
+--------------------------------------------+-------------+--+-------------+
| Ordinary shares of GBP1 each | | | |
+--------------------------------------------+-------------+--+-------------+
| Authorised |400,000,000 | |400,000,000 |
+--------------------------------------------+-------------+--+-------------+
| Allotted, called up and fully paid |290,000,000 | |290,000,000 |
+--------------------------------------------+-------------+--+-------------+
The Company has one class of ordinary shares which carries no right to fixed
income.
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
NOTES TO THE ACCOUNTS - 31 DECEMBER 2008 (CONTINUED)
22MOVEMENT ON RESERVES AND RECONCILIATION OF MOVEMENTS IN TOTAL EQUITY
+------------------------------------------+---------+--+----------+--+------------+
| | Share | |Retained | | Total |
| |Capital | |Reserves | | Equity |
+------------------------------------------+---------+--+----------+--+------------+
| | GBPm | | GBPm | | GBPm |
+------------------------------------------+---------+--+----------+--+------------+
| | | | | | |
+------------------------------------------+---------+--+----------+--+------------+
| At 1 January 2007 | 290.0 | | 126.1 | | 416.1 |
+------------------------------------------+---------+--+----------+--+------------+
| Profit for the year | - | | 96.6 | | 96.6 |
+------------------------------------------+---------+--+----------+--+------------+
| Dividends paid | - | | (40.0) | | (40.0) |
+------------------------------------------+---------+--+----------+--+------------+
| | | | | | |
+------------------------------------------+---------+--+----------+--+------------+
| At 31 December 2007 | 290.0 | | 182.7 | | 472.7 |
+------------------------------------------+---------+--+----------+--+------------+
| Profit for the year | - | | 63.0 | | 63.0 |
+------------------------------------------+---------+--+----------+--+------------+
| Dividends paid | - | | (40.0) | | (40.0) |
+------------------------------------------+---------+--+----------+--+------------+
| | | | | | |
+------------------------------------------+---------+--+----------+--+------------+
| At 31 December 2008 | 290.0 | | 205.7 | | 495.7 |
+------------------------------------------+---------+--+----------+--+------------+
23. NET CASH FROM OPERATING ACTIVITIES
+-----------------------------------------------------+-----------+--+-----------+
| | 2008 | | 2007 |
+-----------------------------------------------------+-----------+--+-----------+
| | GBPm | | GBPm |
+-----------------------------------------------------+-----------+--+-----------+
| | | | |
+-----------------------------------------------------+-----------+--+-----------+
| Operating profit | 140.7 | | 149.5 |
+-----------------------------------------------------+-----------+--+-----------+
| Depreciation and amortisation | 61.2 | | 60.3 |
+-----------------------------------------------------+-----------+--+-----------+
| Amortisation of deferred revenue | (15.3) | | (14.4) |
+-----------------------------------------------------+-----------+--+-----------+
| Decrease in provisions | (0.3) | | (0.6) |
+-----------------------------------------------------+-----------+--+-----------+
| | | | |
+-----------------------------------------------------+-----------+--+-----------+
| Operating cash flows before movements in working | 186.3 | | 194.8 |
| capital | | | |
+-----------------------------------------------------+-----------+--+-----------+
| | | | |
+-----------------------------------------------------+-----------+--+-----------+
| Decrease/(increase) in inventories | 0.5 | | (0.3) |
+-----------------------------------------------------+-----------+--+-----------+
| Decrease/(increase) in receivables | 13.8 | | (7.5) |
+-----------------------------------------------------+-----------+--+-----------+
| (Decrease)/increase in payables | (3.4) | | 11.8 |
+-----------------------------------------------------+-----------+--+-----------+
| | | | |
+-----------------------------------------------------+-----------+--+-----------+
| Cash generated by operations | 197.2 | | 198.8 |
+-----------------------------------------------------+-----------+--+-----------+
| | | | |
+-----------------------------------------------------+-----------+--+-----------+
| Income taxes paid | (26.8) | | (34.6) |
+-----------------------------------------------------+-----------+--+-----------+
| Group relief paid | (8.1) | | - |
+-----------------------------------------------------+-----------+--+-----------+
| Dividends received | 0.1 | | - |
+-----------------------------------------------------+-----------+--+-----------+
| Interest received | 7.9 | | 9.5 |
+-----------------------------------------------------+-----------+--+-----------+
| Interest paid | (41.8) | | (47.8) |
+-----------------------------------------------------+-----------+--+-----------+
| | | | |
+-----------------------------------------------------+-----------+--+-----------+
| Net cash from operating activities | 128.5 | | 125.9 |
+-----------------------------------------------------+-----------+--+-----------+
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
NOTES TO THE ACCOUNTS - 31 DECEMBER 2007 (CONTINUED)
24PENSION COMMITMENTS
The Company has three retirement benefit schemes.
The Northern Electric Group of the ESPS is a defined benefit scheme for
directors and employees, which provides pension and other related benefits based
on final pensionable pay. The assets of the Northern Electric Group of the ESPS,
which was closed to staff commencing employment on or after 23 July 1997, are
held in a separate trustee-administered fund. NEMPS and YEPP are made available
to new employees.
The Northern Electric Group of the ESPS, NEMPS and YEPP are operated by Northern
Electric plc on behalf of the participating companies within the CE Group.
The last full actuarial valuation of the Northern Electric Group of the ESPS was
carried out by the Group Trustees' actuarial advisors, Hewitt Associates, as at
31 March 2007. The projected unit method was used for the valuation. The
principal actuarial assumptions were that pre retirement investment returns
would exceed salary increases by 1.8% per annum (inclusive of merit awards) and
post retirement returns would exceed future pension increases by 1.8% per annum.
The total market value of the assets of the Northern Electric Group of the ESPS,
at the date of the actuarial valuation, was GBP926.7m.
For the Northern Electric Group of the ESPS, the actuarial valuation showed that
the value of the assets represented 90.7% of the actuarial value of the accrued
benefits. This represents a shortfall of assets compared to the value of accrued
benefits of GBP95.1m. The accrued benefits include all benefits for pensioners
and other former members, as well as benefits based on service completed to date
for active members, and allows for an estimate of future salary increases.
The CE Group reached agreement during March 2008 with the Group Trustees to
repair this deficit. The agreement comprises monthly cash payments of GBP2.4m
(GBP28.8m per annum) backdated to commence in April 2007 in addition to the
normal employer contributions. Of these annual payments, GBP5.7m will be paid by
the Company. These payments aim to remove the shortfall of GBP95.1m by December
2010 subject to the actuarial assumptions adopted for the triennial valuation as
at 31 March 2007 being borne out in practice.
The Northern Electric Group of the ESPS is a defined benefit plan that shares
the risk between various entities under common control. There is no contractual
agreement or stated policy for charging the net defined benefit cost for the
plan as a whole to individual group entities and accordingly the Company
accounts for the scheme as if it were a defined contribution scheme.
The contribution rates to the Northern Electric Group of the ESPS, in addition
to the deficit repair contributions mentioned above, for 2008 were 44.7% (60.7%
to March 2008) for certain senior management and 26.3% (20.6% to March 2008) for
other employees. These rates will remain in place until March 2010.
The money purchase pension schemes are also accounted for as a defined
contribution scheme.
The Company's pension cost for the year ended 31 December 2008 was GBP13.9m
(2007: GBP10.1m).
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
NOTES TO THE ACCOUNTS - 31 DECEMBER 2008 (CONTINUED)
24PENSION COMMITMENTS (CONTINUED)
Disclosures in relation to the Northern Electric Group of the ESPS are:
Principal assumptions:
+-----------------------------------+---------------------+------------------+
| | 2008 | 2007 |
+-----------------------------------+---------------------+------------------+
| Valuation method | Projected unit | Projected unit |
+-----------------------------------+---------------------+------------------+
| Discount rate | 6.40% | 5.90% |
+-----------------------------------+---------------------+------------------+
| Inflation rate | 3.00% | 3.20% |
+-----------------------------------+---------------------+------------------+
| Increase to pensions | 3.00% | 3.20% |
+-----------------------------------+---------------------+------------------+
| Increase to deferred benefits | 3.00% | 3.20% |
+-----------------------------------+---------------------+------------------+
| Salary increases | 3.25% | 3.45% |
+-----------------------------------+---------------------+------------------+
The mortality assumptions are based on the recent actual mortality experience of
members within the CE Group and the assumptions also allow for future mortality
improvements. The assumption is that a member currently aged 60 will live for a
further 26 years, if he is male, and for a further 27 years, if she is
female. Life expectancy at age 60 for non-pensioners (currently aged 45) is
assumed to be 28 years, if they are male, and 28 years, if they are female.
For closed schemes, such as the Northern Electric Group of the ESPS, under the
projected unit method the current service cost will increase as the members of
the scheme approach retirement.
Changes in present value of the defined benefit obligation are as follows:
+-----------------------------------------+-----------+--+-----------+
| | 2008 | | 2007 |
+-----------------------------------------+-----------+--+-----------+
| | GBPm | | GBPm |
+-----------------------------------------+-----------+--+-----------+
| | | | |
+-----------------------------------------+-----------+--+-----------+
| Opening defined benefit obligation | 917.2 | | 925.9 |
+-----------------------------------------+-----------+--+-----------+
| Current service cost | 10.3 | | 11.9 |
+-----------------------------------------+-----------+--+-----------+
| Interest cost | 53.0 | | 47.2 |
+-----------------------------------------+-----------+--+-----------+
| Contributions from employees | 3.1 | | 3.5 |
+-----------------------------------------+-----------+--+-----------+
| Actuarial gains | (87.3) | | (32.0) |
+-----------------------------------------+-----------+--+-----------+
| Benefits paid | (41.0) | | (39.3) |
+-----------------------------------------+-----------+--+-----------+
| | | | |
+-----------------------------------------+-----------+--+-----------+
| Closing defined benefit obligation | 855.3 | | 917.2 |
+-----------------------------------------+-----------+--+-----------+
Changes in the fair value of the plan assets are as follows:
+----------------------------------------+------------+--+-----------+
| | 2008 | | 2007 |
+----------------------------------------+------------+--+-----------+
| | GBPm | | GBPm |
+----------------------------------------+------------+--+-----------+
| | | | |
+----------------------------------------+------------+--+-----------+
| Opening fair value of plan assets | 956.6 | | 912.8 |
+----------------------------------------+------------+--+-----------+
| Expected returns | 66.2 | | 63.9 |
+----------------------------------------+------------+--+-----------+
| Actuarial losses | (231.4) | | (19.6) |
+----------------------------------------+------------+--+-----------+
| Contributions by employer | 47.9 | | 35.3 |
+----------------------------------------+------------+--+-----------+
| Contribution from employees | 3.1 | | 3.5 |
+----------------------------------------+------------+--+-----------+
| Benefits paid | (41.0) | | (39.3) |
+----------------------------------------+------------+--+-----------+
| | | | |
+----------------------------------------+------------+--+-----------+
| Closing fair value of plan assets | 801.4 | | 956.6 |
+----------------------------------------+------------+--+-----------+
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
NOTES TO THE ACCOUNTS - 31 DECEMBER 2008 (CONTINUED)
24PENSION COMMITMENTS (CONTINUED)
The fair value of the plan assets at the balance sheet date is analysed below:
+---------------------------+-------+--+-------+--+--------+--+--------+
| | Long term rates | Value |
| | of return | |
| | expected at | |
+---------------------------+------------------+-----------------------+
| | 2008 | | 2007 | | 2008 | | 2007 |
+---------------------------+-------+--+-------+--+--------+--+--------+
| | % | | % | | GBPm | | GBPm |
+---------------------------+-------+--+-------+--+--------+--+--------+
| | | | | | | | |
+---------------------------+-------+--+-------+--+--------+--+--------+
| Equities | 8.90 | | 8.90 | | 322.2 | | 388.7 |
+---------------------------+-------+--+-------+--+--------+--+--------+
| Gilts | 5.35 | | 5.10 | | 404.7 | | 445.3 |
+---------------------------+-------+--+-------+--+--------+--+--------+
| Cash | 3.25 | | 6.00 | | (4.8) | | 23.3 |
+---------------------------+-------+--+-------+--+--------+--+--------+
| Property | 7.90 | | 7.90 | | 79.3 | | 99.3 |
+---------------------------+-------+--+-------+--+--------+--+--------+
| | | | | | | | |
+---------------------------+-------+--+-------+--+--------+--+--------+
| Total fair value of | | | | | 801.4 | | 956.6 |
| scheme assets | | | | | | | |
+---------------------------+-------+--+-------+--+--------+--+--------+
The CE Group employs a building block approach in determining the long-term rate
of return on pension plan assets. Historical markets are studied and assets with
higher volatility are assumed to generate higher returns consistent with widely
accepted capital market principles. The assumed long term rates of return on
each asset class are set out within these disclosures. The overall expected rate
of return on assets is then derived by aggregating the expected return for each
asset class over the actual asset allocation for the Northern Electric Group of
the ESPS.
The CE Group expects to contribute approximately GBP44.1m to its defined benefit
plan in 2009, including GBP28.4m of pension deficit repair costs.
25OPERATING LEASE ARRANGEMENTS
+--------------------------------------------------------+--------+--+--------+
| | 2008 | | 2007 |
+--------------------------------------------------------+--------+--+--------+
| | GBPm | | GBPm |
+--------------------------------------------------------+--------+--+--------+
| | | | |
+--------------------------------------------------------+--------+--+--------+
| Minimum lease payments under operating leases | 4.7 | | 3.9 |
| recognised in the year | | | |
+--------------------------------------------------------+--------+--+--------+
At the balance sheet date, the Company had outstanding commitments for future
minimum lease payments under non-cancelable operating leases, which fall due as
follows:
+------------------------------------------------------+----------+--+--------+
| | 2008 | | 2007 |
+------------------------------------------------------+----------+--+--------+
| | GBPm | | GBPm |
+------------------------------------------------------+----------+--+--------+
| | | | |
+------------------------------------------------------+----------+--+--------+
| Within one year | 2.3 | | 2.6 |
+------------------------------------------------------+----------+--+--------+
| In the second to fifth year inclusive | 4.2 | | 4.9 |
+------------------------------------------------------+----------+--+--------+
| After five years | 3.3 | | 3.3 |
+------------------------------------------------------+----------+--+--------+
| | | | |
+------------------------------------------------------+----------+--+--------+
| | 9.8 | | 10.8 |
+------------------------------------------------------+----------+--+--------+
Leases consist of rent payable in respect of vehicle leases from a related party
and property.
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
NOTES TO THE ACCOUNTS - 31 DECEMBER 2008 (CONTINUED)
26RELATED PARTY TRANSACTIONS
The Company has advanced/received loans to/from companies in the CE Group. The
total interest included in investment income in the income statement for the
year ended 31 December 2008 was GBP0.4m (2007: GBP0.1m). The total interest
included in finance costs in the income statement for the year ended 31 December
2008 was GBP8.5m (2007: GBP18.8m). Included within borrowings is GBP150.2m as at
31 December 2008 (2007: GBP312.4m) in respect of these loans.
Interest on loans from CE Group companies is charged at a commercial rate.
The Company entered into transactions, in the ordinary course of business, with
other CE Group companies. Transactions entered into and trading balances
outstanding were as follows:
+--------------------------------+----------+--+-----------+--+-----------+--+-------------+
| Related |Sales to | |Purchases | | Amounts | | Amounts |
| Party | Related | | from | | Owed by | | Owed to |
| | Party | | Related | | Related | | Related |
| | | | Party | | Party | | Party |
+--------------------------------+----------+--+-----------+--+-----------+--+-------------+
| | | | | |(Note 15) | | (Note 16) |
+--------------------------------+----------+--+-----------+--+-----------+--+-------------+
| | GBPm | | GBPm | | GBPm | | GBPm |
+--------------------------------+----------+--+-----------+--+-----------+--+-------------+
| | | | | | | | |
+--------------------------------+----------+--+-----------+--+-----------+--+-------------+
| 2008: | | | | | | | |
+--------------------------------+----------+--+-----------+--+-----------+--+-------------+
| CE Insurance | - | | 1.0 | | - | | - |
| Services Limited | | | | | | | |
+--------------------------------+----------+--+-----------+--+-----------+--+-------------+
| Northern | - | | 3.6 | | - | | - |
| Electric plc | | | | | | | |
+--------------------------------+----------+--+-----------+--+-----------+--+-------------+
| Northern | 6.1 | | 9.8 | | - | | - |
| Electric | | | | | | | |
| Distribution | | | | | | | |
| Limited | | | | | | | |
+--------------------------------+----------+--+-----------+--+-----------+--+-------------+
| Vehicle Lease | - | | 3.0 | | - | | 0.2 |
| and Service | | | | | | | |
| Limited | | | | | | | |
+--------------------------------+----------+--+-----------+--+-----------+--+-------------+
| | | | | | | | |
+--------------------------------+----------+--+-----------+--+-----------+--+-------------+
| 2007: | | | | | | | |
+--------------------------------+----------+--+-----------+--+-----------+--+-------------+
| CE Insurance | - | | 1.1 | | 4.2 | | - |
| Services Limited | | | | | | | |
+--------------------------------+----------+--+-----------+--+-----------+--+-------------+
| Northern | - | | 4.8 | | - | | - |
| Electric plc | | | | | | | |
+--------------------------------+----------+--+-----------+--+-----------+--+-------------+
| Northern | 5.8 | | 9.3 | | - | | - |
| Electric | | | | | | | |
| Distribution | | | | | | | |
| Limited | | | | | | | |
+--------------------------------+----------+--+-----------+--+-----------+--+-------------+
| Vehicle Lease | - | | 3.0 | | - | | 0.3 |
| and Service | | | | | | | |
| Limited | | | | | | | |
+--------------------------------+----------+--+-----------+--+-----------+--+-------------+
Sales and purchases from related parties were made at commercial prices.
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.
Included within profit on disposal of plant and equipment in the income
statement is GBPnil (2007: GBP4.2m) receivable from CE Insurance Services
Limited.
YORKSHIRE ELECTRICITY DISTRIBUTION plc
REGISTERED NUMBER 4112320
NOTES TO THE ACCOUNTS - 31 DECEMBER 2007 (CONTINUED)
27IMMEDIATE PARENT UNDERTAKING AND CONTROLLING PARTY
The immediate parent undertaking of Yorkshire Electricity Distribution plc is
Yorkshire Electricity Group plc. The ultimate controlling party and ultimate
parent undertaking of Yorkshire Electricity Group plc is Berkshire Hathaway,
Inc., a company incorporated in the United States of America.
Copies of the group accounts of Berkshire Hathaway, Inc (the parent undertaking
of the largest group preparing group accounts) which include Yorkshire
Electricity Distribution plc and the group accounts of CE Electric UK Funding
Company, the smallest parent undertaking to prepare group accounts in the UK,
can both be obtained from the Company Secretary, CE Electric UK Funding Company,
Lloyds Court, 78 Grey Street, Newcastle upon Tyne, NE1 6AF.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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