NORTHERN IRELAND ELECTRICITY PLC - Annual Financial Report.Northern Ireland Electricity Northern Ireland Electricity plc (NIE) is the electricity transmission company in Northern Ireland. NIE does not generate electricity but purchases it from several power stations in Northern Ireland, as well as interconnectors with the Republic of Ireland and Scotland. plc Annual Report and Accounts for year ended 31 March 2010
Northern Ireland Electricity's Annual Report and Accounts for the year ended 31 March 2010 have been submitted to the UKLA's viewing facility and are also available on Northern Ireland Electricity plc's website at:
The full annual report and accounts follow:-
The directors of Northern Ireland Electricity plc (NIE or the Company) present their report and the Group accounts for the year ended 31 March 2010. All references in this report and accounts to "Group" denote de·note
tr.v. de·not·ed, de·not·ing, de·notes
1. To mark; indicate: a frown that denoted increasing impatience.
2. Northern Ireland Electricity plc and its subsidiary undertakings and to "Company" denote Northern Ireland Electricity plc, the parent company.
The accounts have been prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.
As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with International Financial Reporting Standards International Financial Reporting Standards (IFRS) are standards and interpretations adopted by the International Accounting Standards Board (IASB).
Many of the standards forming part of IFRS are known by the older name of International Accounting Standards (IAS). (IFRS IFRS International Financial Reporting Standard(s)
IFRS Inter Frame Relay Service
IFRS Indiana Facilities Registry System ) as adopted by the European Union (EU) and applied in accordance with the provisions of the Companies Act 2006.
Results and Dividends
The results for the year ended 31 March 2010 show a profit after tax of [pounds]60.6m (2009 - [pounds]75.7m). The Company paid interim ordinary dividends of [pounds]55.0m (2009 - [pounds]110.6m). Principal Activities The Company's principal activity is the transmission and distribution of electricity in Northern Ireland through NIE Transmission and Distribution (T& D). The Company completed the sale of SONI Limited (SONI), the transmission system operator in Northern Ireland, to EirGrid plc on 11 March 2009.
Events Since the Year End
On 6 July 2010 Viridian Group Limited (Viridian), the immediate parent undertaking of the Company, entered into a conditional agreement to sell the Company to ESB. The sale is subject to a number of conditions including Republic of Ireland (RoI) and United Kingdom (UK) competition clearance and new financing arrangements being put in place for the remaining Viridian group businesses. Subject to fulfilment of the conditions, the transaction is expected to complete by the end of 2010.
Key Performance Indicators Key Performance Indicators (KPI) are financial and non-financial metrics used to quantify objectives to reflect strategic performance of an organization. KPIs are used in Business Intelligence to assess the present state of the business and to prescribe a course of action.
The directors have determined that the following key performance indicators (KPIs), covering both financial and operational performance, are the most effective measures of progress towards achieving the Group's objectives.
The Group's financial KPIs are Group pro-forma operating profit Operating profit (or loss)
Revenue from a firm's regular activities less costs and expenses and before income deductions.
See operating income. (based on regulated reg·u·late
tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates
1. To control or direct according to rule, principle, or law.
2. entitlement An individual's right to receive a value or benefit provided by law.
Commonly recognized entitlements are benefits, such as those provided by Social Security or Workers' Compensation. ) and interest cover (based on pro-forma operating profit).
KPIs 2010 2009
Group pro-forma operating profit (based on regulated [pounds]108.8m [pounds]114.0m entitlement)
Interest cover (based on pro-forma operating profit) 5.3 times 4.3 times
The Group's pro-forma operating profit decreased from [pounds]114.0m to [pounds]108.8m, reflecting the disposal of SONI and lower T&D profits principally reflecting the impact of deflation on regulated revenue and costs associated with an ice storm on 30 March 2010.
The calculation of Group pro-forma operating profit is shown below:
2010 2009 Year to 31 March [pounds]m
Group statutory operating profit*: Operating profit from continuing operations 114.6 84.0 Operating profit from discontinued operations - 32.8 ----- ----- 114.6 116.8 Deduct: over-recovery of regulated entitlement (5.8)
----- ----- Group pro-forma operating profit 108.8 114.0 *In accordance with IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations, SONI is classified as a discontinued operation in the income statement for the year ended 31 March 2009. IFRS 5 requires that, in the circumstances of discontinued operations, the profits earned by the continuing operations on sales to the discontinued operations be eliminated on consolidation and attributed to the discontinued operations and vice versa.
This representation does not reflect the profits earned by continuing or discontinued operations Discontinued operations
Divisions of a business that have been sold or written off and that no longer are maintained by the business. as if they were stand alone entities.
Interest cover increased from 4.3 times to 5.3 times principally due to lower finance costs. The calculation of interest cover is shown below:
Year to 31 March 2010 2009 [pounds]m [pounds]m Group pro-forma operating profit 108.8 114.0 Net finance costs (before net pension scheme interest): Continuing operations (20.6) (26.2) Discontinued operations - (0.5) ----- ----- (20.6) (26.7) Interest cover 5.3 times 4.3 times Operational KPIs The operational KPIs are:
- performance against the overall and guaranteed standards set by the Northern
Ireland Ireland, Irish Eire (âr`ə) [to it are related the poetic Erin and perhaps the Latin Hibernia], island, 32,598 sq mi (84,429 sq km), second largest of the British Isles. Authority for Utility Regulation (NIAUR);
- the number of complaints which the Consumer Council for Northern Ireland Northern Ireland: see Ireland, Northern.
Part of the United Kingdom of Great Britain and Northern Ireland occupying the northeastern portion of the island of Ireland. Area: 5,461 sq mi (14,144 sq km). Population (2001): 1,685,267.
(Consumer Council) takes up on behalf of consumers (Stage 2 complaints); and
- the average number of minutes lost per consumer per annum Per annum
distribution fault interruptions, excluding the effect of major storms (CML 1. CML - A query language.
["Towards a Knowledge Description Language", A. Borgida et al, in On Knowledge Base Management Systems, J. Mylopoulos et al eds, Springer 1986].
2. CML - Concurrent ML. ).
Operational KPIs and commentary thereon are set out on page 9.
Regulation and Legislation
The electricity industry in Northern Ireland is governed gov·ern
v. gov·erned, gov·ern·ing, gov·erns
1. To make and administer the public policy and affairs of; exercise sovereign authority in.
2. principally by the Electricity (Northern Ireland) Order 1992 (the 1992 Order) and by the conditions of the licences which have been granted under the 1992 Order. The 1992 Order has been amended a·mend
v. a·mend·ed, a·mend·ing, a·mends
1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive.
2. by subsequent legislation including the Energy (Northern Ireland) Order 2003 (the 2003 Order) and most recently, the Electricity Regulations (Northern Ireland) 2007 and the Electricity (Single Wholesale Market) (Northern Ireland) Order 2007 (the SEM Order).
NIAUR and the Department of Enterprise Trade and Investment (DETI) are the principal regulators. Each is given specific powers, duties and functions under the relevant legislation. The functions of NIAUR include licensing (pursuant to a general authority given by DETI) and the general supervision and enforcement of the licensing regime. DETI's functions include licensing, the giving of consents for new power stations and overhead lines, fuel stocking, the encouragement of renewable generation and the regulation of matters relating to the quality and safety of electricity supply.
Regulators' objectives and duties
The principal objective of both NIAUR and DETI in carrying out their functions in relation to electricity is to protect the interests of consumers of electricity, wherever appropriate, by promoting effective competition between those engaged in, or in commercial activities connected with, the generation, transmission or supply of electricity. Each of NIAUR and DETI has a duty to carry out its functions in the manner which it considers is best calculated to further this principal objective, having regard to a number of factors, including the need to ensure that all reasonable demands for electricity are met and that licensees are able to finance their authorised activities. In performing that duty they are required to have regard to the interests of individuals whose circumstances include being disabled, chronically sick or of pensionable age or having low incomes or residing in rural areas. They must also have regard to the effect of the industry's activities on the environment and their role includes promoting energy efficiency. The 2003 Order gives the Consumer Council responsibility for representing electricity consumers and dealing with their complaints. The Consumer Council has powers to investigate matters relating to the interests of consumers regarding their electricity supply and to obtain information from electricity licence holders. EU Legislation
A further package of EU legislative measures concerning energy markets was introduced on 3 September September: see month. 2009. The package includes measures which aim to ensure the effective separation of networks from generation and supply activities. The sale of SONI in March 2009 was consistent with this aim. DETI "Don't even think it!" See digispeak. intends to consult on its implementation proposals from October October: see month. to December December: see month. 2010 following which the required regulations will be drafted and finalised.
As a transmission licensee licensee n. a person given a license by government or under private agreement. (See: license, licensor)
LICENSEE. One to whom a license has been given. 1 M. Q. & S. 699 n. and electricity distributor, the Company is required to develop and maintain an efficient, co-ordinated and economical system of:
- electricity transmission - the bulk transfer of electricity across its high
voltage The force, or pressure, of electricity. Also known as "potential." "Voltage drop" is the difference in voltage from one end of an electrical circuit to the other. For instructional purposes, voltage is often compared to water pressure. See volt-amps and current. network of overhead lines
mainly operating at 275kV and 110kV; and
- electricity distribution - the transfer of electricity from the high voltage The term high voltage characterizes electrical circuits, in which the voltage used is the cause of particular safety concerns and insulation requirements. High voltage is used in electrical power distribution, in cathode ray tubes, to generate X-rays and particle beams, to
transmission system and its delivery to consumers across a network of overhead
lines and underground cables operating at 33kV, 11kV and lower voltages.
The Company's licence requires it to:
- provide transmission services, including making the transmission system
available to SONI and offer terms to SONI for connections by third parties to
the transmission system;
- comply with the transmission interface arrangements which govern its
relationship with SONI;
- comply with specified spec·i·fy
tr.v. spec·i·fied, spec·i·fy·ing, spec·i·fies
1. To state explicitly or in detail: specified the amount needed.
2. To include in a specification.
3. industry codes and agreements;
- offer terms for connection to and use of the distribution system on a
non-discriminatory basis and secure NIAUR's approval for the basis of charges;
- provide market registration and data services to suppliers to support
competition for supplies to consumers and establish market registration
arrangements to facilitate its obligations as an appointed ap·point
tr.v. ap·point·ed, ap·point·ing, ap·points
1. To select or designate to fill an office or a position: appointed her the chief operating officer of the company.
2. meter meter, unit of measure
meter, abbr. m, fundamental unit of length in the metric system. The meter was originally defined as 1/10,000,000 of the distance between the equator and either pole; however, the original survey was inaccurate and the meter was later data provider
under the Single Electricity Market (SEM) trading rules;
- draw up and publish a schedule of public service obligation (PSO PSO - Oracle Parallel Server ) charges for
the provision of services which are of a public service nature; and
- manage the land bank which retains sites in Northern Ireland that are
suitable for electricity generation and which all prospective generators can
NIAUR sets guaranteed and overall standards, the majority of which apply to services provided by the Company (e.g. the timely restoration of consumers' supplies following an interruption and prescribed times for responding to consumers' voltage complaints). The guaranteed standards apply in individual cases and the Company is obliged to make a payment to each consumer affected if it fails to meet a guaranteed standard. The overall standards apply at the collective level and, whilst the Company is not required to make payments to consumers if it fails to meet an overall standard, the licence obliges the Company to conduct its business in such a way as can reasonably be expected to lead to it achieving the overall standards.
NIAUR has statutory powers to enforce compliance with licence conditions. The 2003 Order provides for NIAUR to levy To assess; raise; execute; exact; tax; collect; gather; take up; seize. Thus, to levy a tax; to levy a Nuisance; to levy a fine; to levy war; to levy an execution, i.e., to levy or collect a sum of money on an execution.
A seizure. a financial penalty (up to 10% of the licensee's revenue) for breach of a relevant condition.
NIAUR may modify the conditions of the licence, either in accordance with its terms or in accordance with the procedures set out in the relevant legislation, with the agreement of the Company after due notice, public consultation and consideration of any representations and objections. In the absence of such agreement, NIAUR is required to make a referral to the Competition Commission before a proposed licence modification can be made. Modifications may introduce new conditions (relating to activities authorised by the licence or to other activities) or may amend existing conditions. A modification can be vetoed by DETI. Modifications of licence conditions may also be made by statutory order as a consequence of a reference under the Competition Act 1998. In addition, specific powers have been given in legislation to modify licence conditions without the Company's consent e.g. to implement EU legislation. The licence may be terminated by not less than 25 years' notice given by DETI and is revocable in certain circumstances including: where the Company consents to revocation; where the Company fails to comply with an enforcement order made by NIAUR; or where specified insolvency procedures are initiated in respect of the Company or its assets.
The Company's licence is available on NIAUR's website www.uregni.gov See .gov and GovNet.
(networking) gov - The top-level domain for US government bodies. .uk
Transmission and Distribution (T&D)
NIE holds a transmission licence covering its roles as owner of the transmission and distribution assets and distribution system operator in Northern Ireland. It is responsible for the planning, development, construction and maintenance of the transmission and distribution network and for the operation of the distribution network.
The T&D network comprises a number of interconnected networks of overhead lines and underground cables which are used for the transfer of electricity to c819,000 consumers via a number of substations. There are 2,100km of the transmission system, of which some 80km are underground; 42,900km of the distribution system, of which some 13,100km are underground; and c240 major substations. T&D's transmission system is connected to that of the RoI through 275kV and 110kV interconnectors and to that in Scotland via the Moyle Interconnector. The T&D business derives its revenue principally through charges for use of the distribution system and PSO charges levied on electricity suppliers and charges for transmission services (mainly for use of the transmission system) levied on SONI. NIE Powerteam, a fellow subsidiary undertaking of Viridian, provides electrical infrastructure construction and refurbishment, supply chain and meter reading services to the Company. Price control T&D is subject to a price control, defined in a formula set out in the Company's licence, which limits the revenue it may earn and the prices it may charge. The principles of price regulation employed in the licence conditions reflect the general duties of NIAUR and DETI under the relevant legislation. These include having regard to the need to ensure that NIE is able to finance its authorised activities. If the amount of revenue recovered in any one year exceeds or falls short of the amount allowed by the price control formula, a correction factor operates in the following year to give back any surplus with interest, or to recover any deficit with interest, as appropriate. A surplus is referred to as an over-recovery and a deficit as an under-recovery. The T&D price control was reset with effect from 1 April 2007 and is scheduled to run to 31 March 2012. This is the fourth five year regulatory period since privatisation of the Company and it is referred to as Regulatory Period 4 (RP4).
The key aspects of the RP4 price control are as follows:
Rate of return: Up until 31 March 2010 the allowed rate of return was consistent with the 2005 distribution network operator (DNO) price control in Great Britain (GB) in respect of the distribution portion of T&D's regulatory asset base (RAB) (which is taken to represent 82% of the overall RAB) but a lower rate applied to the 18% representing the transmission portion. This resulted in a blended rate of return of 4.8% post tax real. For the last two years of RP4 the baseline allowed rate of return on the distribution portion of the RAB will be 4.0% (post tax real) in line with the GB DNO Distribution Price Control Review 5 (DPCR5). The allowed rate of return on the transmission portion will remain unchanged. This results in a blended rate of return of 4.1% post tax real. Operating costs: The allowance for controllable costs in each year of RP4 is set equal to the RPI-indexed level of actual costs incurred during the corresponding year in RP3 (T&D price control period April 2002 to March 2007). The allowance was subject to some specific reductions in 2007/08 and 2008/09 and also a small disallowance in respect of early retirement pension deficiency costs. The allowance for uncontrollable costs such as rates, wayleaves and licence fees is set equal to the actual cost in each year. Capital expenditure: The five year capital expenditure budget (net of customer contributions) agreed at the start of RP4 was [pounds]358m (in 2009/10 prices) compared to [pounds]293m in RP3 (in 2009/10 prices). This investment is driven by the need to replace worn assets and to meet continued growth in customer demand. T&D has commenced discussions with NIAUR on the price control which is due to apply from 1 April 2012 (RP5). NIAUR's indicative timetable shows an initial consultation in June 2010, covering policies and issues, a business plan submission by T&D in October 2010, NIAUR's initial proposals in June 2011 and final proposals in November 2011.
T&D revenues (based on regulated entitlement) increased from [pounds]233.1m to [pounds]236.2m reflecting growth in the RAB Rab (räb), Ital. Arbe, island (1991 pop. 9,205), 40 sq mi (104 sq km) off Croatia, in the Adriatic Sea. One of the Dalmatian islands, it is a popular seaside resort. Fishing and agriculture are the main occupations. and higher PSO charges offset by the impact of deflation deflation: see inflation.
Contraction in the volume of available money or credit that results in a general decline in prices. A less extreme condition is known as disinflation. . T&D operating profit (based on regulated entitlement) decreased from [pounds]110.1m to [pounds]107.7m principally reflecting the impact of deflation on regulated revenue and costs associated with an ice storm on 30 March 2010.
Operational performance KPIs 2010 2009 Number Number Overall standards - defaults None None Guaranteed standards - defaults None None Stage 2 complaints to the Consumer Council 3 3 CML * 59 62
*average number of minutes lost per consumer per annum through distribution fault interruptions, excluding the effect of major storms
All the overall standards were achieved and there were no defaults against the guaranteed standards (2009 - none).
T&D's strong focus on service failure analysis limits the number of instances when consumers are dissatisfied to the extent that they refer a complaint to the Consumer Council. The number of Stage 2 complaints was three (2009 - three). The number of CML was 59 minutes (2009 - 62). This performance is better than the target range of 70-90 minutes set by NIAUR for the period of the RP4 price control. Ice storm
On 30 March 2010, a severe ice storm resulted in widespread damage to T&D's network and the loss of supply to almost 140,000 consumers. T&D's emergency plan was fully implemented with the mobilisation n. 1. Mobilization.
Noun 1. mobilisation - act of marshaling and organizing and making ready for use or action; "mobilization of the country's economic resources"
mobilization of employees and external contractors including significant additional resources from the RoI and GB.
Helicopters were deployed to assist in locating and assessing damage and delivering equipment to locations which were inaccessible due to heavy snow. Supplies of electricity were restored to 83% of the affected consumers within 24 hours and over 120km of overhead lines were rebuilt in a five day period. In the areas worst affected, T&D, in conjunction with local councils, opened nine community reception centres to provide warmth, food and access to voluntary services. A dedicated team maintained contact with c400 critical care consumers dependent on life-supporting electrical equipment, who lost electricity supply as a result of the storm. Following the restoration of supplies T&D made goodwill payments of [pounds]100 to c700 consumers who lost electricity supply for the longest period. NIAUR has agreed to treat the storm as a severe weather event and to apply an exemption from guaranteed standards of performance relating to the restoration of supply. Investment
T&D continues to make substantial investment in its infrastructure assets. Total capital expenditure during the year (before customer contributions) including expenditure on non-network assets was [pounds]95.1m (2009 - [pounds]104.7m).
T&D, working jointly with EirGrid, is progressing the development of the 400kV Tyrone-Cavan interconnector to further strengthen the interconnection of the electricity networks of Northern Ireland and the RoI. In December 2009, T&D submitted a planning application seeking consent to construct a new 275/400kV substation near Moy, Co Tyrone and 33.9km of new 400kV overhead transmission line from the new substation to a crossing point on the border between Co. Armagh and Co. Monaghan in the RoI. Submissions made during a public consultation process, which closed on 19 February 2010, are being considered by the Northern Ireland Planning Service and a decision is expected during 2010/ 11. DETI has proposed a target for Northern Ireland of 40% of electricity consumption from renewable sources by 2020. T&D is working with DETI and NIAUR on a long-term strategy for the development of the electricity network to support the connection of additional renewable generation. It is estimated that an investment in the transmission system of the order of [pounds]1bn over the next 10 - 15 years will be needed to achieve DETI's target.
During the year T&D made further progress with an IT project to support the full decoupling Decoupling
The occurrence of returns on asset classes diverging from their normal pattern of correlation.
Take for example stock and corporate bond returns, which normally rise and fall together. of T&D and NIE Energy Supply (a fellow Viridian vi·rid·i·an
A durable bluish-green pigment.
[From Latin viridis, green; see virid.] business) customer records and remove the current restrictions, inherent in the legacy systems, on residential consumers in Northern Ireland switching electricity supplier.
Group revenue and operating profit
Based on IFRS 5, revenue from continuing operations increased from [pounds]206.5m to [pounds] 242.0m and operating profit from continuing operations increased from [pounds]84.0m to [pounds]114.6m. The directors consider that the Group's pro-forma revenue and operating profits from continuing and discontinued operations (as shown in note 3(iii) to the accounts) give a more meaningful measure of performance. Revenue (based on regulated entitlement) decreased from [pounds]257.4m to [pounds]236.2m principally reflecting the disposal of SONI. Operating profit (based on regulated entitlement) decreased from [pounds]114.0 to [pounds]108.8m reflecting the disposal of SONI and lower T&D profits. Net finance costs
The Group's net finance costs relating to relating to relate prep → concernant
relating to relate prep → bezüglich +gen, mit Bezug auf +acc continuing operations continuing operations
Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the decreased from [pounds]33.2m to [pounds]30.4m reflecting lower interest rates.
The Group's tax charge relating to continuing operations of [pounds]21.8m (2009 - [pounds] 14.1m) reflects the increase in the profit before tax from continuing operations of [pounds]84.2m (2009 - [pounds]50.8m). An analysis of the tax charge is shown in note 8 to the accounts.
Loss for the year from discontinued operations
The loss for the year from discontinued operations of [pounds]1.8m relates to the finalisation n. 1. same as finalization.
Noun 1. finalisation - the act of finalizing
mop up, windup, completion, culmination, closing - a concluding action of pension arrangements in respect of SONI employees and related adjustments to the disposal consideration.
The Group's net cash flows from operating activities increased to [pounds]102.0m (2009 - [pounds]86.9m) reflecting working capital movements and lower interest payable.
The cash out flow in respect of the purchase of property, plant and equipment (net of customer contributions) was [pounds]77.4m (2009 - [pounds]88.6m) reflecting a reduction in the number of new connections to the T&D network.
Interim ordinary dividends paid were [pounds]55.0m (2009 - [pounds]110.6m).
Net debt increased from [pounds]466.6m at 31 March 2009 to [pounds]497.3m at 31 March 2010 reflecting the cash flows noted above. An analysis of net debt is shown in note 21 to the accounts.
Defined benefit pension liability
The pension liability in the Group's defined benefit scheme under IAS 19 Employee Benefits increased from [pounds]77.9m at 31 March 2009 to [pounds]136.2m at 31 March 2010 reflecting higher scheme liabilities due to a decrease in the discount rate (resulting from lower bond yields) used to discount scheme liabilities, higher inflation forecasts and changes in mortality assumptions (reflecting recent scheme experience and the continuing upward trend in observed life expectancies), offset by higher asset values.
Corporate Governance Corporate Governance
The relationship between all the stakeholders in a company. This includes the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy, and rule of law.
The directors of the Company are:
Mike Toms (independent non-executive chairman); John Biles (independent non-executive director); and Harry McCracken Harry McCracken (born April 2, 1964) was educated in the public schools of Newton, Massachusetts, the Cambridge School of Weston, and Boston University, where he earned the B,A, in history. McCracken is the current Editor in Chief of PC World. (executive director).
Harry McCracken was appointed as a director on 7 July July: see month. 2009. Laurence Laurence is the surname or the given name of several people: Surname
As required under the Company's licence, the Board of Directors comprises a majority of independent non-executive directors. Each independent non-executive director has relevant experience and knowledge of the energy sector.
Mike Toms, Chairman, is a non-executive director of UK Coal PLC, Birmingham Birmingham, cities, United States
1 City (1990 pop. 265,968), seat of Jefferson co., N central Ala., in the Jones Valley near the southern end of the Appalachian system; founded and inc. Airport Holdings Limited, Oxera Consulting Limited and Bellway Bellway plc (LSE: BWY) is a major British residential property developer. It was founded in 1946 by John T. Bell (1878 - 1965) and his sons John and Russell, and is based on Newcastle upon Tyne. plc and was formerly Group Director, Planning and Regulatory Affairs Regulatory Affairs (RA), also called Government Affairs, is a profession within regulated industries, such as pharmaceuticals, medical devices, energy, and banking. Regulatory Affairs professionals usually have responsibility for the following general areas:
John Biles, Chairman of the Audit Committee, is a non-executive director and Chairman of the Audit Committee of Charter International plc, Bodycote PLC, Sutton & East Surrey Water PLC and Hermes Fund Managers Ltd. He was formerly Finance Director of FKI plc and Group Financial Director of Chubb Security Plc. Harry McCracken is Managing Director. He chairs the Company's Executive Committee and is also an executive director of Viridian. He was appointed MD of the Company in July 2009. From 2003 to 2009 he was Group Managing Director of Viridian Power & Energy. He joined the Company in 1970 as an engineer and progressed to Corporate Planning Manager prior to appointment to the Company's Board as Operations Director in 1992. The Company's licence requires it to establish and at all times maintain the full managerial and operational independence of the T&D business from other businesses within the Viridian group involved in the generation and supply of electricity in Northern Ireland or in the RoI. The Company's Compliance Plan sets out the practices, procedures, systems and rules of conduct to ensure compliance with this licence condition. The Compliance Plan provides that the Board will at all times be responsible for the day to day management and operation of the Company. Viridian participates in the corporate governance of the Company to the extent permitted by the Compliance Plan.
The directors acknowledge that they have responsibility for the Company's systems of internal control and risk management and monitoring their effectiveness. The purpose of these systems is to manage, rather than eliminate, the risk of failure to achieve business objectives, to provide reasonable assurance as to the quality of management information and to maintain proper control over the income, expenditure, assets and liabilities of the Company. No system of control can, however, provide absolute assurance against material misstatement or loss. Accordingly, the directors have regard to those specific controls, which in their judgement, are appropriate to the Company's business given the relative costs and benefits of implementing them.
The Board's Audit Committee comprises the two independent non-executive directors and is chaired by John Biles. The Board is satisfied that John Biles has recent and relevant financial experience.
The Committee had four meetings during the year with both members attending each meeting. The external auditors (Ernst & Young LLP), the internal auditors (PricewaterhouseCoopers LLP), and the Company's Managing Director attend each meeting at the invitation of the Committee.
In relation to financial reporting the Committee:
- monitors the integrity of the Company's interim and annual accounts and
tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates
1. To control or direct according to rule, principle, or law.
2. accounts before their submission Submission
reluctantly gives up her fiancé on her family’s advice. [Br. Lit.: Jane Austen Persuasion in Magill I, 734] to the Board for approval;
- considers the appropriateness of the Company's accounting policies, whether
the accounts give a true and fair view and the appropriateness of the going
- reviews significant issues and judgements and challenges where necessary the
actions and judgements of management in relation to the accounts; and
- considers guidance issued by the Financial Reporting Council The Financial Reporting Council (FRC) is a unified, independent regulator with a mission of promoting confidence in corporate reporting and governance in the United Kingdom. as it applies to
The Committee monitors and reviews the effectiveness of internal controls and the Company's risk management system and the effectiveness of the internal audit function. The Committee approves the annual internal audit plan and, at each meeting, reviews reports from the internal auditors on progress against the plan, assurance levels, recommendations made and proposed actions to implement recommendations. The Committee oversees the relationship with the external auditors and keeps under review the effectiveness of the external auditors' work in terms of nature, scope and results of audit and reviews and monitors the independence of the external auditor. The Committee makes recommendations to the Board on the appointment of the external auditors and their remuneration and determines their terms of engagement. The Committee reviews the Company's arrangements for its employees to raise concerns about possible wrongdoing in financial reporting or other matters as set out in the Company's Whistleblowing Policy. There were no issues raised under the policy during the year.
The Audit Committee regularly meets with the internal and external auditors AUDITORS, practice. Persons lawfully appointed to examine and digest accounts referred to them, take down the evidence in writing, which may be lawfully offered in relation to such accounts, and prepare materials on which a decree or judgment may be made; and to report the whole, together without management being present.
Internal control and risk management in relation to the financial reporting process
Strong financial and business controls are necessary to ensure the integrity and reliability of financial and other information on which the Company relies for day-to-day operations, external reporting and for longer term planning. The Company exercises financial and business control through a combination of: appropriately qualified and experienced personnel; rigorous business planning processes; detailed performance analysis; an integrated accounting system; and clearly defined approval limits. The internal auditors test the effectiveness of financial and business controls. The external auditors provide advice on specific accounting and tax issues. The Audit Committee's role in respect of financial reporting is set out in the Audit Committee section above.
Risk Management and Principal Risks and Uncertainties
The Company operates a structured and disciplined approach to the management of risk. The Company conducts business in a manner which balances costs and risks while taking account of all its stakeholders and protecting the Company's performance and reputation by prudently managing the risks inherent in the business. Management regularly identifies and considers the risks to which the business is exposed. Management's assessment of the key risks and the associated controls and actions required to mitigate these risks are recorded in risk registers. Each risk is regularly assessed for the severity of its impact on the business and for the effectiveness of the controls in place. The risk environment is reviewed continually in order to identify new or emerging potential risks. As noted above the Audit Committee plays a key role in internal control and risk management. The emphasis on sound management structures and policies and procedures is backed up by operational and financial review mechanisms and an externally resourced internal audit function, provided by PricewaterhouseCoopers LLP.
The principal risks and uncertainties that affect the Company are described below but are not intended to be an exhaustive analysis of all the risks that may arise in the ordinary course of business or otherwise.
The Company has a key responsibility to maintain a safe and reliable electricity network and to restore supplies as quickly as possible following interruptions. Over the long-term this is achieved by ensuring the correct level of investment in the network. One of the major operational risks is that in the short-term the electricity network, which is primarily of overhead line construction, can be subject to damage, and potentially major disruption, by storms caused by high winds, ice-accretion on power lines resulting from snowfalls and lightning storms. The Company has measures in place to manage the risk of damage to the electricity network resulting from adverse weather conditions. These include the strengthening of the network through appropriate investment, reliability-centred network maintenance and a systematic overhead line refurbishment and tree cutting programme. A specific emergency plan exists to address major incidents impacting the network: this plan is regularly reviewed and tested. Consumer service There is a risk that the Company fails to meet consumer service expectations or fails to deliver the overall and guaranteed standards of service agreed with NIAUR which could result in damage to reputation and compensation payments to consumers. Adherence to consumer standards is closely monitored and the number of complaints to the Consumer Council and performance against overall and guaranteed standards are KPIs.
Health and safety
The Company is committed to ensuring a safe working environment. The risks arising from inadequate management of health and safety matters are the exposure of employees, contractors and third parties to the risk of injury, potential liability and/or loss of reputation. These risks are closely managed by the Company through the promotion of a strong health and safety culture and well defined health and safety policies. The annual health, safety and risk plan sets out detailed targets for the management of safety. There is a strong focus on the audit of work sites and the reporting and reviewing of near miss incidents. The approach to health and safety issues is described more fully in the Corporate Social Responsibility section.
One of the major risks for the Company arises from the quinquennial regulatory price control review, when the future income that the Company is entitled to receive from charges for use of the electricity network is set for the next five years. The Company's approach to price control reviews is to be pro-active in promoting arrangements that will lead to an agreed outcome. This includes adherence to relevant precedent and best practice. The Company's price control for regulated entitlement contains an element of indexation which is linked to the Retail Price Index (RPI). The relationships with NIAUR and DETI are managed by senior management and the dedicated regulatory affairs team through frequent meetings, informed dialogue and formal correspondence. There is regular reporting to NIAUR and DETI on a wide range of financial and other regulatory matters including capital expenditure and licence compliance.
The Company has measures in place to manage the risk that it sustains a greater than necessary financial impact through inability to carry on its operations either for a short or prolonged period. The Company maintains a business continuity plan and an IT disaster recovery plan. Business continuity plans are reviewed and tested annually. Contingency plans to manage the risk from a potential 'flu pandemic were reviewed and updated throughout the year in light of government and World Health Organisation advice.
Outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management.
The Company outsources a range of important ICT (information and communication technology) and business process services. There is a risk of disruption to the Company if there are service delivery failures. Comprehensive business continuity and disaster recovery plans are maintained to manage this risk. Following an OJEU (Official Journal of the European Union) retendering exercise Northgate Managed Services Limited was reappointed to deliver these services for the five year period from October 2009. Voice and data telecoms services are provided by eircom through a contract managed by Northgate.
Social, environmental and ethical eth·i·cal
1. Of, relating to, or dealing with ethics.
2. Being in accordance with the accepted principles of right and wrong that govern the conduct of a profession. factors
The Company has in place measures to protect against financial and reputational risk from any failure to manage social, environmental and ethical (SEE) factors. In general, SEE factors are managed through embedding corporate social responsibility (CSR) into the Company's management processes and core business activities. Environmental risk, in particular, is managed through: a detailed environmental risk register; environmental action plans; certified environmental management systems; and identification of potential environmental exposures. These matters are monitored by nominated environmental compliance officers in key parts of the business.
Most employees of the Company are members of VGPS. This has two sections: 'Options' which is a money purchase arrangement and 'Focus' which is a defined benefit arrangement, closed to new entrants in 1998. There is a risk that the cost of funding the Focus section could increase if investment returns are lower than expected, mortality rates improve or salary or benefit increases are higher than expected. The VGPS trustees seek the advice of professional investment managers regarding the scheme's investments. Discussions with the VGPS trustees are ongoing in relation to the 31 March 2009 actuarial valuation. It is expected that the past service contribution rate will increase reflecting lower than expected investment returns during the three year period since the last valuation and changes in mortality assumptions reflecting VGPS recent experience and the continuing upward trend in observed life expectancies as advised by Hewitt, the actuaries to VGPS.
IT security and data protection
Failure to maintain adequate IT security measures Noun 1. security measures - measures taken as a precaution against theft or espionage or sabotage etc.; "military security has been stepped up since the recent uprising"
security could lead to the loss of data through malicious Involving malice; characterized by wicked or mischievous motives or intentions.
An act done maliciously is one that is wrongful and performed willfully or intentionally, and without legal justification.
DESERTION, MALICIOUS. attack on the Company's IT systems or employee negligence negligence, in law, especially tort law, the breach of an obligation (duty) to act with care, or the failure to act as a reasonable and prudent person would under similar circumstances. . Loss of Company or consumer data could damage the Company's reputation, adversely impact operational performance or lead to a loss of income. The Company actively promotes awareness of IT security and data protection and targeted controls and procedures are in place to mitigate mit·i·gate
To moderate in force or intensity.
miti·gation n. the risks.
Viridian's centralised Adj. 1. centralised - drawn toward a center or brought under the control of a central authority; "centralized control of emergency relief efforts"; "centralized government"
centralized treasury function manages the Company's liquidity, funding, investment and financial risk, including interest rate and counterparty Counterparty
The other participant, including intermediaries, in a swap or contract. credit risk. The Viridian treasury function's objective is to manage risk at optimum cost. The treasury function employs a continuous forecasting and monitoring process to manage risk.
Capital management and liquidity risk
The Company is financed through a combination of equity and debt finance. Details in respect of the Company's equity are shown in the Statement of Changes in Equity and in note 24 to the accounts. The Company's debt finance at 31 March 2010 comprised [pounds]173.5m in respect of a Eurobond due to mature in September 2018 and intercompany loans from Viridian of [pounds]317.6m which are repayable on demand. At 31 March 2010 2009 [pounds]m [pounds]m Cash and cash equivalents 0.2 1.6 Intercompany loans from Viridian (317.6) (288.4) Eurobond (173.5) (173.4) Interest payable on Eurobond (6.4) (6.4) ----- ----- Net debt (497.3) (466.6) Loans and other borrowings maturity analysis: In one year or less or on demand (324.0) (294.8) In more than five years (173.5) (173.4) ----- ----- (497.5) (468.2)
The main source of liquidity for the Company, including short-term working capital requirements Capital requirements
Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. , is cash generated from operations and intercompany loans from Viridian.
The Company's liquidity risk in respect of intercompany funding is managed through the preparation of cash flow forecasts and discussions with Viridian's treasury function regarding the level of intercompany funding required. Intercompany loans are adjusted on a daily basis to meet the Company's operating cash requirements.
As noted above, Viridian has entered into a conditional agreement to sell the Company to ESB. Upon completion of the sale the intercompany loans from the Viridian group would be replaced by intercompany loans from ESB or third party funding. In relation to equity, the Company's policy is to finance equity dividends from accumulated profits. In relation to debt finance, the Company's policy is to maintain a prudent level of gearing. As noted above, interest cover is a KPI. There have been no changes in the Company's capital management policies since last year.
The Company's licence contains various financial conditions. The Company complies with these conditions which principally relate to the availability of financial resources, borrowings on an arm's length basis, restrictions on granting security over the Company's assets and the payment of dividends.
Interest rate risk
The borrowings of the Company are denominated in Sterling. The Eurobond carries a fixed interest rate of 6.875% and intercompany loans from Viridian carry a variable interest rate based on LIBOR. The Company has no derivative financial instruments in respect of interest rates. Interest rate exposure is managed by Viridian at the group level. At 31 March 2010 2009 [pounds]m [pounds]m Loans and other borrowings fixed/floating analysis: Fixed rate debt (179.9) (179.8) Variable rate debt (317.6) (288.4) ----- ----- (497.5) (468.2) Credit risk The Company's principal financial assets are cash and cash equivalents, trade and other receivables and other financial assets as outlined in the table below: At 31 March 2010 2009 [pounds]m [pounds]m Cash and cash equivalents 0.2 1.6 Trade and other receivables 43.4 46.1 Other financial assets 0.3 0.4 ---- ---- 43.9 48.1
As noted above, the T&D business derives its revenue principally from charges for use of the distribution system and PSO charges levied on electricity suppliers and charges for transmission services levied on SONI.
The Company's credit risk in respect of trade receivables from electricity suppliers is mitigated by security received in the form of cash deposits, letters of credit or parent company guarantees. With the exception of public bodies, payments in relation to new connections or alterations are paid for in advance of the work being carried out. Payments received on account are disclosed in note 18 to the accounts. The Company may be exposed to credit-related loss in the event of non-performance by bank counterparties. The Company does not anticipate any non-performance given the high credit ratings of the established financial institutions that comprise these counterparties. The Company manages credit risk arising in respect of such counterparties by transacting only with bank counterparties rated investment grade and above.
Further information on financial instruments is set out in the notes to the accounts in compliance with IFRS 7 Financial Instruments: Disclosures.
The Company's business activities, together with the principal risks and uncertainties likely to affect its future performance, are described above.
On the basis of their assessment of the Company's financial position, which has included discussions with the Viridian group, the directors have a reasonable expectation that the sale of the Company to ESB will be completed and that the financing requirements of the Company will be supported by ESB following the sale. Accordingly, the directors continue to adopt the going concern basis in preparing the annual report and accounts.
Corporate Social Responsibility (CSR (1) (Customer Service Representative) A person who handles a customer's request regarding a bill, account changes or service or merchandise ordered. Agents in call centers are known as CSRs. See call center. )
The Company is committed to operating in a socially, environmentally and ethically eth·i·cal
1. Of, relating to, or dealing with ethics.
2. Being in accordance with the accepted principles of right and wrong that govern the conduct of a profession. See Synonyms at moral.
3. responsible manner. It aims to be recognised as transparent (1) Refers to a change in hardware or software that, after installation, causes no noticeable change in operation. Also known as "feature transparency." Contrast with "seamless integration," which means that an additional component to the system can be added without incurring any and ethical in its dealings and to contribute to the general economic and social well-being and development of the communities in which it operates.
The Company recognises the importance of engaging with a wide range of stakeholders including: its shareholders; consumers; employees; the wider community; those representing the environment; and suppliers. It does this through many channels including working closely with: industry regulators; various environmental bodies; various health and safety bodies; trade unions; business representatives; elected representatives and politicians; contractors; and landlords.
The Company has defined a number of principal CSR themes and priorities relevant to the management of SEE-related risks that may impact upon the short and long-term value of the Company. These are classified below under the headings of Workplace, Environment, Marketplace and Community.
The Company had 256 employees at 31 March 2010 (2009 - 262). NIE Powerteam, a fellow subsidiary undertaking of Viridian, provides electrical infrastructure construction and refurbishment and other managed services to the Company. NIE Powerteam had 940 employees at 31 March 2010 (2009 - 966).
Health and safety
A CSR priority for the Company is to ensure the safety of employees, contractors and the general public through the promotion of a positive health and safety culture and adherence to legislation and recognised safety standards. The Company's health and safety policy aims to promote high standards and is supported by specific safety principles, rules, policies and procedures. Contractors must adhere to the same safety rules and requirements as employees.
The Board is deeply saddened to record that in September 2009 a six year old girl died on coming into contact with an overhead line while climbing a tree.
The Company health and safety management system is based upon the principles of the Health and Safety Executive guidance 'Successful Health and Safety Management' and the Institute of Directors/Health and Safety Commission guidance 'Leading Health and Safety at Work'. The approach to employment-related performance, such as safety and sickness absence, is to set targets in line with best practice. Safety performance is reported to the Energy Networks Association and the Company regularly engages with other relevant organisations including the Royal Society for the Prevention of Accidents (RoSPA), the Health and Safety Executive for Northern Ireland and DETI. During the year RoSPA awarded the Company and NIE Powerteam a Level Four Quality Safety Audit award following a comprehensive audit.
Including NIE Powerteam, there were five reportable incidents (2009 - six) and no lost time incidents (2009 - two) during the year. Formal processes for incident investigation and analysis are in place.
The Company is committed to a working environment: in which personal and employment rights are upheld; which ensures equality of opportunity for all employees and job applicants; and which enables employees to realise their maximum potential and to be appropriately challenged and fully engaged in the business, with opportunities for skills enhancement and personal development. The Company and NIE Powerteam are Investors in People accredited.
The Company is pro-active in implementing human resource policies and procedures to ensure compliance with fair employment, sex discrimination, equal pay, disability discrimination, race discrimination, sexual orientation and age discrimination legislation. The Group's equal opportunities policy commits it to providing equality of opportunity for all employees and job applicants and it regularly monitors its actions to promote compliance with legislation and to ensure that it provides equality of opportunity in all its employment practices. Equal opportunity measures and statistics in respect of the relevant businesses are reported formally to the Equality Commission for Northern Ireland.
It is Company policy to provide people with disabilities equal opportunities for employment, training and career development, having regard to aptitude and ability. Any member of staff who becomes disabled during employment is given assistance and re-training where possible.
Remuneration REMUNERATION. Reward; recompense; salary. Dig. 17, 1, 7.
The Company operates fair and visible remuneration policies which are externally benchmarked to ensure that employees are paid an appropriate salary for the work they undertake. The Company seeks to align employee interests with those of other key stakeholders through an effective approach to recognition and reward, based on business and individual performance. Various reward schemes are in place including incentive schemes, out of hours schemes, time banking arrangements, bonus schemes and skills progression arrangements.
Learning and development
The Company aims to align its human resources policies with key business drivers, which include performance and productivity improvement; cost reduction; business growth and innovation; and providing value to customers. These policies are supported by clearly defined values and behaviours, a robust performance management process, a strong commitment to employee and management development and organisational competence built upon appropriate capabilities and skills. To ensure a highly skilled, multi-disciplined workforce, a multi-skilled approach has been taken to vocational training schemes. Learning and development needs are identified through performance, planning and review processes. Policies There are formal employee complaints and grievance procedures and the Company has a wide range of family-friendly working arrangements including enhanced maternity and paternity provisions, adoption, parental and dependant leave, a child care scheme, career breaks, job sharing and flexible working hours.
Sickness SICKNESS. By sickness is understood any affection of the body which deprives it temporarily of the power to fulfill its usual functions.
2. Sickness is either such as affects the body generally, or only some parts of it. absence
The Company believes that the pro-active management of illness and absenteeism is to the mutual benefit of the Company and its employees. An employee health and well-being policy is in place with specific policies on stress management, mental health, alcohol and drug-related problems, smoking and first aid. External occupational health and counselling services are available for employees. Including NIE Powerteam, sickness absence was 2.44% in 2009/10 compared to 2.68% the previous year, below the UK national average of 3.3%.
Employee participation and external engagement
The Company places significant emphasis on internal communications. Employee communications occur through team briefings, engagement groups, communication and involvement groups, project groups, electronic communications, company forums and through interaction, consultation and negotiation with trade unions. Employee relations are positive and constructive. Including NIE Powerteam, approximately 73% of employees are union members. There are well established arrangements for consultation, involvement and the promotion of employee relations through a framework of company councils. Several consultative committees are also in place dealing with areas such as health and safety and business improvement ideas. A managed process of communication occurs at the individual employee level and the performance, planning and review processes are designed to include upward feedback.
The Company engages with relevant external organisations including the Confederation of British Industry The Confederation of British Industry is a not for profit organisation incorporated by Royal charter which promotes the interests of its members, some 200,000 British businesses, a figure which includes some 80% of FTSE 100 companies and around 50% of FTSE 350 (CBI CBI
cumulative book index
CBI Confederation of British Industry
CBI n abbr (= Confederation of British Industry) → C.E.O.E. ) Employment Affairs Committee, the Equality equality
Generally, an ideal of uniformity in treatment or status by those in a position to affect either. Acknowledgment of the right to equality often must be coerced from the advantaged by the disadvantaged. Equality of opportunity was the founding creed of U.S. Commission for Northern Ireland and the Labour Relations labour relations (US), labor relations npl → relations fpl dans l'entreprise
labour relations labour npl → Beziehungen pl Agency.
The Company's environmental policy commits the Company to protecting the environment and is designed to ensure compliance with all relevant legislative and regulatory requirements. Where practical and economically viable, the Company seeks to develop standards in excess of such requirements. Areas of particular focus include the responsible management of emissions, waste and recycling, measures to protect against oil pollution and the promotion of energy efficiency. The Company is assessing its obligations under, and collating data in order to ensure compliance with, the UK Government's Carbon Reduction Commitment (CRC) Energy Efficiency Scheme which became effective in April 2010. As noted in the Business Review, the Company continues to work with DETI and NIAUR on a long-term strategy for the development of the electricity network to support the connection of additional renewable generation. The Company is committed to a programme of research and development appropriate to its businesses. As part of its price control arrangements under RP4, the Company has committed to a [pounds]1m Sustainable Networks Programme to fund research focused on identifying the best long-term options for development of the T&D network to accommodate Government objectives on sustainability. Over the last three years [pounds]0.6m has been provided to progress a number of projects aimed at facilitating the connection of increased levels of distributed renewable generation to the network. During the year the Company and NIE Powerteam renewed their ISO 14001:2004 certification for their environmental management system. In the 2009 environmental management survey conducted by ARENA Network in Northern Ireland, the Company was positioned in the first quintile achieving a score of 88% compared with the Northern Ireland average of 67% and a utilities sector average of 72%. The Company has a full time environmental compliance officer and designated auditors in its relevant operations. The Company's Sustainable Management of Assets and Renewable Technologies (SMART) programme is part of the regulatory framework agreed with NIAUR. The programme supports emerging renewable energy technologies and encourages a sustainable approach to the provision of network infrastructure to meet customer demand in Northern Ireland. During the year the Company committed over [pounds]0.4m under the SMART programme to support photovoltaics, biomass and wind and hydro-electric power projects.
A CSR priority is to maintain a highly ethical approach to regulatory responsibilities, licence obligations and public positioning. The Company aims to be transparent and ethical in all its dealings with third parties and has a number of policies in place to underpin this objective. Policies include internal ethical dealing and 'whistleblowing' procedures as well as the Company's corporate governance arrangements. The Company recognises that it has an opportunity to encourage suppliers of materials and services to deliver good environmental and safety performance and to maintain responsible practices towards their employees and the communities in which they operate. The Company subscribes to the Achilles utilities vendor database to pre-qualify potential suppliers for major contracts on a fair and equal basis; this assessment includes environmental and health and safety practices. In addition the Company assesses suppliers' CSR practices through questionnaires issued with invitation-to-tender documents.
Through its mainstream business activities and its community involvement policy, the Company seeks to make a positive impact on the communities in which it operates.
The Company seeks to maintain safe and reliable electricity supplies to consumers. As noted in the Business Review, the number of CMLs during the year was 59 minutes, compared with 62 minutes the previous year. The overall consumer standards set by NIAUR were achieved and there were no defaults against the guaranteed standards. Over recent years the Company has achieved a significant reduction in the level of complaints referred to the Consumer Council with only three such complaints during 2009/10 (2008/09 - three).
The Company provides a critical care information service to c2,800 consumers who are dependent on life-supporting electrical equipment.
During the year, the Company continued its public safety awareness programme, promoting the importance of electrical safety to over 18,000 school children, farmers, anglers and building contractors. The Company's 'Kidzsafe' programme raises safety awareness among primary school children in an effort to reduce incidences of vandalism and electricity-related injuries.
The Company continued to host a number of farm safety events. The Company's safety website www.niesafety.co.uk offers key safety advice on a wide range of activities.
As part of its price control arrangements for RP4, the Company has committed to a [pounds]1m vulnerable customer programme to help alleviate fuel poverty in Northern Ireland by assisting low income households to access grants and social benefits.
Charitable and Political Donations
In addition to sponsorship of charities and organisations of [pounds]4,000, the Group's donations to charities in the year were [pounds]10,000 (2009 - [pounds]10,000).
There were no contributions for political purposes.
Payment of Suppliers
The Company's procurement policy is to source equipment, goods and services from a wide range of suppliers throughout the EU and beyond in accordance with commercial practices based on fairness and transparency. The Company recognises the important role that suppliers play in its business, and works to ensure that payments are made to them in accordance with agreed contractual terms. At 31 March 2010 the Company had 45 days payments outstanding to trade creditors.
Disclosure of Information to the Auditors
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information, being information needed by the auditors in connection with preparing their report, of which the auditors are unaware. Having made enquiries of fellow directors and the Group's auditors, each director has taken all the steps that he is obliged to take 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.
The Company purchased and maintained directors' and officers' liability insurance throughout the year.
Statement of Directors' Responsibilities
The directors are responsible for preparing the accounts in accordance with applicable United Kingdom law and those IFRS as adopted by the EU.
The directors are required to prepare accounts for each financial year which present fairly the financial position of the Company and of the Group and the financial performance and cash flows of the Company and the Group for that year. In preparing those accounts, the directors are required to:
- select suitable accounting policies and then apply them consistently;
- present information, including accounting policies, in a manner that provides
relevant, reliable, comparable and understandable information;
- provide additional disclosures when compliance with the specific requirements
of IFRS is insufficient in·suf·fi·cient
1. Not sufficient.
2. Incapable of proper functioning. to enable users to understand the impact of particular
transactions, other events and conditions on the entity's financial position
and financial performance of the Company and the Group, and disclose and
explain any departure from IFRS where, in their view, compliance would be so
misleading as to conflict with a fair presentation; and
- state that (except for any such departure) the accounts have been prepared in
accordance with IFRS as adopted by the EU.
The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Group and the Company to enable them to ensure that the Group and Company accounts comply with the Companies Act 2006 and, in the case of the Group accounts, Article 4 of the International Accounting Standards (IAS) Regulation. They are also responsible for safeguarding the assets of the Group and the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
As required under the UK Listing Authority's Disclosure and Transparency (1) The quality of being able to see through a material. The terms transparency and translucency are often used synonymously; however, transparent would technically mean "seeing through clear glass," while translucent would mean "seeing through frosted glass." See alpha blending. Rules, each of the directors listed on page 12 confirms that to the best of his knowledge:
- the accounts, prepared in accordance with IFRS as adopted by the EU, give a
true and fair view of the assets, liabilities, financial position and profit of
the Company and the undertakings included in the consolidation taken as a
- the Directors' Report includes a fair review of the development and
performance of the business and the position of the Company and the
undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they face.
By order of the Board Ruth Conacher Company Secretary Registered Office 120 Malone Road Belfast BT9 5HT Registered Number: NI 26041 Date: 21 July 2010 INDEPENDENT AUDITORS' REPORT
To the members of Northern Ireland Electricity plc
We have audited the accounts of Northern Ireland Electricity plc for the year ended 31 March 2010 which comprise the Group Income Statement, the Group and Company Statements of Comprehensive Income, the Group and Company Balance Sheets, the Group and Company Statements of Changes in Equity, the Group and Company Cash Flow Statements and the related notes 1 to 28. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and, as regards the Company accounts, as applied in accordance with the provisions of the Companies Act 2006. This report is made solely to the Company's members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006. 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
As explained more fully in the Statement of Directors' Responsibilities set out on page 23, the directors are responsible for the preparation of the accounts and for being satisfied that they give a true and fair view. Our responsibility is to audit the accounts in accordance with applicable law and International Standards on Auditing (ISA) (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.
Scope of the audit of the accounts
An audit involves obtaining evidence about the amounts and disclosures in the accounts sufficient to give reasonable assurance that the accounts are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group's and Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the accounts.
Opinion on the accounts
In our opinion:
- the accounts give a true and fair view of the state of the Group's and
Company's affairs as at 31 March 2010 and of the Group's profit for the year
- the Group accounts have been properly prepared in accordance with IFRS as
adopted by the EU;
- the Company accounts have been properly prepared in accordance with IFRS as
adopted by the EU and as applied in accordance with the provisions of the
Companies Act 2006; and
- the accounts have been prepared in accordance with the requirements of the
Companies Act 2006 and as regards the Group accounts, Article 4 of the IAS See iPlanet Application Server.
1. (computer) IAS - The first modern computer. It had main registers, processing circuits, information paths within the central processing unit, and used Von Neumann's fetch-execute cycle.
Opinion on other matter prescribed pre·scribe
v. pre·scribed, pre·scrib·ing, pre·scribes
1. To set down as a rule or guide; enjoin. See Synonyms at dictate.
2. To order the use of (a medicine or other treatment). by the Companies Act 2006
In our opinion the information given in the Directors' Report for the financial year for which the accounts are prepared is consistent with the accounts.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
- adequate accounting records have not been kept by the Company, or returns
adequate for our audit have not been received from branches not visited by us;
- the Company accounts are not in agreement with the accounting records and
- certain disclosures of directors' remuneration specified by law are not made;
- we have not received all the information and explanations we require for our
Colm Devine Devine can refer to: People
Date: 22 July 2010 GROUP INCOME STATEMENT for the year ended 31 March 2010 2010 2009 Note [pounds]m [pounds]m Continuing operations Revenue 3,5 242.0 206.5 Operating costs 5 (127.4) (122.5) ----- ----- OPERATING PROFIT 114.6 84.0 Finance costs (20.6) (26.2) Net pension scheme interest (9.8) (7.0) Net finance costs 7 (30.4) (33.2) ----- ----- PROFIT FROM CONTINUING OPERATIONS BEFORE TAX 84.2 50.8 Tax charge 8 (21.8)
----- ----- PROFIT FROM CONTINUING OPERATIONS AFTER TAX 62.4 36.7 Discontinued operations
(Loss)/profit for the year from discontinued dis·con·tin·ue
v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues
1. To stop doing or providing (something); end or abandon: 4 (1.8) 39.0 operations
----- ----- PROFIT FOR THE YEAR ATTRIBUTABLE TO THE EQUITY 60.6 75.7 HOLDERS OF THE PARENT COMPANY ===== ===== STATEMENTS OF COMPREHENSIVE INCOME for the year ended 31 March 2010 Note Group Company 2010 2009 2010 2009 [pounds]m [pounds]m [pounds]m [pounds]m Profit for the financial year 60.6 75.7 60.6 76.7 ---- ---- ---- ---- Other comprehensive income/(expense):
n. pl. ac·tu·ar·ies
A statistician who computes insurance risks and premiums.
[Latin loss on pension scheme 23 (59.7) (25.7) (59.7) (25.2)
assets and liabilities Deferred tax credit relating to 16.7 7.2 16.7
actuarial loss on pension scheme assets and liabilities ---- ---- ---- ---- Net other comprehensive expense for (43.0) (18.5) (43.0) (18.1) the year ---- ---- ---- ---- Total comprehensive income for the year attributable to the equity holders of the parent company 17.6 57.2 17.6 58.6 ==== ==== ==== ==== GROUP AND COMPANY BALANCE SHEET as at 31 March 2010 Note 2010 2009 [pounds]m [pounds]m Non-current assets Property, plant and equipment 11 1,063.1 1,009.1 Intangible assets 13 38.6 44.0 Financial assets 14 0.1 0.2 ------- ------- 1,101.8 1,053.3 Current assets ------- ------- Inventories 15 6.0 6.1 Trade and other receivables 16 43.4 46.1 Financial assets 14 0.2 0.2 Cash and cash equivalents 17 0.2 1.6 ------- ------- 49.8 54.0 ------- ------- TOTAL ASSETS 1,151.6 1,107.3 ------- ------- Current liabilities Trade and other payables 18 104.0 98.7 Current tax payable 9.4 13.1 Deferred income 19 7.8 7.4 Financial liabilities 20 324.0 294.8 Provisions 22 1.7 3.8 ------- ------- 446.9 417.8 ------- ------- Non-current liabilities Deferred tax liabilities 8 80.1 91.9 Deferred income 19 219.3 212.7 Financial liabilities 20 173.5 173.4 Provisions 22 7.5 8.1 Pension liability 23 136.2 77.9 ------- ------- 616.6 564.0 ------- ------- TOTAL LIABILITIES 1,063.5 981.8 ------- ------- NET ASSETS 88.1 125.5 ======= ======= Equity Share capital 24 36.4 36.4 Share premium 24 24.4 24.4 Capital redemption reserve 24 6.1 6.1 Accumulated profits 21.2 58.6 ------- ------- TOTAL EQUITY 88.1 125.5 ======= =======
The accounts were approved by the Board of directors and authorised for issue on 21 July 2010. They were signed on its behalf by:
Harry McCracken Managing Director Date: 21 July 2010 STATEMENTS OF CHANGES IN EQUITY for the year ended 31 March 2010 Group Capital Share Share redemption Accumulated capital premium reserve profits Total [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m At 1 April 2008 36.4 24.4 6.1 112.0 178.9 Profit for the year - - - 75.7 75.7 Net other comprehensive - - - (18.5) (18.5) expense for the year ---- ---- ---- ----- ----- Total net comprehensive income - - - 57.2 57.2 for the year Equity dividends - - - (110.6) (110.6) ---- ---- ---- ----- ----- At 1 April 2009 36.4 24.4 6.1 58.6 125.5 Profit for the year - - - 60.6 60.6 Net other comprehensive - - - (43.0) (43.0) expense for the year ---- ---- ----- ----- ----- Total net comprehensive income - - - 17.6 17.6 for the year Equity dividends - - - (55.0) (55.0) ---- ----- ---- ----- ----- At 31 March 2010 36.4 24.4 6.1 21.2 88.1 ==== ==== ==== ===== ===== Company Capital Share Share redemption Accumulated Capital premium reserve profits Total [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m At 1 April 2008 36.4 24.4 6.1 110.6 177.5 Profit for the period - - - 76.7 76.7 Net other comprehensive - - - (18.1) (18.1) expense for the year ---- ----- ---- ----- ----- Total net comprehensive - - - 58.6 58.6 income for the year Equity dividends - - - (110.6) (110.6) ---- ---- ---- ----- ----- At 1 April 2009 36.4 24.4 6.1 58.6 125.5 Profit for the period - - - 60.6 60.6 Net other comprehensive - - - (43.0) (43.0) expense for the year ---- ---- ---- ---- ---- Total net comprehensive - - - 17.6 17.6 income for the year Equity dividends - - - (55.0) (55.0) ---- ---- ---- ---- ---- At 31 March 2010 36.4 24.4 6.1 21.2 88.1 ==== ==== ==== ==== ==== CASH FLOW STATEMENTS for the year ended 31 March 2010 Group Company Note 2010 2009 2010 2009 [pounds]m [pounds]m [pounds]m [pounds]m Cash flows from operating activities Profit for the year 60.6 75.7 60.6 76.7 Adjustments for: Tax charge - continuing operations 21.8 14.1 21.8
Tax charge - discontinued operations - 8.8 -
Net finance costs - continuing 30.4 33.2 30.4
operations Net finance costs - discontinued - 0.7 - - operations Loss/(gain) on disposal of 1.8 (15.7) 1.8 (14.2) discontinued operations Depreciation of property, plant and 11 40.8 38.6 40.8 36.0 equipment Amortisation of customers' 19 (7.8) (7.4) (7.8) (7.4) contributions and grants
Amortisation Noun 1. amortisation - the reduction of the value of an asset by prorating its cost over a period of years
reduction, step-down, diminution, decrease - the act of decreasing or reducing something
2. of intangible assets 13 5.6 5.7 5.6
Loss on disposal of property, plant 0.1 - 0.1
and equipment Impairment of property, plant and - 2.6 -
equipment Defined benefit pension charge less 22 (8.5) (8.5) (8.5) (8.1) contributions paid Net movement in provisions (2.8) (4.1) (2.8) (4.1) ----- ----- ----- ----- Operating cash flows before movement in 142.0 143.7 142.0 144.2 working capital Decrease/(increase) in working capital 1.9 (3.6) 1.9
----- ----- -----
Cash generated from operations 143.9 140.1 143.9 147.2 Interest received - - - 0.6 Interest paid (20.6) (28.5) (20.6) (28.2) Current taxes paid (21.3) (24.7) (21.3) (24.2) ----- ----- ----- ----- Net cash flows from operating activities 102.0 86.9 102.0 95.4 ----- ----- ----- ----- Purchase of property, plant and (92.2) (110.1) (92.2) (104.8) equipment Purchase of intangible assets 13 (0.2) (0.7) (0.2) (0.7)
Contributions in respect of property, 19 14.8 21.5 14.8 21.5
plant and equipment Disposal of subsidiary undertaking 4 - 11.8 - 14.2 Repayment of loans made - 12.0 - 7.4 ----- ----- ----- ----- Net cash flows used in investing (77.6) (65.5) (77.6) (62.4) activities ----- ----- ----- ----- Cash flows from financing activities Proceeds from borrowings 29.2 85.2 29.2 79.5 Equity dividend paid (55.0) (110.6) (55.0) (110.6) ----- ----- ----- ----- Net cash flows used in financing (25.8) (25.4) (25.8) (31.1) activities ----- ----- ----- -----
Net (decrease)/increase in cash and cash (1.4) (4.0) (1.4)
equivalents Cash and cash equivalents at beginning 1.6 5.6 1.6 (0.3) of year ---- ---- ---- ----
Cash and cash equivalents at end of year 17 0.2 1.6 0.2
1.6 ==== ==== ==== ====
For the purposes of the cash flow statements, cash and cash equivalents comprise To embrace, cover, or include; to confine within; to consist of.
In the law governing patents—grants of an exclusive right or privilege to make, use, or sell an invention or product for a term of years—the term comprise cash at bank and in hand, short-term bank deposits and bank overdrafts.
NOTES TO THE ACCOUNTS 1. General Information
Northern Ireland Electricity plc is a public limited company incorporated and domiciled dom·i·cile
1. A residence; a home.
2. One's legal residence.
v. dom·i·ciled, dom·i·cil·ing, dom·i·ciles
1. in Northern Ireland.
The accounts have been prepared in accordance with IFRS as adopted by the EU and applied in accordance with the provisions of the Companies Act 2006. The accounts are presented in Sterling ([pounds]) with all values rounded to the nearest [pounds] 100,000 except where otherwise indicated.
2. Accounting Policies
Adoption of new and revised accounting standards and interpretations
The Group has adopted the following revised accounting standards that are relevant in the preparation of the accounts for the year ended 31 March 2010:
- IAS1 (revised) "Presentation of Financial Statements". The reconciliation of
changes in equity, previously disclosed dis·close
tr.v. dis·closed, dis·clos·ing, dis·clos·es
1. To expose to view, as by removing a cover; uncover.
2. To make known (something heretofore kept secret). in note 24 to the Group's accounts for
the year ended 31 March 2009 is now a primary statement entitled en·ti·tle
tr.v. en·ti·tled, en·ti·tling, en·ti·tles
1. To give a name or title to.
2. To furnish with a right or claim to something: "Statement of
Changes in Equity". In addition, the Group and Company Statements of
Recognised Income and Expense have been replaced with Group and Company
Statements of Comprehensive Income resulting in some presentational changes
from the previous statement.
- Amendment to paragraph 23 of IFRS 8 'Operating Segments' in the Improvements
to IFRS April 2009. The Group has early adopted the amendment and not
disclosed total assets information for each reportable segment.
The following amendments to existing standards and interpretations were also effective for the current period, but did not have a material impact on the Group's accounts: IAS 1 and IAS 32 Amendment - Financial Instruments Puttable at Fair Value and Obligations Arising on Liquidation (effective for accounting periods beginning on or after 1 January 2009) IAS23 Borrowing Costs (revised) IFRS 7 Amendments to IFRS 7 Improving Disclosures about Financial Instruments IFRIC 14 The Limit in a Defined Benefit Asset, Minimum Funding Requirements and their Interaction IFRS 1 and IAS 27 Amendment - Cost of Investment in a Subsidiary, Jointly Controlled Entity or Associate IFRS 2 Amendment - Vesting Conditions and Cancellations (effective for accounting periods beginning on or after 1 July 2008) IFRIC 13 Customer Loyalty Programmes (effective for accounting periods beginning on or after 1 July 2008) IFRIC 15 Agreements for the Construction of Real Estate (effective for accounting periods beginning on or after 1 January 2009) IFRIC 16 Hedges of a Net Investment in a Foreign Operation (effective for accounting periods beginning on or after 1 October 2008) IFRIC 17 Distribution of Non-Cash Assets to Owners (effective for accounting periods beginning on or after 1 July 2009)
At the date of authorisation of these accounts, the following standards and interpretations considered as relevant to the Group and Company, which have not been applied in the accounts, were in issue but not yet effective:
IAS 27 (revised) Consolidated and Separate Financial Statements (effective for accounting periods beginning on or after 1 July 2009) IAS 24 Revised Related Party Disclosures (effective for accounting periods beginning on or after 1 January 2011) IAS 39 Amendment - Eligible Hedged Items (effective for accounting periods beginning on or after 1 July 2009) IFRS 3 (revised) Business Combinations (effective for accounting periods beginning on or after 1 July 2009) IFRS 9 Financial Instruments: Classification and Measurement (effective for accounting periods beginning on or after 1 January 2013) Improvements Improvements to IFRS (April 2009) (various effective dates)
IFRIC IFRIC International Financial Reporting Interpretations Committee
IFRIC International Financial Reporting Issues Committee 9 and IAS 39 Embedded Inserted into. See embedded system. Derivatives derivatives
In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. (effective for accounting periods
beginning on or after 30 June 2009) IFRIC 14 Amendment - Prepayments of a Minimum Funding Requirement (effective) for accounting periods beginning on or after 1 January 2011) IFRIC 18 Transfers of Assets from Customers (effective for accounting periods beginning after 31 October 2009 in respect of transfers of assets on or after 1 July 2009)
Whilst the directors do not anticipate that the adoption of these standards and interpretations will have a material impact on the Group's accounts in the period of initial application, the adoption of the standards and interpretations may result in certain changes in the presentation of the Group's accounts from 2011 onwards on·ward
Moving or tending forward.
adv. also on·wards
In a direction or toward a position that is ahead in space or time; forward.
Adv. 1. .
The principal accounting policies are set out below:
Basis of consolidation
The Group accounts consolidate the accounts of Northern Ireland Electricity plc (the Company) and entities controlled by the Company (its subsidiaries). Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group.
All intra-group transactions, balances, income and expenses are eliminated on consolidation.
Company's investments in subsidiaries
The Company recognises its investments in subsidiaries at cost less any recognised impairment Impairment
1. A reduction in a company's stated capital.
2. The total capital that is less than the par value of the company's capital stock.
1. This is usually reduced because of poorly estimated losses or gains.
2. loss. Distributions received from subsidiaries are recognised in the income statement. The carrying values of investments in subsidiaries are reviewed annually for any indications of impairment, including whether the carrying value Carrying Value
Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt.
This is different than market value, as it can be higher or lower depending on the circumstances. is impaired See assistive technology. as a result of the receipt of dividends.
Foreign currency translation
The functional and presentational currency of the Company and its subsidiaries is Sterling ([pounds]).
Foreign currency transactions are translated into the functional currency at the rates of exchange prevailing on the dates of the transactions. Foreign exchange gains and losses resulting from settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the exchange rates prevailing at the balance sheet date are recognised in the income statement.
Property, plant and equipment
Property, plant and equipment are included in the balance sheet at cost, less accumulated depreciation and any recognised impairment loss. The cost of self-constructed assets includes the cost of materials, direct labour and an appropriate portion of overheads. Interest on funding attributable to significant capital projects is capitalised during the period of construction provided it meets the recognition criteria in IAS 23 and is written off as part of the total cost of the asset.
Freehold Freehold, borough, United States
Freehold, borough (1990 pop. 10,742), seat of Monmouth co., E central N.J.; settled c.1650, called Monmouth Courthouse (1715–1801), inc. as a town 1869, as a borough 1919. land is not depreciated Depreciated may refer to:
1. Lying in a straight line.
2. Relating to a device whose linkage produces or copies motion in straight lines.
3. basis so as to write off the cost, less estimated residual Residual
See:Residual value values, over their estimated useful economic lives as follows:
Infrastructure assets - up to 40 years Non-operational buildings - freehold and long leasehold An estate, interest, in real property held under a rental agreement by which the owner gives another the right to occupy or use land for a period of time.
leasehold n. - up to 50 years Fixtures and equipment - up to 25 years
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact.
2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or indicate the carrying value may not be recoverable. Where the carrying value exceeds the estimated recoverable amount, the asset is written down to its recoverable amount.
The recoverable amount of property, plant and equipment is the greater of net selling price and value in use. In assessing value in use, estimated future cash flows are discounted to their present value using a pre tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash flows, the recoverable amount is determined for the cash generating unit to which the asset belongs. Impairment losses are recognised in the income statement. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from its continued use. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the net selling price and the carrying amount of the asset.
The cost of acquiring computer software is capitalised and amortised on a straight-line basis over its estimated useful economic life which is between five and ten years. Costs include direct labour relating to software development and an appropriate portion of directly attributable overheads. Interest on funding attributable to significant capital projects is capitalised during the period of construction provided it meets the recognition criteria in IAS 23 and is written off as part of the total cost of the asset.
The carrying value of computer software is reviewed for impairment annually when the asset is not yet in use and subsequently when events or changes in circumstances indicate that the carrying value may not be recoverable.
Gains or losses arising from derecognition of computer software are measured as the difference between the net selling price and the carrying amount of the asset.
Inventories are stated at the lower of average purchase price and net realisable value.
Cash and cash equivalents Cash and cash equivalents comprise cash at bank and in hand and short-term deposits with maturities of three months or less.
Loans and receivables Receivables
An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed Loans and receivables are initially recorded at fair value. After initial recognition, loans and receivables are measured at amortised cost using the effective interest method.
Interest bearing loans and overdrafts Interest bearing loans and overdrafts are initially recorded at fair value, being the proceeds received net of direct issue costs. After initial recognition, interest bearing loans are subsequently measured at amortised cost using the effective interest method. Trade and other receivables Trade receivables do not carry any interest and are recognised and carried at the lower of their original invoiced value and recoverable amount. Provision is made when there is objective evidence that the asset is impaired. Balances are written off when the probability of recovery is assessed as being remote.
Trade payables Trade payables are not interest bearing and are stated at their nominal value Nominal Value
The stated value of an issued security that remains fixed, as opposed to its market value, which fluctuates.
When referring to fixed-income securities, the nominal value is also the face value. .
Borrowing costs attributable attributable
emanating from or pertaining to attribute.
see attributable risk (below).
attributable risk to significant capital projects are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
Operating lease Operating Lease
A lease contract that allows the use of an asset, but does not convey rights similar to ownership of the asset.
An operating lease is not capitalized it is accounted for as a rental expense. contracts
Leases are classified as operating lease contracts whenever the terms of the lease do not transfer substantially all the risks and benefits of ownership to the lessee.
Rentals payable under operating leases are charged to the income statement on a straight-line basis over the lease term.
Revenue is recognised to the extent that it is probable PROBABLE. That which has the appearance of truth; that which appears to be founded in reason. that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services In economics, economic output is divided into physical goods and intangible services. Consumption of goods and services is assumed to produce utility (unless the "good" is a "bad"). It is often used when referring to a Goods and Services Tax. provided in the normal course of business, exclusive of value added tax value added tax n (BRIT) → impuesto sobre el valor añadido or agregado (LAM)
value added tax n (Brit and other sales related taxes.
The following specific recognition criteria criteria (krītēr´ē),
n. must also be met before revenue is recognised:
Interest receivable Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.
Use of System and PSO revenue Revenue is recognised on the basis of units distributed during the year. Revenue includes an assessment of the volume of electricity distributed, estimated using historical consumption patterns.
Transmission service revenue Revenue is recognised in accordance with the schedule of entitlement set by NIAUR for each tariff tariff, tax on imported and, more rarely, exported goods. It is also called a customs duty. Tariffs may be distinguished from other taxes in that their predominant purpose is not financial but economic—not to increase a nation's revenue but to protect domestic period.
Government grants and customer contributions
Government grants and customer contributions received in respect of property, plant and equipment are deferred and released to the income statement by instalments over the estimated useful economic lives of the related assets.
Grants received in respect of expenditure charged to the income statement during the year are included in the income statement.
The tax charge represents the sum of tax currently payable and deferred tax. Tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the tax is also dealt with in equity. Tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes both items of income or expense that are taxable or deductible in other years as well as items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates (and tax laws) that have been enacted or substantially enacted by the balance sheet date. Deferred tax is the tax payable or recoverable on differences between the carrying amount of assets and liabilities in the accounts 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. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax is not recognised on temporary differences where they arise from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination that at the time of the transaction affects neither accounting nor taxable profit nor loss.
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 deferred tax asset to be recovered. Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantially enacted by the balance sheet date.
Final dividends are recorded in the period in which shareholder approval is obtained. Interim dividends are recorded in the period in which they are paid.
Provisions are recognised when (i) the Group has a present obligation (legal or constructive) as a result of a past event (ii) it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and (iii) a reliable estimate can be made of the amount of the obligation. Where the Group expects a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is included within finance costs.
Pensions and other post-retirement benefits
Employees of the Group are entitled to membership of VGPS VGPS Village Green Preservation Society (Kinks album) , which has both defined benefit and defined contribution pension arrangements. The amount recognised in the balance sheet in respect of liabilities represents the present value of the obligations offset by the fair value of assets.
Pension scheme assets are measured at fair value and liabilities are measured using the projected unit method and discounted at a rate equivalent to the current rate of return on a high quality corporate bond of equivalent currency and term to the liabilities. Full actuarial valuations are obtained at least triennially and updated at each balance sheet date. Actuarial gains and losses are recognised in full in the period in which they occur and are recognised outside the income statement and presented in the statement of comprehensive income. The cost of providing benefits under the defined benefit scheme is charged to the income statement over the periods benefiting from employees' service. Past service cost is recognised immediately to the extent that the benefits are already vested. Curtailment losses are recognised in the income statement in the period they occur. The expected return on pension scheme assets and the interest on pension scheme liabilities are included within net finance costs.
Pension costs in respect of defined contribution arrangements are charged to the income statement as they become payable.
The Group has adopted the exemption exemption n. 1) in income taxation, a credit given for each dependent, blindness or other disability, and age over 65, which result in a downward calculation in tax levels. allowed in IFRS 1 to recognise all cumulative actuarial gains and losses at the transition date in reserves.
The Group presents as exceptional items on the face of the income statement those material items of income and expense which, because of the nature and expected infrequency of the events giving rise to them, merit separate presentation to allow shareholders to understand better the elements of financial performance in the year, so as to facilitate comparison with prior periods and to assess better trends in financial performance.
Critical accounting judgements and key sources of estimation estimation
In mathematics, use of a function or formula to derive a solution or make a prediction. Unlike approximation, it has precise connotations. In statistics, for example, it connotes the careful selection and testing of a function called an estimator. uncertainty
Pensions and other post employment benefits Employees of the Group are entitled to membership of VGPS which has both defined benefit and defined contribution arrangements. The cost of providing benefits under the defined benefit scheme is determined using the projected unit method. The key assumptions used for the actuarial valuation are based on the Group's best estimate of the variables that will determine the ultimate cost of providing post-employment benefits, on which further detail is provided in note 22.
3. Operating Segments Information
The Group's operating businesses are organised and managed according to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. the nature of the goods and services provided as described in the Directors' Report. Until 11 March 2009, the Group's operating segments included SONI Limited.
The operating segment information provided below is based on regulated entitlement in line with the basis of information regularly reported to the directors. The adjustment for over-recovery represents the amount by which the Group over-recovered against its regulated entitlement. Inter-segment pricing is determined on an arm's length basis.
In accordance with IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations, SONI is classified as a discontinued operation discontinued operation
A segment of a business that has been abandoned or sold or for which plans for one or another of these actions have been approved. See also continuing operations. in the income statement for the year ended 31 March 2009.
IFRS 5 requires that, in the circumstances of discontinued operations, the profits earned by the continuing operations on sales to the discontinued operations be eliminated on consolidation and attributed to the discontinued operations and vice versa. This representation does not reflect the profits earned by continuing or discontinued operations as if they were stand alone entities. The combination of this treatment is the main reason for the increase in revenue and operating profits from continuing operations to [pounds]242.0m and [pounds]113.5m respectively in the year ended 31 March 2010 from [pounds]206.5m and [pounds] 84.0m respectively in the year ended 31 March 2009.
(i) Revenue and profit - continuing operations
2010 2010 2010 2009 2009 2009 External Internal Total External Internal Total [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m Revenue T&D 236.0 0.2 236.2 197.9 35.2 233.1 Other 0.2 - 0.2 0.3 0.1 0.4 ----- ---- ----- ----- ---- ----- 236.2 0.2 236.4 198.2 35.3 233.5 Inter-group elimination (0.2) (35.3) ----- ----- 236.2 198.2 Adjustment for 5.8 8.3 over-recovery ----- ----- 242.0 206.5 ----- ----- Operating costs T&D (128.5) (123.0) Other 0.9 0.4 Inter-group elimination 0.2 0.1 ----- ----- (127.4) (122.5) ----- ----- Operating profit T&D 107.7 110.1 Other 1.1 0.8 Inter-group elimination - (35.2) ----- ----- 108.8 75.7 Adjustment for 5.8 8.3 over-recovery ----- ---- 114.6 84.0 Finance costs (20.6) (26.2) Net pension scheme (9.8) (7.0) interest ---- ---- Net finance costs (30.4) (33.2) ---- ---- Profit from continuing 84.2 50.8 operations before tax ==== ====
(ii) Revenue and profit - discontinued operations
2010 2010 2010 2009 2009 2009 External Internal Total External Internal Total [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m Revenue SONI - - - 59.2 - 59.2 Adjustment for - (5.5) under-recovery ---- ---- - 53.7 ---- ---- Operating costs SONI - (56.1) Inter-group elimination - 35.2 ---- ---- - (20.9) ---- ---- Operating profit SONI - 3.1 Inter-group elimination - 35.2 ---- ---- - 38.3 Adjustment for - (5.5) under-recovery ---- ---- - 32.8 Interest receivable - 0.4 Finance costs - (0.9) Net pension scheme interest - (0.2) --- ---- Net finance costs - (0.7) --- ---- Profit before tax charge - 32.1 ==== ====
(iii) Revenue and profit - continuing and discontinued operations
The above disclosures are in accordance with IFRS 5. However, the directors believe the following breakdown of the total Group's business gives a more meaningful measure of performance.
Revenue Operating profit 2010 2009 2010 2009 [pounds]m [pounds]m [pounds]m [pounds]m T&D 236.2 233.1 107.7 110.1 SONI - 59.2 - 3.1 Other 0.2 0.4 1.1 0.8 Inter-group elimination (0.2) (35.3) - - ----- ----- ----- ----- 236.2 257.4 108.8 114.0 Adjustment for over-recovery 5.8 2.8 5.8 2.8 ----- ----- ----- ----- Total 242.0 260.2 114.6 116.8 ===== ===== ===== =====
Relating to continuing operations 242.0 206.5 114.6 84.0 Relating to discontinued operations - 53.7 - 32.8
----- ----- ----- ----- Total 242.0 260.2 114.6 116.8 ===== ===== ===== ===== (iv) Other information 2010 2009 [pounds]m [pounds]m Capital additions Continuing operations: T&D 95.1 104.7 Other - 0.1 Discontinued operations: SONI - 4.8 ----- ----- 95.1 109.6 ===== ===== Depreciation and amortisation Continuing operations: T&D 38.5 36.7 Other 0.1 0.2 ---- ---- 38.6 36.9 ==== ==== Increase in provisions Continuing operations: T&D 1.5 0.7 ==== ==== Major customers
The table below shows revenue received by the Group from
fellow Viridian undertakings:
2010 2009 [pounds]m [pounds]m Continuing operations: T&D 186.1 173.2 Discontinued operations: SONI - 35.2 ----- ----- 186.1 208.4 ===== =====
During the year ended 31 March 2010 T&D received revenue of [pounds]35.0m from SONI.
(v) Geographical ge·o·graph·ic also ge·o·graph·i·cal
1. Of or relating to geography.
2. Concerning the topography of a specific region.
The following table provides an analysis of the Group's external revenue based on the location of customers.
UK RoI Total UK RoI Total 2010 2010 2010 2009 2009 2009 [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m Continuing operations T&D 235.5 6.5 242.0 192.5 14.0 206.5 ===== ===== ===== ===== ===== ===== Discontinued operations SONI - - - 53.7 - 53.7 ===== ===== ===== ===== ===== =====
RoI revenue relates to use of system charges to suppliers based in the RoI, which supply energy to customers based in Northern Ireland.
The Group's assets are all located within the UK.
4. Discontinued operations
On 11 March 2009 the sale of SONI was completed.
(i) Group Income Statement
The results of discontinued operations in the Group Income Statement are as follows: 2010 2009 [pounds]m [pounds]m Revenue - 53.7 Operating costs - (20.9) ---- ---- Operating profit - 32.8 Interest receivable - 0.4 Finance costs - (0.9) Net pension scheme interest - (0.2) ---- ---- Net finance costs - (0.7) ---- ---- Profit from discontinued operations before tax - 32.1 Current tax charge - (9.7) Deferred tax credit - 0.9 ---- ---- Total tax charge - (8.8) ---- ---- Profit from discontinued operations after tax - 23.3
(Loss)/profit on disposal of discontinued operations before (1.1) 15.7
Tax charge relating to loss on disposal of discontinued (0.7) -
operations ---- ----
(Loss)/profit on disposal of discontinued operations (1.8) 15.7
(Loss)/profit for the year from discontinued operations (1.8) 39.0
The loss on disposal of discontinued operations in the current year arises from the finalisation of pension arrangements in respect of SONI employees and related adjustments to the disposal consideration.
The tax charge in the Group Income Statement relating to the profit on disposal of discontinued operations is [pounds]0.7m (2009 - [pounds]nil).
(ii) Cash Flow Statement
The cash flows of discontinued operations which have been included in the Cash Flow Statement are as follows:
Group Company 2010 2009 2010 2009 [pounds]m [pounds]m [pounds]m [pounds]m
Net cash flows (used in)/from operating cash flows - (7.7) -
Net cash flows (used in)/from investing activities - (5.2) -
Net cash flows provided by/(used in) financing - 9.5 -
An analysis of the assets and liabilities of SONI at the date of disposal and the profit arising on disposal is as follows:
As at 11 March 2009 [pounds]m Total disposal consideration
Net assets: Property, plant and equipment 15.4 Deferred tax asset 0.4 Trade and other receivables 13.4 Cash and cash equivalents 2.4 Trade and other payables (19.4) Loans (12.0) Pension liability (1.7) ----- Total net liabilities sold (1.5) ----- Costs of disposal 1.2 ----- Profit on disposal 15.7 ===== Net cash inflow arising on disposal: Cash consideration 15.4 Costs of disposal (1.2) ----- Net proceeds received by the Company
Cash and cash equivalents disposed of (2.4) ----- 11.8 =====
(iii) Investment in Jointly Controlled Operation
Since 1 November November: see month. 2007, SONI has undertaken the role of market operator to the SEM through a jointly controlled operation, SEMO SEMO Southeast Missouri State University
SEMO State Emergency Management Office
SEMO Supply and Equipment Management Officer
SEMO Selma to Montgomery National Historic Trail (US National Park Service) , with EirGrid EirGrid plc is the state-owned electric power transmission operator in the Republic of Ireland. It is a public limited company registered under the Companies Acts; 100% of its shares are held by the Minister for Communications, Marine and Natural Resources who appoints the board. . Under the joint control agreement, SONI is responsible for 25% of the funding of SEMO.
An analysis of SONI's share of SEMO's assets and liabilities at the date of disposal is as follows: [pounds]m Non-current assets 7.8 Current assets 6.4 ----- Total assets 14.2 Current liabilities (13.5) ----- Share of net assets of jointly controlled operation
The Group's share of the jointly controlled operation's operating profits for the period ended 31 March 2009, included in discontinued operations, was as follows: 2009 [pounds]m Revenue 3.2 Operating costs (2.6) --- Share of operating profit of jointly controlled operation
5. Revenue and Operating Costs operating costs npl → gastos mpl operacionales
An analysis of external revenue is as follows:
2010 2009 Continuing Discontinued Total Continuing Discontinued Total [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m Regulated energy 242.0 - 242.0 206.5 53.7 260.2 business revenue Interest - - - - 0.4 0.4 receivable ----- ----- ----- ----- ----- ----- 242.0 - 242.0 206.5 54.1 260.6 ===== ===== ===== ===== ===== =====
Operating costs are analysed as follows:
2010 2009 Continuing Discontinued Total Continuing Discontinued Total [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m Energy costs - - - - 5.2 5.2 Employee costs 11.3 - 11.3 11.2 3.9 15.1 (note 6) Depreciation and 38.6 - 38.6 36.9 - 36.9 amortisation Other operating 77.5 - 77.5 74.4 11.8 86.2 charges ----- ----- ----- ----- ----- ----- 127.4 - 127.4 122.5 20.9 143.4 ===== ===== ===== ===== ===== ===== Operating costs include: 2010 2009 [pounds]m [pounds]m Depreciation charge on property, plant and equipment 40.8
Associated release of customers' contributions and grants (7.8) (7.4) ---- ---- 33.0 31.2 Amortisation of intangible assets 5.6
Impairment of property, plant & equipment -
Minimum payments due under operating leases 0.4
Cost of inventories recognised as an expense 1.5 2.2 Auditors' remuneration [pounds]'000 [pounds]'000 Auditors' remuneration in respect of services to the Group and Company: Audit of the accounts 36 39 Taxation services 2 12 Other assurance 4 4 6. Employees Employee costs 2010 2009 Continuing Discontinued Total Continuing Discontinued Total [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m Salaries 11.6 - 11.6 11.6 3.3 14.9 Social security 1.1 - 1.1 1.1 0.3 1.4 costs Pension costs - defined 0.3 - 0.3 0.3 0.1 0.4 contribution plans - defined benefit 1.5 - 1.5 1.6 0.3 1.9 plans ---- ---- ---- ---- ---- ---- 14.5 - 14.5 14.6 4.0 18.6 Less: charged to (3.2) - (3.2) (3.4) (0.1) (3.5) the balance sheet ---- ---- ---- ---- ---- ---- Charged to the 11.3 - 11.3 11.2 3.9 15.1 income statement ==== ==== ==== ==== ==== ==== Employee numbers Average during Actual headcount the year at 31 March Number Number Number Number 2010 2009 2010 2009 T&D 231 227 227 232 SONI - 68 - - Other 29 30 29 30 --- --- --- --- 260 325 256 262 === === === === Directors' emoluments
The remuneration of the directors paid by the Company was as follows:
2010 2009 [pounds]m [pounds]m Emoluments in respect of qualifying services 0.7
Aggregate contributions to defined contribution pension schemes - 0.1
Emoluments in respect of qualifying services for the year ended 31 March 2010 included deferred remuneration awarded in the year but payable in future years. No amounts were paid to directors in respect of long term incentive plans.
The remuneration in respect of the highest paid director was as follows:
2010 2009 [pounds]'000 [pounds]'000 Emoluments 589 328 Total accrued pension at 31 March (per annum) 146 - 2010 2009 Number Number Members of the defined benefit pension scheme 1 - Members of the defined contribution scheme 1 1 No directors exercised share options during the year or received shares under long-term incentive schemes. The Company made pension contributions of [pounds]21,000 in respect of the directors during the year ended 31 March 2010 (2009 - [pounds] 71,000). 7. Net Finance Costs 2010 2009 [pounds]m [pounds]m Interest receivable: Bank interest - 0.4 ---- ---- Interest payable: Amounts owed to fellow Viridian undertakings (8.6) (15.2) Eurobond (12.0) (12.0) ---- ---- (20.6) (27.2) Less: capitalised interest 0.1 0.1 ---- ---- Total interest charged to the Group Income Statement (20.5)
Other finance costs: Amortisation of financing charges (0.1) - ---- ---- Total finance costs (20.6) (27.1) ---- ---- Net pension scheme interest: Expected return on pension scheme assets 25.0
Interest on pension scheme liabilities (34.8) (38.1) ---- ---- (9.8) (7.2) ---- ---- Net finance costs (30.4) (33.9) ==== ==== Relating to continuing operations (30.4)
Relating to discontinued operations - (0.7) ---- ---- (30.4) (33.9) ==== ====
Interest charged to the balance sheet during the year was capitalised using a weighted average interest rate of 2.6% (2009 - 5.0%).
8. Tax Charge
(i) Analysis of charge in the year
2010 2009 Group Income Statement [pounds]m [pounds]m Current tax charge UK corporation tax at 28% (2009 - 28%) 18.7
Corporation tax overprovided in previous years (1.1) - ---- ---- Total current tax charge 17.6 21.9 Deferred tax charge
The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property.
Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real and reversal reversal n. the decision of a court of appeal ruling that the judgment of a lower court was incorrect and is reversed. The result is that the lower court which tried the case is instructed to dismiss the original action, retry the case, or is ordered to change its of temporary differences in current year 5.8
Origination and reversal of temporary differences relating to (0.9)
- prior years ---- ---- Total deferred tax charge 4.9 1.0 ---- ---- Total tax charge 22.5 22.9 ==== ==== Relating to continuing operations 21.8
Relating to discontinued operations 0.7 8.8 ---- ---- 22.5 22.9 ==== ==== Tax relating to items charged in other comprehensive income Deferred tax Actuarial losses on pension liability (16.7)
(ii) Reconciliation of total tax charge
The tax charge in the Group Income Statement for the year is lower than the standard rate of corporation tax in the UK of 28% (2009 - 28%). The differences are reconciled rec·on·cile
v. rec·on·ciled, rec·on·cil·ing, rec·on·ciles
1. To reestablish a close relationship between.
2. To settle or resolve.
2010 2009 [pounds]m [pounds]m Accounting profit from continuing and discontinued operations 83.1 82.9 before tax charge Accounting profit multiplied by the UK standard rate of corporation tax of 28% (2009 - 28%) 23.3
Tax overprovided in previous years (2.0)
Other permanent differences 1.2 (0.3) ---- ---- Tax charge for the year 22.5 22.9 ==== ====
There are no tax consequences for the Company attaching to the payment of dividends to shareholders.
(iii) Deferred tax
The deferred tax included in the Group and Company Balance Sheet is as follows: 2010 2009 [pounds]m [pounds]m Deferred tax assets Pension liability 38.1 21.8 Other temporary differences 2.7 3.5 ---- ---- 40.8 25.3 ---- ---- Deferred tax liabilities Accelerated capital allowances 119.6
Held-over gains on property disposals 1.3 1.3 ----- ----- 120.9 117.2 ----- ----- Net deferred tax liability 80.1 91.9 ===== =====
The deferred tax included in the Group Income Statement is as follows:
2010 2009 [pounds]m [pounds]m Accelerated capital allowances 3.7
Other temporary differences 0.8
Temporary differences in respect of pensions (0.4)
Deferred tax charge/(credit) in respect of discontinued 0.8 (0.9) operations --- --- Deferred tax charge 4.9 1.0 === === Relating to continuing operations 4.2
Relating to discontinued operations 0.7 (0.9) --- --- 4.9 1.0 === ===
9. Profit for the Financial Year
The profit dealt with in the accounts of the Company is [pounds]60.6m (2009 - [pounds]76.7m). No separate income statement is presented for the Company as permitted by Section 408 of the Companies Act 2006.
10. Equity Dividends
Amounts recognised as distributions to equity holders in the 2010 2009 year: [pounds]m [pounds]m Equity dividends on ordinary shares: Interim dividend of 37.78p per share for the year ended 31 March 2010 (2009 - 75.98p per share) 55.0 110.6 ==== =====
11. Property, Plant and Equipment
Group Non- operational Fixtures Infrastructure land and and assets buildings equipment Total [pounds]m [pounds]m [pounds]m [pounds]m Cost: At 1 April 2008 1,427.4 5.1 39.6 1,472.1 Additions 101.2 - 2.9 104.1 Disposals (0.4) - - (0.4) ------- ------- ------- ------- At 31 March 2009 1,528.2 5.1 42.5 1,575.8 Additions 92.6 - 2.3 94.9 Disposals (0.7) - - (0.7) ------- ------- ------- ------- At 31 March 2010 1,620.1 5.1 44.8 1,670.0 ------- ------- ------- ------- Depreciation: At 1 April 2008 496.8 1.0 30.7 528.5 Charge for the year 35.7 0.1 2.8 38.6 Disposals (0.4) - - (0.4) ------- ------- ------- ------- At 31 March 2009 532.1 1.1 33.5 566.7 Charge for the year 38.0 0.1 2.7 40.8 Disposals (0.6) - - (0.6) ------- ------- ------- ------- At 31 March 2010 569.5 1.2 36.2 606.9 ------- ------- ------- ------- Net book value At 31 March 2008 930.6 4.1 8.9 943.6 ======= ======= ======= ======= At 31 March 2009 996.1 4.0 9.0 1,009.1 ======= ======= ======= ======= At 31 March 2010 1,050.6 3.9 8.6 1,063.1 ======= ======= ======= ======= Included in Group infrastructure assets are amounts in respect of assets under construction amounting to [pounds]31.7m (2009 - [pounds]40.4m) and capitalised interest of [pounds] 4.5m (2009 - [pounds]4.5m). Company Non- operational Fixtures Infrastructure land and and assets buildings equipment Total [pounds]m [pounds]m [pounds]m [pounds]m Cost: At 1 April 2008 1,427.0 5.1 39.6 1,471.7 Additions 101.2 - 2.9 104.1 ------- ------- ------- ------- At 31 March 2009 1,528.2 5.1 42.5 1,575.8 Additions 92.6 - 2.3 94.9 Disposals (0.7) - - (0.7) ------- ------- ------- ------- At 31 March 2010 1,620.1 5.1 44.8 1,670.0 ------- ------- ------- ------- Depreciation: At 1 April 2008 496.4 1.0 30.7 528.1 Charge for the year 35.7 0.1 2.8 38.6 ------- ------- ------- ------- At 31 March 2009 532.1 1.1 33.5 566.7 Charge for the year 38.0 0.1 2.7 40.8 Disposals (0.6) - - (0.6) ------- ------- ------- ------- At 31 March 2010 569.5 1.2 36.2 606.9 ------- ------- ------- ------- Net book value At 31 March 2008 930.6 4.1 8.9 943.6 ======= ======= ======= ======= At 31 March 2009 996.1 4.0 9.0 1,009.1 ======= ======= ======= ======= At 31 March 2010 1,050.6 3.9 8.6 1,063.1 ======= ======= ======= =======
Included in Company infrastructure assets are amounts in respect of assets under construction amounting to [pounds]31.7m (2009 - [pounds]40.4m) and capitalised interest of [pounds]4.5m (2009 - [pounds]4.5m).
12. Investments Company - Investment in subsidiaries 2010 2009 [pounds]m [pounds]m At 1 April - 0.5 Impairment of investment in NIE Generation Limited - (0.5) --- --- At 31 March - - === === At 31 March 2010, the Company held an investment of 100% of ordinary shares in NIE Generation Limited, a company incorporated in Northern Ireland. NIE Generation Limited ceased all operating activities on 14 September 2007 resulting in an impairment of the Company's carrying value of its investment in NIE Generation Limited as at 31 March 2009.
13. Intangible Assets
Group and Company - Computer software 2010 [pounds]m Cost: At 1 April 2008 61.6 Additions acquired externally 0.7 ---- At 31 March 2009 62.3 Additions acquired externally 0.2 ---- At 31 March 2010 62.5 ---- Amortisation/impairment: At 1 April 2008 12.6 Amortisation charge for the year 5.7 ---- At 31 March 2009 18.3 Amortisation charge for the year 5.6 ---- At 31 March 2010 23.9 ---- Net book value: At 31 March 2008 49.0 ==== At 31 March 2009 44.0 ==== At 31 March 2010 38.6 ====
Computer software includes capitalised interest of [pounds]0.8m (2009 - [pounds]0.9m).
14. Financial Assets Group and Company 2010 2009 [pounds]m [pounds]m Non-current Other loans 0.1 0.2 === === Current Other loans 0.2 0.2 === === The directors consider that the carrying amount of financial assets equates to fair value. 15. Inventories Group and Company 2010 2009 [pounds]m [pounds]m Materials and consumables 3.8 3.9 Work-in-progress 2.2 2.2 --- --- 6.0 6.1 === === 16. Trade and Other Receivables Group and Company 2010 2009 [pounds]m [pounds]m
Trade receivables (including unbilled un·billed
1. Not having been billed or charged for: unbilled medical charges.
2. Appearing, as in a movie, without being credited: an unbilled walk-on. consumption) 10.3 9.3 Other receivables
Amounts owed by fellow Viridian undertakings 32.2
Prepayments and accrued income 0.5 0.4 ---- ---- 43.4 46.1 ==== ====
Trade receivables are stated net of a provision of [pounds]0.8m (2009 - [pounds]0.7m) for estimated irrecoverable amounts based on past default experience:
Group and Company 2010 2009 [pounds]m [pounds]m At 1 April 0.7 0.5 Increase in provision 0.3 0.3 Bad debts written off (0.2) (0.1) --- --- At 31 March 0.8 0.7 === === The above provision includes [pounds]0.6m (2009 - [pounds]0.6m) in respect of individual balances impaired based on the age of debt and past default experience. There is no provision for estimated irrecoverable amounts included in 'amounts owed by fellow Viridian undertakings' which are all within credit terms.
The following shows an aged analysis of trade receivables:
Group and Company 2010 2009 [pounds]m [pounds]m Within credit terms: Current 8.9 6.9 Past due but not impaired: Less than 30 days - - 30 - 60 days 0.3 0.5 60 - 90 days - 0.1 + 90 days 1.1 1.8 ---- ---- 10.3 9.3 ==== ==== The credit quality of trade receivables that are neither past due nor impaired is assessed by reference to external credit ratings where available, otherwise historical information relating to counterparty default rates is used. The directors consider that the carrying amount of trade and other receivables approximates to fair value.
17. Cash and Cash Equivalents
Group and Company 2010 2009 [pounds]m [pounds]m Cash at bank and in hand 0.2 1.6 === ===
Cash at bank and in hand earns interest at floating rates based on daily bank deposit rates. The directors consider that the carrying amount of cash and cash equivalents equates to fair value.
18. Trade and Other Payables Group and Company 2010 2009 [pounds]m [pounds]m Trade payables 7.0 11.5 Payments received on account 27.8 23.1 Amounts owed to fellow Viridian undertakings 43.0 46.1 Tax and social security 3.1 1.6 Accruals 23.1 16.4 ----- ----- 104.0 98.7 ===== ===== The directors consider that the carrying amount of trade and other payables equates to fair value. 19. Deferred Income Group and Company Customers' Grants contributions Total [pounds]m [pounds]m [pounds]m Current 0.5 6.4 6.9 Non-current 9.6 189.5 199.1 ----- ----- ----- Total at 1 April 2008 10.1 195.9 206.0 ----- ----- ----- Receivable - 21.5 21.5 Released to income statement (0.5) (6.9) (7.4) ----- ----- ----- Current 0.5 6.9 7.4 Non-current 9.1 203.6 212.7 ----- ----- ----- Total at 31 March 2009 9.6 210.5 220.1 ----- ----- ----- Receivable - 14.8 14.8 Released to income statement (0.5) (7.3) (7.8) ----- ----- ----- Current 0.5 7.3 7.8 Non-current 8.6 210.7 219.3 ----- ----- ----- Total at 31 March 2010 9.1 218.0 227.1 ===== ===== ===== 20. Financial Liabilities Group and Company 2010 2009 [pounds]m [pounds]m Current Interest payable on Eurobond 6.4 6.4 Amounts owed to fellow Viridian undertakings 317.6 288.4 ----- ----- 324.0 294.8 ===== ===== Non-current Eurobond 173.5 173.4 ===== =====
Loans and other borrowings outstanding are repayable re·pay
v. re·paid , re·pay·ing, re·pays
1. To pay back: repaid a debt.
2. as follows:
Group and Company 2010 2009 [pounds]m [pounds]m In one year or less or on demand 324.0 294.8 In more than five years 173.5 173.4 ----- ----- 497.5 468.2 ===== =====
The Group's objectives, policies and strategies in respect of financial liabilities and capital management are disclosed on pages 16-17 of the Directors' Report.
The principal features of the Group's borrowings are as follows:
- the Eurobond Eurobond
A bond that is denominated in a different currency than the one of the country in which the bond is issued.
A eurobond is usually categorized by the currency in which it is denominated, and is usually issued by an international syndicate. is repayable in 2018 and carries a fixed rate of interest of
- amounts owed to fellow Viridian undertakings are repayable on demand. The
weighted average interest rate during the year was 2.62% (2009 - 5.07%).
With the exception of the Eurobond which had a fair value at 31 March 2010 of [pounds] 189.1m (2009 - [pounds]201.5m) based on current market prices, the directors consider that the carrying amount of loans and other borrowings equates to fair value. An increase of 0.5% in effective interest rates would increase the interest charged to the Group Income Statement by [pounds]1.6m (2009 - [pounds]1.6m); a decrease of 0.25% would reduce the interest charged to the Group Income Statement by [pounds]0.8m (2009 - [pounds]0.7m). The tables below summarise the maturity profile of the Group and Company's financial liabilities (including trade and other payables) based on contractual undiscounted payments. At 31 March 2010 On Within 3 3 to 12 1 to 5 More than Group and Company demand months months years 5 years Total [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m Interest payable on Eurobond - - 12.0 48.1 48.2 108.3 Eurobond - - - - 175.0 175.0 Amounts owed to fellow 317.6 - - - - 317.6 Viridian undertakings Trade and other payables 24.7 76.2 - - - 100.9 ----- ----- ----- ----- ----- ----- 342.3 76.2 12.0 48.1 223.2 701.8 ===== ===== ===== ===== ===== ===== At 31 March 2009 On Within 3 3 to 12 1 to 5 More than Group and Company demand months months years 5 years Total [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m Interest payable on Eurobond - - 12.0 48.0 60.3 120.3 Eurobond - - - - 175.0 175.0 Amounts owed to fellow 288.4 - - - - 288.4 Viridian undertakings Trade and other payables 21.5 75.6 - - - 97.1 ----- ----- ----- ----- ----- ----- 309.9 75.6 12.0 48.0 235.3 680.8 ===== ===== ===== ===== ===== ===== 21. Analysis of Net Debt At Non At 1 April Cash cash 31 March 2009 flow movement 2010 [pounds]m [pounds]m [pounds]m [pounds]m Cash and cash equivalents 1.6 (1.4) - 0.2 Interest payable on Eurobond (6.4) (12.0) 12.0 (6.4) Current financial liabilities (288.4) (29.2) - (317.6) Eurobond (173.4) - (0.1) (173.5) ------ ------ ------ ------ (466.6) (42.6) 11.9 (497.3) ====== ====== ====== ====== 22. Provisions Group and Company Liability and damage Environment claims Other Total [pounds]m [pounds]m [pounds]m [pounds]m Current 2.8 0.6 0.4 3.8 Non-current 5.5 2.6 - 8.1 --- --- --- --- Total at 1 April 2009 8.3 3.2 0.4 11.9 --- --- --- ---- Applied in the year (1.5) (0.5) (0.2) (2.2) Increase in provisions 0.1 1.2 0.2 1.5 Release to income statement (2.0) (0.1) - (2.1) Unwinding of discount 0.1 - - 0.1 --- --- --- --- Current 0.4 0.9 0.4 1.7 Non-current 4.6 2.9 - 7.5 --- --- --- --- Total at 31 March 2010 5.0 3.8 0.4 9.2 === === === === Environment Provision has been made for expected costs of decontamination and demolition arising from obligations in respect of power station sites formerly owned by the Group. It is anticipated that most expenditure will take place within the next five years. Liability and damage claims Notwithstanding the intention of the directors to defend vigorously claims made against the Group, liability and damage claim provisions have been made which represent the directors' best estimate of costs expected to arise from ongoing third party litigation matters and employee claims. These provisions are expected to be utilised within a period not exceeding five years.
23. Pension Commitments
Most employees of the Group are members of VGPS. This has two sections: 'Options' which is a money purchase arrangement whereby the Group generally matches the members' contributions up to a maximum of 6% 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. Hewitt, the actuaries to VGPS, have provided a valuation of Focus under IAS 19 as at 31 March 2010 based on the following assumptions (in nominal terms) and using the projected unit method. 2010
Rate of increase in pensionable salaries 4.45% per annum 4.0% per annum Rate of increase in pensions in payment 3.45% per annum 3.0% per annum Discount rate 5.60% per annum 6.75% per annum Inflation assumption 3.45% per annum 3.0% per annum Life expectancy:
Current pensioners (at age 60) - males 25.0 years 23.7 years
Current pensioners (at age 60) - females 27.7 years 26.4 years
Future pensioners (at age 60) - males *26.7 years 24.5 years
Future pensioners (at age 60) - females *29.4 years 27.2 years
*Life expectancy Life Expectancy
1. The age until which a person is expected to live.
2. The remaining number of years an individual is expected to live, based on IRS issued life expectancy tables. from age 60 for males and females currently aged 40.
The life expectancy assumptions are based on standard actuarial mortality tables and include an allowance for future improvements in life expectancy.
The valuation under IAS 19 at 31 March 2010 shows a Group net pension liability relating to continuing operations (before deferred tax) of [pounds]136.2m (2009 - [pounds] 77.9m). A 0.5% increase/decrease in the assumed discount rate would decrease/ increase the net pension liability by [pounds]45.8m. A 0.5% increase/decrease in the assumed inflation rate would increase/decrease the net pension liability by [pounds] 43.8m. A one year increase/decrease in life expectancy would increase/decrease the net pension liability by [pounds]17.9m.
Assets and Liabilities
The Group and Company's share of the assets and liabilities of Focus and the expected rates of return are:
Value at Expected Value at Expected 31 March rate of 31 March rate of 2010 return 2009 return [pounds]m % [pounds]m % Equities 210.3 7.7 137.1 7.2 Bonds 314.7 5.0 309.6 5.2 Other 19.4 4.5 3.2 4.0 ----- ----- Total market value of assets 544.4 449.9 Actuarial value of liabilities (680.6) (527.8) ----- ----- Net pension liability (136.2) (77.9) ===== ===== The expected rate of return on equities is based on the expected median return over the long-term. The expected rate of return on bonds is measured directly from actual market yields for UK gilts and corporate bonds. Other assets include cash balances and other investments. The expected rate of return on these assets is measured directly from short-term market interest rates.
Changes in the market value of assets
Group Continuing operations Discontinued operations 2010 2009 2010 2009 [pounds]m [pounds]m [pounds]m [pounds]m Market value of assets at 1 April 449.9 532.9 - 10.6 Expected return 25.0 30.4 - 0.5 Contributions from employer 10.0 9.7 - 0.7 Contributions from scheme members 0.2 0.4 - 0.1 Benefits paid (34.7) (32.6) - (0.7) Actuarial gain / (loss) 88.4 (90.9) - (1.7) Disposal of discontinued 5.6 - - (9.5) operations ----- ----- ----- ----- Market value of assets at 31 March 544.4 449.9 - - ===== ===== ===== ===== Company Continuing operations Discontinued operations 2010 2009 2010 2009 [pounds]m [pounds]m [pounds]m [pounds]m Market value of assets at 1 April 449.9 532.9 - - Expected return 25.0 30.4 - - Contributions from employer 10.0 9.7 - - Contributions from scheme members 0.2 0.4 - - Benefits paid (34.7) (32.6) - - Actuarial gain / (loss) 88.4 (90.9) - - Disposal of discontinued 5.6 - - - operations ----- ----- ----- ----- Market value of assets at 31 March 544.4 449.9 - - ===== ===== ===== =====
Changes in the actuarial value of liabilities
Group Continuing operations Discontinued operations 2010 2009 2010 2009 [pounds]m [pounds]m [pounds]m [pounds]m Actuarial value of liabilities at 527.8 586.7 - 12.0 1 April Interest cost 34.8 37.4 - 0.7 Current service cost 1.4 1.6 - 0.3 Curtailment loss 0.1 - - - Contributions from scheme members 0.2 0.4 - 0.1 Benefits paid (34.7) (32.6) - (0.7) Actuarial loss / (gain) 148.1 (65.7) - (1.2) Disposal of discontinued 2.9 - - (11.2) operations ----- ----- ----- ----- Actuarial value of liabilities at 680.6 527.8 - - 31 March ===== ===== ===== ===== Company Continuing operations Discontinued operations 2010 2009 2010 2009 [pounds]m [pounds]m [pounds]m [pounds]m Actuarial value of liabilities at 527.8 586.7 - - 1 April Interest cost 34.8 37.4 - - Current service cost 1.4 1.6 - - Curtailment loss 0.1 - - - Contributions from scheme members 0.2 0.4 - - Benefits paid (34.7) (32.6) - - Actuarial loss / (gain) 148.1 (65.7) - - Disposal of discontinued 2.9 - - - operations ----- ----- ----- ----- Actuarial value of liabilities at 680.6 527.8 - - 31 March ===== ===== ===== ===== The Group expects to make contributions of [pounds]1.9m to Focus in 2010/11 in respect of current service pension costs. During the year ended 31 March 2010, the Group made contributions of [pounds]6.0m in respect of past service pension costs; it is expected that contributions in respect of past service will increase significantly in 2010/11 reflecting lower than expected investment returns during the three year period since the last valuation and changes in mortality assumptions reflecting VGPS recent experience and the continuing upward trend in observed life expectancies. The Group's share of VGPS service costs is allocated based on the pensionable payroll. Contributions from employer, interest cost, asset returns and experience gains or losses are allocated based on the Group's share of the VGPS net pension liability.
Analysis of the amount charged to operating Group Company costs (before capitalisation n. 1. same as capitalization.
Noun 1. capitalisation - writing in capital letters
writing - letters or symbols that are written or imprinted on a surface to represent the sounds or words of a language; "he turned the paper )
2010 2009 2010 2009 [pounds]m [pounds]m [pounds]m [pounds]m Current service cost (1.4) (1.9) (1.4) (1.6) Curtailment loss (0.1) - (0.1) - --- --- --- --- Total operating charge (1.5) (1.9) (1.5) (1.6) === === === === Relating to continuing operations (1.5) (1.6) (1.5)
Relating to discontinued operations - (0.3) - - --- --- --- --- (1.5) (1.9) (1.5) (1.6) === === === === Focus is closed to new members and therefore under the projected unit method the current service cost for members of this section as a percentage of salary will increase as they approach retirement age. Analysis of the amount (charged)/credited to Group Company net pension scheme interest 2010 2009 2010 2009 [pounds]m [pounds]m [pounds]m [pounds]m Expected return on assets 25.0 30.9 25.0 30.4 Interest on liabilities (34.8) (38.1) (34.8) (37.4) ---- ---- ---- ---- Net pension scheme interest (9.8) (7.2) (9.8) (7.0) ==== ==== ==== ==== Relating to continuing operations (9.8) (7.0) (9.8)
Relating to discontinued operations - (0.2) - - --- --- --- --- (9.8) (7.2) (9.8) (7.0) === === === ===
The actual return on Group Focus assets was [pounds]113.4m (2009 - loss of [pounds]61.7m). The actual return on Company Focus assets was [pounds]113.4m (2009 - loss of [pounds]60.5m).
Analysis of amount recognised in the Group Company Statement of Comprehensive Income 2010 2009 2010 2009 [pounds]m [pounds]m [pounds]m [pounds]m Actuarial gain/(loss) on assets 88.4 (92.6) 88.4
Actuarial (loss)/gain on liabilities (148.1) 66.9 (148.1) 65.7 ----- ----- ------ ------ Net actuarial loss (59.7) (25.7) (59.7) (25.2) ===== ===== ===== ===== Relating to continuing operations (59.7) (25.2) (59.7)
Relating to discontinued operations - (0.5) - - ----- ----- ----- ----- (59.7) (25.7) (59.7) (25.2) ===== ===== ===== ===== The cumulative actuarial losses recognised in the Group and Company Statements of Comprehensive Income since 1 April 2004 are [pounds]38.5m and [pounds]44.4m respectively (2009 - actuarial gains of [pounds]21.2m and [pounds]15.3m). The directors are unable to determine how much of the net pension liability recognised on transition to IFRS and taken directly to equity is attributable to actuarial gains and losses since the inception of Focus. Consequently, the directors are unable to determine the amount of actuarial gains and losses that would have been recognised in the Group and Company Statements of Comprehensive Income shown before 1 April 2004. Group Company 2010 2009 2008 2007 2006 2010 2009 2008 2007 2006 [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m History of experience gains and losses Experience 88.4 (92.6) (28.5) (22.8) 86.5 88.4 (90.9) (23.4) (19.5) 74.0 (losses)/ gains on assets
Experience (3.6) (0.7) (0.4) (4.6) (30.6) (3.6) (0.7) (0.3) (3.9) (26.1) losses on
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- Group Company At 31 2010 2009 2008 2007 2006 2010 2009 2008 2007 2006 March [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m Market 544.4 449.9 543.5 672.6 676.0 544.4 449.9 532.9 574.4 576.5 value of assets Actuarial(680.6)(527.8)(598.7)(759.6)(790.3)(680.6)(527.8)(586.7)(647.8)(673.7) value of
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- Net (136.2) (77.9) (55.2) (87.0)(114.3)(136.2) (77.9) (53.8) (73.4) (97.2) pension liability
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Relating (136.2) (77.9) (53.8) (87.0)(114.3)(136.2) (77.9) (53.8) (73.4) (97.2) to continuing operations Relating - - (1.4) - - - - - - - to discontinued operations ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- (136.2) (77.9) (55.2) (87.0)(114.3)(136.2) (77.9) (53.8) (73.4) (97.2) ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
24. Share Capital and Equity
2010 2009 [pounds]m [pounds]m Share capital 36.4 36.4 Share premium 24.4 24.4 Capital redemption reserve 6.1 6.1 Accumulated profits 21.2 58.6 ----- ----- TOTAL EQUITY 88.1 125.5 ===== =====
The balance classified as share capital comprises the nominal value of the Company's equity share capital.
The balance as share premium records the total net proceeds Net Proceeds
The amount received after all costs are deducted from the sale of a piece of property or security.
In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). on the issue of the Company's equity share capital less the nominal value of the share capital.
The balance classified as capital redemption The liberation of an estate in real property from a mortgage.
Redemption is the process by which land that has been mortgaged or pledged is bought back or reclaimed. It is accomplished through a payment of the debt owed or a fulfillment of the other conditions. reserve arises from the legal requirement to maintain the capital of the Company following the return of that amount of capital to shareholders on 2 August 1995.
Allotted and fully paid share capital: 2010 2009 [pounds]m [pounds]m 145,566,431 ordinary shares of 25p each 36.4 36.4 ==== ====
25. Lease Obligations
Property, plant and equipment
The Group and Company have entered into leases on certain items of property, plant and equipment. These leases contain options for renewal before the expiry of the lease term at rentals based on market prices at the time of renewal.
The future minimum lease payments under non-cancellable operating leases are as follows: 2010 2009 [pounds]m [pounds]m Within one year 0.5 0.5 After one year but not more than five years 1.7 1.8 More than five years 5.3 5.7 ---- ---- 7.5 8.0 ==== ====
26. Commitments and Contingent Fortuitous; dependent upon the possible occurrence of a future event, the existence of which is not assured.
The word contingent denotes that there is no present interest or right but only a conditional one which will become effective upon the happening of the Liabilities
(i) Capital commitments
At 31 March 2010 the Group and Company had contracted future capital expenditure in respect of property, plant and equipment of [pounds]9.4m (2009 - [pounds] 10.8m).
(ii) Contingent liabilities Contract buy-out agreement In December 2000, the Group renegotiated a number of the generating contracts at Ballylumford. As part of these arrangements a contract buy-out (CBO) agreement was entered into to make payments to fund a buy-out of the profit element under the original agreements at Ballylumford. The CBO agreement has provisions under which a termination amount becomes payable in certain circumstances. The size of the payment depends on the termination date. The Group does not anticipate that any liability will arise and no provision has been made. Protected persons The Group has contingent liabilities in respect of obligations under the Electricity (Protected Persons) Pensions Regulations (Northern Ireland) 1992 to protect the pension rights of employees of the Group at privatisation. This includes members employed in companies which have subsequently been disposed of by the Group. The Group does not anticipate that any liability will arise.
Power station sites
The Group leases sites to power stations in Northern Ireland. Under the terms of the lease agreements the Group may be required to pay compensation if a lease is terminated. Since the extent of the compensation will depend on the circumstances which give rise to the termination, it is not possible to identify the magnitude of any potential liability. The Group does not anticipate that any liability for compensation will arise and no provision has been made. Liability and damage claims 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 (as disclosed in note 22) 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. The Group does not anticipate that any material liabilities will arise other than those recognised in the accounts.
27. Related Party Disclosures
Remuneration of key management personnel
Key management personnel of the Group comprise the directors of the Company and the Company Secretary. The compensation paid to those personnel is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures: 2010 2009 [pounds]m [pounds]m Salaries and short-term employee benefits 0.5 0.4 Post employment benefits: - defined benefit scheme - - - defined contribution scheme - 0.1 Other long-term benefits 0.2 - --- --- 0.7 0.5 === === Other related parties
During the year the Group and Company contributed [pounds]10.3m (2009 - Group: [pounds]10.8m, Company: [pounds]10.0m) to VGPS.
Group The immediate parent undertaking of the Group is Viridian Group Limited (Viridian). The ultimate parent undertaking in the United Kingdom is El Ventures Limited. The parent of the smallest and largest group of which the Company is a member and for which group accounts are prepared is Viridian Group Holdings Limited, a company incorporated in the Cayman Islands. A copy of Viridian Group Holdings Limited's accounts is available from the Company Secretary, Viridian Group Limited, 120 Malone Road, Belfast, BT9 5HT. The ultimate parent undertaking and controlling party of the Group is Arcapita Bank B.S.C.(c), a company incorporated in the Kingdom of Bahrain.
Principal subsidiaries of Viridian Group Viridian Group plc is a Northern Ireland-based energy business with interests in both Northern Ireland and the Republic of Ireland. Viridian owns Northern Ireland Electricity (NIE), Viridian Power & Energy, Energia, Huntstown and Powerteam. Holdings Limited are related parties of the Group and are listed below:
Eco Wind Power Ltd Viridian Capital Ltd EI Ventures Ltd Viridian Energy Ltd (trading as Energia) ElectricInvest Acquisitions Ltd Viridian Energy Supply Ltd (trading as Energia) ElectricInvest Holding Company Ltd Viridian Enterprises Ltd ElectricInvest (Lux) RoI S.a.r.l. Viridian Group Ltd GenSys Power Ltd Viridian Group Investments Ltd Huntstown Power Company Ltd Viridian Insurance Ltd NIE Powerteam Ltd Viridian Power Ltd NIE Energy Ltd Viridian Power and Energy Holdings Ltd
Power and Energy Holdings (RoI) Ltd Viridian Power and Energy Ltd
Powerteam Electrical Services Ltd Viridian Properties Ltd Powerteam Electrical Services (UK) Viridian Resources Ltd Ltd
Transactions between the Group and the related parties above and the balances outstanding are disclosed below:
Revenue Charges Amounts Amounts from from owed by owed to Ordinary related related related related dividends Interest party party party at party at paid paid 31 March 31 March [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m Year to 31 March 2010 Viridian 55.0 8.6 - - - 328.8 Viridian - - 186.1 71.2 32.2 31.8 subsidiaries ----- ----- ----- ----- ----- ----- 55.0 8.6 186.1 71.2 32.2 360.6 ===== ===== ===== ===== ===== ===== Year to 31 March 2009 Viridian 110.6 14.3 - - - 299.6 Viridian - 0.9 208.4 77.2 35.9 34.9 subsidiaries ----- ----- ----- ----- ----- ----- 110.6 15.2 208.4 77.2 35.9 334.5 ===== ===== ===== ===== ===== =====
Transactions between the Company and the related parties above and the balances outstanding are disclosed below:
Revenue Amounts Amounts Ordinary Interest from Charges owed by owed dividends paid/ related from related to related paid (received) party related party at party at party 31 March 31 March [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m [pounds]m Year to 31 March 2010 Viridian 55.0 8.6 - - - 328.8 Viridian - - 186.1 71.2 32.2 31.8 subsidiaries ---- ---- ----- ----- ---- ----- 55.0 8.6 186.1 71.2 32.2 360.6 ==== ==== ===== ===== ==== ===== Year to 31 March 2009 NIE subsidiaries - (0.6) 34.6 0.2 - - Viridian 110.6 14.2 - - - 299.6 Viridian - 0.7 173.2 72.3 35.9 34.9 subsidiaries ----- ----- ----- ----- ----- ----- 110.6 14.3 207.8 72.5 35.9 334.5 ===== ===== ===== ===== ===== ===== Interest received from and paid to fellow Viridian undertakings reflects floating interest rates based on LIBOR. Outstanding balances with subsidiaries are unsecured. Intra-group loan balances are repayable on demand while current account balances are settled on a monthly basis. Current account balances primarily arise from transactions relating to regulated sales to Viridian subsidiaries and utility contracting services purchased from Viridian subsidiaries. Transactions with Viridian group undertakings are determined on an arm's length basis.
28. Events Since the Year End
On 6 July 2010 Viridian Group Limited entered into a conditional agreement to sell the Company to ESB. The sale is subject to a number of conditions including RoI and UK competition clearance and new financing arrangements being put in place in respect of the remaining Viridian group businesses. Subject to fulfilment of the conditions, the transaction is expected to complete by the end of 2010.