TIDM52HM TIDM46RT TIDM52HM
This announcement is in respect of NIE Finance PLC's bonds
* GBP350,000,000 2.5 per cent Guaranteed Notes due 2025 (ISIN XS1820002308);
and
* GBP400,000,000 6.375 per cent Guaranteed Notes due 2026 (ISIN XS0633547087)
each unconditionally and irrevocably guaranteed by Northern Ireland Electricity
Networks Limited.
Northern Ireland Electricity Networks Limited's Unaudited Interim Report and
Financial Statements for the six months ended 30 June 2019 (non statutory) have
been submitted to the National Storage Mechanism and will shortly be available
for inspection at http://www.morningstar.co.uk/uk/NSM and are available on
Northern Ireland Electricity Networks Limited's website at http://
www.nienetworks.co.uk/about-us/investor-relations
Contact for enquiries: NIE Networks Corporate Communications - telephone 0845
300 3356
INTERIM MANAGEMENT REPORT six months to June 2019
The directors present their interim management report for Northern Ireland
Electricity Networks Limited (NIE Networks or the Company) and its subsidiary
undertakings (the Group) for the six months ended 30 June 2019.
NIE Networks is part of the Electricity Supply Board (ESB), the vertically
integrated energy group based in the Republic of Ireland. NIE Networks is an
independent business within ESB with its own Board of Directors, management and
staff. During the period there were a number of changes to the composition of
the Board as follows: on 1 May 2019, Gordon Parkes, Human Resources Director,
replaced Peter Ewing as Executive Director and, on 23 September 2019, Keith
Jess was appointed as an independent non-executive Director. The other
directors, who continued to hold office during the period and to the date of
approving this report are: Stephen Kingon (independent non-executive Chairman),
Rotha Johnston (independent non-executive Director), Alan Bryce (independent
non-executive Director) and Paul Stapleton (Managing Director).
NIE Networks is the owner of the electricity transmission and distribution
networks in Northern Ireland and is the electricity distribution network
operator, serving around 885,000 customers connected to the network.
The Group's principal activities are:
- constructing and maintaining the electricity transmission and distribution
networks in Northern Ireland and operating the distribution network;
- connecting demand and renewable generation customers to the transmission
and distribution networks; and
- providing electricity meters in Northern Ireland and providing metering
data to suppliers and market operators to enable wholesale and retail
settlement.
Business Update
Price Control
NIE Networks is regulated by the Northern Ireland Authority for Utility
Regulation (the Utility Regulator) and is subject to periodic reviews in
respect of the prices it may charge for use of the transmission and
distribution networks in Northern Ireland.
Regulatory Period 6 (RP6) commenced on 1 October 2017 and will apply for the
period to 31 March 2024.
The RP6 price control sets ex-ante allowances of GBP720 million for capital
investment and GBP471 million in respect of operating costs (2018-19 prices). The
allowances in respect of major transmission load growth projects will be
considered on a case-by-case basis, for example, the North-South
Interconnector. The allowances will be adjusted to reflect 50% of the
difference between the allowances and actual costs incurred. NIE Networks'
Connections business is largely outside the scope of the RP6 price control
following the introduction of contestability.
The RP6 baseline rate of return of 3.14% plus inflation (weighted average cost
of capital based on pre-tax cost of debt and post-tax cost of equity) has been
adjusted to reflect the cost of new debt raised in 2018. This mechanism is new
for RP6, departing from the former approach of setting an ex-ante allowance,
and will align the cost of debt component of the return more closely with
prevailing market conditions at the time of drawdown of new debt.
Financial results
Operating Profit
The Group's operating profit for the six month period decreased from GBP57.8m to
GBP56.4m. Group operating profit includes revenues and costs associated with the
Public Service Obligation (PSO) charges which are fully recoverable, albeit
there are timing differences between the receipt of revenue / payment of costs
and the recovery of those amounts through the PSO charges. PSO charges
contributed a net surplus of GBP1.9m during the six month period (six months to
June 2018 - GBP11.1m surplus). Excluding PSO charges the Group's operating profit
for the six month period increased from GBP46.7m to GBP54.5m mainly as a result of
non recurring redundancy costs of GBP7.1m incurred in 2018.
FFO Interest Cover
The ratio of FFO (funds from operations) to interest paid increased to 2.9
times for the period (six months to 30 June 2018 - 2.8 times1) reflecting a
decrease in interest paid as a result of lower interest costs following the
Group's refinancing in September 2018.
1 (FFO interest cover at 30 June 2018 has been restated in line with changes in
credit rating methodology.)
Net Assets
The Group's net assets increased from GBP373.6m as at 31 December 2018 to GBP395.2m
as at 30 June 2019 reflecting profit after tax of GBP30.6m partly offset by
re-measurement losses (net of tax) on pension scheme liabilities of GBP9.0m
reflecting a decrease in the discount rate used to value scheme liabilities.
Cash Flow
Cash and cash equivalents increased by GBP5.1m in the period reflecting net cash
flows from operating activities of GBP60.9m partly offset by investing activity
out flows of GBP54.7m and financing activity outflows of GBP1.1m in relation to
lease payments.
Operations
Key Performance Indicators (KPIs) are used to measure progress towards
achieving operational objectives. Performance during the period is summarised
below:
KPIs Six months Year ended
ended
30 June 31 December
2019 2018 2018
Safety:
Lost time incidents None 2 2
Network Performance:
Customer Minutes Lost (CML)
Planned CML (minutes) 22 21 41
Fault CML (minutes) 20 29 53
Customer Service:
Overall standards - failures (number of) None None None
Guaranteed standards - defaults (number None None None
of)
Stage 2 complaints to the Consumer 1 None 1
Council
(number of)
Connections:
Customer demand connections completed 2,030 2,452 5,095
(number of)
Sustainability:
Waste recycling rate (%) 98 97 97
Safety
Ensuring the safety of employees, contractors and the general public continued
to be the number one value at the core of all NIE Networks' business
operations. The aim is to provide a zero harm working environment where risks
to health and safety are assessed and controlled. There were no lost time
incidents during the period (2018 - two). The target for lost time incidents
continues to be set at zero.
Network Performance
The average number of minutes lost per consumer through pre-arranged shutdowns
for maintenance and construction (Planned CML) is largely in line with the same
period in the previous year. CML through distribution fault interruptions
(Fault CML) fell from 29 to 20 in the period due to non-recurrence of weather
related faults from 2018 and continued focus on fault management.
Customer Service
The Utility Regulator sets overall and guaranteed standards for NIE Networks'
performance. All the overall standards were achieved and there were no
defaults against the guaranteed standards for customer services activities
delivered during the period (2018 - none). One Stage 2 complaint was taken up
by the Consumer Council on behalf of customers during the period (2018 -
None).
Connections
The number of customer demand connections completed during the period reduced
since the prior period, mainly reflecting a lower number of applications in
relation to connections for commercial premises and network alterations.
Progress in connecting renewable generation continued with two customer
connections in the period connecting 14MW of renewable capacity to the network.
Approximately 1.7GW of renewable generation is now connected to the network
and, with 0.3GW further capacity committed to be connected, the total connected
renewable capacity is expected to reach nearly 2.0GW by 2022. The most recent
publication from the Department for the Economy showed that 44% of the total
annual electricity consumption in Northern Ireland, for the 12 month period
from July 2018 to June 2019, is now being generated from local renewable
sources, ahead of the target date of 2020.
During the period NIE Networks has continued to make progress with industry
stakeholders, through the Connections Innovation Working Group, to consider and
progress appropriate solutions which facilitate the connection of further
Distributed Energy Resources (DER) in Northern Ireland.
Sustainability
The recycling rate for all hazardous and non-hazardous waste (excluding
excavation from roads and footpaths, civil projects excavation and asbestos
removal) continued at a high level with 98% of waste recycled during the
period.
Principal Risks and Uncertainties
The principal risks and uncertainties facing NIE Networks for the remainder of
the financial year, which are managed under NIE Networks' risk management
framework, are as set out in the Group's latest annual report for the year to
31 December 2018 which is available at www.nienetworks.co.uk.
GROUP INCOME STATEMENT
Six months ended Year ended
30 June 31 December
2019 2018 2018
Note Unaudited Unaudited Audited
GBPm GBPm GBPm
Revenue 2 139.7 143.5 275.8
Operating costs (83.3) (85.7) (166.7)
--------------- --------------- ---------------
OPERATING PROFIT 56.4 57.8 109.1
--------------- --------------- ---------------
Finance costs (17.3) (19.6) (38.1)
Net pension scheme interest (1.3) (1.5) (3.0)
--------------- --------------- ---------------
Net finance costs (18.6) (21.1) (41.1)
--------------- --------------- ---------------
PROFIT BEFORE TAX 37.8 36.7 68.0
Tax charge 3 (7.2) (7.0) (13.0)
--------------- --------------- ---------------
PROFIT FOR THE PERIOD / YEAR
ATTRIBUTABLE TO THE EQUITY HOLDERS OF
THE PARENT COMPANY 30.6 29.7 55.0
========= ======== =========
=
GROUP STATEMENT OF COMPREHENSIVE INCOME
Six months ended Year ended
30 June 31 December
2019 2018 2018
Unaudited Unaudited Audited
GBPm GBPm GBPm
Profit for the financial period / year 30.6 29.7 55.0
--------------- --------------- ---------------
Other comprehensive (expense)/income:
Re-measurement (losses)/gains on pension
scheme assets and liabilities (10.8) 74.6 18.7
Deferred tax credit/(charge) relating to
components of other comprehensive income 1.8 (12.7) (3.2)
--------------- --------------- ---------------
Net other comprehensive (expense)/income
for the period / year (9.0) 61.9 15.5
--------------- --------------- ---------------
Total net comprehensive income for the
period / year 21.6 91.6 70.5
========= ======== =========
GROUP BALANCE SHEET
As at As at
30 June 31 December
2019 2018 2018
Note Unaudited Unaudited Audited
GBPm GBPm GBPm
Non-current assets
Property, plant and equipment 4 1,819.3 1,757.3 1,791.1
Intangible assets 4 20.2 19.7 21.2
Right of use leased assets 4 11.3 - -
Derivative financial assets 6 522.7 465.1 486.9
--------------- --------------- ---------------
2,373.5 2,242.1 2,299.2
--------------- --------------- ---------------
Current assets
Inventories 13.1 12.8 13.4
Trade and other receivables 42.8 41.1 53.9
Current tax asset 0.6 0.6 4.7
Derivative financial assets 6 14.0 75.5 12.5
Cash and cash equivalents 35.5 11.3 30.4
--------------- --------------- ---------------
106.0 141.3 114.9
--------------- --------------- ---------------
TOTAL ASSETS 2,479.5 2,383.4 2,414.1
--------------- --------------- ---------------
Current liabilities
Trade and other payables 64.9 63.5 69.0
Current tax payable 1.7 5.5 -
Deferred income 18.6 19.2 18.6
Financial liabilities:
Derivative financial 6 14.0 75.5 12.5
liabilities
Lease financial liabilities 6, 7 2.5 - -
Other financial liabilities 6, 7 8.6 296.4 17.2
Provisions 3.3 5.8 3.8
--------------- --------------- ---------------
113.6 465.9 121.1
--------------- --------------- ---------------
Non-current liabilities
Deferred tax liabilities 71.4 78.9 72.0
Deferred income 515.8 508.2 512.2
Financial liabilities:
Derivative financial 6 522.7 465.1 486.9
liabilities
Lease financial liabilities 6, 7 9.1 - -
Other financial liabilities 6, 7 747.0 398.6 746.8
Provisions 4.1 3.4 4.0
Pension liability 8 100.6 46.6 97.5
--------------- --------------- ---------------
1,970.7 1,500.8 1,919.4
--------------- --------------- ---------------
TOTAL LIABILITIES 2,084.3 1,966.7 2,040.5
--------------- --------------- ---------------
NET ASSETS 395.2 416.7 373.6
========= ========= =========
Equity
Share capital 36.4 36.4 36.4
Share premium 24.4 24.4 24.4
Capital redemption reserve 6.1 6.1 6.1
Accumulated profits 328.3 349.8 306.7
--------------- --------------- ---------------
TOTAL EQUITY 395.2 416.7 373.6
========= ========= =========
The financial statements were approved by the Board of directors and signed on
its behalf by:
Paul Stapleton
Director
26 September 2019
GROUP STATEMENT OF CHANGES IN EQUITY
Capital
Share Share redemption Accumulated
capital premium reserve profits Total
GBPm GBPm GBPm GBPm GBPm
At 1 January 2018 36.4 24.4 6.1 260.5 327.4
---------- ---------- ---------- ---------- ----------
Profit for the year - - - 55.0 55.0
Net other comprehensive income - - - 15.5 15.5
for the year
---------- ---------- ---------- ---------- ----------
Total net comprehensive income - - - 70.5 70.5
for the year
Dividends to the shareholder - - - (22.0) (22.0)
IFRS 15 opening reserves - - - (2.3) (2.3)
adjustment
---------- ---------- ---------- ---------- ----------
At 1 January 2019 36.4 24.4 6.1 306.7 373.6
---------- ---------- ---------- ---------- ----------
Profit for the period - - - 30.6 30.6
Net other comprehensive expense - - - (9.0) (9.0)
for the period
---------- ---------- ---------- ---------- ----------
Total net comprehensive income - - - 21.6 21.6
for the period
---------- ---------- ---------- ---------- ----------
At 30 June 2019 36.4 24.4 6.1 328.3 395.2
===== ===== ===== ===== =====
Capital
Share Share redemption Accumulated
Capital premium reserve profits Total
GBPm GBPm GBPm GBPm GBPm
At 1 January 2018 36.4 24.4 6.1 260.5 327.4
---------- ---------- ---------- ---------- ----------
Profit for the period - - - 29.7 29.7
Net other comprehensive income - - - 61.9 61.9
for the period
---------- ---------- ---------- ---------- ----------
Total net comprehensive income - - - 91.6 91.6
for the period
---------- ---------- ---------- ---------- ----------
IFRS 15 opening reserves - - - (2.3) (2.3)
adjustment
---------- ---------- ---------- ---------- ----------
At 30 June 2018 36.4 24.4 6.1 349.8 416.7
===== ===== ===== ===== =====
GROUP CASH FLOW STATEMENT
Six months ended Year ended
30 June 31 December
2019 2018 2018
Unaudited Unaudited Audited
GBPm GBPm GBPm
Cash flows from operating activities
Profit for the period/year 30.6 29.7 55.0
Adjustments for:
Tax charge 7.2 7.0 13.0
Net finance costs 18.6 21.1 41.1
Depreciation of property, plant and 36.6 35.0 70.5
equipment
Depreciation of right of use leased 1.4 - -
assets
Release of customers' contributions and (9.0) (8.6) (17.5)
grants
Amortisation of intangible assets 2.4 2.2 4.3
Defined benefit pension charge less (9.0) (7.3) (13.8)
contributions paid
Net movement in provisions (0.4) 4.1 0.5
---------- ---------- ----------
Operating cash flows before movement in 78.4 83.2 153.1
working capital
Decrease/(Increase) in working capital 4.1 (0.5) (19.4)
---------- ---------- ----------
Cash generated from operations 82.5 82.7 133.7
Interest paid (25.5) (26.3) (38.9)
Lease interest paid (0.2) - -
Current taxes received/(paid) 4.1 - (4.1)
---------- ---------- ----------
Net cash flows from operating activities 60.9 56.4 90.7
---------- ---------- ----------
Cash flows used in investing activities
Purchase of property, plant and equipment (66.0) (82.6) (147.9)
Customers' cash contributions 12.7 32.2 44.6
Purchase of intangible assets (1.4) (1.9) (5.5)
---------- ---------- ----------
Net cash flows used in investing activities (54.7) (52.3) (108.8)
---------- ---------- ----------
Cash flows (used in) / from financing
activities
Dividends paid to shareholder - - (22.0)
Payments in respect of lease liabilities (1.1) - -
Amounts received from financing activities - - 348.3
Repayment of external borrowings - - (175.0)
Amounts repaid to group undertakings - (4.0) (114.0)
---------- ---------- ----------
Net cash flows (used in) / from financing (1.1) (4.0) 37.3
activities
---------- ---------- ----------
Net increase in cash and cash equivalents 5.1 0.1 19.2
Cash and cash equivalents at beginning of 30.4 11.2 11.2
period / year
---------- ---------- ----------
Cash and cash equivalents at end of period 35.5 11.3 30.4
/ year
======== ======== ========
For the purposes of the cash flow statement, cash and cash equivalents comprise
cash at bank and in hand, short-term bank deposits and bank overdrafts.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
1. Basis of Preparation
The condensed interim financial statements for the period ended 30 June 2019
have been prepared in accordance with International Accounting Standard (IAS)
34 "Interim Financial Reporting" and the Disclosure and Transparency Rules of
the Financial Conduct Authority.
The condensed interim financial statements consolidate the results of Northern
Ireland Electricity Networks Limited (NIE Networks or the Company) and its
subsidiary undertakings, NIE Networks Services Limited and NIE Finance PLC (the
Group).
The condensed interim financial statements have been prepared on the basis of
the accounting policies set out in the financial statements for the year ended
31 December 2018.
The condensed interim financial statements have been prepared on the going
concern basis as the directors, having financial resources to continue in
operational existence for a period of 12 months from the date of approval of
the interim report and financial statements.
The condensed interim financial statements have not been audited or reviewed by
auditors pursuant to the Auditing Practices Board guidance on "Review of
Interim Financial Information performed by the Independent Auditor of the
Entity".
The condensed interim financial statements for the period ended 30 June 2019 do
not constitute statutory financial statements within the meaning of Section 434
of the Companies Act 2006. The report of the auditors on the financial
statements contained within the Group's report for the year ended 31 December
2018 was unmodified and did not contain a statement under either Section 498(2)
or Section 498(3) of the Companies Act 2006 regarding inadequate accounting
records or a failure to obtain necessary information and explanations.
New and revised accounting standards, amendments and interpretations
IFRS 16, 'Leases'
IFRS 16 addresses the definition of a lease, recognition and measurement of
leases, and it establishes principles for reporting useful information to users
of financial statements about the leasing activities of both lessees and
lessors. A key change arising from IFRS 16 is that most operating leases will
be accounted for on balance sheet for lessees.
The standard replaces IAS 17, 'Leases', and related interpretations. The
standard is effective for annual periods beginning on or after 1 January 2019,
and earlier application is permitted, subject to EU endorsement and the entity
adopting IFRS 15, 'Revenue from contracts with customers', at the same time.
The Group's financial liabilities associated with future lease commitments now
recognised on the balance sheet are GBP11.6m and the corresponding right of use
assets are GBP11.3m. Profit before tax has decreased by GBP0.8m as a result of the
accounting changes required under IFRS 16.
Presentational changes have been made to the Group's cash flow in accordance
with the requirements of IFRS 16.
2. Revenue
Six months ended Year ended
30 June 31 December
2019 2018 2018
Unaudited Unaudited Audited
GBPm GBPm GBPm
Revenue:
Sales revenue 130.9 135.1 258.8
Amortisation of customer contributions from 8.8 8.4 17.0
deferred income
---------- ---------- ----------
139.7 143.5 275.8
======== ======== ========
The Group's operating activities, which are described in the interim management
report, comprise one operating segment. Sales revenue consists largely of
income from regulated tariffs.
3. Tax Charge
Six months Year ended
ended 31 December
30 June
2019 2018 2018
Unaudited Unaudited Audited
GBPm GBPm GBPm
Current tax charge
UK corporation tax at 19.0% (2018 - 19.0%) 6.0 5.5 9.0
---------- ---------- ----------
Total current tax 6.0 5.5 9.0
---------- ---------- ----------
Deferred tax charge
Origination and reversal of temporary 1.2 1.5 3.8
differences in current period
Origination and reversal of temporary - - 0.2
differences in prior period
---------- ---------- ----------
Total deferred tax charge 1.2 1.5 4.0
---------- ---------- ----------
Total tax charge 7.2 7.0 13.0
======== ======= ========
4. Capital Additions
Six months Year ended
ended 31 December
30 June
2019 2018 2018
Unaudited Unaudited Audited
GBPm GBPm GBPm
Property, plant and equipment 64.8 76.8 146.1
Intangibles assets - computer software 1.4 1.9 5.5
Right of use leased assets 12.7 - -
---------- ---------- ----------
78.9 78.7 151.6
======== ======== ========
Depreciation of GBP40.4m (30 June 2018 - GBP37.2m) was charged in the period. No
assets were disposed of in the period (30 June 2018 - GBPnil).
5. Capital Commitments
At 30 June 2019 the Group had contracted future capital expenditure in respect
of property, plant and equipment of GBP14.7m (June 2018 - GBP13.6m) and computer
software assets of GBP5.2m (June 2018 - GBP4.7m).
6. Financial Instruments
An overview of financial instruments, other than cash, short-term deposits,
prepayments and tax and social security costs held by the Group as at 30 June
2019 is as follows:
As at 30 June 2019 Held at Fair value
amortised profit or
Financial assets: cost loss
Unaudited Unaudited
GBPm GBPm
Trade and other receivables 39.7 -
Interest rate swaps - 14.0
---------- ----------
Total current 39.7 14.0
---------- ----------
Interest rate swaps - 522.7
---------- ----------
Total non-current - 522.7
---------- ----------
Total financial assets 39.7 536.7
======== ========
Financial liabilities:
Trade and other payables 57.6 -
Interest rate swaps - 14.0
Lease liabilities 2.5 -
Interest bearing loans and borrowings 8.6 -
---------- ----------
Total current 68.7 14.0
---------- ----------
Interest rate swaps - 522.7
Lease liabilities 9.1 -
Interest bearing loans and borrowings 747.0 -
---------- ----------
Total non-current 756.1 522.7
---------- ----------
Total financial liabilities 824.8 536.7
======== ========
The directors consider that the carrying amount of financial instruments equals
fair value.
NIE Networks has held a GBP550m portfolio of inflation linked interest rate swaps
since December 2010. The fair value of inflation linked interest rate swaps is
affected by relative movements in interest rates and market expectations of
future retail price index (RPI) movements.
During 2014 the Company, and its counterparty banks, together agreed a
restructuring of the swaps, including amendments to certain critical terms.
These changes included an extension of the mandatory break period in the swaps
from 2015 to 2022, including immediate settlement of accretion payments
(previously due for payment in 2015), amendments to the fixed interest rate
element of the swaps and an increase in the number of swap counterparties. A
payment of GBP85.9m was made in respect of swap accretion during 2018. Future
accretion payments are now scheduled to occur every 5 years, with remaining
accretion paid on maturity.
At the same time that the restructuring took effect the Company entered into
RPI linked interest rate swap arrangements with ESBNI Limited, the immediate
parent undertaking of the Company, which have identical matching terms to the
restructured swaps. The back to back matching swaps with ESBNI Limited ensure
that there is no net effect on the financial statements of the Company and that
any risk to financial exposure is borne by ESBNI Limited. The fair value
movements have been recognised in finance costs in the income statement.
Positive fair value movements of GBP43.5m arose on the swaps in the six months
ended 30 June 2019 (June 2018: positive fair value movements of GBP31.7m) and
were recognised within finance costs in the income statement, as hedge
accounting was not available.
During June 2019 the Company novated GBP66m of the RPI interest linked swaps from
one swap counterparty to another existing swap counterparty thereby reducing
the overall number of swap counterparties. Due to the back to back arrangements
with ESBNI Limited, no gain or loss has been recognised within the Company or
Group as a result of the novation.
The fair value of interest rate swaps has been valued by calculating the
present value of future cash flows, estimated using forward rates from third
party market price quotations. The Company uses the hierarchy as set out in
IFRS 13 Fair Value Measurement for determining and disclosing the fair value of
financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or
liabilities;
Level 2: other techniques for which all inputs which have a significant effect
on the recorded fair value are observable, either directly or indirectly; and
Level 3: techniques which use inputs which have a significant effect on the
recorded fair value that are not based on observable market data.
The fair value of interest rate swaps as at 30 June 2019 is considered by the
Company to fall within the level 2 fair value hierarchy. The Company
determines whether transfers have occurred between levels in the hierarchy by
re-assessing categorisation (based on the lowest level input that is
significant to the fair value measurement as a whole) at the end of each
reporting period. There have been no transfers between level 1 or 3 of the
hierarchy during the period.
7. Net Debt
30 June 30 June 31 December
2019 2018 2018
Unaudited Unaudited Audited
GBPm GBPm GBPm
Cash at bank and in hand 35.5 11.3 30.4
---------- ---------- ----------
Debt due before 1 year:
Interest payable on GBP175m bond - (9.4) -
Interest payable on GBP350m bond (6.5) (2.3)
Interest payable on GBP400m bond (2.0) (2.0) (14.8)
Interest payable to parent undertaking (0.1) (0.1) (0.1)
Lease liability (2.5) - -
GBP175m bond - (174.9) -
Amounts owed to parent undertaking - (110.0) -
---------- ---------- ----------
(11.1) (296.4) (17.2)
Debt due after 1 year: ---------- ---------- ----------
GBP175m bond - - -
GBP350m bond (348.3) - (348.1)
GBP400m bond (398.7) (398.6) (398.7)
Lease liability (9.1) - -
---------- ---------- ----------
(756.1) (398.6) (746.8)
---------- ---------- ----------
Total net debt (731.7) (683.7) (733.6)
======== ======== ========
7. Pension Commitments
Most employees of the Group are members of the Northern Ireland Electricity
Pension Scheme (NIEPS). The scheme has two sections: 'Options' which is a
money purchase arrangement whereby the Group generally matches the members'
contributions up to a maximum of 7% of salary and 'Focus' which provides
benefits based on pensionable salary at retirement or earlier exit from
service. The assets of the scheme are held under trust and invested by the
trustees on the advice of professional investment managers. The trustees are
required by law to act in the interest of all relevant beneficiaries and are
responsible for the investment policy with regard to the assets and the
day-to-day administration of the benefits of the scheme.
As the benefits paid to members of the Options section of the scheme are
directly related to the value of assets for Options, there are no funding
issues with this section of the scheme. The remainder of this note is therefore
in respect of the Focus section of the scheme.
30 June 30 June 31 December
2019 2018 2018
Unaudited Unaudited Audited
GBPm GBPm GBPm
Market value of assets 1,128.4 1,100.1 1,054.7
Actuarial value of liabilities (1,229.0) (1,146.7) (1,152.2)
---------- ---------- ----------
Net pension liability (100.6) (46.6) (97.5)
======== ======== ========
Changes in the market value of assets
30 June 30 June 31
December
2019 2018 2018
Unaudited Unaudited Audited
GBPm GBPm GBPm
Market value of assets 1,054.7 1,139.2 1,139.2
at beginning of the
period / year
Interest income on 14.6 14.0 27.6
scheme assets
Contributions from 12.3 15.1 28.1
employer
Contributions from 0.2 0.2 0.3
scheme members
Benefits paid (31.8) (45.6) (83.3)
Administration expenses (0.5) (0.8) (1.6)
paid
Re-measurement gains 78.9 (22.0) (55.6)
on scheme assets
---------- ---------- ----------
Market value of assets 1,128.4 1,100.1 1,054.7
at end of the period / ======== ======== ========
year
Changes in the actuarial value of liabilities
30 June 30 June 31 December
2019 2018 2018
Unaudited Unaudited Audited
GBPm GBPm GBPm
Actuarial value of liabilities at 1,152.2 1,266.2 1,266.2
beginning of the period / year
Interest expense on pension liability 15.9 15.5 30.6
Current service cost 2.7 3.5 6.9
Curtailment costs 0.1 3.5 4.1
Past service costs - - 1.7
Contributions from scheme members 0.2 0.2 0.3
Benefits paid (31.8) (45.6) (83.3)
Effects of changes in demographic - (46.3) (45.7)
assumptions
Effect of changes in financial 89.7 (56.7) (44.4)
assumptions
Effect of experience adjustments - 6.4 15.8
---------- ---------- ----------
Actuarial value of liabilities at end of 1,229.0 1,146.7 1,152.2
the period / year ======== ======== ========
8. Related Party Transactions
During the period ended 30 June 2019, the Group contributed GBP15.4m (2018 - GBP
17.8m) to the Northern Ireland Electricity Pension Scheme in respect of Focus
and Options employer contributions, including an element of deficit repair
contributions in respect of Focus.
The immediate parent undertaking of the Group and the ultimate parent company
in the UK is ESBNI Limited (ESBNI). The ultimate parent undertaking and
controlling party of the Group and the parent of the smallest and largest group
of which NIE Networks is a member and for which group financial statements are
prepared is Electricity Supply Board (ESB), a statutory corporation established
under the Electricity (Supply) Act 1927 domiciled in the Republic of Ireland.
A copy of ESB's financial statements is available from ESB's registered office
at Two Gateway, East Wall Road, Dublin 3, DOA A995.
Principal subsidiaries of ESB are related parties of the Group. Transactions
between the Group and related parties are disclosed below:
Amounts Amounts
Revenue Charges owed by owed to
from from related related
Interest related related party at party at
charges party party period end period end
Unaudited Unaudited Unaudited Unaudited Unaudited
GBPm GBPm GBPm GBPm GBPm
Six months ended
30 June 2019
ESB (0.1) - - - (0.1)
ESB subsidiaries - 15.6 (1.4) 2.7 (5.2)
---------- ---------- ---------- ---------- ----------
(0.1) 15.6 (1.4) 2.7 (5.3)
======== ======== ======== ======== ========
Six months ended
30 June 2018
ESB (0.7) - - - (110.1)
ESB subsidiaries - 12.4 (1.9) 2.7 (0.9)
---------- ---------- ---------- ---------- ----------
(0.7) 12.4 (1.9) 2.7 (111.0)
======== ======== ======== ======== ========
9. Contingent Liabilities
In the normal course of business the Group has contingent liabilities arising
from claims made by third parties and employees. Provision for a liability is
made when the directors believe that it is probable that an outflow of funds
will be required to settle the obligation where it arises from an event prior
to the year end.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
Each of the directors, named on page 1, confirm that to the best of their
knowledge:
(i) the interim financial statements have been prepared in accordance with
IAS 34 "Interim Financial Reporting" and give a true and fair view of the
assets, liabilities, financial position and profit of the Group for the six
months to 30 June 2019; and
(ii) the interim management report includes a fair review of the information
required by DTR 4.2.7R of the Disclosure and Transparency Rules.
By order of the Board
Paul Stapleton
Director
26 September 2019
END
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