REG - SSE Plc - Preliminary results for the year to 31 March 2016 <Origin Href="QuoteRef">SSE.L</Origin> - Part 6
18/05/2016 07:06
- Part 6: For the preceding part double click ID:nRSR5345Ye
Interest on net pension scheme liabilities (Note 7) 20.4 2.0 25.1 2.5
Share of interest on net pension scheme liabilities in joint venture (Note 7) 1.9 0.2 (11.1) (1.1)
Deferred tax (Note 8) 121.3 12.1 69.6 7.1
Deferred tax from share of joint ventures and associates 5.8 0.6 11.0 1.1
Adjusted 1,195.5 119.5 1,218.6 124.1
Basic 460.6 46.1 543.1 55.3
Dilutive effect of outstanding share options - (0.1) - (0.1)
Diluted 460.6 46.0 543.1 55.2
Notes to the Preliminary Statement
for the year ended 31 March 2016
10. Earnings per Share (continued)
The weighted average number of shares used in each calculation is as follows:
31 March 2016Number of shares(millions) 31 March 2015Number of shares(millions)
For basic and adjusted earnings per share 1,000.0 981.8
Effect of exercise of share options 1.2 2.1
For diluted earnings per share 1,001.2 983.9
11. Notes to the Consolidated Cash Flow Statement
11.1 Reconciliation of Group operating profit to cash generated from operations
2016 2015
Note £m £m
Profit for the year 585.2 664.4
Add back: taxation 8 8.1 70.8
Add back: net finance costs 7 192.1 250.7
Operating profit 785.4 985.9
Less share of profit of joint ventures and associates (204.8) (163.6)
Operating profit before joint ventures and associates 580.6 822.3
Movement on operating derivatives 31.1 67.8
Pension service charges less contributions paid (35.9) (77.5)
Exceptional charges 889.8 648.7
Depreciation of assets 676.8 656.7
Amortisation and impairment of intangible assets 2.3 3.4
Fixed asset impairments 6.7 -
Impairment of inventories - 1.4
Release of provisions (7.8) -
Release of deferred income (17.9) (16.9)
Charge in respect of employee share awards 16.5 15.0
Profit on disposal of assets and businesses - non exceptional (30.1) (40.2)
Cash generated from operations before working capital movements 2,112.1 2,080.7
11.2 Reconciliation of net increase in cash and cash equivalents to movement in adjusted net debt and hybrid capital
2016 2015
£m £m
(Decrease)/Increase in cash and cash equivalents (1,151.9) 1,053.5
Add/(less):
Issue of hybrid capital 1,161.4 (1,184.3)
New borrowings (1,070.1) (151.1)
Repayment of borrowings 77.7 66.3
Non-cash movement on borrowings (94.8) 269.8
Increase in cash held as collateral and other short term loans 50.1 20.5
Balances due to partners in Clyde Windfarm (Scotland) Limited 200.7 -
Movement in adjusted net debt and hybrid capital (826.9) 74.7
Cash held as collateral refers to amounts deposited on commodity trading exchanges which are reported within Trade and
other receivables on the face of the balance sheet.
Notes to the Preliminary Statement
for the year ended 31 March 2016
12. Acquisitions, disposals and held-for-sale assets
12.1 Acquisitions
On 28 October 2015, the Group through its wholly owned subsidiary, SSE E&P UK Limited, acquired a 20% interest in the four
gas fields and surrounding exploration acreage approximately 125km north west of the Shetland Islands, collectively known
as the Greater Laggan Area, along with a 20% interest in the Shetland Gas Terminal, from Total E&P UK Limited. The cash
consideration paid for the business was £669.0m included the Group's share of post 1 January 2015 capital expenditure on
the Shetland Gas Terminal along with other completion adjustments. Those items were the differences from the consideration
of £565.0m which was announced on 29 July 2015.
Total
£m
Assets acquired
Property, Plant and Equipment 695.8
Development and other intangible assets 73.2
Decommissioning provisions (100.0)
Net assets 669.0
Production commenced from the Laggan-Tormore project on the UK Atlantic Frontier on the 8th February, 2016. In the
financial year, 21m therms of gas were extracted, 38.1k barrels of oil and 1.8k tonnes of natural gas liquids contributing
£7.0m to revenue with a loss after tax of £1.8m during the period to 31 March 2016.
12.2 Held-for-sale assets and liabilities
During the year, the Group substantially completed the programme of non-core asset and business disposals that it had
announced on 26 March 2014 along with a number of other separately identified assets. As the programme comes to an end
some assets and liabilities remain classified as held-for-sale on the balance sheet at 31 March 2016. The aggregated
pre-tax profit contribution of the held for sale assets and businesses in the year to 31 March 2016 was £nil (2015:
£1.8m).
The assets and liabilities classified as held for sale, and the comparative balances at 31 March 2016, are as follows:
Retail Enterprise Total
2016 2015
£m £m £m £m
Property Plant and Equipment - - - 54.2
Forestry Assets - - - 1.8
Other intangible 27.9 - 27.9 21.3
Non-current assets 27.9 - 27.9 77.3
Trade and other receivables - 106.3 106.3 33.0
Current assets - 106.3 106.3 33.0
Total assets 27.9 106.3 134.2 110.3
Trade and other payables - (11.2) (11.2) (10.8)
Loans and borrowings - (5.9) (5.9) -
Current liabilities - (17.1) (17.1) (10.8)
Loans and borrowings - (97.9) (97.9) -
Deferred tax liabilities - - - (0.3)
Non-current liabilities - (97.9) (97.9) (0.3)
Total liabilities - (115.0) (115.0) (11.1)
Net assets 27.9 (8.7) 19.2 99.2
Notes to the Preliminary Statement
for the year ended 31 March 2016
12. Acquisitions, disposals and held-for-sale assets (continued)
12.3 Disposals
(i) Significant disposals
On 29 October 2015, the Group agreed to sell its shareholding in Galloper Offshore Windfarm Limited to its co-venturer RWE
Innogy for cash consideration of £18.3m. The rationale for the disposal was explained in the Group's statement on offshore
wind investment on 26 March 2014. The gain on the disposal of £18.3m was recorded as an exceptional item (Note 6). On 28
May 2015, the Group also agreed to sell three onshore wind development sites (Cour, Blackcraig and Whiteside Hill) to Blue
Energy. Total consideration of these assets was £52.4m. Consequently, an exceptional gain on disposal of £39.3m was
recorded (Note 6). Both disposals were of businesses classified as Held-for-sale at 31 March 2015.
On 18 March 2016, the Group sold a 49.9% stake in its wholly owned operational 349.6MW Clyde Wind Farm located in South
Lanarkshire to Greencoat UK Wind Plc ("UKW") and GMPF & LPFA Infrastructure LLP ("GLIL") for total cash consideration of
£339.2 million. The stake held by the co-investors has been deemed to be that of a non-controlling interest in an entity
under the Group's control. This key accounting judgement is explained at note 4.2 iv. The consequence of this is that the
gain recorded on the part disposal of £138.6m was recognised directly in equity instead of in the income statement and the
non-recourse to SSE loans held by the Clyde entity (£200.7m) require to be recorded on the Group balance sheet. The assets
included in the Clyde Windfarm (Scotland) Limited transaction were not previously held-for-sale.
(ii) Total Disposals
The following table summarises all businesses and assets disposed of during the financial year including the significant
disposals referred to above. The table differentiates the disposals of previously 'held for sale' assets and businesses
from other disposals which include other assets and investments disposed of as part of the normal course of business.
2016 2015
Held for Sale at March 2015 Not Held for Sale at March 2015 Total Held for sale at March 2014 Not Held for Sale atMarch 2014 Total
£m £m £m £m £m £m
Net assets disposed:
Property, plant and equipment 37.5 6.8 44.3 72.2 2.2 74.4
Intangible and biological assets 11.7 - 11.7 2.5 12.1 14.6
Investments - joint venture and other - - - 0.3 15.7 16.0
Trade and other receivables 1.4 - 1.4 348.7 1.7 350.4
Trade and other payables 28.8 - 28.8 (94.3) - (94.3)
Loans and borrowings - - - (230.2) - (230.2)
Net assets 79.4 6.8 86.2 99.2 31.7 130.9
Proceeds of disposal:
Consideration including debt reduction 160.5 381.7 542.2 399.6 67.9 467.5
Deferred consideration - - - 1.1 11.0 12.1
Debt reduction (23.5) - (23.5) (228.8) - (228.8)
Non-recourse loans - (200.7) (200.7) - - -
Costs of disposal - (5.6) (5.6) (3.6) (1.3) (4.9)
Provisions - - - (12.5) 11.0 (1.5)
Net proceeds (i) 137.0 175.4 312.4 155.8 88.6 244.4
-
Gain on disposal after provisions 57.6 168.6 226.2 56.6 56.9 113.5
Presentation:
Equity - 138.6 138.6 - - -
Income statement credit 57.6 30.0 87.6 56.6 56.9 113.5
2016£m 2015£m
Net proceeds of disposal (i) 312.4 244.4
Deferred consideration - (12.1)
Provisions - 1.5
Proceeds of disposal per cash flow statement 312.4 233.8
Cash from Clyde transaction recorded as New Borrowings 200.7 -
Total cash proceeds 513.1 233.8
The debt reduction items, £23.5m (2015 -£228.8m), are associated with the disposal of the street-lighting PFI companies.
Notes to the Preliminary Statement
for the year ended 31 March 2016
13. Loans and other borrowings
2016£m 2015£m
Current
Bank overdraft - 0.2
Other short-term loans 898.8 712.4
898.8 712.6
Obligations under finance leases 24.5 20.2
923.3 732.8
Non current
Loans 5,969.2 5,068.4
Obligations under finance leases 276.3 299.5
6,245.5 5,367.9
Total loans and borrowings 7,168.8 6,100.7
Add:
Cash and cash equivalents (360.2) (1,512.3)
Unadjusted Net Debt 6,808.6 4,588.4
Add/(less):
Hybrid capital (Note 14) 2,209.7 3,371.1
Obligations under finance leases (300.8) (319.7)
Cash held as collateral and other short term loans (121.8) (71.7)
Balances due to non-controlling interest partners in Clyde Windfarm (Scotland) Limited (200.7) -
Adjusted Net Debt and Hybrid Capital 8,395.0 7,568.1
Borrowing facilities
The Group has an established E1.5bn Euro commercial paper programme (paper can be issued in a range of currencies and
swapped into sterling) and as at 31 March 2016 £198.8m commercial paper was outstanding (2015 - nil). During the year the
Group extended its existing £1.5bn of facilities on reduced pricing with the facilities now maturing in August 2020
(£1.3bn) and November 2020 (£0.2bn). These facilities continue to provide back up to the commercial paper programme and at
31 March 2016 they were undrawn. The Group has a further £300m facility available with the European Investment Bank which
will be fully drawn in May 2016 when it will become a 10 year term loan.
14. Hybrid Capital
2016 2015
£m £m
GBP 750m 5.453% perpetual subordinated capital securities - 744.5
EUR 500m 5.025% perpetual subordinated capital securities - 416.9
USD 700m 5.625% perpetual subordinated capital securities 427.2 427.2
EUR 750m 5.625% perpetual subordinated capital securities 598.2 598.2
GBP 750m 3.875% perpetual subordinated capital securities 748.3 748.3
EUR 600m 2.375% perpetual subordinated capital securities 436.0 436.0
2,209.7 3,371.1
14.1 20 September 2010 £750m and E500m hybrid capital bonds
On 1 October 2015 the company redeemed the £750m and E500m hybrid capital bonds issued on 20 September 2010, the redemption
was funded by the proceeds of the £750m and E600m hybrid capital bonds issued on 10 March 2015.
14.2 18 September 2012 E750m and US$700m Hybrid Capital Bonds
Each bond has no fixed redemption date but the Company may, at its sole discretion, redeem all, but not part, of these
capital securities at their principal amount. The date for the discretionary redemption of the capital issued on 18
September 2012 is 1 October 2017 and every five years thereafter.
For the E750m capital issued on 18 September 2012, coupon payments are expected to be made annually in arrears on 1 October
in each year. For the US$700m capital issued on 18 September 2012, coupon payments are expected to be made bi-annually in
arrears on 1 April and 1 October each year.
Notes to the Preliminary Statement
14.3 10 March 2015 £750m and E600m Hybrid Capital Bonds
On 10 March 2015, the Company issued £750m and E600m hybrid capital bonds with no fixed redemption date, but the Company
may, at its sole discretion, redeem all, but not part, of the capital securities at their principal amount. The date for
the first potential discretionary redemption of the £750m hybrid capital bond is 10 September 2020 and then these can occur
every 5 years thereafter. The date for the first discretionary redemption of the E600m hybrid capital bond is 1 April 2021
and then these can occur every 5 years thereafter. The purpose of the outstanding issues was to strengthen SSE's capital
base and fund the Group's ongoing capital investment and acquisitions.
14.4 10 March 2015 £750m and E600m Hybrid Capital Bonds (continued)
For the £750m capital issued on 10 March 2015 the first coupon payment is expected to be made on 10 September 2016 and then
annually in arrears thereafter, and for the E600m capital issued on 10 March 2015, the first coupon payment is expected to
be made on 1 April 2016 and then annually in arrears thereafter.
14.5 Coupon Payments
Coupon payments of £12.5m (2015 - £11.8m) in relation to the US$ capital issued on 18 September 2012 were paid on 1 April
2015. Coupon payments of £12.4m (2015 - £12.4m) were made in relation to the same hybrid capital bond on 1 October 2015,
and payments of £99.7m were made in relation to all other hybrid capital bonds on 1 October 2015.
The Company has the option to defer coupon payments on the bonds on any relevant payment date, as long as a dividend on the
ordinary shares has not been declared. Deferred coupons shall be satisfied only in the following circumstances, all of
which occur at the sole option of the Company:
-- redemption; or
-- dividend payment on ordinary shares.
Interest will accrue on any deferred coupon.
15. Share capital
Number(millions) £m
Allotted, called up and fully paid:
At 31 March 2015 993.0 496.5
Issue of shares (i) 14.6 7.3
At 31 March 2016 1,007.6 503.8
The Company has one class of ordinary share which carries no right to fixed income. The holders of ordinary shares are
entitled to receive dividends as declared and are entitled to one vote per share at meetings of the Company.
(i) (Shareholders were able to elect to receive ordinary shares in place of the final dividend of 61.8p per
ordinary share (in relation to year ended 31 March 2015) and the interim dividend of 26.9p (in relation to the current
year) under the terms of the Company's scrip dividend scheme. This resulted in the issue of 10,600,639 and 1,172,973 new
fully paid ordinary shares respectively (2015: 11,775,169 and 5,348,770). In addition, the Company issued 2.8m (2015 -
1.0m) shares during the year under the savings-related share option schemes for a consideration of £25.0m (2015 - £10.3m)
During the year, on behalf of the Company, the employee share trust purchased 0.8m shares for a total consideration of
£11.1m (2015 - 0.6m shares, consideration of £9.0m). At 31 March 2016, the trust held 3.0m shares (2015 - 3.1m) which had a
market value of £45.5m (2015 - £47.5m).
16. Capital and Financial Risk Management
16.1 Capital management
The Board's policy is to maintain a strong balance sheet and credit rating so as to support investor, counterparty and
market confidence and to underpin future development of the business. The Group's credit ratings are also important in
maintaining an efficient cost of capital and in determining collateral requirements throughout the Group. As at 31 March
2016, the Group's long term credit rating was A- negative outlook for Standard & Poor's and A3 negative outlook for
Moody's.
The maintenance of a medium-term corporate model is a key control in monitoring the development of the Group's capital
structure, and allows for detailed scenarios and sensitivity testing. Key ratios drawn from this analysis underpin regular
updates to the Board and include the ratios used by the rating agencies in assessing the Group's credit ratings.
The Group has the option to purchase its own shares from the market; the timing of these purchases depends on market prices
and economic conditions. The use of share buy-backs is the Group's benchmark for investment decisions and is utilised at
times when management believe the Group's shares are undervalued. No share buy-back was made during the year.
Notes to the Preliminary Statement
16 Capital and Financial Risk Management (continued)
16.1 Capital management (continued)
The Group's debt requirements are principally met through issuing bonds denominated in Sterling and Euros as well as
private placements and medium term bank loans including those with the European Investment Bank. In addition the Group has
issued hybrid capital securities which bring together features of both debt and equity, are perpetual and subordinate to
all senior creditors. The Group has £1.5bn of committed bank facilities which relate to the Group's revolving credit and
bilateral facilities that can be accessed at short notice for use in managing the Group's short term funding requirements
however these committed facilities remain undrawn for the majority of the time.
The Group's capital comprises:
2016£m 2015£m
Total borrowings (excluding finance leases) 6,868.0 5,781.0
Less : Cash and cash equivalents (360.2) (1,512.3)
Net debt (excluding hybrid capital) 6,507.8 4,268.7
Hybrid capital 2,209.7 3,371.1
Cash held as collateral and other short term loans (121.8) (71.7)
Balances due to non-controlling interest partners in Clyde Windfarm (Scotland) Ltd (200.7) -
Adjusted Net Debt and Hybrid Capital 8,395.0 7,568.1
Equity attributable to shareholders of the parent 2,984.8 2,709.4
Total capital 11,379.8 10,277.5
In summary, the Group's intent is to balance returns to shareholders between current returns through dividends and
long-term capital investment for growth. In doing so, the Group will maintain its capital discipline and will continue to
operate within the current economic environment prudently. There were no changes to the Group's capital management approach
during the year.
16.2 Financial risk management
The Board has overall responsibility for the establishment and oversight of the Group's risk management framework. The Risk
and Trading Committee, which reports to the Executive Committee, comprises the two Executive Directors and senior managers
from the Energy Portfolio Management, Retail, Corporate and Finance functions. Its specific remit is to support the Group's
risk management responsibilities by reviewing the strategic, market, credit, operational and liquidity risks and exposures
that arise from the Group's energy portfolio management, generation, retail and treasury operations. This committee is
discussed further in the Corporate Governance section of the Annual Report.
The Group's policies for risk management are established to identify the risks faced by the Group, to set appropriate risk
limits and controls, and to monitor risks and adherence to limits. These policies, and the systems used to monitor
activities, are reviewed regularly by the Risk and Trading Committee.
Exposure to the commodity, currency and interest rate risks noted arise in the normal course of the Group's business and
derivative financial instruments are entered into to hedge exposure to these risks. The objectives and policies for holding
or issuing financial instruments and similar contracts and the strategies for achieving those objectives that have been
followed during the year are explained below.
The Company is required to disclose information on its financial instruments and has adopted policies identical to that of
the Group, where applicable. Separate disclosure is provided where necessary.
For financial reporting purposes, the Group has classified derivative financial instruments into two categories, operating
derivatives and financing derivatives. Operating derivatives relate to qualifying commodity contracts which includes
certain contracts for electricity, gas, oil, coal and carbon. Financing derivatives include all fair value and cash flow
interest rate hedges, non-hedge accounted (mark-to-market) interest rate derivatives, cash flow foreign exchange hedges and
non-hedge accounted foreign exchange contracts. Non-hedge accounted contracts are treated as held for trading.
Notes to the Preliminary Statement
for the year ended 31 March 2016
16. Capital and Financial Risk Management (continued)
16.2 Financial risk management (continued)
The net movement reflected in the interim income statement can be summarised thus:
2016£m 2015£m
Operating derivatives
Total result on operating derivatives (i) (1,375.4) (1,073.5)
Less: amounts settled (ii) 1,344.3 1,005.7
Movement in unrealised derivatives (31.1) (67.8)
Financing derivatives (and hedged items)
Total result on financing derivatives (i) (214.9) (395.5)
Less: amounts settled (ii) 229.2 351.3
Movement in unrealised derivatives 14.3 (44.2)
Net income statement impact (16.8) (112.0)
(i) Total result on derivatives in the income statement represents the total amounts (charged) or credited to the income
statement in respect of operating and financial derivatives.
(ii) Amounts settled in the year represent the result on derivatives transacted which have matured or been delivered and
have been included within the total result on derivatives.
The fair values of the primary financial assets and liabilities of the Group, together with their carrying values, are as
follows:
2016 2016 2015 2015
CarryingValue£m FairValue£m CarryingValue£m FairValue£m
Financial Assets
Current
Trade receivables 1,966.8 1,966.8 2,977.5 2,977.5
Other receivables 23.7 23.7 25.2 25.2
Cash held as collateral and other short term loans 13 121.8 121.8 71.7 71.7
Cash and cash equivalents 13 360.2 360.2 1,512.3 1,512.3
Derivative financial assets 1,615.0 1,615.0 1,999.9 1,999.9
4,087.5 4,087.5 6,586.6 6,586.6
Non-current
Unquoted equity investments 9.9 9.9 11.2 11.2
Loans to associates and jointly controlled entities 591.6 591.6 559.4 559.4
Derivative financial assets 537.7 537.7 566.8 566.8
1,139.2 1,139.2 1,137.4 1,137.4
5,226.7 5,226.7 7,724.0 7,724.0
Financial Liabilities
Current
Trade payables (1,868.3) (1,868.3) (2,707.7) (2,707.7)
Bank loans and overdrafts 13 (898.8) (900.6) (712.6) (714.3)
Finance lease liabilities 13 (24.5) (24.5) (20.2) (20.2)
Derivative financial liabilities (1,783.8) (1,783.8) (2,297.3) (2,297.3)
(4,575.4) (4,577.2) (5,737.8) (5,739.5)
Non-current
Loans and Borrowings 13 (5,969.2) (6,889.9) (5,068.4) (6,213.4)
Finance lease liabilities 13 (276.3) (276.3) (299.5) (299.5)
Derivative financial liabilities (857.5) (857.5) (933.4) (933.4)
(7,103.0) (8,023.7) (6,301.3) (7,446.3)
(11,678.4) (12,600.9) (12,039.1) (13,185.8)
Net financial liabilities (6,451.7) (7,374.2) (4,315.1) (5,461.8)
Notes to the Preliminary Statement
for the year ended 31 March 2016
16. Capital and Financial Risk Management (continued)
16.2 Financial risk management (continued)
(i) Fair Value Hierarchy
The following table provides an analysis of 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 unadjusted quoted market prices 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)
§ 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.
Fair Value Hierarchy
Level 1 Level 2 Level 3 Total
Financial Assets £m £m £m £m
Energy derivatives 378.7 1,475.3 - 1,854.0
Interest rate derivatives - 238.1 - 238.1
Foreign exchange derivatives - 60.6 - 60.6
Equity investments - 25.1 - 25.1
378.7 1,799.1 - 2,177.8
Financial Liabilities
Energy derivatives (436.7) (1,781.6) - (2,218.3)
Interest rate derivatives - (415.5) - (415.5)
Foreign exchange derivatives - (7.5) - (7.5)
Loans and Borrowings - 81.8 - 81.8
(436.7) (2,122.8) - (2,559.5)
There were no significant transfers out of level 1 into level 2 and out of level 2 into level 1 during the year ended 31
March 2016.
17. Retirement Benefit Obligations
Valuation of combined Pension Schemes
Long- term rate of return expected at 31 March 2016 Valueat 31 March 2016 Long- term rate of return expected at 31 March 2015 Valueat 31 March 2015
% £m % £m
Equities 5.5 1,049.6 5.6 1,060.1
Government bonds 1.2 1,001.7 2.6 1,049.6
Corporate bonds 3.0 1,069.7 3.3 1,061.3
Other investments 1.7 581.9 4.1 580.0
Total fair value of plan assets 3,702.9 3,751.0
Present value of defined benefit obligation (3,835.0) (4,209.1)
Pension liability before IFRIC 14 (132.1) (458.1)
IFRIC 14 liability (i) (262.7) (206.5)
Deficit in the schemes (394.8) (664.6)
Deferred tax thereon 71.0 132.8
Net pension liability (323.8) (531.8)
(i) The IFRIC 14 liability represents the deficit repair obligations required to ensure a minimum funding level together
with a restriction on the surplus that can be recognised.
Notes to the Preliminary Statement
for the year ended 31 March 2016
17 Retirement Benefit Obligations(continued)
Movements in the defined benefit asset obligations and assets during the year:
2016 2015
Assets£m Obligations£m Total£m Assets£m Obligations£m Total£m
at 1 April 3,751.0 (4,209.1) (458.1) 3,257.3 (3,693.9) (436.6)
Included in Income Statement
Current service cost - (61.8) (61.8) - (55.4) (55.4)
Past service cost - (4.3) (4.3) - (16.7) (16.7)
Interest income/(cost) 121.2 (134.9) (13.7) 139.9 (156.4) (16.5)
121.2 (201.0) (79.8) 139.9 (228.5) (88.6)
Included in Other Comprehensive Income
Actuarial (loss)/gain arising from:
Demographic assumptions - 48.0 48.0 - - -
Financial assumptions - 277.4 277.4 - (515.4) (515.4)
Experience assumptions - 101.5 101.5 - 70.4 70.4
Return on plan assets excluding interest income (123.1) - (123.1) 362.5 - 362.5
(123.1) 426.9 303.8 362.5 (445.0) (82.5)
Other
Contributions paid by the employer 102.0 - 102.0 149.6 - 149.6
Scheme participants contributions 0.3 (0.3) - 0.3 (0.3) -
Benefits paid (148.5) 148.5 - (158.6) 158.6 -
(46.2) 148.2 102.0 (8.7) 158.3 149.6
Balance at 31 March 3,702.9 (3,835.0) (132.1) 3,751.0 (4,209.1) (458.1)
Charges / (credits) recognised:
2016 2015
£m £m
Current service cost (charged to operating profit) 66.1 72.1
66.1 72.1
(Credited)/charged to finance costs:
Interest on pension scheme assets (121.2) (139.9)
Interest on pension scheme liabilities 134.9 156.4
IFRIC 14 impact on net interest 6.7 8.6
20.4 25.1
18. Capital commitments
2016 2015
£m £m
Capital expenditure:
Contracted for but not provided 898.4 1,059.5
Contracted for, but not provided capital commitments, include the fixed contracted costs of the Group's major capital
projects. In practice, contractual variations may arise on the final settlement of these contractual costs.
Notes to the Preliminary Statement
for the year ended 31 March 2016
19. Related party transactions
The following transactions took place during the year between the Group and entities which are related to the Group but
which are not members of the Group. Related parties are defined as those in which the Group has control, joint control or
significant influence over.
2016 2016 2016 2016 2015 2015 2015 2015
Sale of goods and services Purchase of goods and services Amounts owed from Amounts owed to Sale of goods and services Purchase of goods and services Amounts owed from Amounts owed to
Joint ventures: £m £m £m £m £m £m £m £m
Seabank Power Ltd 13.7 (125.8) - 18.2 20.1 (115.5) 1.8 11.1
Marchwood Power Ltd 12.7 (108.7) 0.1 15.5 28.7 (114.4) 3.4 12.7
Scotia Gas Networks Ltd 46.3 (155.8) 15.9 0.9 49.0 (166.4) 7.7 0.3
Other Joint Ventures 8.1 (1.2) 8.4 - 27.6 (6.0) 3.0 -
Associates 0.5 (59.7) 2.4 3.9 0.8 (41.9) 1.9 2.5
The transactions with Seabank Power Limited and Marchwood Power Limited relate to the contracts for the provision of energy
or the tolling of energy under power purchase arrangements. Scotia Gas Networks Limited has operated the gas distribution
networks in Scotland and the South of England from 1 June 2005. The Group's gas supply activity incurs gas distribution
charges while the Group also provides services to Scotia Gas Networks in the form of a management service agreement for
corporate services, stock procurement services and the provision of the capital expenditure on the development of front
office management information systems.
The amounts outstanding are trading balances, are unsecured and will be settled in cash. No guarantees have been given or
received. No provisions have been made for doubtful debts in respect of the amounts owed by related parties.
20. Post Balance Sheet Events
On 13 May 2016, the Group agreed to waive certain contractual rights that gave rise to the accounting judgement that the
Group had power to control the "relevant activities" of Clyde Windfarm (Scotland) Limited ('Clyde'). As a consequence, the
Group will prospectively account for its interest in Clyde as that of an investment in an equity-accounted joint venture.
This information is provided by RNS
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