REG - SSE Plc - Half-year Report <Origin Href="QuoteRef">SSE.L</Origin> - Part 5
08/11/2017 07:45
- Part 5: For the preceding part double click ID:nRSH8580Vd
presentation used in the Group's consolidated
financial statements for the year ended 31 March 2017.
(i) Going concern
The Directors consider that the Group has adequate resources to continue in operational existence for the foreseeable
future. These interim statements are therefore prepared on a going concern basis.
(ii) Alternative performance measures
The Directors assess the performance of the Group and its reportable segments based on 'alternative performance measures'.
These measures are used for internal performance management and are believed to be appropriate for explaining underlying
performance to users of the accounts. These measures are also deemed the most useful for the ordinary shareholders of the
Company and for other stakeholders.
The performance of the reportable segments is reported based on adjusted profit before interest and tax ('adjusted
operating profit'). This is reconciled to reported profit before interest and tax by adding back exceptional items and
certain re-measurements (see Note 2. (iii) below) and after the removal of interest and taxation on profits from equity
accounted joint ventures and associates.
The performance of the Group is reported based on adjusted profit before tax which excludes exceptional items and certain
re-measurements (see below), the net interest costs associated with defined benefit schemes and taxation on profits from
equity accounted joint ventures and associates. The interest costs removed are non-cash and are subject to variation based
on actuarial valuations of scheme liabilities.
The Group's key performance measure is adjusted earnings per share (EPS), which is based on basic earnings per share before
exceptional items and certain re-measurements (see below), the net interest costs associated with defined benefit schemes
and after the removal of deferred taxation. Adjusted profit after tax is presented on a basis consistent with adjusted EPS
except for the exclusion of payments to holders of hybrid equity.
The interim statements also include an 'adjusted net debt and hybrid capital' measure. This presents financing information
on the basis used for internal liquidity risk management. This measure excludes obligations due under finance leases and
includes cash held as collateral on commodity trading exchanges. The measure represents the capital owed to investors,
lenders and equity holders other than the ordinary shareholders. As with 'adjusted earnings per share', this measure is
considered to be of particular relevance to the ordinary shareholders of the Group as well as other stakeholders and
interested parties.
Finally, the interim statements include an 'investment and capital expenditure' measure. This metric represents the capital
invested by the Group in projects that are anticipated to provide a return on investment over future years and is
consistent with internally applied metrics. This therefore includes capital additions to property, plant and equipment and
intangible assets and also the Group's direct funding of joint venture and associate capital projects. The Group has
considered it appropriate to report these values both internally and externally in this manner due to its use of equity
accounted investment vehicles to grow the Group's asset base, where the Group is providing the source of funding to the
vehicle through either loans or equity. The Group does not include project funded ventures in this metric. In addition, the
Group excludes from this metric additions to property, plant and equipment funded by customer contributions and additions
to intangible assets associated with allowances and certificates. As with 'adjusted earnings per share', this measure is
considered to be part of particular relevance to the ordinary shareholder of the Group as well as other stakeholders and
interested parties.
Reconciliations from the reported measures to adjusted measures along with further description of the rationale for those
adjustments are included in the 'Alternative Performance Measures' section at pages 46 to 50.
2. Basis of preparation (continued)
(iii) Exceptional items and certain re-measurements
Exceptional items are those charges or credits that are considered unusual by nature and scale and of such significance
that separate disclosure is required for the financial statements to be properly understood. The trigger points for
exceptional items will tend to be non-recurring although exceptional charges may impact the same asset class or segment
over time. Market conditions that have deteriorated significantly over time will only be captured to the extent observable
at the balance sheet date. Examples of items that may be considered exceptional include material asset or business
impairment charges, business restructuring costs, significant gains or losses on disposal and contractual settlements
following significant disputes and claims. The Directors consider that any individual gain or loss on disposal of greater
than £30.0m would be disclosed as being exceptional by nature of its scale. Other gains or losses on disposal below this
level may be considered to be exceptional by reference to specific circumstances which will be explained on a case by case
basis.
Certain re-measurements arise on certain commodity, interest rate and currency contracts which are accounted for as held
for trading or as fair value hedges in accordance with the Group's policy for such financial instruments. The amounts shown
in the before exceptional items and certain re-measurements results for these contracts is the amount settled in the
period. This excludes commodity contracts not treated as financial instruments under IAS39 where held for the Group's own
use requirements which are not recorded until the underlying commodity is delivered.
(iv) Other additional disclosures
As permitted by IAS 1 'Presentation of financial statements', the Group's income statement discloses additional information
in respect of joint ventures and associates, exceptional items and certain re-measurements to aid understanding of the
Group's financial performance and to present results clearly and consistently.
As part of the current year implementation of IAS 7 - Disclosure Initiative - a general review of cash flow classifications
was performed. As a result, cash flows arising from purchases of carbon allowances and renewable obligation certificates
have been reclassified from Investing Activities to Operating Activities in line with common industry practice.
3. Summary of significant new accounting policies and reporting changes
In the period, the Group has adopted the amendments to IAS 7: 'Statement of cash flows'; IAS 12: 'Income taxes'; and
'Annual Improvement Project 2014-2016', which are subject to European Union (EU) endorsement, given that endorsement is
expected to be given during 2017. Adopting these amendments has not had a material impact on these financial statements.
The following issued standards have not yet been adopted by the Group:
i) IFRS 9 'Financial instruments' which will be effective from 1 January 2018 (and thus to the Group from 1 April 2018);
ii) IFRS 15 'Revenue from contracts with customers' which will be effective from 1 January 2018 (1 April 2018 to the
Group);
iii) IFRS 16 'Leases' which will be effective from 1 January 2019 (1 April 2019 to the Group), subject to EU endorsement;
and
iv) IFRS 17 'Insurance contracts' which will be effective from 1 January 2021 (1 April 2021 to the Group), subject to EU
endorsement.
In addition to these, there are a number of other amendments and annual improvement project recommendations that are not
yet effective and are subject to endorsement by the EU. These are not anticipated to have a material impact on the Group's
consolidated financial statements.
Detailed disclosure of the progress on the projects to oversee the implementation of IFRS 9 and IFRS 15 was provided in
Notes 2.1 and 2.2 of the Group's consolidated Financial Statements for the year ended 31 March 2017. No material changes on
the expected conclusions from the assessments and the adoption and implementation of the standards have arisen in the six
months to 30 September 2017. The Group therefore remains in the process of confirming the changes required to existing
accounting policies, and will provide disclosure of any financial impacts identified in the Group's consolidated Financial
Statements for the year ended 31 March 2018.
IFRS 16 'Leases' replaces IAS 17 'Leases' and sets out the principles for the recognition, measurement, presentation and
disclosure of leases. The Group anticipates that adoption is likely to result in the majority of arrangements currently
accounted for as operating leases being recognised on the Consolidated Balance Sheet as right-of-use assets and lease
liabilities. The Group has commenced initial assessment of the impact of this standard on the consolidated financial
statements, however at this stage it is not yet practicable to quantify the impact these standards will have. The Group has
no plans for early adoption of IFRS 16.
IFRS 17 'Insurance contracts' was issued in May 2017, replaces IFRS 4 'Insurance Contracts' and sets out the requirements
that a company should apply in reporting information about insurance contracts it issues and reinsurance contracts it
holds. It is not expected that adoption of this standard will have an impact on the Group's consolidated financial
statements.
4. Critical accounting judgements and key sources of estimation uncertainty
In the process of applying the Group's accounting policies, management necessarily makes judgements and estimates that have
a significant effect on the amounts recognised in the financial statements. Changes in the assumptions underlying the
estimates could result in a significant impact to the financial statements. The Group's key accounting judgement and
estimation areas are noted below.
4. Critical accounting judgements and key sources of estimation uncertainty (continued)
4.1 Significant financial judgements - estimation uncertainties
The preparation of these Financial Statements has specifically considered the following significant financial judgements,
all of which are areas of estimation uncertainty.
(i) Impairment testing and valuation of certain non-current assets - estimation uncertainty
The Group reviews the carrying amounts of its goodwill, other intangible assets and specific property, plant and equipment
assets to determine whether any impairment of the carrying value of those assets requires to be recorded. At 30 September
2017, the Group has reviewed goodwill, intangible development assets and specific property, plant and equipment assets
related to gas production, gas storage, thermal power generation and wind power generation for indicators of impairment
arising since the last formal review performed at 31 March 2017. In conducting its reviews, the Group makes judgements and
estimates in considering the recoverable amount of the respective assets or cash-generating units (CGUs).
Changes to the estimates and assumptions on factors such as regulation and legislation changes, power, gas, carbon and
other commodity prices, volatility of gas prices, plant running regimes and load factors, expected proven and probable
reserves, discount rates and other inputs could impact the assessed recoverable value of assets and CGUs and consequently
impact the Group's income statement and balance sheet.
(ii) Revenue recognition - estimated energy consumption - estimation uncertainty
Revenue from Retail energy supply activities includes an estimate of the value of electricity or gas supplied to customers
between the date of the last meter reading and the year end. This estimation will comprise of values for i) billed revenue
in relation to consumption from unread meters based on estimated consumption taking account of various factors including
usage patterns and weather trends (disclosed as trade receivables) and ii) unbilled revenue (disclosed as accrued income).
The volume of unbilled electricity or gas is calculated by assessing a number of factors such as externally notified
aggregated volumes supplied to customers, amounts billed to customers and other adjustments.
Unbilled revenue is calculated by applying the tariffs relevant to the customer type to the calculated volume of
electricity or gas. This estimation methodology is subject to an internal corroboration process that provides support for
the judgements made by management. This process requires the comparison of calculated unbilled volumes to a 'benchmark'
measure of unbilled volumes which is derived using independently verified data and by assessing historical weather adjusted
consumption patterns and actual meter data that is used in industry reconciliation processes for total consumption by
supplier. This aspect of the corroboration process, which requires a comparison of the estimated supplied quantity of
electricity or gas that is deemed to have been delivered to customers and the aggregate supplied quantity of electricity or
gas applicable to the Group's customers that is measured by industry system operators, is a key judgement. The assessment
of electricity unbilled revenue is further influenced by the impact on national settlements data, or for electricity only,
feed-in-tariff supported volumes and spill from solar PV generation. In relation to unbilled gas revenue estimation, the
experience of the Group is that the industry estimated supplied quantities in gas have historically been higher than actual
metered supply. To take account of this, the Group applies a further judgement, being a percentage reduction to unbilled
consumption volume, to the measurement of its unbilled revenue in the financial statements. It is expected that this
judgement will become less critical as the industry transitions to smart meter technology.
(iii) Retirement benefits - estimation uncertainty
The assumptions in relation to the cost of providing post-retirement benefits during the period are based on the Group's
best estimates and are set after consultation with qualified actuaries. While these assumptions are believed to be
appropriate, a change in these assumptions would impact the level of the retirement benefit obligation recorded and the
cost to the Group of administering the schemes. Further detail on the calculation basis and key assumptions used is
disclosed in Note 17 of these interim statements.
4.2 Other key accounting judgements
Other key accounting judgements applied in the preparation of these Financial Statements include the following:
(i) Business combinations and acquisitions - accounting judgement
Business combinations and acquisitions require a fair value exercise to be undertaken to allocate the purchase price to the
fair value of the identifiable assets acquired and the liabilities assumed. The determination of the fair value of the
assets and liabilities is based, to a certain extent, on management's judgement. The amount of goodwill initially
recognised as a result of a business combination is dependent on the allocation of this purchase price to the identifiable
assets and liabilities with any unallocated portion being recorded as goodwill. There were no business combinations in the
period.
(ii) Treatment of disputes and claims - accounting judgement
The Group is exposed to the risk of litigation, regulatory judgements and contractual disputes through the course of its
normal operations. The Group considers each instance separately in accordance with legal advice and will provide or
disclose information as deemed appropriate. Changes in the assumptions around the likelihood of an outflow of economic
resources or the estimation of any obligation would change the values recognised in the financial statements.
4. Critical accounting judgements and key sources of estimation uncertainty (continued)
4.2 Other key accounting judgements (continued)
(iii) Consolidation of interest in investments and trading arrangements - accounting judgement
Judgement is often required in assessing the level of control held by the Group in its investments or trading arrangements.
Depending on the balance of facts and circumstances in each case, the Group may either have control, joint control or
significant influence over the entity or arrangement. Where the Group has joint control of an arrangement, judgement is
also required to assess whether the arrangement is a joint operation or joint venture.
Restatement of interest in Clyde Windfarm (Scotland) Limited
On 13 May 2016 the Group relinquished contractual rights which were deemed to give control over the relevant activities of
the Clyde Windfarm development. The Group held 50.1% of the equity in Clyde Windfarm (Scotland) Limited following a sale
transaction during 2015/16, but due to the contractual arrangement between the equity investors, did not retain control of
the venture.
At the point the Group relinquished control, the Group disposed of 100% of its investment in subsidiary and acquired an
investment in joint venture which was recognised at cost in the 30 September 2016 interim statement. Under IFRS 3 business
combinations the acquisition of the investment in joint venture should have been recognised at fair value. In its 31 March
2017 annual report and accounts the Group recognised a fair value uplift in the value of its equity interest of £59.1m on
its acquisition of its stake in the Clyde Windfarm (Scotland) Limited joint venture. Within this interim statement, the
Group has accordingly restated the comparative period to include this fair value uplift. The following financial statement
line items have been restated at 30 September 2016 to adjust for the recognition of this fair value uplift:
Consolidated income statement and statement of other comprehensive income for the period ended 30 September 2016
As previously reported Adjustment As restated
£m £m £m
Others 525.6 - 525.6
Other operating income 24.5 59.1 83.6
Profit for the period 550.1 59.1 609.2
Total comprehensive income 267.7 59.1 326.8
Attributable to:
Ordinary shareholders of the parent 476.2 59.1 535.3
Other equity holders 73.9 - 73.9
Basic earnings per share (pence) 47.2 5.9 53.1
Diluted earnings per share (pence) 47.2 5.8 53.0
The adjustment above results in a corresponding increase of £59.1m to 'Equity investments in joint ventures and associates'
and 'Retained earnings' within the consolidated balance sheet as at 30 September 2016.
There is no impact on the total operating, investing or financing cash flows for the period ended 30 September 2016.
4.3 Other areas of estimation uncertainty
(i) Provisions and contingencies
The assessments undertaken in recognising provisions and contingencies have been made in accordance with IAS 37. Provisions
are calculated based on estimations. The evaluation of the likelihood of the contingent events has required best judgement
by management regarding the probability of exposure to potential loss. Should circumstances change following unforeseeable
developments, this likelihood could alter.
(ii) Decommissioning costs
The estimated cost of decommissioning at the end of the useful lives of certain property, plant and equipment assets is
reviewed periodically and has been reassessed in the year to 31 March 2017. Decommissioning costs in relation to gas
exploration and production assets are periodically agreed with the field operators and reflect the latest expected economic
production lives of the fields. Provision is made for the estimated discounted cost of decommissioning at the balance
sheet date. The dates for settlement of future decommissioning costs are uncertain, particularly for gas exploration and
production assets where reassessment of gas and liquids in place and fluctuation in commodity prices and operating costs
can lengthen or shorten the field life, but are currently expected to be incurred predominantly between 2017 and 2040.
(iii) Valuation of trade receivables
The basis of determining the provisions for bad and doubtful debts is explained within the Accompanying Information section
A6 at pages 176 to 184 of the 31 March 2017 financial statements. While the provisions are considered to be appropriate,
changes in estimation basis or in economic conditions could lead to a change in the level of provisions recorded and
consequently on the charge or credit to the income statement.
4. Critical accounting judgements and key sources of estimation uncertainty (continued)
4.3 Other areas of estimation uncertainty (continued)
(iv) Gas and liquids reserves
The volume of proven and probable (2P) gas and liquids reserves is an estimate that affects the unit of production
depreciation of producing gas and liquids property, plant and equipment. This is also a significant input estimate to the
associated impairment and decommissioning calculations. The estimation of gas and liquid reserves is subject to change
between reporting periods, following the review and updating of inputs such as regional activity, geological data,
reservoir performance data, well drilling activity, commodity prices and production costs. 2P reserves, and other
classifications out-with 2P, can both increase and decrease following assessment of the inputs. The estimates of gas and
liquid reserves are formally reviewed on an annual basis using an independent reserves auditor, and the impact of a change
in estimated proven and probable reserves is dealt with prospectively by depreciating the remaining book value of producing
assets over the expected future production. If proven and probable reserves estimates are revised downwards, earnings could
be affected by an immediate write-down (impairment) of the asset's book value or a higher future depreciation expense.
5. Segmental information
The Group's operating segments are those used internally by the Board to run the business and make strategic decisions.
The types of products and services from which each reportable segment derives its revenues are:
Business Area Reported Segments Description
Networks Electricity Distribution The economically regulated lower voltage distribution of electricity to customer premises in the North of Scotland and the South of England.
Electricity Transmission The economically regulated high voltage transmission of electricity from generating plant to the distribution network in the North of Scotland.
Gas Distribution SSE's share of Scotia Gas Networks, which operates two economically regulated gas distribution networks in Scotland and the South of England.
Retail Energy Supply The supply of electricity and gas to residential and business customers in the UK and Ireland.
Enterprise The integrated provision of services in competitive markets for industrial and commercial customers including electrical contracting, private energy networks, lighting services and telecoms capacity and bandwidth.
Energy-related Services The provision of energy-related goods and services to customers in the UK including meter reading and installation, boiler maintenance and installation and domestic telecoms and broadband services.
Wholesale Energy Portfolio Management (EPM) and Electricity Generation The generation of power from renewable and thermal plant in the UK and Ireland and the optimisation of SSE's power and gas and other commodity requirements.
Gas Storage The operation of gas storage facilities in the UK.
Gas Production The production and processing of gas and oil from North Sea fields.
The internal measure of profit used by the Board is 'adjusted profit before interest and tax' or 'adjusted operating
profit' which is arrived at before exceptional items, the impact of financial instruments measured under IAS 39, the net
interest costs associated with defined benefit pension schemes and after the removal of taxation and interest on profits
from joint ventures and associates.
Analysis of revenue, operating profit, assets and other items by segment is provided below. All revenue and profit before
taxation arise from operations within the UK and Ireland.
5. Segmental information (continued)
(a) Revenue by segment
Six months ended 30 September 2017 Six months ended 30 September 2016
External revenue Intra-segment revenue(i) Total revenue External revenue Intra-segment revenue(i) Total revenue
£m £m £m £m £m £m
Networks
Electricity Distribution 354.9 109.2 464.1 367.4 114.8 482.2
Electricity Transmission 162.1 - 162.1 179.4 - 179.4
517.0 109.2 626.2 546.8 114.8 661.6
Retail
Energy Supply 2,920.2 60.1 2,980.3 3,043.6 47.4 3,091.0
Enterprise 206.9 48.6 255.5 190.8 46.1 236.9
Energy-related Services 54.8 70.2 125.0 39.6 62.6 102.2
3,181.9 178.9 3,360.8 3,274.0 156.1 3,430.1
Wholesale
EPM and Electricity Generation 8,430.7 1,194.0 9,624.7 7,374.2 1,287.2 8,661.4
Gas Storage 5.0 147.3 152.3 7.6 126.9 134.5
Gas Production 12.4 103.5 115.9 16.6 108.1 124.7
8,448.1 1,444.8 9,892.9 7,398.4 1,522.2 8,920.6
Corporate unallocated 37.1 130.2 167.3 43.6 120.9 164.5
Total 12,184.1 1,863.1 14,047.2 11,262.8 1,914.0 13,176.8
Year ended 31 March 2017
External revenue Intra-segment revenue(i) Total revenue
£m £m £m
Networks
Electricity Distribution 814.8 259.7 1,074.5
Electricity Transmission 358.2 0.2 358.4
1,173.0 259.9 1,432.9
Retail
Energy Supply 7,252.5 102.1 7,354.6
Enterprise 371.6 99.5 471.1
Energy-related Services 119.9 151.0 270.9
7,744.0 352.6 8,096.6
Wholesale
EPM and Electricity Generation 20,009.5 3,198.9 23,208.4
Gas Storage 13.5 280.4 293.9
Gas Production 35.5 235.4 270.9
20,058.5 3,714.7 23,773.2
Corporate unallocated 62.4 273.9 336.3
Total 29,037.9 4,601.1 33,639.0
(i) Revenue from the Group's investment in Scotia Gas Networks Limited, the Group's share being £194.7m (2016 - £279.8m,
March 2017 - £486.7m) is not recorded in the revenue line in the income statement
5. Segmental information (continued)
(b) Operating profit by segment
Six months ended 30 September 2017 Six months ended 30 September 2016
Adjusted operating profit reported to the Board Joint Venture/ Associate share of interest and tax (i) Before exceptional items and certain re-measurements Exceptional items and certain re-measurements Total Adjusted operating profit reported to the Board Joint Venture/ Associate share of interest and tax (i) Before exceptional items and certain re-measurements Exceptional items and certain re-measurements(ii) Total
£m £m £m £m £m £m £m £m £m £m
Networks
Electricity Distribution 176.0 - 176.0 - 176.0 181.0 - 181.0 - 181.0
Electricity Transmission 97.9 - 97.9 - 97.9 135.6 - 135.6 - 135.6
Gas Distribution 81.2 (47.7) 33.5 1.7 35.2 139.3 (70.0) 69.3 23.8 93.1
355.1 (47.7) 307.4 1.7 309.1 455.9 (70.0) 385.9 23.8 409.7
Retail
Energy Supply 46.7 - 46.7 - 46.7 47.1 - 47.1 - 47.1
Enterprise 12.2 - 12.2 - 12.2 4.8 - 4.8 - 4.8
Energy-related Services 11.4 - 11.4 - 11.4 8.6 - 8.6 - 8.6
70.3 - 70.3 - 70.3 60.5 - 60.5 - 60.5
Wholesale
EPM and Electricity Generation 160.7 (20.1) 140.6 29.3 169.9 123.2 (16.6) 106.6 221.2 327.8
Gas Storage (5.3) - (5.3) - (5.3) (4.3) - (4.3) - (4.3)
Gas Production 4.5 - 4.5 - 4.5 2.1 - 2.1 - 2.1
159.9 (20.1) 139.8 29.3 169.1 121.0 (16.6) 104.4 221.2 325.6
Corporate unallocated 0.9 - 0.9 - 0.9 (0.2) - (0.2) - (0.2)
Total 586.2 (67.8) 518.4 31.0 549.4 637.2 (86.6) 550.6 245.0 795.6
(i) The adjusted operating profit of the Group is reported after removal of the Group's share of interest, fair value
movements on financing derivatives and tax from joint ventures and associates and after adjusting for exceptional items and
certain re-measurements (note 6). The share of Scotia Gas Networks Limited interest includes loan stock interest payable to
the consortium shareholders. The Group has accounted for its 33% share of this, £7.7m (2016 - 50% share; £11.5m, March 2017
- 33% share; £12.7m), as finance income (note 7).
(ii) Restated to include the Clyde fair value uplift of £59.1m as an exceptional item. See note 4.2 (iii).
Year ended 31 March 2017
Adjusted operating profit reported to the Board Joint Venture/ Associate share of interest and tax (i) Before exceptional items and certain re-measurements Exceptional items and certain re-measurements Total
£m £m £m £m £m
Networks
Electricity Distribution 433.4 - 433.4 - 433.4
Electricity Transmission 263.7 - 263.7 - 263.7
Gas Distribution 239.4 (108.9) 130.5 21.2 151.7
936.5 (108.9) 827.6 21.2 848.8
Retail
Energy Supply 389.5 - 389.5 (76.3) 313.2
Enterprise 16.7 - 16.7 - 16.7
Energy-related Services 16.1 - 16.1 (36.4) (20.3)
422.3 - 422.3 (112.7) 309.6
Wholesale
EPM and Electricity Generation 501.2 (38.6) 462.6 273.5 736.1
Gas Storage (13.0) - (13.0) (23.8) (36.8)
Gas Production 26.4 - 26.4 (227.5) (201.1)
514.6 (38.6) 476.0 22.2 498.2
Corporate unallocated 0.6 - 0.6 283.3 283.9
Total 1,874.0 (147.5) 1,726.5 214.0 1,940.5
6. Exceptional items and certain re-measurements
Year ended 31 March2017£m Six months ended 30 September 2017£m (Restated)Six months ended 30 September 2016(i)£m
Exceptional items (note 6.1)
(376.4) Asset impairments and related charges 7.9 -
1.8 Provisions for restructuring and other liabilities - -
(374.6) 7.9 -
307.3 Net gains on disposals of businesses and other assets - -
59.1 Fair value uplift on loss of control of Clyde (Note 4.2 (iii)) - 59.1
(8.2) 7.9 59.1
19.5 Share of effect of change in UK corporation tax on deferred tax liabilities and assets of associate and joint venture investments - 23.2
11.3 Total exceptional items 7.9 82.3
Certain re-measurements (note 6.2)
201.0 Movement on operating derivatives 21.4 162.1
52.6 Movement on financing derivatives (24.0) (20.2)
1.7 Share of movement on derivatives in jointly controlled entities (net of tax) 1.7 0.6
255.3 (0.9) 142.5
266.6 Exceptional items before taxation 7.0 224.8
Taxation
35.4 Effect of change in UK corporation tax rate on deferred tax assets and liabilities - 51.8
118.7 Taxation on other exceptional items (1.5) -
154.1 (1.5) 51.8
(48.1) Taxation on certain re-measurements 0.4 (28.4)
106.0 Taxation (1.1) 23.4
372.6 Exceptional items after taxation 5.9 248.2
(i) Restated to include the Clyde fair value uplift of £59.1m. See note 4.2 (iii)
Exceptional items are disclosed across the following categories within the income statement:
Year ended 31 March2017£m Six months ended 30 September 2017£m (Restated)Six months ended 30 September 2016£m(i)
Cost of sales:
31.6 Thermal Generation - -
201.0 Movement on operating derivatives (note 16) 21.4 162.1
232.6 21.4 162.1
Operating costs:
(227.5) Gas Production (E&P) related charges - -
(23.8) Gas Storage related charges - -
(120.3) Retail and technology development related charges - -
(34.6) Other exceptional provisions and charges 7.9 -
(406.2) 7.9 -
Operating income:
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