Comw.bk.a.38 Regulatory News (BC39)

NORTHERN POWERGRID (YORKSHIRE) plc

HALF-YEARLY FINANCIAL REPORT FOR THE

SIX MONTHS ENDED 30 JUNE 2018

INTERIM MANAGEMENT REPORT

Cautionary Statement

This interim management report has been prepared solely to provide additional information to shareholders to assess the business and strategies of Northern Powergrid (Yorkshire) plc (the "Company") and should not be relied on by any other party or for any other purpose.

Business Model

The Company is part of the Northern Powergrid Holdings Company group of companies (the "Northern Powergrid Group") and its principal activity during the six months to 30 June 2018 was to act as an authorised distributor under the Electricity Act 1989. The Company distributes electricity to approximately 2.3 million customers connected to its electricity distribution network within its distribution services area.

Results for the six months ended 30 June 2018

The Company delivered a satisfactory performance for the six months ended 30 June 2018 and profit after tax remained in line with the 6 months ended 30 June 2017.

Revenue

Revenue at £214.4 million was £6.5 million higher than for the six months ended 30 June 2018 mainly due to higher tariffs, increased units distributed and higher amortisation of customer contributions.

Cash flow

Cash and cash equivalents as at 30 June 2018 were £197.9 million, representing an increase of £11.2 million when compared with the position at 31 December 2017.

The Company has access to £75 million under a five-year committed revolving credit facility provided by Lloyds Bank plc, Royal Bank of Scotland plc and Abbey National Treasury Services plc, which is due to expire on 30 April 2020.

In addition, the Company has access to short-term borrowing facilities provided by Yorkshire Electricity Group plc, a related party, and to a £19 million overdraft facility provided by Lloyds Bank plc.

Financial position

Profit before tax at £71.2 million was in line with the 6 months ended 30 June 2017 with higher revenues largely offset by higher costs including depreciation.

Dividends

No ordinary dividends were paid in the period resulting in £57.8 million being transferred to reserves.

Principal risks and uncertainties

Information concerning the principal risks and uncertainties facing the Company are included in the Company's latest annual reports and accounts for the year to 31 December 2017, which is available at www.northernpowergrid.com. It is anticpated that these risks will continue to be the principal risks facing the Company for the remaining six months of 2018.

Going concern

In the Company's latest annual reports and accounts for the year to 31 December 2017 the directors set out a number of factors they took into account when they considered continuing to adopt the going concern basis in preparing those annual reports and accounts. The directors confirm that no events have occurred during the six months to 30 June 2018, which alter the view expressed in the annual reports and accounts to 31 December 2017.

Future strategy and objectives

The directors intend that the Company will continue to develop its business by operating with the goal of efficiently investing in its distribution network, improving the quality of supply and service provided to customers and delivering the regulatory business plan for ED1.

Responsibility Statement

The board of directors confirm that to the best of their knowledge:

(a) the condensed set of finanical statements, which has been prepared in accordance with IAS 34, gives a true and fair view of the assets, liabilities, financial position and profit of the Company as required by DTR 4.2.4R for the six months to 30 June 2018; and

(b) the interim management report contains a fair review of the information required by DTR 4.2.7R.

By order of the board

P A Jones

Director

7 September 2018

CONDENSED STATEMENT OF PROFIT OR LOSS – SIX MONTHS ENDED 30 JUNE 2018

CONDENSED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME - SIX MONTHS ENDED 30 JUNE 2018

There is no other comprehensive income for the Company for the six months to 30 June 2018 or the comparative six month period in 2017 other than the profits reported above.

CONDENSED STATEMENT OF FINANCIAL POSITION - SIX MONTHS ENDED 30 JUNE 2018

The interim financial statements were approved by the board of directors and authorised for issue on 7 September 2018 and were signed on its behalf by:

P A Jones

Director

CONDENSED STATEMENT OF CHANGES IN EQUITY - SIX MONTHS ENDED 30 JUNE 2018

CONDENSED STATEMENT OF CASH FLOWS – SIX MONTHS ENDED 30 JUNE 2018 

1. GENERAL INFORMATION

The information included within these condensed financial statements that refer to the year ended 31 December 2017 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditor reported on those accounts and that report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

2. ACCOUNTING POLICIES

Basis of preparation

The annual financial statements of the Company are prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.

Going concern

In the Company's latest annual reports and accounts for the year to 31 December 2017 the directors set out a number of factors they took into account when they considered continuing to adopt the going concern basis in preparing those annual reports and accounts. The directors confirm that no events have occurred during the six months to 30 June 2018, which alter the view expressed in the annual reports and accounts to 31 December 2017.

Changes in accounting policy

The Company's accounting policies and methods of computation are the same as the accounting policies which are described in the Company's financial statements for the year ended 31 December 2017, with the only changes being outlined below.

Application of new and revised IFRS

In the current year, the company has a number of amendments to IFRS by the International Accounting standards Board ("IASB) that are mandatorily effective for an accounting period that begins on or after 1 January 2018:

New and revised standards in issue but not yet effective

The Company has not yet applied the following new and revised IFRSs that have been issued but not yet effective for the period ended 30 June 2018:

3. SEGMENTAL ANALYSIS

Revenue, profit before tax and net assets are attributable to electricity distribution. Revenue is all in respect of sales to United Kingdom customers.

Revenue represents charges made to customers for use of the distribution system, rental of meters, the recharge of costs incurred on behalf of related parties, amortisation of customer contributions and other goods sold and services provided, exclusive of value added tax.

4. INCOME TAX EXPENSE

Tax for the six month period ended 30 June 2018 is charged at 19.00% (six months ended 30 June 2017: 19.25%; year ended 31 December 2017: 19.25%), which represents the best estimate of the average annual effective tax rate expected for the full year, as applied to the pre-tax income of the six month period.

The Finance No2 Act 2015 reduced the rate of corporation tax to 19% effective from 1 April 2017 and to 18% effective from 1 April 2020. The Finance Act 2016, which was substantively enacted on 6 September, 2016 further reduced the rate of corporation tax effective from 1 April 2020 to 17%. Accordingly deferred tax assets and liabilities have been calculated at the tax rates which will be in force when the underlying temporary differences are expected to reverse.

5. NOTES TO THE CASH FLOW STATEMENT

6. FINANCIAL INSTRUMENTS

Except as detailed in the following table, the directors consider that the carrying value amounts of financial assets and financial liabilities recorded at amortised cost are approximately equal to their fair values:

7. RELATED PARTY TRANSACTIONS

Transactions entered into with related parties and balances outstanding were as follows:

Sales and purchases from related parties were made at commercial prices.

Interest on loans to/from Group companies is charged at a commercial rate.