REG - SSE Plc - Preliminary results for the year to 31 March 2015 <Origin Href="QuoteRef">SSE.L</Origin> - Part 4
15/07/2015 18:29
- Part 4: For the preceding part double click ID:nRST7125Nc
window to be reflected at the back end such that suppliers have a period of
five years unconstrained in which to deliver their obligations;
· a reversion to the EU requirements to deliver smart meters to 80%, rather than 100%, of homes by 2020 in order to
prevent cost escalations; and
· the programme to be subject to a review to provide sufficient assurance that it is being delivered in a way which
achieves its aim of being cost-effective and net positive for customers.
Investing in becoming a market-leading retailer of energy and essential services
In the context of a fiercely competitive market for energy, SSE has a clear strategy to differentiate itself and create
value by becoming a market-leading, digital and diversified retailer of energy and essential services. With energy,
telephone, broadband, gas boiler and electrical maintenance and installation offers already in place, it is uniquely
positioned to offer a complete suite of essential services in the home. Throughout this period of consolidation, SSE has
been investing in laying the foundations for growth in an integrated GB 'domestic' business, bringing together its energy
and non-energy businesses to create broader, deeper and more valuable customer relationships.
To that end, in the 12 months to March 2015, SSE has:
· launched a new brand campaign in both Great Britain and Ireland;
· continued to invest in a fundamental overhaul of its digital channels in order to create a simple, seamless and
intuitive customer experience and provide the best possible service at the lowest possible cost;
· introduced a new customer relationship management (CRM) platform to enable it to make better use of data, understand
more fully its customer base and tailor communications and propositions to the needs of different customers;
· invested in new systems to support the national expansion of its home services offering;
· developed and reopened sales channels and processes that will facilitate assured and compliant growth.
Building a brand that customers know and trust
In order to become a market-leading, digital and diversified supplier of energy and essential services, SSE needs to be a
household brand that customers know and trust. The launch in October 2014 of the company's first-ever national television
advertising campaign was therefore a significant step on this journey.
Complementing the brand campaign and further enhancing the value it offers customers, SSE has continued to develop its
sponsorship activities and in March was announced as one of the official sponsors of ITV's coverage of the 2015 Rugby World
Cup.
Having increased awareness of SSE as a leading national brand, SSE's brand campaign and sponsorship activities provide SSE
with a valuable platform from which to launch new products and services as it seeks to attract and retain customers. This
is especially important for home services, where a new national offering, underpinned by improved CRM capabilities and
market-leading propositions, mean the business is well positioned for growth having already begun to stabilise customer
numbers.
Providing tailored services for business customers
SSE has made good progress with its strategy for developing Business Supply, as it seeks to become a business that offers
solutions across the energy value chain to its customers, working with them as their energy partner rather than simply
their energy supplier.
In 2014/15, SSE has continued to drive improvements for its small business customers, ending the practice of automatic
contract rollovers for small business customers, as well as extending to these customers its existing commitment not to
back-bill micro-business customers for more than 12 months where they have previously been under-billed due to a genuine
billing error on SSE's part. Unlike some suppliers, SSE also publishes its Variable Business Rates clearly on its website
to help smaller businesses benchmark and compare prices simply.
SSE is continuing to engage positively with the UK government, the Federation of Small Businesses and leading Third Party
Intermediaries (TPIs) in order to understand better the needs of its customers and identify further ways in which it can
make improvements for small business customers.
Looking ahead, as it moves into the delivery stage of its development plan, SSE will be launching a new portfolio
management and energy analytics tool which will allow customers direct access to their data, as well as providing the
opportunity for data hosting. In 2015/16, it is also looking to accelerate its growth as a business gas supplier by
entering the daily metered sector.
Supplying energy and energy-related services to customers in Ireland
SSE's retail brand SSE Airtricity is the second largest energy provider in Ireland and the only energy supply brand to
operate in all of the competitive gas and electricity markets across the island. At 31 March 2015, SSE Airtricity supplied
electricity and gas to 802,000 household and business accounts in the Republic of Ireland (ROI) and Northern Ireland (NI).
In addition to being the largest single provider of wind power in the all-island Single Electricity Market (SEM), with 40%
of the electricity it supplies coming from renewable sources, SSE Airtricity is also a market-leader in award-winning
digital service with around 65% of all customer interactions performed via the company's online, digital and mobile
platforms.
Highly competitive market conditions, in particular in the Republic, which has seen the emergence of new domestic market
entrants in the deregulated gas and electricity markets, led to a reduction in SSE Airtricity customer numbers in the first
half of the year. The launch of its new brand campaign in October marked a return to growth, however, and by year end SSE
Airtricity continued to have an all-island share by customer numbers of 21% of the total combined gas and electricity
markets.
In addition to electricity and gas, SSE Airtricity offers energy-related products and services including natural gas boiler
and heating services such as repair and installation. During the year the company completed a buyout of its successful
joint venture SSE Airtricity Energy Services. This company is positioned for future expansion and to that end has been
fully integrated into SSE's existing operations.
In early 2015 SSE Airtricity announced changes to its standard energy prices in each of the markets in which it operates in
Ireland and Northern Ireland:
· Northern Ireland (gas): The setting of SSE Airtricity's regulated gas prices, including any changes to those prices,
requires the formal approval of Northern Ireland's Utility Regulator under a defined annual Price Control review process.
From 1 April 2013 SSE Airtricity's natural gas prices have been frozen, providing customers stability and peace of mind for
a period of two years. In February 2015, SSE Airtricity announced it was reducing its regulated natural gas prices for its
household and small business customers by 7.8% on average with effect from 1 April 2015, saving £53 for a typical household
natural gas customer. The next interim Price Control review will be conducted by the company and the NI Utility Regulator
in October 2015.
· Northern Ireland (electricity): Also in February 2015, SSE Airtricity announced it was reducing its standard
electricity prices by 8% from 1 April 2015, saving £55 for a typical household electricity customer.
· Republic of Ireland: In January 2015 SSE Airtricity announced it was reducing its prices for around 440,000
household customers in Ireland's highly competitive and deregulated energy markets by 4% for natural gas and by 2% for
electricity. The price cuts, which took effect from 1 April 2015, equate to a typical annual saving of E58 for customers
on SSE Airtricity's most popular Direct Debit and eBilling Dual Fuel Standard tariffs.
Operating a national metering business
SSE's metering business undertakes meter reading operations and meter operator work in all parts of the UK. Because
metering currently involves being at customers' premises, there are significant operational issues and risks associated
with this activity. The number of SSE electricity and gas supply customers who receive bills based on actual meter
readings stands at 96.2%, compared to 96.7% last year. SSE Metering has also installed over 25,500 AMR (automatic meter
reading) meters which are read remotely. In the 12 months to 31 March, SSE collected 7.8 million electricity readings and
5.2 million gas readings.
Energy Supply and Energy Related Services priorities in 2015/16 and beyond
For 2015/16, SSE's key priorities in Energy Supply and Energy Related Services remain to:
· acquire and retain customers through competitively priced, compelling propositions, industry-leading customer
service, and enhanced Customer Relationship Management (CRM) driven by better use of data and segmentation;
· build successfully the new brand and maximise the opportunity this presents to engage with customers, the public and
all of SSE's stakeholders and illustrate that SSE is committed to progressive reform in energy;
· engage constructively with the CMA with a view to delivering the right outcomes for energy customers and investors;
· take the digital opportunity by creating an effortless online customer experience and developing best-in-class
applications, products and services; and
· take costs out of supplying energy, both internally by driving operational efficiencies and externally, working with
the new government to ensure that energy policies are as cost-effective as possible and, ultimately, funded more
progressively through taxation.
Enterprise
Introduction
SSE Enterprise provides services in Mechanical & Electrical Contracting, Energy Solutions, Lighting, Utilities and
Telecoms. It helps businesses achieve energy savings and provides knowledge and expertise which enables businesses to
become more sustainable. SSE Enterprise has a significant self-delivery capability enabling it to provide engineering
excellence in sensitive environments including hospitals, data centres, refineries and core utilities. Its solutions are
designed, engineered and delivered to the particular needs of the customer.
Financial performance in SSE Enterprise
SSE Enterprise's businesses were previously reported under 'Other Networks and 'Energy-related Services'. In 2014/15, this
Enterprise segment, including SSE Enterprise Energy Solutions for eight months (see below), delivered operating profit of
£70.4m, compared with £56.8m in 2013/14. This followed the disposal of the gas connections business in September 2014.
Enabling SSE Enterprise to focus on core opportunities
In order to enable SSE Enterprise to focus on the opportunities which are core to its future plans, SSE sold during 2014/15
its gas transportation business, a data centre in Hampshire and its equity interest in special purpose entities for the
delivery of seven street lighting projects for a total of around £390m, including proceeds received and debt reduced. SSE
is progressing the sale of equity in its two remaining streetlighting PFI projects.
Building a new division focused on business customers
SSE Enterprise brings together the services SSE offers to compete in competitive markets for industrial, commercial and
public sector customers. SSE Enterprise seeks to provide 'essential services for business, delivered with energy'. As a
nationwide business, SSE Enterprise employs 3,500 skilled engineers and technicians, serving more than 250,000 customers,
across more than 50 locations.
SSE Enterprise has an established track record of delivering solutions for customers in energy and related services for the
retail, financial, public and utilities sectors. The acquisition of the energy management company Energy Solutions Group
(ESG), since re-named SSE Enterprise Energy Solutions, in July 2014, added new capabilities to the business.
Creating a 'shared value' philosophy with customers is a driving force within SSE Enterprise. It focuses on creating a
long-term relationship through key account managers for its larger and more complex customers.
SSE Enterprise's principal businesses are:
SSE Enterprise Contracting (SSEC) is one of the UK's leading mechanical and electrical contractors, delivering services
ranging from small works to major design and build projects. SSEC is also the largest street lighting contractor
responsible for managing over one million lamps in 24 local authorities located across England, Wales and Scotland, and a
further 28 authorities in the Republic of Ireland.
SSE Enterprise Telecoms (SSEET) provides class-leading connectivity and data centre services from a 13,800km private fibre
optic network connected to more than 65 data centres and 240 points of presence spanning the UK. With its extensive
telecoms and data centre operational expertise, it offers commercial security with unrivalled in-house engineering teams.
It also offers modern businesses the bespoke connectivity and communication solutions they need to succeed.
SSE Enterprise Utilities (SSEEU) is a multi -utility service provider with extensive experience and expertise in working
with all domestic, retail and commercial industry sectors. It works with developers in England, Scotland and Wales
providing infrastructure solutions, carbon reduction and capital investment, from major electrical, gas and water
infrastructure to extensive heat networks. It is firmly established as one of the country's largest operators of an
Independent Gas Transporter network with over 140,000 connections; and it now runs 12 district heating schemes throughout
the UK with more to follow.
SSE Enterprise Energy Solutions (SSEES) is the UK`s leading supplier of building control solutions. It designs, installs
and optimises building management technologies which deliver efficient operating environments for its customers. Customers
benefit from reduced cost of technology deployment, increased comfort and productivity of their employees and more
effective management of escalating energy costs. The business previously traded as The Energy Solutions Group and was
acquired by SSE in July 2014. It is now committed to becoming the UK`s leading provider of energy management solutions for
business customers. In line with increasing pressures on customers to understand and comply with changing legislation,
such as the Energy Saving Opportunity Scheme (ESOS), reduce costs and understand multiple complex data sources, the
business has invested significantly in the development of new customer propositions and services.
Setting the right priorities for SSE Enterprise
The focus for Enterprise in 2015/16 is on realising the benefits from consolidation of activities and developing effective
customer relationship management and thereby laying the foundations for sustainable business growth in the period to 2020
and beyond.
Retail - Conclusion
The energy market in Great Britain and Ireland continues to face great competitive, political and regulatory pressure.
However, as a progressive company, SSE is responding positively to these challenges - delivering for customers with a two
and a half year price freeze while getting its own house in order by driving through operational efficiencies and making
the investments required to thrive in the future energy market.
SUMMARY FINANCIAL STATEMENTS 2014/15
Consolidated Income Statement
for the year ended 31 March 2015
2015 2014
Beforeexceptionalitems andcertainre-measure-ments Exceptional items and certainre-measure-ments(note 7) Total Beforeexceptionalitems andcertainre-measure-ments restated Exceptional items andcertainre-measure-ments(note 7) Total restated(note 3)
Note £m £m £m £m £m £m
Revenue 6 31,654.4 - 31,654.4 30,585.0 - 30,585.0
Cost of sales (28,801.3) (432.8) (29,234.1) (27,732.3) (560.2) (28,292.5)
Gross profit / (loss) 2,853.1 (432.8) 2,420.3 2,852.7 (560.2) 2,292.5
Operating costs (1,361.5) (358.5) (1,720.0) (1,316.0) (303.0) (1,619.0)
Other operating income 47.2 74.8 122.0 17.3 - 17.3
Operating profit / (loss) before joint ventures and associates 1,538.8 (716.5) 822.3 1,554.0 (863.2) 690.8
Joint ventures and associates:
Share of operating profit / (loss) 342.6 (25.9) 316.7 326.1 (34.9) 291.2
Share of interest (124.2) - (124.2) (137.5) - (137.5)
Share of movement on derivatives - 6.7 6.7 - 3.1 3.1
Share of tax (34.2) (1.4) (35.6) (33.8) 62.6 28.8
Share of profit / (loss) on joint ventures and associates 184.2 (20.6) 163.6 154.8 30.8 185.6
Operating profit / (loss) 6 1,723.0 (737.1) 985.9 1,708.8 (832.4) 876.4
Finance income 8 95.9 - 95.9 122.7 - 122.7
Finance costs 8 (302.4) (44.2) (346.6) (342.4) (64.2) (406.6)
Profit before taxation 1,516.5 (781.3) 735.2 1,489.1 (896.6) 592.5
Taxation 9 (271.2) 200.4 (70.8) (407.3) 260.8 (146.5)
Profit for the year 1,245.3 (580.9) 664.4 1,081.8 (635.8) 446.0
Attributable to:
Ordinary shareholders of the parent 1,124.0 (580.9) 543.1 958.9 (635.8) 323.1
Other equity holders 121.3 - 121.3 122.9 - 122.9
Basic earnings per share (pence) 11 55.3 33.5
Diluted earnings per share (pence) 11 55.2 33.3
Interim dividend paid per share (pence) 10 26.6 26.0
Final dividend proposed per share (pence) 10 61.8 60.7
88.4 86.7
The accompanying notes are an integral part of the financial information in this announcement.
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2015
2015 2014 restated (note 3)
£m £m
Profit for the year 664.4 446.0
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Actuarial (losses)/gain on retirement benefit schemes (79.3) 19.0
Taxation on actuarial gains/(losses) on defined benefit pension schemes 16.3 (23.5)
(63.0) (4.5)
Share of joint ventures actuarial losses on retirement benefit schemes (2.1) (29.2)
Share of joint ventures taxation of actuarial losses on retirement benefit schemes 0.2 6.2
(1.9) (23.0)
Items that will be reclassified subsequently to profit or loss:
Losses on effective portion of cash flow hedges (41.9) (54.5)
Transferred to assets and liabilities on cash flow hedges (4.5) (0.8)
Taxation on cashflow hedges 8.8 12.6
(37.6) (42.7)
Share of joint ventures gain on effective portion of cash flow hedges (9.4) 13.2
Share of joint ventures taxation on cashflow hedges 1.9 (3.3)
(7.5) 9.9
Losses on revaluation of available for sale investments, net of taxation (3.2) (5.1)
Exchange difference on translation of foreign operations (119.7) (22.6)
Gain on net investment hedge 61.7 16.2
Taxation on net investment hedge (13.0) (3.7)
(71.0) (10.1)
Other comprehensive loss, net of taxation (184.2) (75.5)
Total comprehensive income for the period 480.2 370.5
Attributable to:
Ordinary shareholders of the parent 358.9 247.6
Other equity holders 121.3 122.9
480.2 370.5
Consolidated Balance Sheet
as at 31 March 2015
2015 2014restated (note 3)
Note £m £m
Assets
Property, plant and equipment 11,303.9 11,085.2
Intangible assets:
Goodwill 598.0 585.1
Other intangible assets 170.4 304.2
Equity investments in associates and joint ventures 875.2 826.7
Loans to associates and joint ventures 559.4 521.6
Other investments 26.4 42.3
Deferred tax assets 270.2 207.3
Derivative financial assets 566.8 368.4
Non-current assets 14,370.3 13,940.8
Other intangible assets 433.5 433.7
Inventories 342.3 393.0
Trade and other receivables 4,527.0 4,300.6
Cash and cash equivalents 14 1,512.3 458.9
Derivative financial assets 1,999.9 1,261.2
Current assets held for sale 13 110.3 332.5
Current assets 8,925.3 7,179.9
Total assets 23,295.6 21,120.7
Liabilities
Loans and other borrowings 14 732.8 618.7
Trade and other payables 5,277.1 4,960.8
Current tax liabilities 308.4 315.2
Provisions 99.5 134.3
Derivative financial liabilities 2,297.3 1,470.2
Liabilities held for sale 13 11.1 19.2
Current liabilities 8,726.2 7,518.4
Loans and other borrowings 14 5,367.9 5,676.3
Deferred tax liabilities 716.0 757.5
Trade and other payables 424.6 416.2
Provisions 382.4 313.4
Retirement benefit obligations 18 664.6 637.7
Derivative financial liabilities 933.4 681.7
Non-current liabilities 8,488.9 8,482.8
Total liabilities 17,215.1 16,001.2
Net assets 6,080.5 5,119.5
Equity:
Share capital 16 496.5 487.4
Share premium 862.7 861.5
Capital redemption reserve 22.0 22.0
Hedge reserve (72.1) (27.0)
Translation reserve (69.5) 1.5
Retained earnings 1,469.8 1,587.3
Equity attributable to ordinary shareholders of the parent 2,709.4 2,932.7
Hybrid capital 15 3,371.1 2,186.8
Total equity attributable to equity holders of the parent 6,080.5 5,119.5
The accompanying notes are an integral part of the financial information in this announcement.
Consolidated Statement of Changes in Equity
for the year ended 31 March 2015
Statement of changes in equity Sharecapital Share premiumaccount Capital redemptionreserve Hedge reserve Translationreserve Retained earnings Total attributable to ordinary shareholders Hybrid Capital Total
£m £m £m £m £m £m £m £m £m
At 1 April 2014 487.4 861.5 22.0 (27.0) 1.5 1,587.3 2,932.7 2,186.8 5,119.5
Profit for the year - - - - - 543.1 543.1 121.3 664.4
Other comprehensive income - - - (37.6) (71.0) (66.2) (174.8) - (174.8)
Share of jointly controlled entities and associates other comprehensive income - - - (7.5) - (1.9) (9.4) - (9.4)
Total comprehensive income for the year - - - (45.1) (71.0) 475.0 358.9 121.3 480.2
Dividends to shareholders - - - - - (854.1) (854.1) - (854.1)
Scrip dividend related share issue 8.6 (8.6) - - - 255.6 255.6 - 255.6
Distributions to hybrid capital holders - - - - - - - (121.3) (121.3)
Issue of shares 0.5 9.8 - - - - 10.3 - 10.3
Issue of hybrid capital - - - - - - - 1,184.3 1,184.3
Credit in respect of employee share awards - - - - - 15.0 15.0 - 15.0
Investment in own shares - - - - - (9.0) (9.0) - (9.0)
At 31 March 2015 496.5 862.7 22.0 (72.1) (69.5) 1,469.8 2,709.4 3,371.1 6,080.5
Statement of changes in equity Share capital Share premiumaccount Capital redemptionreserve Hedge reserve Translationreserve Retained earnings Total attributable to ordinary shareholders Hybrid Capital Total
£m £m £m £m £m £m £m £m £m
At 1 April 2013 482.1 857.9 22.0 5.8 11.6 1,982.7 3,362.1 2,186.8 5,548.9
Profit for the year - - - - - 323.1 323.1 122.9 446.0
Other comprehensive income - - - (42.7) (10.1) (9.6) (62.4) - (62.4)
Share of jointly controlled entities and associates other comprehensive income - - - 9.9 - (23.0) (13.1) - (13.1)
Total comprehensive income for the year - - - (32.8) (10.1) 290.5 247.6 122.9 370.5
Dividends to shareholders - - - - - (819.6) (819.6) - (819.6)
Scrip dividend related share issue 4.8 (4.8) - - - 130.2 130.2 - 130.2
Distributions to hybrid capital holders - - - - - - - (122.9) (122.9)
Issue of shares 0.5 8.4 - - - - 8.9 - 8.9
Credit in respect of employee share awards - - - - - 15.5 15.5 - 15.5
Investment in own shares - - - - - (12.0) (12.0) - (12.0)
At 31 March 2014 487.4 861.5 22.0 (27.0) 1.5 1,587.3 2,932.7 2,186.8 5,119.5
Consolidated Cash Flow Statement
for the year ended 31 March 2015
2015 2014 restated (note 3)
Note £m £m
Cash generated from operations before working capital movements 12 2,080.7 2,134.2
(Increase) in inventories (8.5) (104.1)
(Increase) / Decrease in receivables (243.1) 312.4
Increase) in payables 394.0 216.2
(Decrease) in provisions (66.2) (18.9)
Cash generated from operations 2,156.9 2,539.8
Dividends received from joint ventures and associates 110.1 104.1
Interest received 95.9 113.8
Interest paid (227.8) (284.1)
Income taxes paid (164.8) (147.1)
Payment for consortium relief (12.0) (26.4)
Net cash from operating activities 1,958.3 2,300.1
Cash flows from Investing activities
Purchase of property, plant and equipment (1,345.3) (1,475.1)
Purchase of other intangible assets (241.8) (403.8)
Deferred income received 2.9 7.2
Proceeds from sale of held for sale assets 13 167.2 -
Proceeds from sale of property, plant and equipment 13 25.3 158.6
Proceeds from sale of business and subsidiaries 13 5.3 3.2
Proceeds from sale of other investments 13 36.0 -
Loans to joint ventures and associates (33.9) (83.9)
Purchase of businesses and subsidiaries 13 (66.0) (109.6)
Loans and equity repaid by joint ventures 15.0 19.4
Investment in joint ventures and associates (20.0) (10.0)
Increase in other investments (0.1) (0.7)
Net cash from investing activities (1,455.4) (1,894.7)
Cash flows from financing activities
Proceeds from issue of share capital 10.3 8.9
Dividends paid to company's equity holders 10 (598.5) (689.4)
Issue of hybrid capital 15 1,184.3 -
Hybrid capital dividend payments 15 (121.3) (122.9)
Employee share awards share purchase (9.0) (12.0)
New borrowings 151.1 1,815.8
Repayment of borrowings (66.3) (1,514.8)
Net cash from financing activities 550.6 (514.4)
Net increase/(decrease) in cash and cash equivalents 1,053.5 (109.0)
Cash and cash equivalents at the start of year 458.6 567.6
Net increase/(decrease) in cash and cash equivalents 1,053.5 (109.0)
Cash and cash equivalents at the end of year 1,512.1 458.6
Cash and cash equivalents in balance sheet 14 1,512.3 458.9
Bank overdrafts (i) (0.2) (0.3)
Cash and cash equivalents as above 1,512.1 458.6
(i) Bank overdrafts are reported on the balance sheet as part of current loans and borrowings. For cash flow purposes,
these have been included as cash and cash equivalents.
Notes to the Preliminary Statement
for the year ended 31 March 2015
1. Financial Information
The financial information set out in this announcement does not constitute the Group's consolidated financial statement for
the years ended 31 March 2015 or 2014, but is derived from those accounts. Consolidated financial statements for the year
ended 31 March 2014 have been delivered to the Registrar of Companies, and those for the year ended 31 March 2015 will be
delivered in due course. The auditors have reported on those accounts and their reports were (i) unqualified; (ii) did not
include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report;
and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006 in respect of the accounts for
2015. This preliminary announcement was authorised by the Board on 19 May 2015.
2. Basis of preparation
The financial information set out in this announcement has been extracted from the consolidated financial statements of SSE
plc for the year ended 31 March 2015. These consolidated financial statements were prepared under the historical cost
convention, excepting certain assets and liabilities stated at fair value and in accordance with International Financial
Reporting Standards and their interpretations, as adopted by the European Union (adopted IFRS). This consolidated
financial information has been prepared on the basis of accounting policies consistent with those applied in the
consolidated financial statements for the year ended 31 March 2014, with the exception of the newly effective accounting
standards, amendments and interpretations disclosed in Note 3. The Directors consider that the Group has adequate
resources to continue in operational existence for the foreseeable future. The financial information has therefore been
prepared on a going concern basis. The financial statements are presented in Pounds Sterling.
3. Standards, amendments and interpretations
3.1 Effective in financial year ended March 2015
(i) IFRIC 21
The Group has adopted IFRIC 21: 'Levies' in the current financial year. The interpretation clarifies that an entity should
recognise liabilities for qualifying levies on the occurrence of an activity that triggers an obligation to the relevant
authority. Qualifying levies fall within the scope of IAS 37 'Provisions, contingent liabilities and contingent assets',
but not within the scope of IAS 12 'Income taxes' or other standards. The adoption of the interpretation has had no impact
on the Group's accounting policies or on the results of the Group for the financial year ending 31 March 2015. The
interpretation will be applied by the Group in relation to its mandated funding, as a licenced energy supplier, of the
Contracts for Difference ('CfDs') scheme introduced by the UK Government on 1 April 2015.
(ii) IFRS 10, 11 and 12
IFRS 10: 'Consolidated financial statements', IFRS 11: 'Joint arrangements', IFRS 12: 'Disclosures of interests in other
entities', and revisions to IAS 27: 'Separate financial statements' and IAS 28: 'Investments in associates and joint
ventures' have been adopted by the Group in the financial year ended 31 March 2015.
The most significant impact for the Group relates to the adoption of IFRS 11. Under this standard, the Group has assessed
its joint arrangements in order to identify those which require to be classified as joint operations rather than joint
ventures. Joint operations arise where the venturers are deemed to have joint control and have rights to the assets and
obligations for the liabilities of the arrangement as opposed to having rights to the net assets of the arrangement.
Accordingly, a joint operator will recognise its share of the operation's assets, liabilities, revenue and expenses in the
consolidated financial statements rather than its net share of the result of the venture. The Group has assessed that its
investment in Greater Gabbard Offshore Winds Limited falls within this category under the standard, but that all other
joint arrangements held by the Group are classified as joint ventures, which will continue to be equity accounted.
This has resulted in the restatement of the Group's Consolidated Income Statement, Consolidated Balance Sheet, Consolidated
Statement of Comprehensive Income and Consolidated Cash Flow Statements for the year to 31 March 2014. These restatements
are summarised below.
It should be noted that as the Group currently reports its adjusted profit measures including its respective shares of
operating profit, interest and tax of the affected investments, no change arises in respect of the measures reported
internally and in the Annual Report in respect of underlying performance.
The restatement impact on the Group can be summarised as follows:
Notes to the Preliminary Statement
for the year ended 31 March 2015
3. Standards, amendments and interpretations effective in 2015 (continued)
Extract of Consolidated Income Statement Year ended 31 March 2014
Reported IFRS 11 Restated
£m £m £m
Operating profit before jointly ventures and associates 611.0 79.8 690.8
Joint ventures and associates:
Share of operating profit 371.0 (79.8) 291.2
Share of interest (147.9) 10.4 (137.5)
Share of movement on derivatives 3.1 - 3.1
Share of tax 11.6 17.2 28.8
Share of profit/(loss) on joint ventures and associates 237.8 (52.2) 185.6
Operating profit 848.8 27.6 876.4
Finance income 133.1 (10.4) 122.7
Finance costs (406.6) - (406.6)
Profit before taxation 575.3 17.2 592.5
Taxation (129.3) (17.2) (146.5)
Profit for the year 446.0 - 446.0
Extract of Consolidated Balance Sheet Year ended 31 March 2014
Reported IFRS 11 Restated
£m £m £m
Property, plant and equipment 10,316.6 768.6 11,085.2
Equity investments in associates and joint ventures 1,543.5 (716.8) 826.7
Loans to associates and joint ventures 521.6 - 521.6
Cash and cash equivalents (including bank overdrafts) 442.5 16.4 458.9
Deferred tax liabilities
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