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BD49 Elc. N 8.875%26

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Electricity North West Limited Half-year Report (9903G)

30/11/2020 4:35pm

UK Regulatory


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TIDMBD49

RNS Number : 9903G

Electricity North West Limited

30 November 2020

Electricity North West Limited (the "Company") is pleased to announce its Half Year Financial Report for the period ended 30 September 2020.

The Half Year Report is available to view on the Company's website:

https://www.enwl.co.uk/about-us/news/stock-exchange-announcements .

For further information please contact Electricity North West's press office on 0844 209 1957

or email pressoffice@enwl.co.uk .

Company Registration No. 02366949

ELECTRICITY NORTH WEST LIMITED

Half Year Condensed Consolidated Financial Statements

for the period ended 30 September 2020

Contents

Interim Management Report......................................................................................................... 1

Condensed Consolidated Statement of Comprehensive Income..................................................... 5

Condensed Consolidated Statement of Financial Position............................................................... 6

Condensed Consolidated Statement of Changes in Equity.............................................................. 7

Condensed Consolidated Statement of Cash Flows........................................................................ 8

Notes to the Condensed Consolidated Financial Statements........................................................... 9

Interim Management Report

Cautionary statement

This interim management report contains certain forward-looking statements with respect to the consolidated financial condition and business of Electricity North West Limited ("ENWL" or "the Company") and its subsidiaries (together referred to as "the Group"). Statements or forecasts relating to events in the future necessarily involve risk and uncertainty and are made by the Directors in good faith based on the information available at the date of signature of this report, with no obligation to update these forward-looking statements. Nothing in this unaudited interim management report should be construed as a profit forecast nor should past performance be relied upon as a guide to future performance.

Financial statements

The Annual Report and Consolidated Financial Statements of the Company can be found at www.enwl.co.uk.

Operations

The Group's principal activity is the operation of electricity distribution assets owned by ENWL. The distribution of electricity is regulated by the terms of ENWL's Electricity Distribution Licence granted under the Electricity Act 1989 and monitored by the Gas and Electricity Markets Authority.

Adoption of IFRS 16 'Leases'

The Group adopted IFRS 16 during the prior year. Transition to IFRS 16 resulted in an opening reserves adjustment of GBP0.2m, along with incremental lease liabilities of GBP5.0m and right of use assets of GBP4.6m being recognised. More details of the impact of IFRS 16 can be found in Note 11. IFRS 16 was fully reflected in the audited accounts for the year ended 31 March 2020, and more details on the impact of IFRS 16 can be found

in the Annual Report and Consolidated Financial Statements of the Company at   www.enwl.co.uk . 

Consolidated results

 
                                  Restated 
                      6 months    6 months        Year 
                         ended       ended       ended 
                        30 Sep      30 Sep      31 Mar 
                          2020        2019        2020 
------------------  ----------  ----------  ---------- 
 Revenue               GBP204m     GBP222m     GBP478m 
 Profit before          GBP41m      GBP57m     GBP158m 
  tax and fair 
  value movements 
 Profit/ (loss)       GBP(26)m    GBP(22)m     GBP146m 
  before tax 
 Net cash flow          GBP27m       GBP6m      GBP48m 
  before financing 
  activities 
 Net debt            GBP1,121m   GBP1,165m   GBP1,149m 
------------------  ----------  ----------  ---------- 
 

Revenue

Our revenues are collected, in-part, based on the demand over the network. With the Coronavirus lockdown and regional restrictions, this revenue has naturally fallen. To the extent that we do not collect all our allowed revenues in this year, the regulatory framework adjusts collections in future years, and therefore this will not have a lasting economic impact on the Group.

Revenue is GBP18m lower in the six months to 30 September 2020 compared to the same period in the prior year. This is mainly due to the impact of the COVID-19 restrictions.

The revenue for the six months to 31 March 2021 is expected to be higher than that in the six months to 30 September 2020, due to the seasonally higher volumes of electricity units distributed over the winter period, but the expectation is that they will also be lower than the equivalent period in the prior year due to the impact of the COVID-19 restrictions.

Profit before tax and fair value movements

Profit before tax and fair value movements is GBP16m lower than the six months to September 2019. This is primarily due to the lower revenue.

Interim Management Report (continued)

Profit/ (loss) before tax

The loss before tax of GBP26m is GBP4m bigger compared to the loss for the same period in the prior year. This is mainly due to the effect of the lower revenue, offset by lower fair value losses (see Note 6). The fair value movements are a result of the combined effect of the changes in market expectations of future interest rates and of inflation rates (see Note 12).

Net cash flow before financing

The net cash flow before financing is GBP21m higher than the same period in the prior year. Cash generated from operations was stable, with the increase primarily due to GBP12m lower capital expenditure and GBP9m lower tax paid.

Net Debt

Net debt has decreased by GBP28m in the six-month period to 30 September 2020; this is due to the GBP269m increase in borrowings, offset by the GBP297m increase in cash. The increase in borrowings is mainly due to a new GBP300m inter-company loan and the repayment of GBP30m on the revolving credit facility .

Dividends

There were no final dividends declared for the year ended 31 March 2020 and no dividends have, therefore, been paid in the period. The Directors have proposed an interim dividend of GBP30.7m for the year ended 31 March 2021. More details on dividends are given in Note 8.

Retirement benefit scheme

The retirement benefit obligation over the six-month period to 30 September 2020, has increased from GBP26m to GBP97m. The main reason for the increase is the significant reduction in the discount rate used to value the liabilities that has not been fully offset by the increase in value of the assets (see Note 13).

Principal risks and uncertainties

The principal trade and activities of the Group are carried out in ENWL and a comprehensive review of the strategy and operating model, the regulatory environment, the resources and principal risks and uncertainties facing the Company, and ultimately the Group, are outlined in the Strategic Report of the ENWL Annual Report and Consolidated Financial Statements for the year ended 31 March 2020, which are available on the website, www.enwl.co.uk.

The Board considers that the principal risks and uncertainties have not changed from the last annual report. In particular, the risk of a widespread outbreak of COVID-19 and the associated disruption to the business continues to be a significant risk.

Going concern

When considering whether to continue to adopt the going concern basis in preparing these condensed financial statements, the Directors have taken into account a number of factors, including the following:

-- The Company's electricity distribution licence includes the obligation in standard licence condition 40 to maintain an investment grade issuer credit rating, which has been met;

-- Under section 3A of the Electricity Act 1989, the Gas and Electricity Markets Authority has a duty, in carrying out its functions, to have regard to the need to secure that licence holders are able to finance their activities, which are the subject of obligations imposed by or under Part 1 of the Electricity Act 1989 or the Utilities Act 2000;

Interim Management Report (continued)

Going concern (continued)

-- Management has prepared, and the Directors have reviewed, the approved Group budgets for the year ending 31 March 2021 and forecasts covering the period to the end of the current price review, in 2023. These forecasts include projections and cash flow forecasts, including covenant compliance considerations. Inherent in forecasting is an element of uncertainty and forecasts have been sensitised for possible changes in the key assumptions, including RPI and over/under recoveries of allowed revenue. This analysis demonstrates that there is sufficient headroom on key covenants and that sufficient resources are available to the Group within the forecast period;

-- Short-term liquidity requirements are forecast to be met from the Group's operating cash flow and short-term deposit balances. A further GBP50m of committed undrawn bank facilities are available from lenders; these have a maturity of more than one year. Whilst the utilisation of these facilities is subject to gearing covenant restrictions, projections to 31 March 2021 and 2023 indicate there is significant headroom on these covenants.

Also, an assessment of the significance and ongoing rapid developments of the COVID-19 impact has been undertaken and performance against this assessment is regularly reviewed and updated. The Directors have reviewed the assumptions behind demand projections, financial performance and liquidity, and assessed Group resilience to a reduction in income brought about by reduced electricity demand.

The Board has given detailed consideration to the principal risks and uncertainties affecting the Group and Company, as referred to above, and all other known factors which could impact on the Group and the Company's ability to remain a going concern.

Consequently, after making appropriate enquiries, the Directors have a reasonable expectation that the Company and Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Half Year Condensed Consolidated Financial Statements.

The going concern basis has been adopted by the Directors, with consideration of the guidance given in 'Going Concern and Liquidity Risk: Guidance for Directors of UK Companies 2009' published by the Financial Reporting Council in October 2009, together with the updated guidance issued in 2016.

Ultimate parent undertaking and controlling party

The immediate parent undertaking is North West Electricity Networks plc, a company incorporated and registered in the United Kingdom. The ultimate parent undertaking is North West Electricity Networks (Jersey) Limited, a company incorporated and registered in Jersey. In the prior year, there was a change in ownership of the shares in North West Electricity Networks (Jersey) Limited and, therefore, a change in the ultimate controlling parties of the Company. Following completion of the sale on 3 December 2019, the ultimate shareholdings are:

   --    KDM Power Limited (40.0%); 
   --    Equitix ENW 6 Limited (25.0%); 
   --    Equitix MA North HoldCo Limited (15.0%); and 
   --    Swingfords Holdings Corporation Limited (20.0%). 

Interim Management Report (continued)

Directors

The names of the Directors who held office during the period and to date are given below. Directors served for the whole six-month period, and to the date of this report, except where otherwise indicated.

Executive Directors

-- Peter Emery

-- David Brocksom

Non-executive Directors

-- Dr John Roberts (resigned 3 October 2020)

-- Anne Baldock

-- Alistair Buchanan

-- Susan Cooklin

-- Rob Holden

-- Sion Jones

-- G Pan

-- S Sumitomo

-- P O'Flaherty (appointed 1 April 2020)

-- Y Hamada (appointed 1 April 2020, resigned 25 June 2020)

-- T Tanaka (appointed 25 June 2020)

-- Y Yamabayashi (resigned 1 April 2020)

-- A Bhuwania (resigned 1 April 2020)

-- Chris Dowling (resigned 4 June 2020)

Alternate Directors during the six-months were:

-- A Bhuwania

-- G Blackburn

-- K Fukushima

-- F Kumura

-- T Kuwahara

-- H Lea-Wilson

-- Z Liu

-- H Nakamura

-- T Pedraza

-- H Yu

Sion Jones, Yoichi Hamada, Shinichiro Sumitomo and Genping Pan are shareholder appointed directors and have appointed alternate directors during their time as Board members. Sion Jones's alternate is Achal Bhuwania. Yoichi Hamada's alternate is Kaoru Fukushima and Shinichiro Sumitomo's alternate is Fukashi Kumura. Hailin Yu is the alternate to Genping Pan.

Responsibility statement

We confirm that to the best of our knowledge:

-- the condensed set of consolidated financial statements, which has been prepared in accordance with the applicable set of accounting standards, gives a true and fair view of the assets, liabilities, financial position and profit or loss of the issuer, and the undertakings included in the consolidation as a whole as required by DTR 4.2.4R;

-- the interim management report includes a fair review of the information required by DTR 4.2.7R; and

-- the condensed set of consolidated financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting'.

Registered address

Electricity North West Limited

Borron Street

Stockport

Cheshire

SK1 2JD

Approved by the Board of Directors and signed on its behalf:

D Brocksom

Chief Financial Officer

27 November 2020

Consolidated and Company Statement of Profit or Loss and Other Comprehensive Income

For the period ended 30 September 2020

 
                                                           Unaudited      Unaudited       Audited 
                                                        Period ended   Period ended    Year ended 
                                                             30 Sept        30 Sept   31 Mar 2020 
                                                 Note           2020           2019          GBPm 
                                                                GBPm           GBPm 
=============================================  ======  =============  =============  ============ 
 
Revenue                                          4             204.1          222.4         478.1 
=============================================  ======  =============  =============  ============ 
 
Employee costs                                                (32.8)         (29.4)        (57.0) 
Depreciation and amortisation expense                         (62.4)         (60.4)       (121.4) 
Other operating costs (total)                                 (38.4)         (44.0)        (87.5) 
=============================================  ======  =============  =============  ============ 
Total operating expenses                                     (133.6)        (133.8)       (265.9) 
=============================================  ======  =============  =============  ============ 
 
Operating profit                                                70.5           88.6         212.2 
 
Investment income                                5               0.4            0.1           0.1 
Finance expense                                  6            (96.5)        (111.1)        (66.7) 
=============================================  ======  =============  =============  ============ 
 
(Loss) / Profit before taxation                               (25.6)         (22.4)         145.6 
 
Taxation                                         7               5.2            2.9        (43.5) 
=============================================  ======  =============  =============  ============ 
 
Profit/(loss) for the year attributable 
 to equity shareholders of the Company                        (20.4)         (19.5)         102.1 
 
Other comprehensive (expense)/ income: 
Items that will not be reclassified 
 subsequently to profit or loss: 
Re-measurement of net defined benefit 
 scheme                                                       (77.0)         (15.5)        (74.1) 
Deferred tax on remeasurement of 
 defined benefit scheme                                         14.6            2.6          14.0 
Adjustment of brought forward deferred 
 tax due to change in future tax 
 rates                                                                            -           1.7 
Other comprehensive (expense)/ income 
 for the period                                               (62.4)         (12.9)        (58.4) 
=============================================  ======  =============  =============  ============ 
 
Total comprehensive income / (expense) 
 for the period attributable to shareholders                  (82.8)         (32.4)          43.7 
=============================================  ======  =============  =============  ============ 
 

All the results for the current and prior periods are derived from continuing operations.

Condensed Consolidated Statement of Financial Position

As at 30 September 2020

 
                                               Unaudited      Unaudited       Audited 
                                            Period ended   Period ended    Year ended 
                                                 30 Sept        30 Sept   31 Mar 2020 
                                     Note           2020           2019          GBPm 
                                                    GBPm           GBPm 
=================================  ======  =============  =============  ============ 
ASSETS 
Non-current assets 
Intangible assets and goodwill                      57.2           53.0          53.8 
Property, plant and equipment                    3,391.8        3,311.6       3,361.6 
Retirement benefit surplus           13                -           24.1             - 
                                                 3,449.0        3,388.7       3,415.4 
=================================  ======  =============  =============  ============ 
Current assets 
Inventories                                         12.8           10.5          10.8 
Trade and other receivables                         62.9           57.7          63.4 
Cash and cash equivalents                          352.8           23.6          56.2 
                                                   428.5           91.8         130.4 
=================================  ======  =============  =============  ============ 
Total assets                                     3,877.5        3,480.5       3,545.8 
=================================  ======  =============  =============  ============ 
LIABILITIES 
Current liabilities 
Trade and other payables                         (154.9)        (126.7)       (126.2) 
Current tax liabilities                            (4.2)          (0.7)         (4.8) 
Borrowings <1 year                   10          (208.1)          (8.6)         (8.9) 
Provisions                           14            (0.1)          (0.4)         (0.1) 
                                                 (367.3)        (136.4)       (140.0) 
=================================  ======  =============  =============  ============ 
Net current liabilities                             61.2         (44.4)         (9.6) 
Non-current liabilities 
Borrowings > 1 year                  10        (1,266.1)      (1,179.9)     (1,196.7) 
Derivative financial instruments     12          (483.3)        (484.1)       (416.9) 
Provisions                           14            (1.7)          (1.9)         (1.7) 
Retirement benefit obligation        13           (96.8)              -        (26.3) 
Deferred tax                                     (129.5)        (134.7)       (155.8) 
Customer contributions                           (663.3)        (645.9)       (656.1) 
                                               (2,640.7)      (2,446.5)     (2,453.5) 
=================================  ======  =============  =============  ============ 
Total liabilities                              (3,008.0)      (2,582.9)     (2,593.5) 
=================================  ======  =============  =============  ============ 
Net assets                                         869.5          897.6         952.3 
=================================  ======  =============  =============  ============ 
EQUITY 
Called up share capital                            238.4          238.4         238.4 
Share premium account                                4.4            4.4           4.4 
Revaluation reserve                                 83.0           87.2          84.1 
Capital redemption reserve                           8.6            8.6           8.6 
Retained earnings                                  535.1          559.0         616.8 
=================================  ======  =============  =============  ============ 
Total equity                                       869.5          897.6         952.3 
=================================  ======  =============  =============  ============ 
 

Approved by the Board of Directors on 27 November 2020 and signed on its behalf by:

D Brocksom

Director

Condensed Consolidated Statement of Changes in Equity

For the period ended 30 September 2020

 
                                             Called      Share                     Capital 
                                           up share    premium   Revaluation    redemption    Retained     Total 
                                            capital    account       reserve       reserve    earnings    equity 
                                               GBPm       GBPm          GBPm          GBPm        GBPm      GBPm 
=======================================  ==========  =========  ============  ============  ==========  ======== 
 
At 31 March 2019 (audited)                    238.4        4.4          88.2           8.6       607.1     946.7 
Opening reserve adjustment: transition 
 to IFRS 16                                       -          -             -             -         0.2       0.2 
---------------------------------------  ----------  ---------  ------------  ------------  ----------  -------- 
Opening reserves                              238.4        4.4          88.2           8.6       607.3     946.9 
Loss for the period                               -          -             -             -      (19.5)    (19.5) 
Other comprehensive expense for the 
 period                                           -          -             -             -      (12.9)    (12.9) 
Transfer from revaluation reserve                 -          -         (1.0)             -         1.0         - 
Total comprehensive expense for the 
 period                                           -          -         (1.0)             -      (31.4)    (32.4) 
=======================================  ==========  =========  ============  ============  ==========  ======== 
Equity dividends (Note 8)                                    -             -             -      (16.9)    (16.9) 
=======================================  ==========  =========  ============  ============  ==========  ======== 
At 30 September 2019 (unaudited)              238.4        4.4          87.2           8.6       559.0     897.6 
=======================================  ==========  =========  ============  ============  ==========  ======== 
 
At 31 March 2019 (audited)                    238.4        4.4          88.2           8.6       607.1     946.7 
Opening reserve adjustment: transition 
 to IFRS 16                                       -          -             -             -         0.2       0.2 
Opening reserves                              238.4        4.4          88.2           8.6       607.3     946.9 
Profit for the period                             -          -             -             -       102.1     102.1 
Other comprehensive expense for the 
 period                                           -          -             -             -      (58.4)    (58.4) 
Transfer from revaluation reserve                 -          -         (4.1)             -         4.1         - 
Total comprehensive income/(expense) 
 for the period                                   -          -         (4.1)             -        47.8      43.7 
=======================================  ==========  =========  ============  ============  ==========  ======== 
Equity dividends (Note 8)                         -          -             -             -      (38.3)    (38.3) 
=======================================  ==========  =========  ============  ============  ==========  ======== 
At 31 March 2020 (audited)                    238.4        4.4          84.1           8.6       616.8     952.3 
=======================================  ==========  =========  ============  ============  ==========  ======== 
 
Loss for the period                               -          -             -             -      (20.4)    (20.4) 
Other comprehensive expense for the 
 period                                           -          -             -             -      (62.4)    (62.4) 
Transfer from revaluation reserve                 -          -         (1.1)             -         1.1         - 
Total comprehensive expense for the 
 period                                           -          -             -             -      (81.7)    (81.7) 
=======================================  ==========  =========  ============  ============  ==========  ======== 
Equity dividends (Note 8)                                    -             -             -           -         - 
=======================================  ==========  =========  ============  ============  ==========  ======== 
At 30 September 2020 (unaudited)              238.4        4.4          83.0           8.6       535.1     869.5 
=======================================  ==========  =========  ============  ============  ==========  ======== 
 

Condensed Consolidated Statement of Cash Flows

For the period ended 30 September 2020

 
                                                        Unaudited      Unaudited       Audited 
                                                     Period ended   Period ended    Year ended 
                                                          30 Sept        30 Sept   31 Mar 2020 
                                              Note           2020           2019          GBPm 
                                                             GBPm           GBPm 
==========================================  ======  =============  =============  ============ 
 
Operating activities 
Cash generated from operations                16            117.0          117.1         297.6 
Interest paid                                              (10.6)          (9.2)        (48.9) 
Tax paid                                                    (7.2)         (15.8)        (23.8) 
------------------------------------------  ------  -------------  -------------  ------------ 
 
Net cash generated from operating 
 activities                                                  99.2           92.1         224.9 
 
Investing activities 
Interest received and similar income                          0.2            0.1           0.1 
Purchase of property, plant and 
 equipment                                                 (88.0)        (100.1)       (202.6) 
Purchase of intangible assets                               (3.1)          (4.0)         (8.0) 
Proceeds from sale of property, 
 plant and equipment                                            -            0.3          32.9 
Customer contributions received                              18.5           17.4           0.6 
==========================================  ======  =============  =============  ============ 
Net cash used in investing activities                      (72.4)         (86.3)       (177.0) 
==========================================  ======  =============  =============  ============ 
 
Net cash flow before financing activities                    26.8            5.8          47.9 
 
Financing activities 
Proceeds from external borrowings                               -           14.0          30.0 
Repayment of external borrowings                           (33.5)          (3.5)         (7.0) 
Repayment of lease liabilities                              (0.8)              -         (1.2) 
Inflow from inter-company loans                             304.1            1.5           2.1 
Dividends paid                                8                 -         (16.9)        (38.3) 
Net cash used in financing activities                       269.8          (4.9)        (14.4) 
==========================================  ======  =============  =============  ============ 
 
Net increase in cash and cash equivalents                   296.6            0.9          33.5 
--------------------------------------------------  -------------  -------------  ------------ 
 
Cash and cash equivalents at beginning 
 of period                                                   56.2           22.7          22.7 
==========================================  ======  =============  =============  ============ 
Cash and cash equivalents at end 
 of period                                                  352.8           23.6          56.2 
==========================================  ======  =============  =============  ============ 
 

Notes to the Condensed Consolidated Financial Statements

   1.       General Information 

Electricity North West Ltd is a company incorporated in the United Kingdom under the Companies Act 2006.

The financial information for the six-month period ended 30 September 2020, and similarly the six-month period ended 30 September 2019, has neither been audited nor reviewed by the auditor. The financial information for the year ended 31 March 2020 has been based on information in the audited financial statements for that year.

The financial information for the year ended 31 March 2020 does not constitute the statutory financial statements for that year (as defined in s434 of the Companies Act 2006), but is derived from those financial statements. Statutory financial statements for 31 March 2020 have been delivered to the Registrar of Companies. The auditor reported on those financial statements: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under s498(2) or s498(3) of the Companies Act 2006.

   2.       Significant accounting policies 

Basis of accounting

The Annual Report and Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the European Union (EU). The Half Year Condensed Consolidated Financial Statements of the Group which are unaudited, have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' (IAS 34) as adopted by the EU.

The results for the period ended 30 September 2020 have been prepared using the same method of computation and the same accounting policies set out in the Annual Report and Consolidated Financial Statements of ENWL for the year ended 31 March 2020.

Although some of the Group's operations may sometimes be affected by seasonal factors such as general weather conditions, the Directors do not feel that this has a material effect on the performance of the Group, beyond the expected impact on revenue outlined on page 1, when comparing the interim results to those expected to be achieved in the second half of the year.

Going concern

The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Half Year Condensed Consolidated Financial Statements. Further detail is contained in the Interim Management Report.

Changes in accounting policy

There are no accounting policies and standards adopted for the six-month period ended 30 September 2020, or for the remainder of the year to 31 March 2021, that have a significant impact on the Company.

Notes to the Condensed Consolidated Financial Statements

   3.       Critical accounting judgements and key sources of estimation uncertainty 

In the application of the Group's accounting policies the directors are required to make judgements (other than those involving estimations) that have a significant impact on the amounts recognised and to make estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period; or in the period of the revision and future periods if the revision affects both current and future periods.

Critical judgements in applying the group's accounting policies

The following are the critical judgements, apart from those involving estimations (which are presented separately below), that the directors have made in applying the Group's accounting policies and that have the most significant effect on the amounts recognised in the financial statements.

Property, Plant and Equipment

The Group recognises infrastructure assets where the expenditures incurred enhance or increase the capacity of the network, whereas any expenditure classed as maintenance is expensed in the period it is incurred. Capital projects often contain a combination of enhancement and maintenance activity which are not distinct and, therefore, the allocation of costs between capital and operating expenditure is inherently judgemental. The costs capitalised include an allocation of overhead costs, relating to the proportion of time spent by support function staff, which is also inherently judgemental.

Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are outlined below.

Impairment of tangible and intangible assets (including goodwill)

Management assesses the recoverability of tangible and intangible assets on an annual basis. Determining whether any of those assets are impaired requires an estimation of the value in use of the asset to the Group. This value in use calculation requires the Group to estimate the future cash flows expected to arise from the asset and a suitable discount rate in order to calculate present value for the asset and compare that to its carrying value. This concluded that no impairment loss is required against those assets.

Notes to the Condensed Consolidated Financial Statements

   3.       Critical accounting judgements and key sources of estimation uncertainty (continued) 

Fair values of derivative financial instruments

In estimating the fair value of derivative financial instruments, the Group uses market-observable data (Level 1 and 2 inputs) to the extent it is available. Where such data is not available, certain estimates (Level 3 inputs) regarding inputs to the valuation are required to be made. Level 3 inputs form a significant part of the fair value of the financial instruments held by the Group. Information about the valuation techniques and inputs used are disclosed in Note 12.

Retirement benefit schemes

The Group's defined benefit obligation is derived using various assumptions, as disclosed in Note 22. Results can be affected significantly by the assumptions used, which management decide based on advice by a firm of actuaries.

The valuation of the assets held within the scheme has been impacted by the COVID-19 pandemic. Where available, market data is used to value assets, however for some less liquid assets, up-to-date data is not available, certain estimates regarding inputs to the valuation are required to be made, as disclosed in Note 22.

   4.       Operating segments 

Predominantly all Group operations arise from electricity distribution in the North West of England and associated activities. Only one significant operating segment is therefore regularly reviewed by the Chief Executive Officer and Executive Leadership Team.

The geographical origin and destination of revenue is all within the United Kingdom. In addition, whilst revenue can fluctuate with weather conditions, revenues are not affected significantly by seasonal trends.

Notes to the Condensed Consolidated Financial Statements (continued)

   5.       Investment income 
 
                                             Unaudited      Unaudited       Audited 
                                          Period ended   Period ended    Year ended 
                                               30 Sept        30 Sept   31 Mar 2020 
                                                  2020           2019          GBPm 
                                                  GBPm           GBPm 
=======================================  =============  =============  ============ 
 
Interest receivable on short-term bank 
 deposits                                          0.4            0.1           0.1 
=======================================  =============  =============  ============ 
 
   6.       Finance expense 
 
                                                     Unaudited      Unaudited       Audited 
                                                  Period ended   Period ended    Year ended 
                                                       30 Sept        30 Sept   31 Mar 2020 
                                                          2020           2019          GBPm 
                                                          GBPm           GBPm 
===============================================  =============  =============  ============ 
 
Interest expense: 
Interest on Group borrowings (Note 
 10)                                                       8.2            7.3          14.5 
Interest on borrowings held at amortised 
 cost                                                     19.9           20.2          41.2 
Net interest settlements on derivatives                  (0.3)          (0.4)         (9.7) 
Indexation of index-linked debt                            2.1            5.1          10.2 
Reimbursement of impairment on inter-company 
 loans (Note 10)                                           0.1              -             - 
Interest payable on leases                                 0.1            0.1           0.3 
Net interest on pension plan obligations                   0.3          (0.4)         (1.0) 
Capitalisation of borrowing costs under 
 IAS 23 (Note 9)                                         (0.3)          (0.3)         (1.1) 
-----------------------------------------------  -------------  -------------  ------------ 
 
Total interest expense                                    30.1           31.6          54.4 
 
Fair value movements on financial instruments: 
Fair value movement on derivatives 
 (Note 12)                                                66.4           79.5          12.3 
===============================================  =============  =============  ============ 
 
Total finance expense                                     96.5          111.1          66.7 
===============================================  =============  =============  ============ 
 

Notes to the Condensed Consolidated Financial Statements (continued)

   7.       Taxation 
 
                                              Unaudited      Unaudited       Audited 
                                           Period ended   Period ended    Year ended 
                                                30 Sept        30 Sept   31 Mar 2020 
                                                   2020           2019          GBPm 
  Group                                            GBPm           GBPm 
========================================  =============  =============  ============ 
 
Corporation tax: 
Current period                                      6.5            9.8          23.5 
Adjustments in respect of prior periods               -              -         (1.5) 
========================================  =============  =============  ============ 
                                                    6.5            9.8          22.0 
========================================  =============  =============  ============ 
 
Deferred tax: 
Current period                                   (11.7)         (12.7)           0.6 
Prior periods                                         -              -           1.5 
Impact of change in future tax rates                  -              -          19.4 
                                                 (11.7)         (12.7)          21.5 
========================================  =============  =============  ============ 
 
Tax charge for the period                         (5.2)          (2.9)          43.5 
========================================  =============  =============  ============ 
 

Corporation tax is calculated at 19% (30 Sept 2019: 19%, 31 Mar 2020: 19%) of the estimated assessable profit for the period. The rate applicable from 1 April 2020 now remains at 19%, rather than the previously enacted reduction to 17%. This was substantively enacted on 17 March 2020. Deferred tax is calculated using the rate at which it is expected to reverse. Accordingly, the deferred tax has been calculated on the basis that it will reverse in future at the 19% (2019: 17%) rate.

   8.       Dividends 
 
                                             Unaudited      Unaudited       Audited 
                                          Period ended   Period ended    Year ended 
                                               30 Sept        30 Sept   31 Mar 2020 
                                                  2020           2019          GBPm 
                                                  GBPm           GBPm 
=======================================  =============  =============  ============ 
 
Amounts recognised as distributions 
 to equity holders in the period: 
Final dividends for the year ended 
 31 March 2019 of 3.54 pence per share               -           16.9          16.9 
Interim dividends for the year ended 
 31 March 2020 of 4.49 pence per share               -              -          21.4 
 
Dividends for the period (Note 15)                   -           16.9          38.3 
=======================================  =============  =============  ============ 
 

At the Board meeting in November 2020 the Directors proposed an interim dividend of GBP30.7m for the year ending 31 March 2021, subject to approval by equity holders of the Company. This is not shown as a liability in the financial statements at 30 September 2020.

Notes to the Condensed Consolidated Financial Statements (continued)

   9.       Property, plant and equipment 

During the period, the Group spent GBP99.2m (30 Sept 2019: GBP109.2m, 31 Mar 2020: GBP210.5m) on additions to property, plant and equipment as part of its capital programme for its operating network. Included in this figure is capitalised interest of GBP0.3m (30 Sept 2019: GBP0.3m, 31 Mar 2020: GBP1.1m), in accordance with IAS 23 (see Note 6).

The Company has recognised incremental right of use assets of GBP4.9m (30 Sept 2019: GBP4.6m, 31 Mar 2020: GBP5.1), in accordance with IFRS 16 (see Note 11).

   10.     Borrowings 
 
                                             Unaudited      Unaudited       Audited 
                                          Period ended   Period ended    Year ended 
                                               30 Sept        30 Sept   31 Mar 2020 
                                                  2020           2019          GBPm 
                                                  GBPm           GBPm 
=======================================  =============  =============  ============ 
 
Current liabilities: 
Bank and other term borrowings                     7.1            6.8           7.0 
Lease liabilities (Note 11)                        1.4            1.8           1.9 
Amounts owed to affiliated undertaking 
 (Note 12, 15)                                   199.6              -             - 
=======================================  =============  =============  ============ 
                                                 208.1            8.6           8.9 
Non-current liabilities: 
Bonds held at amortised cost (Note 
 12)                                             632.2          632.9         634.4 
Bank and other term borrowings                   250.0          268.0         282.0 
Lease liabilities (Note 11)                        3.7            3.2           3.6 
Amounts owed to parent undertaking 
 (Note 15)                                        81.5           76.8          77.4 
Amounts owed to affiliated undertaking 
 (Note 12, 15)                                   298.7          199.0         199.3 
---------------------------------------  -------------  -------------  ------------ 
 
                                               1,266.1        1,179.9       1,196.7 
=======================================  -------------  -------------  ============ 
 
Total borrowings                               1,474.2        1,188.5       1,205.6 
=======================================  =============  =============  ============ 
 

As at 30 Sept 2020 the Group had GBP50.0m of unutilised committed bank facilities (30 Sept 2019: GBP36.0m, 31 Mar 2020: GBP20.0m).

The Group's debt facilities expire between 2021 and 2046.

Notes to the Condensed Consolidated Financial Statements (continued)

   11.     Leases 
 
                                        Unaudited      Unaudited       Audited 
                                     Period ended   Period ended    Year ended 
                                          30 Sept        30 Sept   31 Mar 2020 
                                        2020 GBPm      2019 GBPm          GBPm 
==================================  =============  =============  ============ 
 
Lease assets: 
Land and buildings                       2.5            2.4           2.5 
Telecom                                  0.2             -            0.2 
Vehicles                                 2.2            2.2           2.4 
----------------------------------  -------------  -------------  ------------ 
 
Total assets (Note 9)                    4.9            4.6           5.1 
----------------------------------  -------------  -------------  ------------ 
 
Lease liabilities: 
Land and buildings                       2.7            2.8           2.9 
Telecom                                  0.2             -            0.2 
Vehicles                                 2.2            2.2           2.4 
----------------------------------  -------------  -------------  ------------ 
 
Total liabilities (Note 10)              5.1            5.0           5.5 
==================================  =============  =============  ============ 
 
 

The lease liabilities have been discounted at 5% for land and buildings and telecoms, and 6% for vehicles.

Notes to the Condensed Consolidated Financial Statements (continued)

   12.     Financial instruments 

Fair values

All of the fair value measurements recognised in the statement of financial position for the Group and Company occur on a recurring basis.

Where available, market values have been used to determine fair values (see Level 1 in the fair value hierarchy overleaf).

Where market values are not available, fair values have been calculated by discounting future cash flows at prevailing interest and RPI rates sourced from market data (see Level 2 in the fair value hierarchy overleaf). In accordance with IFRS 13, an adjustment for non-performance risk has then been made to give the fair value.

The non-performance risk has been quantified by calculating either a credit valuation adjustment (CVA) based on the credit risk profile of the counterparty, or a debit valuation adjustment (DVA) based on the credit risk profile of the relevant group entity, using market-available data.

Whilst the majority of the inputs to the CVA and DVA calculations meet the criteria for Level 2 inputs, certain inputs regarding the Group's credit risk are deemed to be Level 3 inputs, due to the lack of market-available data. The credit risk profile of the Group has been built using the few market-available data points, e.g. credit spreads on the listed bonds, and then extrapolated over the term of the derivatives. It is this extrapolation that is deemed to be Level 3. All other inputs to both the underlying valuation and the CVA and DVA calculations are Level 2 inputs.

For certain derivatives, the Level 3 inputs form an insignificant part of the fair value and, as such, these derivatives are disclosed as Level 2. Otherwise, the derivatives are disclosed as Level 3.

The adjustment for non-performance risk as at 30 Sept 2020 is GBP88.2m (30 Sept 2019: GBP104.0m, 31 Mar 2020: GBP106.8m), of which GBP87.9m (30 Sept 2019: GBP103.7m, 31 Mar 2020: GBP106.3m) is classed as Level 3.

The following table shows the sensitivity of the fair values of derivatives disclosed as Level 3 to the Level 3 inputs, determined by applying a 10bps shift to the credit curve used to calculate the DVA.

 
                         Unaudited        Unaudited         Audited 
                      Period ended     Period ended      Year ended 
                      30 Sept 2020     30 Sept 2019     31 Mar 2020 
                    -10bps  +10bps   -10bps  +10bps  -10bps  +10bps 
                      GBPm    GBPm     GBPm    GBPm    GBPm    GBPm 
=================  =======  ======  =======  ======  ======  ====== 
 
Inflation-linked 
 swaps               (5.9)     5.7    (6.7)     6.5   (2.0)     1.9 
=================  =======  ======  =======  ======  ======  ====== 
 

On entering certain derivatives, the valuation technique used resulted in a fair value loss. As this, however, was neither evidenced by a quoted price nor based on a valuation technique using only data from observable markets, this loss on initial recognition was not recognised. This was supported by the transaction price of nil. This difference is being recognised in profit or loss on a straight-line basis over the life of the derivatives. The aggregate difference yet to be recognised in profit or loss is GBP55.1m (30 Sept 2019: GBP58.7m, 31 Mar 2020: GBP56.6m). The movement in the period all relates to the straight-line release to profit or loss, net of GBP0.5m recognised on new swaps in the period.

Notes to the Condensed Consolidated Financial Statements (continued)

   12.     Financial instruments (continued) 

Fair values (continued)

 
                                               Unaudited      Unaudited       Audited 
                                            Period ended   Period ended    Year ended 
                                                 30 Sept        30 Sept   31 Mar 2020 
                                                    2020           2019          GBPm 
                                                    GBPm           GBPm 
=========================================  =============  =============  ============ 
 
FV of derivatives pre IFRS 13 adjustment         (626.6)        (646.8)       (580.3) 
CVA/ DVA                                            88.2          104.0         106.8 
Day 1 adjustments                                   55.1           58.7          56.6 
-----------------------------------------  -------------  -------------  ------------ 
 
IFRS 13 FV of derivatives                        (483.3)        (484.1)       (416.9) 
=========================================  =============  =============  ============ 
 

The value of derivatives is disclosed gross of any collateral held. At 30 September 2020, the Group held GBPnil (30 Sept 2019: GBPnil, 31 Mar 2020: GBPnil) as collateral in relation to derivative financial instruments, included within current liabilities. The cash collateral does not meet the offsetting criteria in IAS 32: 42, but it can be set off against the net amount of the derivatives in the case of default and insolvency or bankruptcy, in accordance with associated collateral arrangements.

The following table provides an analysis of the Group's financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable:

-- Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

-- Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

-- Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

 
                                        Unaudited      Unaudited       Audited 
                                     Period ended   Period ended    Year ended 
                                          30 Sept        30 Sept   31 Mar 2020 
                                             2020           2019          GBPm 
                                             GBPm           GBPm 
==================================  =============  =============  ============ 
 
Derivative financial liabilities; 
Level 1                                         -              -             - 
Level 2                                    (56.0)         (13.1)        (12.6) 
Level 3                                   (427.3)        (471.0)       (404.3) 
----------------------------------  -------------  -------------  ------------ 
 
                                          (483.3)        (484.1)       (416.9) 
==================================  =============  =============  ============ 
 

Notes to the Condensed Consolidated Financial Statements (continued)

   12.     Financial instruments (continued) 

During the six-months to 30 September 2020, swaps with fair value of GBP40.7m were transferred from Level 3 to Level 2 (30 Sept 2019: no transfers, 31 Mar 2020: no transfers). The transfers were principally due to a change in the significance of the unobservable inputs used to derive the Group's credit curve for the DVA, as described in this section above. Any transfers between levels are determined and recognised at the end of the reporting period.

The following table provides a reconciliation of the fair value amounts disclosed as Level 3.

 
                                             Unaudited      Unaudited       Audited 
                                          Period ended   Period ended    Year ended 
                                               30 Sept        30 Sept   31 Mar 2020 
                                                  2020           2019          GBPm 
                                                  GBPm           GBPm 
=======================================  =============  =============  ============ 
 
Opening balance                                (404.3)        (395.4)       (395.4) 
 
On new instruments in the period                 (1.6)              -             - 
Transfers from Level 3 into Level 2               40.7              -             - 
Total gains or losses in profit or 
 loss: 
    -On instruments carried forward in 
     Level 3                                    (62.1)         (75.6)         (8.9) 
=======================================  =============  =============  ============ 
 
Closing balance                                (427.3)        (471.0)       (404.3) 
=======================================  =============  =============  ============ 
 

For cash and cash equivalents, trade and other receivables and trade and other payables the book values approximate to the fair values because of their short-term nature.

Except as detailed in the following table, the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the financial statements are approximately equal to their fair values. The fair values shown in the table below are derived from market values and, therefore, meet the Level 1 criteria.

 
                                                 Unaudited      Unaudited       Audited 
                                              Period ended   Period ended    Year ended 
                                                   30 Sept        30 Sept   31 Mar 2020 
                                                      2020           2019          GBPm 
                                                      GBPm           GBPm 
===========================================  =============  =============  ============ 
 
Carrying value: 
    Bonds held at amortised cost (Note 
     10)                                           (632.2)        (632.9)       (634.4) 
    Amounts owed to affiliated undertaking 
     (Note 10)                                     (498.3)        (199.0)       (199.3) 
 
Fair value: 
    Bonds held at amortised cost (Note 
     10)                                           (896.3)        (916.7)     (1,127.5) 
    Amounts owed to affiliated undertaking 
     (Note 10)                                     (513.7)        (217.8)       (221.2) 
===========================================  =============  =============  ============ 
 

Notes to the Condensed Consolidated Financial Statements (continued)

   12.     Financial instruments (continued) 

Changes in circumstances significantly affecting the fair value of financial assets and financial liabilities

Over the period there has been a GBP66.4m loss on financial instruments held at FVTPL (Note 6). This is primarily due to changes in future interest and inflation expectations used to derive the fair values. GBP15.8m of the loss is a result of the decrease in interest rate expectations, GBP24.0m loss as a result of the change in inflation expectation profile and GBP26.3m as a result in the change of credit risk over the period.

   13.     Retirement benefit schemes 

Defined benefit schemes

The defined benefit surplus/obligation is calculated using the latest actuarial valuation as at 31 March 2019 and has been projected forward by an independent actuary to take account of the requirements of IAS 19 'Employee Benefits' in order to assess the position at 30 September 2020 for the purpose of these financial statements. The present value of the defined benefit surplus/obligation, the related current service cost and the past service cost were measured using the projected unit credit method. The defined benefit plan assets have been updated to reflect their market value as at 30 September 2020. Differences between the expected return on assets and the actual return on assets have been recognised as an actuarial gain or loss in the statement of comprehensive income in accordance with the Group's accounting policy.

The increase in the defined benefit obligation over the six-month period to 30 September 2020 to GBP96.8m (30 Sept 2019: GBP24.1m surplus, 31 Mar 20120: GBP26.3m obligation), was primarily due to the significant reduction in the discount rate, which increased the value placed on the liabilities, partially offset by an increase in the asset value due to higher than expected returns.

Under the IAS 19 'Employee Benefits' valuation basis, the Group applies the principles of IFRIC 14, 'IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction', whereby a surplus is only recognised to the extent that the Group is able to access the surplus either through an unconditional right of refund to the surplus or through reduced future contributions relating to ongoing service, which have been substantively enacted or contractually agreed. Further, where the Group does not have access to any funds once they are paid into the scheme, the IFRS financial position recorded reflects the higher of any underlying IAS 19 deficit and any obligation for committed deficit funding where applicable.

The Group has concluded that it can recognise the full amount of this surplus on the grounds that it could gain sufficient economic benefit from the refund of the surplus assets that would be available to it following the final payment to the last beneficiary of the Section.

Notes to the Condensed Consolidated Financial Statements (continued)

   14.     Provisions 
 
                                          Unaudited      Unaudited       Audited 
                                       Period ended   Period ended    Year ended 
                                            30 Sept        30 Sept   31 Mar 2020 
                                               2020           2019          GBPm 
                                               GBPm           GBPm 
====================================  =============  =============  ============ 
 
Opening Balance                                 1.8            3.0           3.0 
 
Charged to the income statement                   -              -             - 
Released to the income statement                  -              -         (0.2) 
Reclassified under IFRS 16 as lease 
 liabilities                                      -              -         (0.6) 
Utilisation of provision                          -          (0.7)         (0.4) 
====================================  =============  =============  ============ 
 
Closing balance                                 1.8            2.3           1.8 
====================================  =============  =============  ============ 
 
Current                                         0.1            0.4           0.1 
Non current                                     1.7            1.9           1.7 
====================================  =============  =============  ============ 
 
Closing balance                                 1.8            2.3           1.8 
====================================  =============  =============  ============ 
 

During the year ended 31 March 2013 a provision was created in connection with a portfolio of retail properties for which the Company was liable under privity of contract. The combined closing provision of GBP0.1m (30 Sept 2019: GBP0.4m, 31 Mar 2020: GBP0.1m), which now relates to one out of town retail property, has been evaluated by management, is supported by relevant external property specialists, and reflects the Company's best estimate as at the Statement of Financial Position date of the amounts that could become payable by the Company, on a discounted basis.

The Company is part of a Covenanter Group (CG) which is party to a Deed of Covenant under which certain guarantees over the benefits of members of the EATL Group of the Electricity Supply Pension Scheme have been given. The Company has recognised a GBP1.7m provision on a discounted basis at 30 Sept 2020 (30 Sept 2019: GBP1.9m, 31 Mar 2020: GBP1.7m) relating to the Company's 6.7% share of the liabilities.

Notes to the Condensed Consolidated Financial Statements (continued)

   15.     Related party transactions 

Loans are made between companies in the North West Electricity Networks (Jersey) Group on which varying rates of interest are chargeable. Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. During the period, the Electricity North West Ltd Group companies entered into the following transactions with related parties who are not members of that Group:

 
                                                    Unaudited      Unaudited       Audited 
                                                 Period ended   Period ended    Year ended 
                                                      30 Sept        30 Sept   31 Mar 2020 
                                                         2020           2019          GBPm 
                                                         GBPm           GBPm 
==============================================  =============  =============  ============ 
 
Recharges to: 
Electricity North West (Construction 
 and Maintenance) Ltd                                     0.5            0.6           1.6 
Electricity North West Services Ltd                       0.8            0.8           1.8 
 
Recharges from: 
Electricity North West (Construction 
 and Maintenance) Ltd                                   (0.4)          (0.1)         (0.1) 
Electricity North West Services Ltd                     (2.1)          (2.9)         (6.7) 
 
Interest payable to: 
North West Electricity Networks plc                     (1.0)          (1.1)         (2.0) 
ENW Finance plc                                         (7.2)          (6.2)        (12.5) 
----------------------------------------------  -------------  -------------  ------------ 
Interest on Group borrowings (Note 6)                   (8.2)          (7.3)        (14.5) 
----------------------------------------------  -------------  -------------  ------------ 
 
Reimbursement on intercompany loan impairment 
 ENW Finance plc                                        (0.1)              -             - 
Dividends paid to North West Electricity 
 Networks plc (Note 8)                                      -         (16.9)        (38.3) 
 
Directors' remuneration                                 (1.1)          (1.1)         (2.2) 
Directors' services                                         -          (0.1)       - 
==============================================  =============  =============  ============ 
 

Notes to the Condensed Consolidated Financial Statements (continued)

   15.     Related party transactions (continued) 

Amounts outstanding between the Group and other companies within the North West Electricity Networks (Jersey) Limited Group:

 
                                                 Unaudited      Unaudited       Audited 
                                              Period ended   Period ended    Year ended 
                                                   30 Sept        30 Sept   31 Mar 2020 
                                                      2020           2019          GBPm 
                                                      GBPm           GBPm 
===========================================  =============  =============  ============ 
 
Amounts owed by: 
North West Electricity Networks plc                    3.4            3.4           3.4 
Electricity North West (Construction 
 and Maintenance) Ltd                                  0.5            0.2           0.6 
Electricity North West Services Ltd                    0.7            0.2           0.6 
Electricity North West Property Ltd                    0.1              -           0.1 
North West Electricity Networks (Jersey) 
 Ltd                                                   0.9              -           0.9 
North West Electricity Networks (Holdings) 
 Ltd                                                   0.2            0.7           0.2 
-------------------------------------------  -------------  -------------  ------------ 
Total                                                  5.8            4.5           5.8 
-------------------------------------------  -------------  -------------  ------------ 
 
Amounts owed to: 
Electricity North West Services Ltd                  (0.5)          (0.6)         (0.4) 
 
Interest payable to: 
North West Electricity Networks plc                  (0.6)          (0.6)         (0.6) 
ENW Finance plc                                      (3.2)          (4.6)         (2.5) 
Reimbursement on intercompany loan 
 impairment ENW Finance Plc                          (0.1) 
 
Borrowings payable to (Note 10): 
North West Electricity Networks plc                 (81.5)         (76.8)        (77.4) 
ENW Finance plc                                    (498.3)        (199.0)       (199.3) 
 
Group tax relief to: 
North West Electricity Networks plc                      -          (3.2)         (7.9) 
North West Electricity Networks (Holdings) 
 Ltd                                                     -          (0.1)             - 
 
 

The loan from North West Electricity Networks plc accrues weighted average interest at 2.54% per annum (30 Sept 2019: 2.69%, 31 Mar 2020: 2.70%) and is repayable in March 2023.

Of the two loans from ENW Finance plc, one accrues interest at 6.125% (30 Sept 2019: 6.125%, 31 Mar 2019: 6.125%) and is repayable in July 2021, the other at 1.415% (30 Sept 2019: nil, 31 Mar 2020: nil) was entered in the six-month period and is repayable in July 2030.

Notes to the Condensed Consolidated Financial Statements (continued)

   16.     Cash generated from operations 
 
                                                    Unaudited      Unaudited       Audited 
                                                 Period ended   Period ended    Year ended 
                                                      30 Sept        30 Sept   31 Mar 2020 
                                                         2020           2019          GBPm 
                                                         GBPm           GBPm 
==============================================  =============  =============  ============ 
 
Operating profit                                         70.5           88.6         190.5 
 
Adjustments for: 
    Depreciation of property, plant and 
     equipment                                           62.4           57.2         114.9 
    Amortisation of intangible assets                       -            3.2           6.5 
    Amortisation of customer contributions(1)           (9.3)          (9.0)        (18.3) 
    Profit on disposal of property, plant 
     and equipment                                          -          (0.3)         (0.6) 
Cash contributions in excess of pension 
 charge to operating profit                            (11.3)         (10.1)        (22.5) 
==============================================  =============  =============  ============ 
 
Operating cash flows before movement 
 in working capital                                     112.3          129.6         292.2 
 
Changes in working capital: 
    (Increase)/decrease in inventories                  (2.0)            1.8         (1.5) 
    (Increase)/decrease in trade and other 
     receivables                                        (0.9)              -           5.7 
    Increase/(decrease) in provisions and 
     payables                                             7.6         (14.3)         (9.6) 
==============================================  =============  =============  ============ 
 
Cash generated from operations                          117.0          117.1         297.6 
==============================================  =============  =============  ============ 
 

(1) In the 6 months ended 30 September 2020 GBP9.3m (30 Sept 2019: GBP9.0m, 31 Mar 2019 GBP18.3m) of amortisation in respect of customer contributions has been amortised through revenue in accordance with IFRS 15.

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