Nthn.elec.prf Regulatory News (NTEA)

23 Apr 2007 14:23

Northern Electric PLC23 April 2007 NORTHERN ELECTRIC plc ANNOUNCEMENT 23 APRIL 2007 PRELIMINARY STATEMENT OF ANNUAL RESULTS AND DIVIDENDS FOR YEAR ENDED 31 DECEMBER2006 The financial information set out below does not constitute the Group andCompany's statutory accounts for the years ended 31 December 2006 and 31December 2005. Statutory accounts for the year ended 31 December 2005 have beendelivered to the Registrar of Companies and those for the year ended 31 December2006 will be delivered to the Registrar of Companies by 31 July 2007. TheGroup's auditors have reported on the accounts for the year ended 31 December2006. Their report was unqualified and did not contain statements under Section237(2) or (3) of the Companies Act 1985. This announcement has been prepared on the basis of accounting policies set outin the Annual Report and Accounts for the year ended 31 December 2005. Whilst the financial information included in this announcement has been computedin accordance with International Financial Reporting Standards (IFRSs), thisannouncement does not itself contain sufficient information to comply withIFRSs. Principal Activities & Business Review Northern Electric plc (the "Company") is a subsidiary of CE Electric UK FundingCompany and its principal activity during the year was to act as a holdingcompany. The activities of the Company's principal subsidiaries during the year were thedistribution of electricity by Northern Electric Distribution Limited (NEDL) andthe provision of engineering contracting services by Integrated Utility ServicesLimited (IUS). NEDL serves an area of approximately 14,400 sq km in the north east of Englandwith a resident population of 3.2 million, receives electricity from theNational Grid transmission system and distributes it to the 1.6 millioncustomers connected to its electricity distribution network of transformers,switchgear and overhead and underground cables, at voltages of up to 132kV. NEDLis an authorised distributor under the Electricity Act 1989 and holds anelectricity distribution licence granted by the Secretary of State. During the year, £113.1m was invested in the electricity distribution system forthe replacement of assets and continuing network improvements intended toincrease the quality of the electricity supply provided to its customers. Certain anomalies in the information reported to Ofgem by NEDL under the Qualityof Service incentive scheme were identified and investigated internally duringthe year. The results of those investigations were communicated to Ofgem and, on3 November 2006, Ofgem announced that it was investigating the possible breachby NEDL of standard condition 49 of its licence. This condition requires, interalia, the licensee to provide Ofgem, or its agent, with certain informationpertaining to the number and duration of interruptions in the supply ofelectricity through the licensee's electricity distribution system andinformation relating to the number and identity of people who had telephoned thelicensee to report a loss of supply. The investigation is continuing as at thedate of this announcement. Although none of NEDL's customers have paid too muchfor their electricity as a result of these issues, should the investigationconclude that there has been a contravention of the licence, Ofgem has a rangeof remedies available including the making of enforcement orders and theimposition of financial penalties. Any penalty imposed must be reasonable andmay not exceed 10% of NEDL's revenue. No provision for any potential penalty hasbeen made in the accounts. IUS provided engineering contracting services to a range of clients during theyear, including NEDL, Yorkshire Electricity Distribution plc (YEDL), CentralNetworks, Network Rail, Northumbrian Water and Yorkshire Water. YEDL is a fellowsubsidiary of the CE Electric UK Funding Company group (the CE Group) and,following a re-organisation of the way the CE Group's electricity distributionbusinesses operated, IUS entered into agreements with NEDL and YEDL, under whichNEDL and YEDL purchased the assets and liabilities of the business of IUS whichprovides connections services and work on and services for the improvement andrepair of their electricity distribution networks. Such agreements wereeffective from 1 April 2006. On 8 December 2006, Northern Electric Generation (Peaking) Limited, a Groupcompany, completed the arrangements entered into on 28 June 2005 to dispose ofits interest in Northern Electric Generation (TPL) Limited, which holds aninvestment in Teesside Power Limited. The results for the year to 31 December 2006 show a profit before tax of £112.3mwhich represented an increase of £0.6m compared to the prior year. The prioryear benefited from a non- recurring gain of £4.6m following the arrangementsentered into to dispose of the Group's interest in Northern Electric Generation(TPL) Limited. In 2006, the absence of similar gains was offset by highermargins and lower pension costs. The directors recommend that no final dividend is paid in respect of the year.An interim dividend of 39.16 pence per ordinary share, totalling £50.0m, waspaid during the year. Net debt at 31 December 2006 was £182.1m which represented an increase of £62.4mduring the year. Enquiries Enquiries should be made to John Elliott, Company Secretary, on 0191 2235103. NORTHERN ELECTRIC plc ANNUAL RESULTS - YEAR ENDED 31 DECEMBER 2006 GROUP INCOME STATEMENT 2006 2005 £m £m Revenue 280.3 297.3Cost of sales (77.9) (97.3) Gross profit 202.4 200.0 Distribution costs (54.2) (54.4)Administrative expenses (17.0) (18.4) Operating profit 131.2 127.2 Share of profit after tax of joint venture accounted for usingthe equity method 0.4 0.6Other (losses)/gains (0.3) 4.2Investment income 16.2 13.1Finance costs (35.2) (33.4) Profit before tax 112.3 111.7 Income tax expense (35.9) (36.6) Profit from ordinary activities after tax attributed to equityshareholders of the Company 76.4 75.1 All activities relate to continuing operations. STATEMENT OF RECOGNISED INCOME AND EXPENSE There is no other income or expense for the Group other than the profitsreported above. MOVEMENT ON RESERVES AND RECONCILIATION OF TOTAL EQUITY Share Capital Share Premium Redemption Retained Total Capital Account Reserve Earnings Equity £m £m £m £m £m Total equity at 31 December2005 72.2 158.8 6.2 150.0 387.2Profit for the year - - - 76.4 76.4Dividends - - - (50.0) (50.0) Total equity at 31 December2006 72.2 158.8 6.2 176.4 413.6 NORTHERN ELECTRIC plc ANNUAL RESULTS - YEAR ENDED 31 DECEMBER 2006 GROUP BALANCE SHEET 2006 2005 £m £m Non-current assetsProperty, plant and equipment 1,092.1 1,009.7Intangibles 6.0 4.1Investments in joint venture 3.2 3.4Investments in other companies 0.1 13.6Long-term securities - 100.0Retirement benefit asset 4.8 -Trade and other receivables 4.6 2.8 1,110.8 1,133.6 Current assetsInventories 17.2 27.9Trade and other receivables 55.6 53.8Short-term securities 100.0 -Cash and cash equivalents 79.1 146.5 251.9 228.2 Total assets 1,362.7 1,361.8 Current liabilitiesTrade and other payables (66.4) (82.1)Current income tax liabilities (12.6) (16.3)Deferred revenue (9.4) (7.0)Borrowings (114.3) (19.4)Provisions (3.7) (4.7) (206.4) (129.5) Net current assets 45.5 98.7 Non-current liabilitiesBorrowings (246.9) (346.8)Deferred income tax liabilities (166.3) (154.9)Retirement benefit obligations (1.3) (37.3)Deferred revenue (327.3) (305.4)Provisions (0.9) (0.7) (742.7) (845.1) Total liabilities (949.1) (974.6) Net assets 413.6 387.2 EQUITYShare capital 72.2 72.2Share premium 158.8 158.8Retained earnings 176.4 150.0Other reserves 6.2 6.2 Total equity 413.6 387.2 NORTHERN ELECTRIC plc ANNUAL RESULTS - YEAR ENDED 31 DECEMBER 2006 GROUP STATEMENT OF CASH FLOWS 2006 2005 £m £m Net cash from operating activities 77.7 57.8 Investing activitiesDividends received from joint venture 0.6 0.2(Payments)/proceeds from disposal of business unit/subsidiary (6.7) 2.9Purchase of long-term securities - (100.0)Proceeds from disposal of property, plant and equipment 0.6 -Purchases of property, plant and equipment (114.4) (104.1)(Purchases)/disposal of intangible assets (3.3) 0.4Receipt of customer contributions 33.2 36.4 Net cash used in investing activities (90.0) (164.2) Financing activitiesEquity dividends paid (50.0) (50.0)Movement in borrowings from parent/subsidiary undertaking 0.9 94.7Repayment of borrowings (6.0) (100.0)New borrowings raised - 155.3 Net cash (used in)/from financing activities (55.1) 100.0 Net decrease in cash and cash equivalents (67.4) (6.4) Cash and cash equivalents at beginning of year 146.5 152.9 Cash and cash equivalents at end of year 79.1 146.5 This information is provided by RNS The company news service from the London Stock Exchange