TIDM56WD
RNS Number : 9469D
Northern Electric Finance PLC
30 March 2011
The following regulated information, disseminated pursuant to
DTR 6.3.5, comprises the Annual Report and Accounts of Northern
Electric Finance plc for the year ended 31 December 2010.
Pursuant to LR 17.3.1, the document has been submitted to the
National Storage Mechanism and will shortly be available for
inspection at:
www.hemscott.com/nsm.do
The 2010 Annual Report and Accounts are also available on the
website
www.ce-electricuk.com
Enquiries:
John Elliott 0191 223 5103
REPORT OF THE DIRECTORS AND
FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
FOR
NORTHERN ELECTRIC FINANCE PLC
NORTHERN ELECTRIC FINANCE PLC (REGISTERED NUMBER: 3070482)
CONTENTS OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2010
Page
Company Information 1
Report of the Directors 2
Report of the Independent Auditors 8
Income Statement 9
Statement of Comprehensive Income 10
Statement of Financial Position 11
Statement of Changes in Equity 12
Statement of Cash Flows 13
Notes to the Financial Statements 14
NORTHERN ELECTRIC FINANCE PLC
COMPANY INFORMATION
FOR THE YEAR ENDED 31 DECEMBER 2010
DIRECTORS: G E Abel
P Ainsley
P A Jones
T E Fielden
SECRETARY: J Elliott
REGISTERED OFFICE: Lloyds Court
78 Grey Street
Newcastle upon Tyne
NE1 6AF
REGISTERED NUMBER: 3070482 (England and Wales)
AUDITORS: Deloitte LLP
Newcastle upon Tyne
NORTHERN ELECTRIC FINANCE PLC (REGISTERED NUMBER: 3070482)
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 31 DECEMBER 2010
The directors present the annual report and accounts of Northern
Electric Finance plc (the "Company") for the year ended 31 December
2010, which includes the business review and audited financial
statements for that year. Pages 2 to 7 inclusive of this annual
report comprise a directors' report that has been drawn up and
presented in accordance with the Companies Act 2006.
Cautionary statement regarding forward-looking statements
This annual report has been prepared for the members of the
Company only. The Company, its directors, employees or agents do
not accept or assume responsibility to any other person in
connection with this document and any such responsibility or
liability is expressly disclaimed. This annual report contains
certain forward-looking statements, which can be identified by the
fact that they do not relate only to historical or current facts.
In particular, all statements that express forecasts, expectations
and projections with respect to future matters, including trends in
results of operations, business prospects, the availability of
financing to the Company and anticipated cost savings are
forward-looking statements.
By their nature, these statements and forecasts involve risk and
uncertainty because they relate to events and depend on
circumstances that may or may not occur in the future. There are a
number of factors that could cause actual results or developments
to differ materially from those expressed or implied by these
forward-looking statements and forecasts. The forward-looking
statements reflect the knowledge and information available at the
date of preparation of this annual report and will not be updated
during the year. Nothing in this annual report should be construed
as a profit forecast.
PRINCIPAL ACTIVITY
The Company is a subsidiary of Northern Electric Distribution
Limited ("NEDL"), part of the CE Electric UK Funding Company group
of companies (the "CE Group"), and was established in August 1995
to raise finance, including the issue of long-term bonds, on behalf
of the Northern Electric group of companies, which is also part of
the CE Group. During the year, the Company continued to be the
issuer of long-term bonds.
Given that the sole purpose of the Company is to raise finance
on behalf of NEDL, its immediate parent company, the objective of
the Company is to ensure that it has sufficient funds to cover its
interest charges as they fall due. Details of key performance
indicators used in the CE Group can be found in the Business Review
in the CE Electric UK Funding Company directors' report.
Details of the key risks faced by the Company in respect of its
borrowings can be found on page 4 of this directors' report and in
Note 10 to the accounts.
REVIEW OF BUSINESS
Financial Review
Results and dividends
The Company made a loss after tax for the year of GBP33,000
(2009: loss GBP65,000). No dividends were paid during the year and
the directors recommend that no final dividend be paid in respect
of the year.
Share capital
There were no changes to the Company's share capital during the
year.
Taxation
Full details of the Company's taxation charge are provided in
Note 5 to the accounts.
Net cash outflow from operating activities
The net cash outflow from operating activities was GBP7,000
(2009: GBP2,000).
DIVIDENDS
The Company's dividend policy is that dividends will be paid
only after having due regard to available distributable reserves,
available liquid funds and the financial resources and facilities
needed to enable the Company to carry on its business for at least
the next year.
RESEARCH AND DEVELOPMENT
Given that the sole purpose of the Company is to raise finance
on behalf of NEDL, the Company does not undertake research and
development.
NORTHERN ELECTRIC FINANCE PLC (REGISTERED NUMBER: 3070482)
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 31 DECEMBER 2010
FUTURE DEVELOPMENTS
The financial position of the Company, as at the year end, is
shown in the statement of financial position on page 11. There have
been no significant events since the year end and it is the
intention of the directors that the Company will continue to raise
finance on behalf of the CE Group, if required, in the future.
DIRECTORS
The directors shown below have held office during the whole of
the period from 1 January 2010 to the date of this report.
G E Abel
P Ainsley
P A Jones
T E Fielden
GOING CONCERN
The Company's business activities, together with details
regarding its future development, performance and position are set
out in the Review of Business in the Directors' Report. In
addition, the Company's objectives, policies and processes for
managing its capital, its financial risk management objectives,
details of its financial instruments and hedging activities and its
exposures to credit risk and liquidity risk are included in the
Business Review in the Directors' Report and the appropriate notes
to the accounts.
When considering continuing to adopt the going concern basis in
preparing the annual report and accounts, the directors have taken
account of a number of factors that arise due to the Company being
a wholly-owned subsidiary of NEDL, including the following:
a) NEDL is a stable electricity distribution business operating
an essential public service and is regulated by the Gas and
Electricity Markets Authority ("GEMA"). In carrying out its
functions, GEMA has a statutory duty under the Electricity Act 1989
to have regard to the need to secure that licence holders are able
to finance their activities, which are the subject of obligations
under Part 1 of the Electricity Act 1989 (including the obligations
imposed by the electricity distribution licence) or by the
Utilities Act 2000;
b) NEDL is profitable with strong underlying cash flows
resulting in low gearing and holds investment grade credit ratings;
and
c) NEDL has access to considerable financial resources, in the
form of short-term borrowings made available by Yorkshire
Electricity Group plc, a fellow company in the CE Group and also
has committed revolving credit facilities in place from Lloyds TSB
Bank plc, Royal Bank of Scotland plc and Abbey National Treasury
Services plc until 31 March 2013.
Consequently, after making enquiries, the directors have a
reasonable expectation that the Company has adequate resources to
continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in
preparing the annual report and accounts.
NORTHERN ELECTRIC FINANCE PLC (REGISTERED NUMBER: 3070482)
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 31 DECEMBER 2010
PRINCIPAL RISKS AND UNCERTAINTIES
Liquidity risk
The principal risk facing the Company is not having sufficient
liquidity to enable the Company to meet its liabilities as they
fall due and to provide adequately for contingencies. In this
respect, borrowing facilities are made available to the Company by
other companies in the CE Group, if required. The Company continues
to maintain its investment grade issuer credit rating.
Interest rate risk
The Company is financed by long-term borrowings at fixed rates
and has access to short-term borrowing facilities at floating rates
of interest. As at 31 December 2010, 100 % of the Company's
borrowings were at fixed rates and the average maturity of these
borrowings was 19 years.
Currency risk
No material currency risks are faced by the Company.
Trading risk
Throughout the year under review, the Company's policy was that
no trading in financial derivatives should be undertaken.
Financial derivatives
As at 31 December 2010 and during the year it was the Company's
policy not to hold any derivative financial instruments.
NORTHERN ELECTRIC FINANCE PLC (REGISTERED NUMBER: 3070482)
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 31 DECEMBER 2010
CORPORATE GOVERNANCE STATEMENT
Section 1B.1.5R of the Disclosure and Transparency Rules ("DTR")
requires an issuer, whose transferable securities are admitted to
trading, to provide, in its annual directors' report, a corporate
governance statement. However, DTR 1B.1.6R provides that the rules
in DTR 7.2.2R, 7.2.3R and 7.2.7R do not apply to an issuer, which
has not issued shares, which are admitted to trading. Accordingly,
as the Company has no shares admitted to trading, it is eligible
for the exemption provided by DTR 1B.1.6R.
Main features of the internal control risk and management
systems
The CE Group's principal management forum with regard to
corporate governance is the Governance and Risk Management Group
("GRMG"). Its purpose is to ensure that CE Group companies apply
and maintain appropriate arrangements to deliver sound corporate
governance and comply with the overall strategy, framework and
supporting policies. The GRMG monitors and reviews the strategic
risk environment, ensuring the continued suitability, adequacy and
effectiveness of risk management arrangements.
The risk management framework was monitored regularly during the
year to ensure that all strategic risks, including those relating
to environmental and social issues, were being addressed. Risk
management policies and procedures were reviewed and updated to
ensure a robust and clear approach was maintained. Mr R Dixon, an
independent non-executive director of CE Electric UK Funding
Company and NEDL, attends meetings of the GRMG to provide an
independent view in respect of the matters discussed.
The CE Group operates a structured and disciplined approach to
the management of risk, as part of the overall risk management
approach. Those risks assessed to be significantly high are logged
within a risk register that is reviewed regularly by the GRMG and
key indicators track the number of significant risks actively
monitored by the GRMG at any one time.
Risks are assessed with due regard to probability and impact and
the risk environment is reviewed continually in order that new or
emerging potential risks are identified. Risk mitigation and loss
control plans are prepared in response to strategic risks in order
that the directors can be assured that appropriate mitigating
actions are in place and being implemented. These plans are
monitored through to implementation and reviewed to determine
whether the level of residual, mitigated risk is within an
acceptable level of tolerance.
A rigorous internal control environment exists within the CE
Group based on regular reporting, a series of operational and
financial policy statements, investigations undertaken by internal
audit and a stringent process for ensuring the implementation of
any recommendations. MidAmerican Energy Holdings Company
("MidAmerican"), a parent company of the Company, requires a
quarterly control risk self-assessment to be undertaken by all
senior managers as part of its programme for compliance with the
requirements of the Sarbanes-Oxley Act. During the year, the CE
Group completed the annual, extensive programme to review its
company-wide controls and opportunities to enhance control
arrangements, identified by that review, have been implemented.
Other key features of the CE Group's internal control system
are:
- Comprehensive business planning and financial reporting
procedures, including the annual preparation of detailed
operational budgets for the year ahead and projections for
subsequent years;
- Regular review of key performance indicators to assess
progress towards objectives;
- A range of policies, codes of practice and more detailed
instructions that define the processes to be followed;
- A strong internal audit function to provide independent
scrutiny of internal control systems and risk management
procedures, including the standards required by the Sarbanes-Oxley
Act;
- Centralised treasury operations that operate within defined
limits and are subject to regular reporting requirements and audit
reviews; and
- Established procedures for planning, approving and monitoring
major capital expenditure, major projects and the development of
new business which includes short and long-term budgets, risk
evaluation, detailed appraisal and review procedures, defined
authority levels and post-investment performance reviews.
Details of other financial risks faced by the Company can be
found on page 4 of the Directors' Report.
NORTHERN ELECTRIC FINANCE PLC (REGISTERED NUMBER: 3070482)
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 31 DECEMBER 2010
CE Electric UK Funding Company has established an audit
committee for the CE Group under delegated terms of reference,
which include monitoring of the financial reporting process, the
effectiveness of the internal control, internal audit and risk
management systems, the statutory audit of the accounts, the
independence of and the provision of additional services by the
statutory auditor. DTR 7 requires an audit committee to have at
least one independent member and a member with competence in
accounting and/or auditing, although these requirements could be
satisfied by one and the same person. Given that Mr Dixon is an
independent non-executive director of CE Electric UK Funding
Company and NEDL, the Audit Committee comprises
R Dixon Non-Executive Director
T E Fielden Finance Director
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors are responsible for preparing the Report of the
Directors and the financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
have elected to prepare the financial statements in accordance with
International Financial Reporting Standards as adopted by in the
European Union. Under company law the directors must not approve
the financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the company and the
group and of the profit or loss of the group for that period. In
preparing these financial statements, International Accounting
Standard 1 requires the directors to:
-- Properly select and apply accounting policies; -- 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 in IFRSs are insufficient to enable
users to understand the impact of particular transactions, other
events and conditions on the entity's financial position and
financial performance; and -- Make an assessment of the company's
ability to continue as a going concern.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the company's and
the group's transactions and disclose with reasonable accuracy at
any time the financial position of the company and the group and
enable them to ensure that the financial statements comply with the
Companies Act 2006. They are also responsible for safeguarding the
assets of the company and the group and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
.
.
NORTHERN ELECTRIC FINANCE PLC (REGISTERED NUMBER: 3070482)
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 31 DECEMBER 2010
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS
Each of the directors, who is a director of the Company as at
the date of this report, confirms that:
a) so far as he is aware, there is no relevant audit information
of which the Company's auditors are unaware; and
b) he has taken all the steps he ought to have taken as a
director in order to make himself aware of any relevant audit
information and to establish that the auditors are aware of that
information.
This confirmation is given and should be interpreted in
accordance with the provisions of S418 of the Companies Act
2006.
AUDITORS
A resolution to re-appoint Deloitte LLP as the Company's
auditors and authorise the directors to determine their
remuneration will be proposed at the Annual General Meeting.
ON BEHALF OF THE BOARD:
J Elliott
Secretary
18 March 2011
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE
ANNUAL REPORT AND ACCOUNTS
Each of the directors as at the date of the Annual Report, whose
names and functions are set out on page 3 of the Report of the
Directors confirms that, to the best of their knowledge:
a) the Company accounts, prepared in accordance with applicable
UK law and in conformity with IFRS, give a true and fair view of
the assets, liabilities, financial position and profit or loss of
the Company; and
b) the Report of the Directors includes a fair review of the
development and performance of the business and the position of the
Company, together with a description of the principal risks and
uncertainties it faces.
The responsibility statement was approved by the Board of
Directors on 18 March 2011 and signed by:
P A Jones
President and Chief Operating Officer
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF
NORTHERN ELECTRIC FINANCE PLC
We have audited the financial statements of Northern Electric
Finance plc for the year ended 31 December 2010 which comprise the
Income Statement, the Statement of Comprehensive Income, the
Statement of Financial Position, the Statement of Changes in
Equity, the Statement of Cash Flows and the related notes 1 to 14.
The financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union.
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
a Report of the Auditors 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 auditor
As explained more fully in the Statement of Directors'
Responsibilities set out on page six, the directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view. Our responsibility
is to audit and express an opinion on the financial statements in
accordance with applicable law and International Standards on
Auditing (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 financial statements
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the 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 financial statements.
Opinion on financial statements
In our opinion the financial statements:
- give a true and fair view of the state of the company's affairs
as at 31 December 2010 and of its loss for the year then ended;
- have been properly prepared in accordance with IFRSs as adopted
by the European Union; and
- have been prepared in accordance with the requirements of the
Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Report of the
Directors for the financial year for which the financial statements
are prepared is consistent with the financial statements.
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, or returns adequate
for our audit have not been received from branches not visited
by us; or
- the financial statements are not in agreement with the accounting
records and returns; or
- certain disclosures of directors' remuneration specified by law
are not made; or
- we have not received all the information and explanations we require
for our audit.
Christopher Powell FCA (Senior Statutory Auditor)
for and on behalf of Deloitte LLP
Chartered Accountants and Statutory Auditors
Newcastle upon Tyne
29 March 2011
NORTHERN ELECTRIC FINANCE PLC (REGISTERED NUMBER: 3070482)
INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2010
2010 2009
Notes GBP'000 GBP'000
CONTINUING OPERATIONS
Revenue - -
Administrative expenses (6) (6)
OPERATING LOSS (6) (6)
Finance costs 4 (17,101) (17,092)
Finance income 4 17,043 17,005
LOSS BEFORE INCOME TAX (64) (93)
Income tax 5 31 28
LOSS FOR THE YEAR (33) (65)
NORTHERN ELECTRIC FINANCE PLC (REGISTERED NUMBER: 3070482)
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2010
2010 2009
GBP'000 GBP'000
LOSS FOR THE YEAR (33) (65)
OTHER COMPREHENSIVE INCOME - -
TOTAL COMPREHENSIVE INCOME FOR THE YEAR (33) (65)
NORTHERN ELECTRIC FINANCE PLC (REGISTERED NUMBER: 3070482)
STATEMENT OF FINANCIAL POSITION
31 DECEMBER 2010
2010 2009
Notes GBP'000 GBP'000
ASSETS
NON-CURRENT ASSETS
Trade and other receivables 6 247,619 247,559
CURRENT ASSETS
Trade and other receivables 6 3,538 3,554
Cash and cash equivalents 7 1,720 1,727
5,258 5,281
TOTAL ASSETS 252,877 252,840
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital 8 50 50
Retained earnings 9 (709) (676)
TOTAL EQUITY (659) (626)
LIABILITIES
NON-CURRENT LIABILITIES
Borrowings 10 246,280 246,135
Deferred tax 11 362 399
246,642 246,534
CURRENT LIABILITIES
Borrowings 10 6,886 6,925
Tax payable 8 7
6,894 6,932
TOTAL LIABILITIES 253,536 253,466
TOTAL EQUITY AND LIABILITIES 252,877 252,840
The financial statements were approved by the Board of Directors
on 18 March 2011 and were signed on its behalf by:
P A Jones
Director
NORTHERN ELECTRIC FINANCE PLC (REGISTERED NUMBER: 3070482)
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2010
Called up
share Retained Total
capital earnings equity
GBP'000 GBP'000 GBP'000
Balance at 1 January 2009 50 (611) (561)
Changes in equity
Total comprehensive income - (65) (65)
Balance at 31 December 2009 50 (676) (626)
Changes in equity
Total comprehensive income - (33) (33)
Balance at 31 December 2010 50 (709) (659)
NORTHERN ELECTRIC FINANCE PLC (REGISTERED NUMBER: 3070482)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2010
2010 2009
Notes GBP'000 GBP'000
Cash flows from operating activities
Cash generated from operations 14 79 70
Interest paid (17,140) (17,092)
Interest received 17,059 17,019
Tax paid (5) 1
Net cash from operating activities (7) (2)
Decrease in cash and cash equivalents (7) (2)
Cash and cash equivalents
at beginning of year 1,727 1,729
Cash and cash equivalents
at end of year 1,720 1,727
NORTHERN ELECTRIC FINANCE PLC (REGISTERED NUMBER: 3070482)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2010
1. GENERAL INFORMATION
Northern Electric Finance plc is a company originally
incorporated in England and Wales under the Companies Act 1985. The
address of the registered office is Lloyds Court, 78 Grey Street,
Newcastle-upon-Tyne, NE1 6AF.
The nature of the Company's operations and its principal
activities are set out in the Review of Business in the Director's
Report on page 2.
2. ACCOUNTING POLICIES
Accounting convention and basis of preparation
The financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS"). The financial
statements have also been prepared in accordance with IFRSs adopted
by the European Union and therefore comply with Article 4 of the EU
IAS Regulation and with those parts of the Companies Act 2006 (the
"Act") that are applicable to companies reporting under IFRS.
The accounts have been prepared under the historical cost
convention.
Going concern
The directors have, at the time of approving the financial
statements, a reasonable expectation that the Company has adequate
resources to continue in operational existence for the foreseeable
future. Accordingly, they continue to adopt the going concern basis
in preparing the financial statements. Further detail is contained
within the Report of the Directors.
Critical accounting policies
The particular policies adopted by the directors are described
below. The accounting policies have been applied consistently
throughout the year and the preceding year.
Adoption of new or revised standards
In the current year, the directors are not aware of any new or
revised Standards or Interpretations which have impacted these
financial statements.
Revenue
Interest income is accrued on a time basis, by reference to the
principal outstanding and at the effective interest rate
applicable.
Financial instruments
Financial assets and financial liabilities are recognised on the
balance sheet when the Company becomes a party to the contractual
provisions on the instrument.
Financial assets are assessed for indicators of impairment at
each balance sheet date. Financial assets are impaired where there
is objective evidence that, as a result of one or more events that
occurred after the initial recognition of the financial asset, the
estimated future cash flows of the investment have been
impacted.
Financial liabilities and equity
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangement entered
into. An equity instrument is any contract that evidences a
residual interest in the assets of the Company after deducting all
of its liabilities.
Cash and cash equivalents
Loans advanced to the parent company are included within cash
and cash equivalents, having a maturity of less than three months
on the basis that they are readily convertible to known amounts of
cash and are subject to insignificant risk of changes in value.
NORTHERN ELECTRIC FINANCE PLC (REGISTERED NUMBER: 3070482)
NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2010
2. ACCOUNTING POLICIES - continued
Taxation
Income tax expense represents the sum of the tax currently
payable and deferred tax.
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from profit as reported in the income
statement because it excludes items of income or expense that are
taxable or deductible in other years and it further excludes items
that are never taxable or deductible. The Company's liability for
current tax is calculated using tax rates that have been enacted or
substantively enacted at the balance sheet date.
Deferred tax is recognised on differences between the carrying
amounts of assets and liabilities in the financial statements, and
the corresponding tax bases used in the computation of taxable
profit and is accounted for using the balance sheet liability
method. Deferred tax liabilities are generally recognised for all
taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits
will be available against which deductible temporary differences
can be utilised.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the year when the liability is settled or asset realised,
based on tax rates and tax legislation enacted or substantively
enacted at the balance sheet date.
Borrowings
Borrowings are classified as other financial liabilities at
amortised cost. They are recorded at the proceeds received, net of
direct issue costs. Finance charges, including premiums payable on
settlement for redemption and direct issue costs, are accounted for
on an accruals basis in the income statement using the effective
interest rate method. They are added to the carrying amount of the
instruments to the extent that they are not settled in the period
in which they arise.
3. EMPLOYEES AND DIRECTORS
No directors' or key personnel remuneration was charged for the
year (2009: GBPnil). There are no directors' emoluments that are
required to be disclosed under the Act (2009: GBPnil). There were
no employees of the Company during the year (2009: nil).
Auditors' remuneration of GBP6,000 was charged to the Company
for the year (2009: GBP6,000) in relation to the statutory audit of
the Company. There was no fees payable in relation to non-audit
services in 2010 or 2009.
4. NET FINANCE COSTS
2010 2009
GBP'000 GBP'000
Finance income:
Interest receivable on loans
to Group undertakings 17,043 17,005
NORTHERN ELECTRIC FINANCE PLC (REGISTERED NUMBER: 3070482)
NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2010
4. NET FINANCE COSTS - continued
2010 2009
GBP'000 GBP'000
Finance costs:
Interest payable on other borrowings 17,064 16,956
Interest payable on loans
from Group undertakings 37 136
17,101 17,092
Net finance costs 58 87
5. INCOME TAX
Analysis of the tax credit
2010 2009
GBP'000 GBP'000
Current tax:
Tax 6 (7)
Deferred tax (37) (21)
Total tax credit in income statement (31) (28)
Factors affecting the tax charge
The tax assessed for the year is lower than the standard rate of
corporation tax in the UK. The difference is explained below:
2010 2009
GBP'000 GBP'000
Loss on ordinary activities before tax (64) (93)
Loss on ordinary activities
multiplied by the standard rate of corporation tax
in the UK of 28% (2009 - 28%) (18) (26)
Effects of:
Change in tax rates (13) -
Prior year adjustment - (2)
Total income tax credit (31) (28)
NORTHERN ELECTRIC FINANCE PLC (REGISTERED NUMBER: 3070482)
NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2010
5. INCOME TAX - continued
2010 2009
Tax expense comprises: GBP'000 GBP'000
Current tax expense:
Payment for use of group losses 6 (7)
Total current tax charge 6 (7)
Deferred tax:
Deferred tax expenses relating to the origination
and reversal of temporary differences (24) (21)
Effect of changes in tax rates (13) -
Total deferred tax charge (37) (21)
Tax on loss before tax (31) (28)
The Finance Act 2010 includes a provision that the standard rate
of corporation tax in the United Kingdom will reduce from 28% to
27% from April 2011. Accordingly, this rate has been applied when
calculating deferred tax assets and liabilities throughout the CE
Group as at 31 December 2010.
6. TRADE AND OTHER RECEIVABLES
2010 2009
GBP'000 GBP'000
Current:
Amounts owed by Group undertakings 3,538 3,554
Non-current:
Amounts owed by Group undertakings 247,619 247,559
The directors consider that the carrying amount of trade and
other receivables approximates their fair value calculated by
discounting the future cash flows at the market rate at the balance
sheet date.
Loans to Group undertakings are made to Northern Electric
Distribution Limited, the Company's immediate parent, and are at
fixed rates of interest. The maximum exposure to risk to the
Company is the book value of these loans.
7. CASH AND CASH EQUIVALENTS
Cash and cash equivalents represent amounts owed from Yorkshire
Electricity Group plc, a company within the CE Electric UK Funding
Company group, which have a maturity date of less than three months
and which are subject to an insignificant risk of changes in value.
The fair value of cash and cash equivalents is equal to their book
value.
NORTHERN ELECTRIC FINANCE PLC (REGISTERED NUMBER: 3070482)
NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2010
8. CALLED UP SHARE CAPITAL
2010 2009
No./GBP No./GBP
Ordinary shares of GBP1 each;
Authorised 50,000 50,000
Allotted, called up and fully paid 50,000 50,000
The Company has one class of ordinary shares which carries no
right to fixed income.
9. RESERVES
Retained
earnings
GBP'000
At 1 January 2010 (676)
Loss for the year (33)
At 31 December 2010 (709)
NORTHERN ELECTRIC FINANCE PLC (REGISTERED NUMBER: 3070482)
NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2010
10. BORROWINGS
The Directors consideration of liquidity, interest rate and
foreign currency risk are described in detail in the Directors
Report on page 4.
Fair
Book Value Value
2010 2009 2010 2009
GBP'000 GBP'000 GBP'000 GBP'000
The borrowings are
repayable as follows:
On demand or within one
year 6,886 6,925 6,886 6,925
After five years 246,280 246,135 274,014 256,621
253,166 253,060 280,900 263,546
Analysis of borrowings:
2035 - 5.125% 152,683 152,621 147,651 139,903
2020 - 8.875% 100,483 100,439 133,249 123,643
253,166 253,060 280,900 263,546
The fair value of the Company's borrowings is determined with
reference to quoted market prices.
All loans are at fixed interest rates and expose the Company to
fair value interest rate risk.
The Company's loans are guaranteed by Northern Electric
Distribution Limited, its parent company.
The covenants associated with the 2035 bonds issued by the
Company include restrictions on the issuance of new indebtedness
and the making of distributions dependent on the scale of the ratio
of Senior Total Net Debt to Regulatory Asset Value ("RAV") of
Northern Electric Distribution Limited. The definition of Senior
Total Net Debt excludes any subordinated debt and any debt incurred
on a non-recourse basis. In addition, it excludes interest payable,
any fair value adjustments and unamortised issue costs.
All borrowings are denominated in sterling. The Company has no
undrawn committed borrowing facilities.
The following tables detail the remaining contractual maturities
for non-derivative financial liabilities. The tables have been
drawn up based on the discounted cash flows of financial
liabilities based on the earliest possible date on which the
Company can be required to pay. The tables include both interest
and principal cash flows.
Less than 3 months 1 to 5 5+ years Total
3 months to 1 year years
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2010:
Fixed interest
rate liability - 16,563 66,250 458,375 541,188
- 16,563 66,250 458,375 541,188
2009:
Fixed interest
rate liability - 16,563 66,250 474,938 557,751
- 16,563 66,250 474,938 557,751
NORTHERN ELECTRIC FINANCE PLC (REGISTERED NUMBER: 3070482)
NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2010
11. DEFERRED TAX
GBP'000
At 1 January 2010 399
Credit to income statement (37)
At 31 December 2010 362
GBP'000
At 1 January 2009 420
Credit to income statement (21)
At 31 December 2009 399
The balance represents deferred tax on unamortised issue
costs.
12. RELATED PARTY DISCLOSURES
The Company has advanced loans to Northern Electric Distribution
Limited, its immediate parent company. The total interest included
in investment income for the year ended 31 December 2010 was
GBP17,043,000 (2009: GBP17,005,000). Included within trade and
other receivables is GBP251,157,000 as at 31 December 2010 (2009:
GBP251,113,000) in respect of these loans. Included within cash and
cash equivalents is GBP1,720,000 (2009: GBP1,727,000) in respect of
these loans.
The Company has received loans from other companies in the CE
Electric UK Funding Company Group. The total interest included in
finance costs in the income statement for the year ended 31
December 2010 was GBP37,000 (2009: GBP136,000). Included within
borrowings is GBPnil as at 31 December 2010 (2009: GBPnil) in
respect of these loans.
Interest on loans to/from group companies is charged at a
commercial rate.
13. ULTIMATE CONTROLLING PARTY
The immediate parent undertaking of Northern Electric Finance
plc is Northern Electric Distribution Limited. The ultimate
controlling party and ultimate parent undertaking of Northern
Electric Distribution Limited is Berkshire Hathaway, Inc., a
company incorporated in the United States of America.
Copies of the group accounts of Berkshire Hathaway, Inc. (the
parent undertaking of the largest group preparing group accounts)
which include Northern Electric Finance plc and the group accounts
of Northern Electric plc, the smallest parent undertaking to
prepare group accounts in the UK, can both be obtained from the
Company Secretary, CE Electric UK Funding Company, Lloyds Court, 78
Grey Street, Newcastle upon Tyne, NE1 6AF.
14. RECONCILIATION OF LOSS BEFORE INCOME TAX TO CASH GENERATED FROM
OPERATIONS
2010 2009
GBP'000 GBP'000
Loss before income tax (64) (93)
Finance costs 17,101 17,092
Finance income (17,043) (17,005)
(6) (6)
Increase in trade and other receivables (60) (59)
Increase in trade and other payables 145 135
Cash generated from operations 79 70
This information is provided by RNS
The company news service from the London Stock Exchange
END
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