Annual Report and Accounts
April 11 2007 - 3:00AM
UK Regulatory
RNS Number:6495U
EDF Energy Networks (LPN) PLC
10 April 2007
EDF ENERGY NETWORKS (LPN) PLC
Registered Number 3929195
ANNUAL REPORT AND FINANCIAL STATEMENTS
31 December 2005
Page:
2 Directors' report
4 Statement of Directors' responsibilities
5 Independent Auditors' report
6 Profit and loss account
6 Statement of total recognised gains and losses
7 Balance sheet
8 Notes to the financial statements
Directors
Vincent de Rivaz
Paul Cuttill
Humphrey A E Cadoux-Hudson
Company Secretary
Robert Ian Higson
Auditors
Deloitte & Touche LLP
Hill House
1 Little New Street
London
EC4A 3TR
Registered Office
40 Grosvenor Place
Victoria
London
SW1X 7EN
The Directors present their report and financial statements for the year ended
31 December 2005.
Principal activity and review of the business
The Company's principal activity during the year continued to be the
distribution of electricity to domestic, commercial and industrial customers
through network ownership, management, operation, maintenance and renewal. It
will continue in this activity for the foreseeable future.
Results and dividends
The profit for the year, before taxation, amounted to #121.2m (2004 restated:
#96.6m) and after taxation, amounted to #76.3m (2004 restated: #63.5m).
Dividends of #61.7m were paid in the year (2004: #40.0m).
Future developments
The Directors aim to deliver the right balance of customer service and
shareholder return through efficient investment in the Network within the
boundaries of the price control allowances.
Directors and their interests
Directors who held office during the year and subsequently were as follows:
Vincent de Rivaz
Paul Cuttill
Humphrey A E Cadoux-Hudson
None of the Directors had a service contract with the Company in the current or
prior year. They are all employed by the parent Company, EDF Energy plc, and
have service contracts with that Company.
There were no contracts of significance during either year or at the end of the
financial year in which a Director of the Company was materially interested.
None of the Directors who held office at the end of the financial year had any
interests in the shares of the Company or any other Group Company in either year
required to be disclosed under the Companies Act 1985.
Political and charitable contributions
The Company made no charitable or political contributions in either year.
Creditors payment policy
The Company's current policy concerning the payment of its trade creditors and
other suppliers is to:
* agree the terms of payment with those creditors/suppliers when
agreeing the terms of each transaction;
* ensure that those creditors/suppliers were made aware of the terms of
payment by inclusion of the relevant terms in contracts; and
* pay in accordance with its contractual and other legal obligations.
The payment policy applies to all payments to creditors/suppliers for revenue
and capital supplies of goods and services without exception. At 31 December
2005, the Company had an average of 14 days (2004: 33 days) purchases
outstanding in its trade creditors.
Auditors
Deloitte & Touche LLP have expressed their willingness to continue in office as
Auditors and a resolution to reappoint them will be proposed at the forthcoming
Annual General Meeting.
By order of the Board
Humphrey A E Cadoux-Hudson
Company Director
30 June 2006
United Kingdom company law requires the Directors to prepare financial
statements for each financial year which give a true and fair view of the state
of affairs of the Company as at the end of the financial year and of the profit
or loss of the Company for that period. In preparing those financial statements,
the Directors are required to:
* select suitable accounting policies and then apply them consistently;
* make judgements and estimates that are reasonable and prudent;
* state whether applicable accounting standards have been followed, subject
to any material departures disclosed and explained in the financial
statements; and
* prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
Company and enable them to ensure that the financial statements comply with the
Companies Act 1985. They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The Directors confirm that they have complied with these requirements and having
a reasonable expectation that the Company has adequate resources to continue in
operational existence for the foreseeable future, continue to adopt the going
concern basis in preparing the financial statements.
We have audited the financial statements (the "financial statements") of EDF
Energy Networks (LPN) PLC for the year ended 31 December 2005 which comprise the
profit and loss account, statement of total recognised gains and losses, the
balance sheet and the related notes 1 to 23. These financial statements have
been prepared under the accounting policies set out therein.
This report is made solely to the Company's members, as a body, in accordance
with section 235 of the Companies Act 1985. 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
The Directors' responsibilities for preparing the annual report and the
financial statements in accordance with applicable United Kingdom law and United
Kingdom Generally Accepted Accounting Practice are set out in the statement of
Directors' responsibilities.
Our responsibility is to audit the financial statements in accordance with
relevant United Kingdom legal and regulatory requirements and International
Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true
and fair view in accordance with the relevant framework, and are properly
prepared in accordance with the Companies Act 1985. We also report to you if, in
our opinion, the Directors' report is not consistent with the financial
statements, if the Company has not kept proper accounting records, if we have
not received all the information and explanations we require for our audit, or
if information specified by law regarding Directors' remuneration and
transactions with the Company is not disclosed.
We read the Directors' report and the other information contained in the annual
report for the above year as described in the contents section and consider the
implications for our report if we become aware of any apparent misstatements or
material inconsistencies with the financial statements.
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing
(UK and Ireland) issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts and
disclosures in the financial statements. It also includes an assessment of the
significant estimates and judgments made by the Directors in the preparation of
the financial statements, and of whether the accounting policies are appropriate
to the Company's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
Opinion
In our opinion:
* the financial statements give a true and fair view, in accordance with
United Kingdom Generally Accepted Accounting Practice, of the state of the
Company's affairs as at 31 December 2005 and of its profit for the year
then ended; and
* the financial statements have been properly prepared in accordance
with the Companies Act 1985.
Deloitte & Touche LLP
Chartered Accountants and Registered Auditors
London
30 June 2006
2005 2004
Restated
Note #m #m
Turnover 2 266.4 262.8
Cost of sales (9.7) (11.7)
Gross profit 256.7 251.1
Distribution costs (105.1) (122.5)
Administrative expenses (0.3) (2.1)
Operating profit 3 151.3 126.5
Loss on disposal of fixed assets (0.5) -
Profit on ordinary activities before interest and taxation 150.8 126.5
Interest receivable and similar income 5 6.7 6.9
Interest payable and similar charges 6 (36.3) (36.8)
Profit on ordinary activities before taxation 121.2 96.6
Tax on profit on ordinary activities 7 (44.9) (33.1)
Profit for the financial year 18 76.3 63.5
All results are derived from continuing operations in both the current and
preceding year. Prior year figures have been restated to reflect the adoption of
FRS17 'Retirement benefits', from 1 January 2004 (note 15).
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE YEAR ENDED 31 DECEMBER 2005
2005 2004
Restated
Note #m #m
Profit for the financial year 76.3 63.5
Actuarial loss net of deferred tax on defined pension benefits 18 (1.4) (16.7)
Total recognised gain relating to the year 74.9 46.8
Prior period adjustment - adoption of FRS 17 18 (106.2)
Total losses recognised since the last annual report (31.3)
The deferred tax credit reflected in the actuarial loss net of deferred tax on
defined benefit pensions amounted to #0.5m (2004: #7.1m).
2005 2004
Restated
Note #m #m
Fixed assets
Tangible assets 8 1,152.9 1,089.2
Current assets
Debtors 9 38.5 41.1
Investments: unlisted money market investments 2.0 44.5
Cash at bank and in hand 0.5 0.4
41.0 86.0
Creditors: amounts falling due within one year 10 (209.5) (199.2)
Net current liabilities (168.5) (113.2)
Total assets less current liabilities 984.4 976.0
Creditors: amounts falling due after more than one year 11 (468.8) (463.9)
Provision for liabilities and charges 14 (221.8) (222.2)
Net assets excluding pension liabilities 293.8 289.9
Pension liabilities 20 (96.9) (106.2)
Net assets including pension liabilities 196.9 183.7
Capital and reserves
Called up share capital 16 10.0 10.0
Profit and loss account 18 186.9 173.7
Equity shareholder's funds 18 196.9 183.7
The financial statements on pages 6 to 21 were approved by the Board of
Directors on 30 June 2006 and were signed on its behalf by:
Paul Cuttill Humphrey A E Cadoux-Hudson
Director Director
1. Accounting policies
The principal accounting policies are set out below. They have all been applied
consistently throughout the year and the preceding year, with the exception of
accounting for pension costs under FRS17 'Retirement benefits' ("FRS17") as set
out below.
Basis of preparation
These financial statements have been prepared under the historical cost
convention and in accordance with applicable United Kingdom law and accounting
standards, except as noted below in respect of tangible fixed assets.
Cash flow statement
The Company is exempt from preparing a cash flow statement under the terms of
FRS 1 'Cash flow statements (revised 1996)' as it is a member of a group, headed
by EDF Energy plc, whose consolidated accounts include a cash flow statement and
are publicly available.
Tangible fixed assets
Tangible fixed assets are stated at cost, net of depreciation and provision for
impairment. The carrying values of tangible fixed assets are reviewed for
impairment when events or changes in circumstances indicate the carrying value
may not be recoverable.
Depreciation is provided on all tangible fixed assets other than freehold land,
at rates calculated to write off the cost of acquisition of each asset evenly
over its expected useful life, as follows:
Overhead and underground lines - 45 to 60 years
Other network plant and buildings - 20 to 60 years
Fixtures and equipment - 5 years
Vehicles - 5 to 10 years
Capital contributions in respect of capital expenditure are credited to a fixed
asset account and are released to the profit and loss account over the expected
useful lives of the relevant assets by equal annual instalments. The
un-amortised amount of such contributions is shown as a deduction from fixed
assets. This is a departure from the Companies Act 1985, which requires fixed
assets to be included at their purchase price or production cost and hence the
contribution would be presented as deferred income. However, contributions
relate directly to the cost of fixed assets used in the distribution network and
it is the opinion of the Directors that the treatment adopted is necessary to
give a true and fair view. The value of the contributions is shown in note 8.
Finance costs
Finance costs of debt are recognised in the profit and loss account over the
term of such instruments, at a constant rate on the carrying amount.
Debt
Debt is initially stated at the amount of the net proceeds after deduction of
issue costs. The carrying amount is increased by the finance cost in respect of
the accounting period and reduced by payments made in the period.
1. Accounting policies continued
Taxation
Current tax, including UK corporation tax, is provided at amounts expected to be
paid (or recovered) using the tax rates and laws that have been enacted or
substantively enacted by the balance sheet date.
Deferred tax is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date where transactions or
events that result in an obligation to pay more or a right to pay less tax in
the future have occurred at the balance sheet date, with the following
exceptions:
* provision is made for gains on disposal of fixed assets that have been
rolled over into replacement assets only where, at the balance sheet date,
there is a commitment to dispose of the replacement assets with no likely
subsequent rollover or available capital losses;
* provision is made for gains on re-valued fixed assets only where there is a
commitment to dispose of the re-valued assets and the attributable gain can
neither be rolled over nor eliminated by capital losses; and
* deferred tax assets are recognised only to the extent that the Directors
consider that it is more likely than not that there will be suitable
taxable profits from which the future reversal of the underlying timing
difference can be deducted.
Deferred tax is measured on an undiscounted basis.
Derivatives and other financial instruments
The Company holds or issues financial instruments for two main purposes:
* to finance its operations; and
* to manage the interest rate and currency risks arising from its
sources of finance.
The Company finances its operation by a mixture of retained profits, bank
borrowings, medium-term loans, long-term loans and commercial paper. The Company
has borrowings denominated in sterling at both fixed and floating rates of
interest. The main risks arising from the Company's financial instruments are
interest rate risk. The Company's policy for managing these risks is summarised
below and is defined in statements authorised by the Board of Directors and
reviewed on an annual basis. Authority for managing risk consistent with this
corporate policy may be delegated by the Board to, amongst others, the treasury
department of the Company's parent company, EDF Energy plc.
* Interest rate risk
The Company's exposure to interest rate fluctuations on its borrowings and
deposits is managed by using fixed rate debt instruments and index-linked rate
debt instruments.
Investments
Current asset investments are stated at the lower of cost and net realisable
value.
1. Accounting policies continued
Pensions
Employees of the Company participate in a number of group-wide funded defined
benefit pension arrangements, and the Company accounts for these schemes in
accordance with FRS17.
The amounts charged to the profit and loss account are the current service costs
and gains and losses on settlements and curtailments. They are included as part
of staff costs. Past service costs are recognised immediately in the profit and
loss account if the benefits have vested. If the benefits have not vested
immediately the costs are recognised over the period until vesting occurs. The
interest cost and the expected return on the assets are shown as a net amount of
other finance costs or credits adjacent to interest. Actuarial gains and losses
are recognised immediately in the statement of total recognised gains and
losses.
The defined benefit schemes are funded, with the assets of the scheme held
separately from those of the group, in separate trustee administered funds.
Pension scheme assets are measured at fair value and liabilities are measured on
an actuarial basis using the projected unit method and discounted at a rate
equivalent to the current rate of return on a high quality corporate bond or
equivalent currency and term to the scheme liabilities. The actuarial
valuations are obtained at least triennially and are updated at each balance
sheet date. The resulting defined benefit asset or liability, net of the
related deferred tax, is presented separately after other net assets on the face
of the balance sheet.
2. Turnover
Turnover, which is stated net of value added tax, arises entirely in the United
Kingdom and is attributable to the continuing activity of electricity
distribution and the invoice value of other goods and services provided. This
includes an estimate of the sales value of units supplied to customers between
the date of the last meter reading and the year end.
3. Operating profit
2005 2004
This is stated after charging: #m #m
Depreciation of owned assets 31.6 29.5
Amounts payable to Deloitte & Touche LLP and their associates by the Company in
respect of audit services were borne by another Group company in both the
current and prior year. The company had no employees in 2005 (2004: None).
4. Directors' emoluments
All Directors are employees of EDF Energy plc and did not receive any
remuneration for services to the Company during the year or the preceding year.
5. Interest receivable and similar income
2005 2004
Restated
#m #m
Net return on pension scheme 3.7 5.7
Other interest receivable 3.0 1.2
6.7 6.9
6. Interest payable and similar charges
2005 2004
#m #m
On loans from other Group companies 0.3 0.1
On loans wholly repayable within five years 7.0 8.6
On loans repayable in whole or in part after five years 29.0 28.1
36.3 36.8
7. Tax on profits on ordinary activities
(a) Analysis of tax charge in the year:
UK current tax
2005 2004
Restated
#m #m
UK corporation tax charge on profit for the year 33.2 21.9
Adjustment in respect of prior year 5.7 (9.0)
Total current tax charge (Note (b)) 38.9 12.9
UK deferred tax
2005 2004
Restated
#m #m
Origination and reversal of timing differences 3.1 7.7
Adjustment to prior year 2.9 12.5
Total deferred tax charge for the year 6.0 20.2
Total tax charge on profit on ordinary activities 44.9 33.1
(b) Factors affecting tax charge for the year:
The tax assessed for the period is higher (2004: lower) than the standard rate
of corporation tax in the UK of 30%.
The differences are explained below.
2005 2004
Restated
#m #m
Profit on ordinary activities before tax 121.2 96.6
Tax on profit on ordinary activities at standard UK rate of corporation tax of 30% 36.4 29.0
(2004: 30%)
Effect of:
Adjustment to prior year tax charge 5.7 (9.0)
Disallowed expenses and non taxable income 0.3 0.6
Capital allowances in excess of depreciation 1.7 (7.4)
Movement in pension liability (4.5) (1.7)
Other (0.7) 1.4
Current tax charge for the year period 38.9 12.9
8. Tangible fixed assets
(a) Network Non-network Fixtures Vehicles Customers' Total
land and and contributions
buildings equipment
#m #m #m #m #m #m
Cost
At 1 January 2005 2,168.7 20.0 72.9 - (467.7) 1,793.9
Additions 130.2 - - 0.6 (35.1) 95.7
Disposals (2.5) (0.4) - - - (2.9)
At 31 December 2005 2,296.4 19.6 72.9 0.6 (502.8) 1,886.7
Depreciation
At 1 January 2005 740.3 6.0 71.4 - (113.0) 704.7
Charge for the year 42.1 0.1 0.5 0.1 (11.2) 31.6
Disposals (2.5) - - - - (2.5)
At 31 December 2005 779.9 6.1 71.9 0.1 (124.2) 733.8
Net book value
At 31 December 2005 1,516.5 13.5 1.0 0.5 (378.6) 1,152.9
At 31 December 2004 1,428.4 14.0 1.5 - (354.7) 1,089.2
(b) Network assets include land at #11.2m (2004: #10.2m).
2005 2004
The net book value of non-network land and buildings comprised: #m #m
Freehold land 4.4 4.8
Freehold buildings 9.1 9.2
13.5 14.0
(c) Included within tangible fixed assets are assets in course of construction
of #44.2m as at 31 December 2005 (2004: #42.3m).
9. Debtors
2005 2004
#m #m
Debtors: amounts falling due within one year
Trade debtors 15.7 17.2
Amounts owed by Group undertakings 19.2 20.6
Prepayments and accrued income 3.6 3.3
38.5 41.1
10. Creditors: amounts falling due within one year
2005 2004
#m #m
Borrowings (note 12) 77.6 99.9
Trade creditors 0.8 0.8
Amounts owed to Group undertakings 34.8 14.0
Corporation tax (Group payments) 71.5 55.6
Other creditors 2.6 3.0
Other taxation and social security 2.0 1.4
Accruals and deferred income 20.2 24.5
209.5 199.2
11. Creditors: amounts falling due after more than one year
2005 2004
#m #m
Borrowings (note 12) 468.8 463.9
12. Borrowings
2005 2004
#m #m
Amounts falling due within one year
Short term credit revolving facility due August 2006 77.6 -
#100m LPN 8.625% Eurobond due October 2005 - 99.9
77.6 99.9
Amounts falling due after more than one year
#300m 6.125% Bonds due June 2027 305.9 306.1
#150m 3.125% Index Linked Bonds due June 2032 162.9 157.8
468.8 463.9
546.4 563.8
13. Derivatives and financial instruments
Risk management
The Company's funding, liquidity and exposure to interest rate risks are managed
by the Company's immediate parent company, EDF Energy plc. Treasury operations
are conducted within a framework of policies and guidelines authorised by the
Board of EDF Energy plc.
As permitted by FRS 13 'Derivatives and other financial instruments:
disclosures', short-term debtors and creditors have been excluded from the
disclosures.
(a) Interest rate and currency risk
The Company's long-term debt has been issued at fixed rates of interest, other
than the floating rate bond described below. Exposure to short-term interest
rate movements is limited to short-term investments and short and long term
borrowings resulting from funding needs and working capital surpluses and
deficits. The Company does not have any direct material exposure to foreign
currencies.
(b) Interest rate profile
The interest rate profile of the Company's financial liabilities was as follows:
Borrowings Fixed Rate Borrowings
Total Floating Fixed Weighted Weighted
Average Average
rate rate Interest fixed
rate period
#m #m #m % Years
As at 31 December 2005 468.8 162.9 305.9 6.1 21.0
As at 31 December 2004 563.8 157.8 406.0 6.8 17.0
The interest rate on floating rate financial liabilities (Eurobonds 2032) is
based on 3.125% index linked to the Retail Price Index over the period of the
borrowing.
(c) Fair values
The fair values of financial instruments represent the amount at which the
instrument could be exchanged in a current transaction between willing parties,
other than in a forced sale or liquidation. Where market values are not
available, fair values have been calculated by discounting cash flows at
prevailing interest rates at the year end.
Book value Fair value Book Fair
value value
2005 2005 2004 2004
Amounts payable: #m #m #m #m
Within one year 77.6 77.6 99.9 102.9
In more than five years 468.8 577.7 463.9 514.9
546.4 655.3 563.8 617.8
Included within amounts payable within one year is a short term loan of #77.6m
(2004: nil). The fair value of this debt is equal to the carrying value.
14. Provisions for liabilities and charges
The movements in provisions during the current year are as follows:
At 1 January Arising during Released during At 31 December
2005 the year the year 2005
#m #m #m #m
Deferred tax 215.3 1.6 - 216.9
Wayleaves 6.5 - (2.0) 4.5
Other 0.4 - - 0.4
222.2 1.6 (2.0) 221.8
Deferred taxation provided in the financial statements is as follows:
2005 2004
#m #m
Accelerated capital allowances 219.7 218.4
Other timing differences (2.8) (3.1)
Provision for deferred tax 216.9 215.3
The movements in deferred taxation are as follows:
2004 Restated Profit and loss Statement of total 2005
account recognised gains
and losses
#m #m #m #m
Provision for deferred tax 215.3 1.6 - 216.9
Deferred tax shown against pension
liability
(45.5) 4.5 (0.5) (41.5)
Net deferred tax 169.8 6.1 (0.5) 175.4
15. Prior year adjustments
The adoption of FRS17 'Retirement benefits' has required changes in the method
of accounting for pension costs and liabilities. As a result of these changes in
accounting policy the comparatives have been restated as follows:
Balance sheet Pension Deferred Net pension Shareholders'
deficit taxation liability funds
against
pension
liability
#m #m #m #m
At 31 December 2004 as published - - - 289.9
Adoption of FRS17 at 1 January 2004 133.6 (40.1) 93.5 (93.5)
Adoption of FRS17 for the year ended 31 December
2004 - profit and loss account
(5.7) 1.7 (4.0) 4.0
Adoption of FRS17 for the year ended 31 December
2004 - statement of total recognised gains and
losses 23.8 (7.1) 16.7 (16.7)
At 31 December 2004 as restated 151.7 (45.5) 106.2 183.7
Profit and loss account Interest Tax on profit Profit for the
receivable on ordinary financial year
activities
#m #m #m
Year ended 31 December 2004 as published 1.2 (31.4) 59.5
Adoption of FRS17 for the year ended 31 December
2004 5.7 (1.7) 4.0
Year ended 31 December 2004 as restated 6.9 (33.1) 63.5
16. Share capital
Authorised, allotted, called up and fully paid
2005 2004 2005 2004
Number Number #m #m
Ordinary shares of #1.00 each 10,000,000 10,000,000 10.0 10.0
17. Dividends paid
2005 2004
#m #m
Ordinary dividends on equity shares - 6.2p per ordinary share (2004 4.0p) 61.7 40.0
18. Reconciliation of shareholder's funds and movement on reserves
Share Profit and Total
capital loss account Shareholder's
funds
#m #m #m
At 1 January 2004 as published 10.0 260.4 270.4
Prior year adjustment - (93.5) (93.5)
At 1 January 2004 as restated 10.0 166.9 176.9
Profit for the year restated (note 15) - 63.5 63.5
Dividends paid - (40.0) (40.0)
Actuarial loss net of deferred tax on defined pension benefits - (16.7) (16.7)
At 31 December 2004 as restated 10.0 173.7 183.7
Profit for the year - 76.3 76.3
Dividends paid - (61.7) (61.7)
Actuarial loss net of deferred tax on defined pension benefits - (1.4) (1.4)
At 31 December 2005 10.0 186.9 196.9
The prior year adjustments relate to the adoption of FRS17 'Retirement Benefits'
(note 15).
19. Capital commitments
Amounts contracted for but not provided in the financial statements amounted to
#33.8m (2004: #26.5m).
20. Pension commitments
Employees of the Company participate in a number of group-wide funded defined
benefit pension arrangements, and the Company accounts for these schemes in
accordance with FRS17.
The principal pension schemes of EDF Energy plc are the EDF Energy Pension
Scheme (EEPS) and the EDF Energy Group of the Electricity Supply Pension Scheme
(ESPS). Both of these schemes are defined benefit schemes. On 1 September the
EDF Energy Group of the ESPS was created by the merger of the Company's two ESPS
Groups, the London Electricity Group of the ESPS and the SEEBOARD Group of the
ESPS. The London Electricity group and SEEBOARD group of the ESPS closed to new
employees in April 1994 and July 1995 respectively. New employees were offered
membership of the following schemes; the SEEBOARD Final Salary Pension Plan, the
London Electricity 1994 Retirement Plan (LERP), the 24seven Group Personal
Pension Plan (24seven GPP), and the SEEBOARD Pension Investment Plan. The first
of these schemes was a defined benefit scheme whilst all the others are defined
contribution schemes.
The EDF Energy Group closed its non-ESPS pension arrangements (the London
Electricity 1994 Retirement Plan, the SEEBOARD Final Salary Pension Plan, the
SEEBOARD Pension Investment Plan, and the 24seven Group Personal Pension Plan)
with effect from 29 February 2004. A new scheme, the EDF Energy Pension Scheme,
a final salary arrangement, replaced these for future service from 1 March 2004.
A special contribution of #2 million was made to the EDF Energy Pension Scheme
at inception, and the regular ongoing employer's contribution has been assessed
as 10% of pensionable pay. This contribution rate will be reviewed as a result
of future actuarial valuations.
The latest full actuarial valuation of the EDF Energy Group of the ESPS was
carried out by Hewitt Bacon & Woodrow, consulting actuaries, as at 31 March
2004. The valuation was agreed on 15 December 2004, at the same time that a
special contribution was agreed to fund the deficit over a 12 year period from 1
April 2005. The present value of the defined benefit obligation, and the
related current service cost and past service cost, were measured using the
projected unit credit method.
20. Pension commitments continued
The principal financial assumptions used to calculate ESPS liabilities under FRS
17 were:
2005 2004
% p.a. % p.a.
Discount rate 4.7 5.3
Inflation assumption 2.9 2.9
Rate of increase in salaries 3.9 3.9
Rate of increase of pensions increases RPI 2.9 2.9
These assumptions are governed by FRS 17 and do not reflect the assumptions used
by the independent actuary in the triennial valuation as at 31 March 2001, which
determined the Company's contribution rate for future years.
The amount recognised in the balance sheet in respect of the Company's defined
benefit retirement benefit plan is as follows:
2005 2004
#m #m
Fair value of scheme assets 728.2 629.0
Present value of defined benefit obligations (866.6) (780.7)
Deficit in scheme (138.4) (151.7)
Related deferred tax asset 41.5 45.5
Liability recognised in the balance sheet (96.9) (106.2)
This amount is presented in pension liabilities.
Analysis of the amounts charged to the profit and loss account in respect of
these defined benefit schemes are as follows:
2005 2004
#m #m
Expected return on pension scheme assets 44.5 44.7
Interest on pension scheme liabilities (40.8) (39.0)
Net return on pension scheme 3.7 5.7
20. Pension commitments continued
Analysis of the actuarial loss in the statement of total recognised gains and
losses:
2005 2004
#m #m
Actual return less expected return on pension scheme assets 74.8 17.0
Experience gains and losses arising on scheme liabilities (2.7) (4.5)
Changes in assumptions underlying the present value of the scheme liabilities (74.0) (36.3)
(1.9) (23.8)
Movements in the scheme deficit in the current period were as follows:
2005 2004
#m #m
At 1 January 2005 (151.7) (133.6)
Deficit payments 11.5 -
Net finance income 3.7 5.7
Actuarial loss (1.9) (23.8)
At 31 December 2005 (138.4) (151.7)
The analysis of the scheme assets and the expected rate of return at the balance
sheet date were as follows:
Expected return Fair value of
assets
2005 2004 2005 2004
% % #m #m
Gilts 4.1 4.5 148.3 108.9
Equities 7.8 8.2 500.8 465.1
Property 6.8 7.2 19.4 1.1
Corporate bonds 4.5 5.0 52.3 45.6
Cash 4.6 5.0 7.4 8.3
728.2 629.0
20. Pension commitments continued
History of experience gains and losses are as follows:
2005 2004
#m #m
Fair value of scheme assets 728.2 629.0
Present value of defined benefit obligations (866.6) (780.7)
Deficit in the scheme (138.4) (151.7)
Experience adjustments on scheme liabilities:
Amount (#m) (2.7) (4.5)
Percentage of scheme liabilities 0.3% 0.6%
Difference between the expected and actual return on scheme assets:
Amount (#m) 74.8 17.0
Percentage of scheme assets 10.3% 2.7%
Total amount recognised in statement of total recognised gains and losses
net of deferred tax on defined pension benefits:
Amount (#m) (1.4) (16.7)
Percentage of scheme liabilities 0.2% 2.1%
21. Related parties
In accordance with FRS 8 'Related party disclosures', the Company is exempt from
disclosing transactions with entities that are part of the Group or investees of
the Group qualifying as related parties, as it is a wholly owned subsidiary of a
parent, which prepares consolidated accounts which are publicly available.
22. Parent undertaking and controlling party
EDF Energy plc holds a 100% interest in EDF Energy Networks (LPN) plc and is
considered to be the immediate parent company. EDF Energy plc heads the smallest
group for which consolidated accounts are prepared which include the results of
the Company.
At 31 December 2004, Electricite de France SA (EDF), a company incorporated in
France, is regarded by the Directors as the Company's ultimate parent company
and controlling party. This is the largest group for which consolidated
financial statements are prepared. Copies of that company's consolidated
financial statements may be obtained from Electricite de France SA, 22-30 Avenue
de Wagram, 75382, Paris, Cedex 08, France.
23. Regulatory accounts
On 1 October 2001, under the Utilities Act 2000, EDF Energy Networks (LPN) plc
was granted a Distribution Licence under which it is required to produce
regulatory accounts. The regulatory accounts, which cover a twelve month period
ended 31 March of each year, are available free of charge by contacting the
finance department at Energy House, Carrier Business Park, Hazelwick Avenue,
Three Bridges, Crawley, West Sussex, RH10 1EX or by telephoning 01293 657862.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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