Northumbrian Water Finance
 
plc
Registered No: 04326507
Annual Report and Financial Statements
for the year ended 31 March 2025
 
 
Northumbrian Water Finance plc
Annual Report and Financial Statements
for the year ended 31 March 2025
Contents
Page
Company information
3
Strategic report
4
Directors’ report
6
Directors’ responsibilities statement
8
Independent auditor’s report
9
Statement of comprehensive income
18
Balance sheet
19
Statement of changes in equity
20
Notes to the financial statements
21
 
 
Northumbrian Water Finance plc
- 3 -
Company information
Registered No: 04326507
Directors
H Mottram
R W P Somerville
M A Williams
Company Secretary
R W P Somerville
Auditor
Deloitte LLP
Statutory Auditor
 
1 City Square
Leeds
United Kingdom
LS1 2AL
Bankers
National Westminster Bank plc
16 Northumberland Street
Newcastle upon Tyne
NE1 7EL
Registered Office
Northumbria House
Abbey Road
Pity Me
Durham
DH1 5FJ
 
 
Northumbrian Water Finance plc
- 4 -
The Directors of Northumbrian
 
Water Finance plc
 
(NWF or the Company)
 
are pleased to present
 
their
Strategic Report for the year ended 31 March 2025.
 
Review of the business
 
The Company is incorporated and domiciled in the UK.
The Company’s
 
principal activity
 
is to
 
raise and
 
administer finance
 
on behalf
 
of its
 
immediate parent
company, Northumbrian
 
Water Limited (NWL).
 
In April
 
2022, the
 
board of
 
NWL approved
 
an updated
 
Treasury
 
Strategy setting
 
out a
 
framework for
raising
 
c.£1.2bn
 
of
 
funding
 
over
 
the
 
next
 
four
 
years.
 
In
 
October
 
2022
 
the
 
Company
 
established
 
a
£6bn European
 
Medium
 
Term
 
Note
 
(EMTN)
 
programme,
 
of
 
which
 
£1.2bn
 
has been
 
utilised
 
to
 
date,
enabling more regular and efficient issuance of bonds
 
by the Company.
In March 2025,
 
the Company issued
 
two £50m taps
 
of existing bonds
 
under the EMTN,
 
the proceeds
of which were received in the year.
 
After the balance sheet date, the proceeds
 
of a £90m bond priced
off the EMTN in the year were received in April
 
2025.
 
NWL is guarantor of all these bonds and received the
 
issue proceeds by way of inter-company loans.
Future developments
The Directors
 
have no
 
plans to
 
expand the
 
operations of
 
the Company.
 
Future financing
 
activity will
be dependent upon the requirements of NWL.
Results and dividends
The Company made
 
no profit after taxation
 
in the year
 
(2024: £nil).
 
The Directors do
 
not recommend
the payment of a final dividend (2024: £nil).
Risks arising from the Company’s financial
 
instruments
All
 
loans
 
listed
 
in
 
note
 
8,
 
are
 
covered
 
by
 
inter-company
 
loan
 
agreements
 
with
 
NWL
 
on
 
the
 
same
terms
 
and
 
conditions
 
as
 
those
 
of
 
the
 
external
 
loans,
 
leading
 
to
 
a
 
break-even
 
position
 
for
 
the
Company.
 
In
 
addition,
 
all
 
loans
 
are
 
unconditionally
 
and
 
irrevocably
 
guaranteed
 
by
 
NWL;
 
therefore
there are no
 
risks arising
 
from the Company’s
 
financial instruments
 
except the risk
 
of default by
 
NWL
which, in
 
the Directors’
 
opinion, is
 
remote.
 
As such,
 
the Directors
 
do not
 
consider the
 
setting of
 
key
performance indicators to be appropriate.
 
The Company did not use any derivatives during the year.
Risks arising from Climate Change
The Company
 
considers that
 
the impact
 
of climate
 
change does
 
not give
 
rise to
 
a material
 
impact on
these
 
Financial
 
Statements.
 
NWL
 
has
 
assessed
 
and
 
reported
 
its
 
climate
 
risks
 
in
 
its
 
climate-related
financial disclosures.
 
Events after the balance sheet date
 
 
Northumbrian Water Finance plc
- 5 -
There have been no events subsequent to the year end
 
and to the date of signing this report.
Approved by the Board of Directors on 23 July 2025 and signed
 
on its behalf:
H Mottram
Director
23 July 2025
 
 
Northumbrian Water Finance plc
Directors’ report
- 6 -
The
 
Directors
 
are
 
pleased
 
to
 
present
 
their
 
Annual
 
Report
 
and
 
audited
 
Financial
 
Statements
 
for
 
the
year ended 31 March 2025.
Directors
 
The Directors who served during the year and up to the
 
date of signing were:
●
 
H Mottram
●
 
R W P Somerville
●
 
M A Williams
Results and dividends
Information on results and dividends is contained in the
 
Strategic Report.
 
Events after the Balance Sheet date
Events after the Balance Sheet date are disclosed in the Strategic
 
Report.
Going concern
The
 
Directors
 
confirm
 
that,
 
in
 
their
 
opinion,
 
the
 
Company
 
has
 
sufficient
 
resources
 
to
 
continue
 
in
operational
 
existence
 
for
 
the
 
foreseeable
 
future.
 
The
 
going
 
concern
 
status
 
of
 
the
 
Company
 
relies
upon NWL’s ability to
 
repay its borrowings to the Company as they fall due.
In arriving
 
at
 
their
 
decision,
 
the
 
Directors
 
have
 
made
 
enquiries
 
and
 
taken
 
into
 
account
 
the
 
following
factors:
●
 
NWL
 
is
 
a
 
stable
 
water
 
and
 
wastewater
 
business
 
operating
 
an
 
essential
 
public
 
service
 
in
 
a
regulated market;
●
 
NWL
 
has
 
a
 
strong
 
balance
 
sheet,
 
supported
 
by
 
£450m
 
of
 
committed
 
revolving
 
bank
 
facilities
 
of
which
 
£375m
 
was
 
undrawn
 
as
 
at
 
31
 
March
 
2025
 
and
 
new
 
debt
 
issuance
 
received
 
through
 
the
year.
 
After the
 
balance sheet
 
date, the
 
committed
 
revolving facilities
 
were refinanced
 
for a
 
value
of £500m
 
(with
 
capacity
 
to
 
increase
 
to £600m)
 
maturing
 
in
 
April 2028,
 
with
 
options
 
to extend
 
to
April 2030. In addition,
 
proceeds from a £90m
 
bond were received
 
in April 2025 and
 
an additional
committed bank
 
term loan
 
facility of
 
£50m which
 
was signed
 
in June
 
2025, with
 
proceeds not
 
yet
received at the date these accounts have been signed;
●
 
NWL (and NWF’s) investment grade credit ratings;
 
and
●
 
NWL’s
 
going
 
concern
 
and
 
viability
 
statements,
 
as
 
published
 
in
 
its
 
Annual
 
Report
 
and
 
Financial
Statements
 
for
 
the
 
year
 
ended
 
31
 
March
 
2025
 
in
 
particular;
 
its
 
EMTN
 
programme,
 
giving
 
the
Directors confidence that NWL will be able to raise new
 
financing in a timely manner as required.
Accordingly,
 
the Directors
 
continue to
 
adopt the
 
going concern
 
basis in
 
preparing the
 
Annual Report
and Financial Statements.
Future developments
Information on future developments is contained in the
 
Strategic Report.
 
 
Northumbrian Water Finance plc
Directors’ report
- 7 -
Treasury operations
The Company’s
 
Board is
 
responsible for
 
the financing
 
strategy of
 
the Company,
 
which is
 
determined
within
 
treasury
 
policies
 
set
 
by
 
Northumbrian
 
Water
 
Group
 
Limited
 
(NWGL),
 
the
 
immediate
 
parent
company of NWL
 
and indirect parent
 
company of the
 
Company.
 
The aim of
 
this strategy is
 
to assess
the
 
ongoing
 
capital
 
requirement
 
of
 
the
 
Company
 
and
 
to
 
raise
 
funding
 
on
 
a
 
timely
 
basis,
 
taking
advantage of any favourable market opportunities where
 
appropriate.
The
 
Treasury
 
department
 
of
 
NWGL
 
carries
 
out
 
treasury
 
operations
 
on
 
behalf
 
of
 
the
 
Company.
 
Surplus funds are
 
invested based upon
 
forecast requirements, in
 
accordance with the
 
treasury policy.
 
Derivatives
 
may
 
be
 
used
 
as
 
part
 
of
 
this
 
process,
 
but
 
the
 
treasury
 
policies
 
prohibit
 
use
 
of
 
these
 
for
speculation.
Financial instruments
The
 
Company’s
 
policy
 
in
 
relation
 
to
 
the
 
use
 
of
 
financial
 
instruments
 
is
 
set
 
out
 
above.
 
Risks
associated with financial instruments are discussed in
 
the Strategic Report.
Political donations
There have been no political donations during the current or
 
prior year.
Directors’ declaration
As required
 
under section
 
418 of
 
the Companies
 
Act 2006,
 
so far
 
as each
 
Director is
 
aware, there
 
is
no relevant audit information
 
of which the Company
 
’s auditor is
 
unaware and each
 
Director has taken
all
 
the
 
steps
 
that
 
he
 
or
 
she
 
ought
 
to
 
have
 
taken
 
as
 
a
 
Director
 
in
 
order
 
to
 
make
 
himself
 
or
 
herself
aware of
 
any relevant
 
audit information
 
and to
 
establish
 
that the
 
Company’s
 
auditor is
 
aware of
 
that
information.
 
Indemnification of Directors
 
Directors’
 
and
 
Officers’
 
liability
 
insurance
 
was
 
in
 
place
 
for
 
the
 
year
 
ended
 
31
 
March
 
2025.
 
On
 
21
March
 
2017
 
NWGL
 
entered
 
into
 
a
 
deed
 
of
 
indemnity
 
to
 
grant
 
the
 
Directors
 
of
 
NWGL
 
and
 
its
subsidiaries
 
further protection
 
against liability
 
to third
 
parties, subject
 
to the
 
conditions set
 
out
 
in the
Companies Act 2006, and this remains in place.
Auditor
Pursuant
 
to
 
section
 
487
 
of
 
the
 
Companies
 
Act
 
2006,
 
Deloitte
 
LLP
 
is
 
deemed
 
to
 
be
 
re-appointed
 
as
the Company’s auditor for the ensuing year.
Approved by the Board of Directors on 23 July 2025 and
 
signed on its behalf
H Mottram
Director
23 July 2025
 
 
Northumbrian Water Finance plc
Directors’ responsibilities statement
- 8 -
The
 
Directors
 
are
 
responsible
 
for
 
preparing
 
the
 
Annual
 
Report
 
and
 
Financial
 
Statements
 
in
accordance with applicable law and regulations.
Company law requires the
 
Directors to prepare
 
Financial Statements for
 
each financial period.
 
Under
that
 
law
 
the
 
Directors
 
have
 
elected
 
to
 
prepare
 
the
 
Financial
 
Statements
 
in
 
accordance
 
with
 
United
Kingdom
 
Generally
 
Accepted
 
Accounting
 
Practice
 
(United
 
Kingdom
 
Accounting
 
Standards
 
and
applicable
 
law)
 
including Financial
 
Reporting
 
Standard
 
(FRS)
 
101
 
‘Reduced
 
Disclosure
 
Framework’.
Under company law the Directors must not approve
 
the Financial Statements unless they are satisfied
that they give a
 
true and fair view
 
of the state of
 
affairs of the
 
Company and of
 
the profit or loss
 
of the
Company for that period.
 
In preparing these Financial Statements, the Directors
 
are required to:
●
 
select suitable accounting policies and then apply them
 
consistently;
 
●
 
make judgements and accounting estimates that are reasonable
 
and prudent; and
●
 
prepare
 
the
 
Financial
 
Statements
 
on
 
the
 
going
 
concern
 
basis
 
unless
 
it
 
is
 
inappropriate
 
to
presume that the Company will continue in business.
The Directors are
 
responsible for keeping
 
proper accounting records
 
which are sufficient
 
to show and
explain the
 
Company’s
 
transactions
 
and
 
disclose with
 
reasonable
 
accuracy
 
at
 
any time
 
the
 
financial
position of the
 
Company and to
 
enable them to
 
ensure that
 
the Financial
 
Statements comply
 
with the
Companies
 
Act
 
2006.
 
They
 
are
 
also
 
responsible
 
for
 
safeguarding
 
the
 
assets
 
of
 
the
 
Company
 
and
hence
 
for
 
taking
 
reasonable
 
steps
 
for
 
the
 
prevention
 
and
 
detection
 
of
 
fraud
 
and
 
other
 
irregularities.
 
 
 
 
 
 
 
 
Northumbrian Water Finance plc
Independent auditor’s report
to the members of Northumbrian Water
 
Finance plc
- 9 -
Report on the audit of the Financial Statements
1. Opinion
In our opinion the Financial Statements of Northumbrian
 
Water Finance plc (the ‘Company’):
•
 
give
 
a
 
true
 
and
 
fair
 
view
 
of
 
the
 
state
 
of
 
the
 
Company’s
 
affairs
 
as
 
at
 
31
 
March
 
2025
 
and
 
of
 
its
results for the year then ended;
•
 
have
 
been
 
properly
 
prepared
 
in
 
accordance
 
with
 
United
 
Kingdom
 
Generally
 
Accepted
Accounting
 
Practice,
 
including
 
Financial
 
Reporting
 
Standard
 
101
 
‘Reduced
 
Disclosure
Framework’; and
•
 
have been prepared in accordance with the requirements
 
of the Companies Act 2006.
We have audited the Financial Statements which comprise:
●
 
the statement of comprehensive income;
●
 
the balance sheet;
●
 
the statement of changes in equity;
 
●
 
the material accounting policy information; and
●
 
the related notes 1 to 11.
The Financial
 
Reporting Framework
 
that has
 
been applied
 
in their
 
preparation is
 
applicable law
 
and
United
 
Kingdom
 
Accounting
 
Standards,
 
including
 
Financial
 
Reporting
 
Standard
 
101
 
‘Reduced
Disclosure Framework’
 
(United Kingdom Generally Accepted Accounting Practice).
 
2. Basis for opinion
We
 
conducted
 
our
 
audit
 
in
 
accordance
 
with
 
International
 
Standards
 
on
 
Auditing
 
(UK)
 
(ISAs
 
(UK))
and applicable
 
law.
 
Our responsibilities
 
under those
 
standards are
 
further described
 
in the
 
auditor’s
responsibilities for the audit of the Financial Statements
 
section of our report.
 
We are independent of the
 
Company in accordance with the ethical
 
requirements that are relevant to
our
 
audit
 
of
 
the
 
Financial
 
Statements
 
in
 
the
 
UK,
 
including
 
the
 
Financial
 
Reporting
 
Council’s
 
(the
‘FRC’s’)
 
Ethical Standard
 
as applied
 
to listed
 
public interest
 
entities, and
 
we have
 
fulfilled our
 
other
ethical
 
responsibilities
 
in
 
accordance
 
with
 
these
 
requirements.
 
We
 
confirm
 
that
 
we
 
have
 
not
provided any non-audit services prohibited by the FRC’s
 
Ethical Standard to the Company.
We believe that
 
the audit evidence
 
we have obtained
 
is sufficient
 
and appropriate
 
to provide a
 
basis
for our opinion.
3. Summary of our audit approach
Key audit matters
The key audit matters that we identified in the current
 
year was:
●
 
Recoverability of inter-company loans.
The key audit matter identified is consistent with the previous
 
year.
 
 
 
 
 
 
Northumbrian Water Finance plc
Independent auditor’s report
to the members of Northumbrian Water
 
Finance plc
- 10 -
Materiality
The materiality that
 
we used in
 
the current year
 
was £3.2m (2024:
 
£3.59m)
which was determined on the basis of 2% (2024: 2%)
 
of finance income.
Scoping
Audit work
 
to respond
 
to the
 
risks of
 
material misstatement
 
was performed
directly by the audit engagement team.
Significant changes
in our approach
Our approach has remained consistent with that of the
 
previous year.
4. Conclusions relating to going concern
In auditing the Financial Statements,
 
we have concluded that
 
the Directors’ use of the
 
going concern
basis of accounting in the preparation of the Financial
 
Statements is appropriate.
Our evaluation
 
of the
 
Directors’ assessment
 
of the
 
Company’s ability
 
to continue
 
to adopt
 
the going
concern basis of accounting included:
●
 
Assessing financing
 
facilities including availability
 
and access
 
at the balance
 
sheet date, the
nature of facilities, repayment and expiration terms and
 
associated covenants;
●
 
Understood and
 
assessed
 
how management
 
have considered
 
the current
 
conditions within
the sector and how these impact the going concern assessment
 
;
●
 
Evaluating
 
the
 
amount,
 
and
 
performing
 
sensitivity
 
analysis,
 
of
 
headroom
 
in
 
the
 
forecasts
focusing on cash and covenants associated with financing
 
activities;
●
 
Assessing
 
the
 
model
 
used
 
to
 
prepare
 
the
 
forecasts,
 
testing
 
of
 
mathematical
 
accuracy
 
and
reasonableness
 
of those
 
forecasts
 
and assessing
 
historical
 
accuracy
 
of forecasts
 
prepared
by management;
●
 
Evaluating
 
the
 
ability
 
of
 
the
 
Company’s
 
primary
 
debt
 
counterparty,
 
Northumbrian
 
Water
Limited, to continue to service and repay its debt; and
●
 
Evaluating the disclosure made in the Financial Statements.
Based on
 
the work
 
we have
 
performed, we
 
have not
 
identified any
 
material uncertainties
 
relating to
events
 
or
 
conditions
 
that,
 
individually
 
or
 
collectively,
 
may
 
cast
 
significant
 
doubt
 
on
 
the
 
Company’s
ability to continue
 
as a going
 
concern for a
 
period of at
 
least twelve months
 
from when the
 
Financial
Statements are authorised for issue.
Our
 
responsibilities
 
and
 
the
 
responsibilities
 
of
 
the
 
Directors
 
with
 
respect
 
to
 
going
 
concern
 
are
described in the relevant sections of this report.
5. Key audit matters
Key audit matters are
 
those matters that, in
 
our professional judgement,
 
were of most significance
 
in
our audit of the
 
Financial Statements of
 
the current period
 
and include the
 
most significant assessed
risks
 
of
 
material
 
misstatement
 
(whether
 
or
 
not
 
due
 
to
 
fraud)
 
that
 
we
 
identified.
 
These
 
matters
included those which had
 
the greatest effect
 
on the overall audit
 
strategy,
 
the allocation of resources
in the audit,
 
and directing the efforts of the engagement
 
team.
These matters
 
were
 
addressed
 
in
 
the
 
context
 
of
 
our
 
audit of
 
the
 
Financial
 
Statements
 
as a
 
whole,
and in forming our opinion thereon, and we do not provide
 
a separate opinion on these matters.
 
 
 
 
 
Northumbrian Water Finance plc
Independent auditor’s report
to the members of Northumbrian Water
 
Finance plc
- 11 -
 
5.1. Recoverability of inter-company loans
 
Key audit matter
description
The
 
Company
 
has
 
external
 
debt
 
of
 
£3.44bn
 
(2024:
 
£2.96bn)
 
as
 
at
 
31
March
 
2025,
 
with
 
financing
 
comprising
 
listed debt
 
in the
 
form of
 
fixed
 
rate
Eurobonds,
 
a
 
CPI-linked
 
Eurobond
 
and
 
a
 
CPI-linked
 
Private
 
Placement.
 
This debt
 
is due
 
between
 
October 2026
 
and July
 
2053 and
 
incurs interest
of between 1.625%
 
and 6.375%.
 
The purpose of
 
these bonds was
 
to raise
finance for Northumbrian Water
 
Limited (“NWL”),
 
being the parent company
of Northumbrian Water Finance Plc.
In
 
April
 
2024,
 
the
 
Company
 
raised
 
financing
 
on
 
behalf
 
of
 
Northumbrian
Water Limited
 
(“NWL”) of
 
£350m through
 
£100m of
 
CPI-linked Guaranteed
Senior Notes
 
with
 
a coupon
 
of CPI-3m
 
plus 2.49%
 
repayable
 
in 2039
 
and
£250m
 
of
 
fixed
 
rate
 
Guaranteed
 
senior
 
notes
 
with
 
a
 
coupon
 
of
 
5.5%
repayable in 2037.
 
In March
 
2025, the
 
Company raised
 
financing on
 
behalf of
 
NWL of
 
£100m
through
 
two
 
issuances
 
£50m
 
of fixed
 
rate Guaranteed
 
senior notes
 
with
 
a
coupon of 4.5% repayable in 2031 and 5.5% repayable in
 
2027.
The
 
Company
 
also
 
has
 
interest
 
accruals
 
of
 
£56.1m
 
(2024:
 
£46.4m)
 
as
 
at
31 March 2025, with an associated amount owed by group
 
undertakings.
All loans
 
are covered
 
by inter-company
 
loan agreements
 
with NWL
 
on the
same terms and
 
conditions and
 
these loans
 
are guaranteed by
 
NWL which
is
 
the
 
main
 
trading
 
entity
 
in
 
the
 
wider
 
Northumbrian
 
Water
 
Group
 
(“the
Group”).
 
The ability of the Company
 
to repay the debt and relevant
 
interest
charges
 
externally
 
is
 
dependent
 
on
 
the
 
recoverability
 
of
 
the
 
loan
 
to
 
NWL.
 
This
 
recoverability
 
is
 
thus
 
dependent
 
on
 
the
 
performance
 
of
 
NWL.
 
Judgement
 
is
 
therefore
 
required
 
by
 
the
 
Directors
 
as
 
to
 
whether
 
the
 
inter-
company
 
loan
 
directly
 
supporting
 
payment
 
of
 
the
 
external
 
loan
 
is
recoverable
 
based
 
on
 
the,
 
economic,
 
societal
 
and
 
industry
 
changes
 
and
prospects of the trading entity.
 
We
 
consider
 
this
 
to
 
be
 
a
 
key
 
audit
 
matter
 
as
 
the
 
inter-company
 
loans
 
to
NWL is of a significant
 
value and fundamental
 
to the principal activity
 
of the
Company.
Further
 
details
 
are
 
included
 
within
 
the
 
Directors’
 
Report
 
on
 
page
 
6
 
and
notes 1, 5 and 6 to the Financial Statements.
How the scope of
our audit responded
to the key audit
matter
●
 
We
 
obtained
 
an
 
understanding
 
of
 
relevant
 
controls
 
related
 
to
 
the
Company’s
 
assessment
 
of
 
the
 
recoverability
 
of
 
intercompany
loans;
●
 
We
 
evaluated
 
the
 
ability
 
of
 
the
 
Company
 
to
 
continue
 
to
 
repay
 
the
interest
 
and
 
principal
 
on
 
the
 
external
 
debt
 
by
 
assessing
 
the
recoverability of the Company’s inter-company loan to
 
NWL;
●
 
We
 
assessed
 
the
 
ability
 
of
 
NWL
 
to
 
continue
 
to
 
repay
 
the
 
inter-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Northumbrian Water Finance plc
Independent auditor’s report
to the members of Northumbrian Water
 
Finance plc
- 12 -
company interest owed to the Company by evaluating
 
the net asset
position of NWL to determine whether
 
there is enough coverage for
these inter-company borrowings;
●
 
We
 
challenged
 
Director’s
 
assessment,
 
through
 
reference
 
to
external sources of
 
information, of the
 
impact of economic,
 
societal
and
 
industry
 
changes
 
on
 
the
 
carrying
 
value
 
of
 
the
 
NWL’s
 
assets
and liabilities including intercompany receivables; and
 
●
 
We
 
evaluated
 
the
 
appropriateness
 
of
 
disclosures
 
made
 
in
 
the
above -mentioned notes to the Financial Statements.
 
Key observations
Based on the work performed, we concluded that the inter-company
 
loan is
appropriately stated, and the disclosure in respect of the carrying
 
value of
intercompany receivables is appropriate.
6. Our application of materiality
6.1. Materiality
We
 
define
 
materiality
 
as
 
the
 
magnitude
 
of
 
misstatement
 
in
 
the
 
Financial
 
Statements
 
that
 
makes
 
it
probable that
 
the
 
economic
 
decisions of
 
a reasonably
 
knowledgeable
 
person would
 
be changed
 
or
influenced.
 
We
 
use
 
materiality
 
both
 
in
 
planning
 
the
 
scope
 
of
 
our
 
audit
 
work
 
and
 
in
 
evaluating
 
the
results of our work.
Based on
 
our professional
 
judgement, we
 
determined
 
materiality
 
for the
 
Financial
 
Statements
 
as a
whole as follows:
Materiality
£3.2m (2024: £3.59m).
 
Basis for
determining
materiality
2.0%
 
(2024:
 
2.0%)
 
of
 
finance
 
income,
 
being
 
the
 
inter-company
 
interest
received from NWL.
 
Rationale for the
benchmark applied
As the Company
 
was set up
 
with the purpose
 
of raising and
 
holding finance
on
 
behalf
 
of
 
NWL,
 
the
 
finance
 
income
 
from
 
NWL
 
was
 
selected
 
as
 
the
appropriate measure on which to determine materiality.
 
 
 
 
image_p13i0 image_p13i1
 
 
image_p13i2
 
 
 
 
 
 
image_p13i3 image_p13i4
 
 
 
 
 
 
 
 
 
 
 
 
 
Northumbrian Water Finance plc
Independent auditor’s report
to the members of Northumbrian Water
 
Finance plc
- 13 -
Finance income
£160m
Materiality £3.2m
Board of directors
reporting threshold
£0.16m
Finance income
Materiality
6.2. Performance materiality
We
 
set
 
performance
 
materiality
 
at
 
a
 
level
 
lower
 
than
 
materiality
 
to
 
reduce
 
the
 
probability
 
that,
 
in
aggregate,
 
uncorrected
 
and
 
undetected
 
misstatements
 
exceed
 
the
 
materiality
 
for
 
the
 
Financial
Statements
 
as
 
a
 
whole.
 
Performance
 
materiality
 
was
 
set
 
at
 
70%
 
of
 
materiality
 
for
 
the
 
2025
 
audit
(2024: 70%).
 
In determining performance materiality,
 
we considered the following factors:
●
 
Low number of corrected and uncorrected misstatements in
 
prior years;
●
 
Our assessment of the control environment;
●
 
The cumulative knowledge we have of the Company;
 
and
●
 
A low turnover within in management or key accounting
 
personnel at the Company.
 
6.3. Error reporting threshold
We
 
agreed
 
with
 
the
 
Audit
 
Committee
 
that
 
we
 
would
 
report
 
to
 
the
 
Audit
 
Committee
 
all
 
audit
differences
 
in excess
 
of £0.16m
 
(2024: £0.18m),
 
as well
 
as differences
 
below that
 
threshold which,
in our
 
view,
 
warranted reporting
 
on qualitative
 
grounds.
 
We
 
also report
 
to the
 
Audit Committee
 
on
disclosure
 
matters
 
that
 
we
 
identified
 
when
 
assessing
 
the
 
overall
 
presentation
 
of
 
the
 
Financial
Statements.
7. An overview of the scope of our audit
7.1. Scoping
Our
 
audit
 
was
 
scoped
 
by
 
obtaining
 
an
 
understanding
 
of
 
the
 
entity
 
and
 
its
 
environment,
 
including
internal control, and assessing
 
the risks of material
 
misstatement.
 
Audit work to respond
 
to the risks
of material misstatement was performed directly by the audit
 
engagement team.
7.2. Our consideration of the control environment
 
We involved
 
our IT
 
specialists to
 
assess relevant
 
controls over
 
the Company’s
 
IT systems,
 
with the
key
 
system
 
identified
 
being
 
Oracle
 
EBS
 
Financials
 
(‘Oracle’)
 
for
 
their
 
use
 
as
 
the
 
general
 
ledger
system for
 
financial reporting
 
and, as
 
reported to
 
the Audit
 
Committee, we
 
did not
 
adopt nor
 
plan to
adopt
 
a
 
controls
 
reliance
 
approach
 
in
 
the
 
current
 
year,
 
accordingly
 
we
 
did
 
not
 
test
 
the
 
IT
 
controls.
Where
 
any
 
deficiencies
 
in
 
control
 
have
 
been
 
identified
 
we
 
have
 
assessed
 
the
 
severity
 
of
 
these
deficiencies
 
and
 
their
 
impact
 
on
 
our
 
audit
 
procedures,
 
both
 
individually
 
and
 
in
 
aggregate,
 
while
identifying and considering any mitigating controls.
 
 
 
 
 
Northumbrian Water Finance plc
Independent auditor’s report
to the members of Northumbrian Water
 
Finance plc
- 14 -
7.3 Our consideration of climate-related risks
As
 
part
 
of
 
the
 
audit,
 
we
 
made
 
enquiries
 
of
 
management
 
to
 
understand
 
the
 
process
 
they
 
have
adopted to assess
 
the potential impact
 
of climate change
 
on the Financial
 
Statements. Management
considers
 
that
 
the
 
impact
 
of
 
climate
 
change
 
does
 
not
 
give
 
rise
 
to
 
a
 
material
 
financial
 
statement
impact.
 
We
 
used
 
our
 
knowledge
 
of
 
the
 
entity,
 
to
 
evaluate
 
management’s
 
assessment
 
and
 
their
conclusion
 
that
 
there
 
is
 
no
 
material
 
Financial
 
Statement
 
impact.
 
We
 
also
 
considered
 
whether
 
the
disclosures
 
in
 
relation
 
to
 
climate
 
change
 
made
 
in
 
the
 
other
 
information
 
in
 
the
 
annual
 
report
 
is
materially consistent with the Financial Statements and
 
our knowledge from our audit.
8. Other information
The
 
other
 
information
 
comprises
 
the
 
information
 
included
 
in
 
the
 
Annual
 
Report,
 
other
 
than
 
the
Financial
 
Statements
 
and
 
our auditor’s
 
report
 
thereon.
 
The
 
Directors
 
are responsible
 
for
 
the
 
other
information contained within the Annual Report.
Our
 
opinion
 
on
 
the
 
Financial
 
Statements
 
does
 
not
 
cover
 
the
 
other
 
information
 
and,
 
except
 
to
 
the
extent otherwise
 
explicitly stated
 
in our report,
 
we do
 
not express
 
any form
 
of assurance
 
conclusion
thereon.
Our
 
responsibility
 
is
 
to
 
read
 
the
 
other
 
information
 
and,
 
in
 
doing
 
so,
 
consider
 
whether
 
the
 
other
information is materially
 
inconsistent with the
 
Financial Statements
 
or our knowledge
 
obtained in the
course of the audit, or otherwise appears to be materially
 
misstated.
If we
 
identify
 
such
 
material
 
inconsistencies
 
or apparent
 
material
 
misstatements,
 
we are
 
required
 
to
determine whether this gives rise to a material misstatement
 
in the Financial Statements themselves.
 
If, based
 
on the
 
work we
 
have performed,
 
we conclude
 
that there
 
is a
 
material misstatement
 
of this
other information, we are required to report that fact.
We have nothing to report in this regard.
9. Responsibilities of Directors’
As explained
 
more fully
 
in the
 
Directors’ responsibilities
 
statement, the
 
Directors are
 
responsible for
the preparation of the Financial
 
Statements and for being satisfied
 
that they give a true and
 
fair view,
and
 
for
 
such
 
internal
 
control
 
as
 
the
 
Directors
 
determine
 
is
 
necessary
 
to
 
enable
 
the
 
preparation
 
of
Financial Statements that are free from material misstatement,
 
whether due to fraud or error.
In
 
preparing
 
the
 
Financial
 
Statements,
 
the
 
Directors
 
are
 
responsible
 
for
 
assessing
 
the
 
Company’s
ability to continue as a
 
going concern, disclosing as
 
applicable, matters related to
 
going concern and
using
 
the
 
going
 
concern
 
basis
 
of
 
accounting
 
unless
 
the
 
Directors
 
either
 
intend
 
to
 
liquidate
 
the
Company or to cease operations, or have no realistic alternative
 
but to do so.
10. Auditor’s responsibilities for the audit of the Financial
 
Statements
Our
 
objectives
 
are
 
to
 
obtain
 
reasonable
 
assurance
 
about
 
whether
 
the
 
Financial
 
Statements
 
as
 
a
whole are
 
free from
 
material misstatement,
 
whether due
 
to fraud
 
or error,
 
and to
 
issue an
 
Auditor’s
Report
 
that
 
includes
 
our
 
opinion.
 
Reasonable
 
assurance
 
is
 
a
 
high
 
level
 
of
 
assurance
 
but
 
is
 
not
 
a
guarantee
 
that
 
an
 
audit
 
conducted
 
in
 
accordance
 
with
 
ISAs
 
(UK)
 
will
 
always
 
detect
 
a
 
material
misstatement
 
when
 
it
 
exists.
 
Misstatements
 
can
 
arise
 
from
 
fraud
 
or
 
error
 
and
 
are
 
considered
material
 
if,
 
individually
 
or
 
in
 
the
 
aggregate,
 
they
 
could
 
reasonably
 
be
 
expected
 
to
 
influence
 
the
 
 
Northumbrian Water Finance plc
Independent auditor’s report
to the members of Northumbrian Water
 
Finance plc
- 15 -
economic decisions of users taken on the basis of these
 
Financial Statements.
A further description
 
of our responsibilities
 
for the audit
 
of the Financial
 
Statements is located
 
on the
FRC’s
 
website
 
at:
.
 
This
 
description
 
forms
 
part
 
of
 
our
Auditor’s Report.
11.
 
Extent
 
to
 
which
 
the
 
audit
 
was
 
considered
 
capable
 
of
 
detecting
 
irregularities,
 
including
fraud
Irregularities, including fraud, are instances of
 
non-compliance with laws and regulations.
 
We design
procedures
 
in
 
line
 
with
 
our
 
responsibilities,
 
outlined
 
above,
 
to
 
detect
 
material
 
misstatements
 
in
respect
 
of
 
irregularities,
 
including
 
fraud.
 
The
 
extent
 
to
 
which
 
our
 
procedures
 
are
 
capable
 
of
detecting irregularities, including fraud is detailed below.
11.1. Identifying and assessing
 
potential risks related to irregularities
In identifying and assessing
 
risks of material misstatement
 
in respect of irregularities,
 
including fraud
and non-compliance with laws and regulations, we considered
 
the following:
●
 
the
 
nature
 
of
 
the
 
industry
 
and
 
sector,
 
control
 
environment
 
and
 
business
 
performance
including
 
the
 
design
 
of
 
the
 
Company’s
 
remuneration
 
policies,
 
key
 
drivers
 
for
 
Directors’
remuneration, bonus levels and performance targets;
●
 
results
 
of
 
our
 
enquiries
 
of
 
management,
 
internal
 
audit
 
and
 
the
 
Directors
 
about
 
their
 
own
identification and assessment
 
of the risks
 
of irregularities, including
 
those that are
 
specific to
the Company’s sector;
 
●
 
any
 
matters
 
we
 
identified
 
having
 
obtained
 
and
 
reviewed
 
the
 
Company’s
 
documentation
 
of
their policies and procedures relating to:
o
 
identifying,
 
evaluating
 
and
 
complying with
 
laws
 
and regulations
 
and
 
whether
 
they
 
were
aware of any instances of non-compliance;
o
 
detecting and
 
responding to
 
the risks
 
of fraud
 
and whether
 
they have
 
knowledge of
 
any
actual, suspected or alleged fraud; and
o
 
the
 
internal
 
controls
 
established
 
to
 
mitigate
 
risks
 
of
 
fraud
 
or
 
non-compliance
 
with
 
laws
and regulations; and
●
 
the matters
 
discussed
 
among the
 
audit engagement
 
team
 
and relevant
 
internal
 
specialists,
including tax
 
and IT
 
specialists regarding
 
how and
 
where fraud
 
might occur
 
in the
 
Financial
Statements and any potential indicators of fraud.
As a result of these procedures,
 
we considered the opportunities and
 
incentives that may exist within
the
 
organisation
 
for
 
fraud.
 
In
 
common
 
with
 
all
 
audits
 
under
 
ISAs
 
(UK),
 
we
 
are
 
also
 
required
 
to
perform specific procedures to respond to the risk of
 
management override.
We
 
also
 
obtained
 
an
 
understanding
 
of
 
the
 
legal
 
and
 
regulatory
 
frameworks
 
that
 
the
 
Company
operates
 
in,
 
focusing
 
on
 
provisions
 
of
 
those
 
laws
 
and
 
regulations
 
that
 
had
 
a
 
direct
 
effect
 
on
 
the
determination
 
of
 
material
 
amounts
 
and disclosures
 
in
 
the Financial
 
Statements.
 
The key
 
laws and
regulations we considered in this context included the
 
UK Companies Act and tax legislation.
 
In addition, we considered provisions of other laws and
 
regulations that do not have a direct effect on
the Financial Statements
 
but compliance with
 
which may be
 
fundamental to the
 
Company’s ability to
operate or to avoid material penalty.
 
 
 
 
 
 
Northumbrian Water Finance plc
Independent auditor’s report
to the members of Northumbrian Water
 
Finance plc
- 16 -
11.2. Audit response to
 
risks identified
As a result of
 
performing the above,
 
we did not
 
identify any key
 
audit matters related
 
to the potential
risk of fraud or non-compliance with laws and regulations.
 
Our procedures to respond to risks identified included the
 
following:
●
 
reviewing
 
the
 
Financial
 
Statement
 
disclosures
 
and
 
testing
 
to
 
supporting
 
documentation
 
to
assess
 
compliance
 
with
 
provisions
 
of
 
relevant
 
laws
 
and
 
regulations
 
described
 
as
 
having
 
a
direct effect on the Financial Statements;
●
 
enquiring
 
of
 
management,
 
the
 
Directors
 
and
 
both
 
in-house
 
and
 
external
 
legal
 
counsel
concerning actual and potential litigation and claims;
●
 
performing
 
analytical
 
procedures
 
to
 
identify
 
any
 
unusual
 
or
 
unexpected
 
relationships
 
that
may indicate risks of material misstatement due to fraud;
●
 
reading
 
minutes
 
of
 
meetings
 
of
 
those
 
charged
 
with
 
governance,
 
reviewing
 
internal
 
audit
reports and reviewing internal audit reports for the wider
 
Group; and
●
 
In
 
addressing
 
the
 
risk
 
of
 
fraud
 
through
 
management
 
override
 
of
 
controls,
 
testing
 
the
appropriateness of journal entries and other adjustments;
 
assessing whether the judgements
made in
 
making
 
accounting
 
estimates
 
are indicative
 
of a
 
potential
 
bias;
 
and
 
evaluating
 
the
business
 
rationale
 
of
 
any
 
significant
 
transactions
 
that
 
are
 
unusual
 
or
 
outside
 
the
 
normal
course of business.
We
 
also
 
communicated
 
relevant
 
identified
 
laws
 
and
 
regulations
 
and
 
potential
 
fraud
 
risks
 
to
 
all
engagement
 
team
 
members
 
including
 
internal
 
specialists,
 
and
 
remained
 
alert
 
to
 
any
 
indications
 
of
fraud or non-compliance with laws and regulations throughout
 
the audit.
Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies
 
Act 2006
In our opinion, based on the work undertaken in the course
 
of our audit:
●
 
the information
 
given in
 
the Strategic
 
Report and
 
the Directors’
 
Report for
 
the financial
 
year for
which the Financial Statements are prepared is consistent
 
with the Financial Statements; and
●
 
the
 
Strategic
 
Report
 
and
 
the
 
Directors’
 
Report
 
have
 
been
 
prepared
 
in
 
accordance
 
with
applicable legal requirements.
In the light of
 
the knowledge and
 
understanding of the
 
Company and its environment
 
obtained in the
course of the
 
audit, we have
 
not identified any
 
material misstatements
 
in the Strategic
 
Report or the
Directors’ Report.
13. Matters on which we are required to report by
 
exception
13.1. Adequacy of explanations received and accounting
 
records
Under the Companies Act 2006 we are required to report
 
to you if, in our opinion:
●
 
we have not received all the information and explanations
 
we require for our audit; or
●
 
adequate accounting records
 
have not been kept,
 
or returns adequate for
 
our audit have not
been received from branches not visited by us; or
●
 
the Financial Statements are not in agreement with the accounting
 
records and returns.
 
 
 
 
 
 
 
 
Northumbrian Water Finance plc
Independent auditor’s report
to the members of Northumbrian Water
 
Finance plc
- 17 -
We have nothing to report in respect of these
 
matters.
13.2. Directors’ remuneration
Under the Companies
 
Act 2006 we
 
are also required
 
to report if
 
in our opinion
 
certain disclosures
 
of
Directors’ remuneration have not been made.
We have nothing to report in respect of this
 
matter.
14. Other matters which we are required to address
14.1. Auditor tenure
We
 
were
 
appointed
 
by the
 
Directors
 
on
 
14
 
October
 
2011
 
to
 
audit
 
the
 
Financial
 
Statements
 
for
 
the
year
 
ending
 
31
 
March
 
2012
 
and
 
subsequent
 
financial
 
periods.
 
Following
 
a
 
competitive
 
tender
process
 
in
 
April
 
2022,
 
we
 
were
 
reappointed
 
as
 
the
 
Company’s
 
auditor
 
for
 
the
 
year
 
ended
 
March
2024. The period of total uninterrupted engagement
 
including previous renewals and reappointments
of the firm is 14 years, covering the years ending 31 March
 
2012 to 31 March 2025.
14.2. Consistency of the Audit Report with the additional
 
report to the Audit Committee
 
Our audit
 
opinion is
 
consistent with
 
the additional
 
report to
 
the Audit
 
Committee
 
we are
 
required
 
to
provide in accordance with ISAs (UK).
15. Use of our report
This report
 
is made
 
solely to
 
the Company’s
 
members,
 
as a
 
body,
 
in accordance
 
with Chapter
 
3 of
Part 16
 
of the Companies
 
Act 2006.
 
Our audit
 
work has
 
been undertaken
 
so that
 
we might
 
state to
the Company’s
 
members those
 
matters we
 
are required
 
to state
 
to them
 
in an
 
Auditor’s Report
 
and
for
 
no
 
other
 
purpose.
 
To
 
the
 
fullest
 
extent
 
permitted
 
by
 
law,
 
we
 
do
 
not
 
accept
 
or
 
assume
responsibility
 
to
 
anyone
 
other
 
than
 
the
 
Company
 
and
 
the
 
Company’s
 
members
 
as
 
a
 
body,
 
for
 
our
audit work, for this report, or for the opinions we have
 
formed.
Dave Johnson FCA (Senior Statutory Auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
Leeds,
United Kingdom
23 July 2025
 
 
 
 
 
 
 
 
 
 
 
 
Northumbrian Water Finance plc
- 18 -
Statement of comprehensive income
for the year ended 31 March 2025
2025
2024
Notes
£000
£000
Continuing operations
Finance income
159,990
179,431
Finance costs
(159,990)
(179,431)
Result before taxation
-
-
Taxation
4
-
-
Result for the year attributable to the
shareholder of the Company
 
-
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Northumbrian Water Finance plc
- 19 -
Registered No: 04326507
Balance sheet
as at 31 March 2025
2025
2024
Notes
£000
£000
Non-current assets
Loans to group undertakings
5
3,437,692
2,961,292
Current assets
Trade and other receivables
6
56,170
46,457
Cash and bank balances
13
13
56,183
46,470
Total assets
3,493,875
3,007,762
Current liabilities
Trade and other payables
7
(56,133)
(46,420)
(56,133)
(46,420)
Non-current liabilities
Loans and borrowings
8
(3,437,692)
(2,961,292)
Total liabilities
(3,493,825)
(3,007,712)
Net assets
50
50
Capital and reserves
Share capital
9
50
50
Profit and loss account
-
-
Equity attributable to the shareholder of the Company
50
50
Approved by the Board of Directors on 23 July 2025 and signed
 
on its behalf
 
H Mottram
23 July 2025
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Northumbrian Water Finance plc
- 20 -
Statement of changes in equity
for the year ended 31 March 2025
Share capital
Retained
earnings
Total
£000
£000
£000
At 1 April 2023
50
 
-
 
50
 
Result for the year and total comprehensive
income
-
 
-
 
-
 
At 31 March 2024
50
 
-
 
50
 
Result for the year and total comprehensive
income
-
 
-
 
-
 
At 31 March 2025
50
 
-
 
50
 
 
 
Northumbrian Water Finance plc
Notes to the financial statements
for the year ended 31 March 2025
- 21 -
1.
 
Accounting policies
General information
NWF
 
is
 
a
 
company
 
incorporated
 
in
 
the
 
United
 
Kingdom
 
under
 
the
 
Companies
 
Act
 
2006.
 
The
Company is a public company limited by
 
shares registered in England and Wales.
 
The address of the
Company’s
 
registered
 
office
 
is
 
shown
 
on
 
page
 
3.
 
The
 
Company
 
has
 
one
 
reportable
 
segment
 
of
business and
 
the nature
 
of its
 
operations and
 
its principal
 
activities are
 
set out
 
in the
 
Strategic report
on page 4.
These Financial
 
Statements
 
are presented
 
in sterling
 
and all
 
values
 
are rounded
 
to the
 
nearest
 
one
thousand pounds (£000) except where otherwise indicated.
Significant accounting policies
Basis of accounting
The
 
Company
 
meets
 
the
 
definition
 
of
 
a
 
qualifying
 
entity
 
under
 
FRS
 
100
 
‘Application
 
of
 
Financial
Reporting
 
Requirements’
 
issued
 
by
 
the
 
Financial
 
Reporting
 
Council.
 
Accordingly,
 
these
 
financial
statements were prepared in accordance with FRS 101 ‘Reduced
 
Disclosure Framework’.
 
The Financial Statements have been prepared under the historical
 
cost convention.
As permitted
 
by FRS
 
101, the
 
Company has
 
taken advantage
 
of the
 
disclosure exemptions
 
available
under
 
that
 
standard
 
in
 
relation
 
to
 
financial
 
instruments,
 
presentation
 
of
 
a
 
cash
 
flow
 
statement,
standards not yet effective, related party transactions
 
and capital management.
The principal accounting policies adopted are set out below.
Accounting standards
The impact of new standards adopted in the period was
 
not material to the financial statements.
 
Going concern
The
 
Directors
 
confirm
 
that,
 
in
 
their
 
opinion,
 
the
 
Company
 
has
 
sufficient
 
resources
 
to
 
continue
 
in
operational
 
existence
 
for
 
the
 
foreseeable
 
future.
 
The
 
going
 
concern
 
status
 
of
 
the
 
Company
 
relies
upon NWL’s ability to
 
repay its borrowings to the Company as they fall due.
In arriving
 
at
 
their
 
decision,
 
the
 
Directors
 
have
 
made
 
enquiries
 
and
 
taken
 
into
 
account
 
the
 
following
factors:
●
 
NWL
 
is
 
a
 
stable
 
water
 
and
 
wastewater
 
business
 
operating
 
an
 
essential
 
public
 
service
 
in
 
a
regulated market; and
●
 
NWL
 
has
 
a
 
strong
 
balance
 
sheet,
 
supported
 
by
 
£450m
 
of
 
committed
 
revolving
 
bank
 
facilities
 
of
which
 
£375m
 
was
 
undrawn
 
as
 
at
 
31
 
March
 
2025
 
and
 
new
 
debt
 
issuance
 
received
 
through
 
the
year.
 
After the
 
balance sheet
 
date, the
 
committed revolving
 
facilities were
 
refinanced for
 
a value
of £500m
 
(with
 
capacity
 
to
 
increase
 
to £600m)
 
maturing
 
in
 
April 2028,
 
with
 
options
 
to extend
 
to
April 2030. In addition,
 
proceeds from a £90m
 
bond were received
 
in April 2025 and
 
an additional
committed
 
bank
 
term
 
loan
 
facility
 
of
 
£50m
 
was
 
signed
 
in
 
June
 
2025,
 
with
 
proceeds
 
not
 
yet
received at the date these accounts have been signed;
●
 
NWL (and NWF’s) investment grade credit ratings;
 
and
 
 
Northumbrian Water Finance plc
Notes to the financial statements
for the year ended 31 March 2025
- 22 -
1.
 
Accounting policies (continued)
●
 
NWL’s
 
going
 
concern
 
and
 
viability
 
statements,
 
as
 
published
 
in
 
its
 
Annual
 
Report
 
and
 
Financial
Statements
 
for
 
the
 
year
 
ended
 
31
 
March
 
2025;
 
in
 
particular
 
its
 
EMTN
 
programme,
 
giving
 
the
Directors confidence that NWL will be able to raise new
 
financing in a timely manner as required.
The Company raises finance
 
on behalf of its
 
immediate parent company,
 
NWL.
 
All loans are covered
by inter-company
 
loan agreements
 
on the
 
exact same
 
terms and
 
conditions as
 
those of
 
the external
loans,
 
therefore
 
leading
 
to
 
a
 
break-even
 
position
 
for
 
the
 
Company.
 
In
 
addition,
 
all
 
loans
 
are
unconditionally and irrevocably guaranteed by NWL.
 
Accordingly,
 
the
 
Directors
 
believe
 
it
 
is
 
appropriate
 
to
 
continue
 
to
 
adopt
 
the
 
going
 
concern
 
basis
 
in
preparing the Annual Report and Financial Statements.
Finance income
Finance income relates to interest receivable
 
on loans due from NWL.
 
Finance income is taken to the
income statement
 
over the
 
term of
 
the loan
 
at a
 
constant rate
 
on the
 
balance sheet
 
carrying amount
of the loan.
Finance costs
Finance
 
costs
 
and
 
issue
 
costs
 
are
 
recognised
 
in
 
the
 
income
 
statement
 
over
 
the
 
duration
 
of
 
the
borrowing
 
using
 
the
 
effective
 
interest
 
rate
 
method.
 
The
 
carrying
 
amount
 
of
 
index
 
linked
 
borrowings
increases
 
annually
 
in
 
line
 
with
 
the
 
relevant
 
RPI,
 
with
 
the
 
accretion
 
being
 
charged
 
to
 
the
 
income
statement as finance costs payable.
Other borrowing
 
costs are
 
recognised as
 
an expense
 
when incurred
 
and fees
 
are recognised
 
evenly
over the duration of the borrowing.
Taxation
Current tax
The tax currently
 
payable is
 
based on
 
taxable profit
 
for the
 
year.
 
Taxable
 
profit differs
 
from net
 
profit
as reported in
 
the income statement
 
because it excludes
 
items of income
 
or expense that
 
are taxable
or
 
deductible
 
in
 
other
 
years
 
and
 
it
 
further
 
excludes
 
items
 
that
 
are
 
never
 
taxable
 
or
 
deductible.
 
The
Company’s
 
liability
 
for
 
current
 
tax
 
is
 
calculated
 
using
 
tax
 
rates
 
that
 
have
 
been
 
enacted
 
or
substantively enacted by the balance sheet date.
Deferred tax
Deferred
 
tax
 
is
 
the
 
tax
 
expected
 
to
 
be
 
payable
 
or
 
recoverable
 
on
 
differences
 
between
 
the
 
carrying
amounts of assets
 
and liabilities in the
 
Financial Statements
 
and the corresponding
 
tax bases used
 
in
the
 
computation
 
of
 
taxable
 
profit,
 
and
 
is
 
accounted
 
for
 
using
 
the
 
balance
 
sheet
 
liability
 
method.
 
Deferred tax
 
liabilities are
 
generally recognised
 
for all
 
taxable temporary
 
differences and
 
deferred tax
assets
 
are
 
recognised
 
to
 
the
 
extent
 
that
 
it
 
is
 
probable
 
that
 
taxable
 
profits
 
will
 
be
 
available
 
against
which deductible temporary differences can be utilised.
 
 
Northumbrian Water Finance plc
Notes to the financial statements
for the year ended 31 March 2025
- 23 -
Deferred tax is
 
calculated at
 
the tax rates
 
that are
 
expected to
 
apply in the
 
period when
 
the liability
 
is
settled or
 
the asset
 
is realised
 
based on
 
tax laws
 
and rates
 
that have
 
been enacted
 
or substantively
enacted at the balance sheet date.
The
 
measurement
 
of
 
deferred
 
tax
 
liabilities
 
and
 
assets
 
reflects
 
the
 
tax
 
consequences
 
that
 
would
follow from
 
the manner
 
in which
 
the Company
 
expects, at
 
the end
 
of the
 
reporting period,
 
to recover
or settle the carrying amount of its assets and liabilities.
Deferred tax assets
 
and liabilities are
 
offset when
 
there is a
 
legally enforceable right
 
to set off
 
current
tax
 
assets
 
against
 
current
 
tax
 
liabilities
 
and
 
when
 
they
 
relate
 
to
 
income
 
taxes
 
levied
 
by
 
the
 
same
taxation
 
authority
 
and
 
the
 
Company
 
intends
 
to
 
settle
 
its
 
current
 
tax
 
assets
 
and
 
liabilities
 
on
 
a
 
net
basis
.
Current tax and deferred tax for the year
Current
 
and
 
deferred
 
tax
 
are
 
recognised
 
in
 
the
 
income
 
statement,
 
except
 
when
 
they
 
relate
 
to
 
items
that
 
are
 
recognised
 
in
 
other
 
comprehensive
 
income
 
or
 
directly
 
in
 
equity,
 
in
 
which
 
case,
 
the
 
current
and deferred tax are also recognised in other comprehensive
 
income or directly in equity respectively.
Loans and receivables
Loans and receivables are shown at amortised cost less
 
provision for any impairment in value.
Interest bearing loans and borrowings
 
All loans
 
and borrowings
 
are initially
 
stated at
 
the amount
 
of the
 
net proceeds,
 
being fair
 
value of
 
the
consideration
 
received
 
net
 
of
 
issue
 
costs
 
associated
 
with
 
the
 
borrowing.
 
Fixed
 
rate
 
borrowings
 
are
stated
 
at
 
amortised
 
cost.
 
Finance
 
and
 
issue
 
costs
 
are
 
recognised
 
in
 
the
 
income
 
statement
 
over
 
the
duration of the borrowing using the
 
effective interest rate method.
 
The carrying amount of index
 
linked
borrowings
 
increases
 
annually
 
in
 
line
 
with
 
the
 
relevant
 
RPI,
 
with
 
the
 
accretion
 
being
 
charged
 
to
 
the
income
 
statement
 
as
 
finance
 
costs
 
payable.
 
Other
 
borrowing
 
costs
 
are
 
recognised
 
as
 
an
 
expense
when incurred and fees are recognised evenly over the
 
duration of the borrowings.
Realised gains
 
and losses
 
that occur
 
from the
 
early termination
 
of loans
 
and borrowings
 
are taken
 
to
the income statement in that period.
Net debt is the sum of all
 
current and non-current liabilities
 
less cash and cash equivalents, short
 
term
cash deposits, financial investments and loans receivable.
Critical accounting judgements and key sources of
 
estimation uncertainty
In
 
the
 
process
 
of
 
applying
 
the
 
accounting
 
policies,
 
the
 
Company
 
is
 
required
 
to
 
make
 
certain
judgements,
 
estimates
 
and
 
assumptions
 
that
 
it
 
believes
 
are
 
reasonable
 
based
 
on
 
the
 
information
available.
 
The
 
Directors
 
consider
 
that
 
there
 
are
 
no
 
significant
 
judgements
 
or
 
key
 
sources
 
of
estimation uncertainty applied
 
at the balance
 
sheet date, which
 
may have a
 
significant risk of
 
causing
a material adjustment to the carrying amounts of assets
 
and liabilities within the next financial year.
 
 
 
 
 
 
 
 
 
 
 
 
Northumbrian Water Finance plc
Notes to the financial statements
for the year ended 31 March 2025
- 24 -
2.
 
Auditor’s remuneration
Auditor’s
 
remuneration
 
for
 
the
 
audit
 
of
 
the
 
Financial
 
Statements
 
for
 
the
 
year
 
ended
 
31
 
March
 
2025
was
 
£12,621
 
(2024:
 
£12,299)
 
which
 
has
 
been
 
borne
 
by
 
NWL,
 
the
 
Company’s
 
immediate
 
parent
company, and is not
 
repayable.
3.
 
Staff costs
There were no employees during the year (2024: nil).
 
The Directors
 
of the
 
Company
 
are remunerated
 
in
 
full
 
by NWGL
 
and NWL
 
and,
 
as their
 
services
 
to
the Company
 
are incidental
 
to the
 
services
 
provided to
 
other Group
 
companies,
 
they do
 
not receive
any remuneration in respect of qualifying services to the
 
Company (2024: nil).
4.
 
Taxation
(a)
 
Tax in the income statement
There is
 
no tax
 
liability for
 
the year
 
ended 31
 
March 2025
 
(2024: £nil),
 
no deferred
 
tax liability
 
(2024:
£nil) and no unprovided deferred tax (2024: £nil).
(b)
 
Reconciliation of total tax charge
2025
2024
£000
£000
Result before tax multiplied by the rate of UK
corporation tax of 25% (2024: 25%)
-
-
Effects at 25% (2024: 25%) of:
Transfer pricing adjustments
85
 
73
 
Balancing payment receivable
(85)
(73)
Total
 
tax (note 4a)
-
-
Transfer pricing adjustments relate
 
to loans made to NWL, being the immediate parent company.
 
 
Northumbrian Water Finance plc
Notes to the financial statements
for the year ended 31 March 2025
- 25 -
(c) Factors that may affect future tax charges
The rate of UK corporation tax for the current year was
 
25%.
The Organisation
 
for Economic
 
Co-operation
 
and
 
Developments
 
(OECD)
 
released
 
Pillar
 
Two
 
model
rules
 
in
 
December
 
2021
 
introducing
 
a
 
global
 
minimum
 
tax
 
rate
 
of
 
15%
 
to
 
address
 
the
 
tax
 
concerns
about uneven profit
 
distribution and tax
 
contributions of large
 
multinational corporations.
 
In December
2022,
 
the
 
OECD
 
released
 
transitional
 
safe
 
harbour
 
rules
 
as
 
a
 
short-term
 
measure
 
to
 
minimise
 
the
compliance burden for lower risk jurisdictions.
The Pillar
 
Two
 
top-up tax
 
rules were
 
substantially
 
enacted in
 
the UK
 
in 2023
 
with application
 
from 1
January 2024.
 
The Group
 
does not
 
expect to
 
be subject
 
to the
 
top-up tax
 
in relation
 
to its
 
operations
in
 
any
 
of
 
the
 
jurisdictions
 
in
 
which
 
it
 
operates
 
because
 
they
 
fall
 
within
 
the
 
OECD
 
transitional
 
safe
harbour
 
rules
 
which
 
have
 
also
 
been
 
adopted
 
by
 
the
 
UK.
 
The
 
Group
 
has
 
applied
 
a
 
temporary
mandatory relief
 
from deferred
 
tax accounting
 
for the
 
impacts of
 
the top-up
 
tax and
 
will account
 
for it
as current tax when it is incurred.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Northumbrian Water Finance plc
Notes to the financial statements
for the year ended 31 March 2025
- 26 -
5.
 
Loans to group undertakings
Loans to group
undertaking
£000
At 31 March 2024
2,961,292
 
Effect of indexation
 
34,628
 
Amortisation of fees and interest
1,342
 
New loan
 
450,000
 
New loan unamortised fees
(9,570)
At 31 March 2025
3,437,692
 
2025
2024
Disclosed as:
£000
£000
Non-current assets
3,437,692
 
2,961,292
 
Loans to
 
group
 
undertaking
 
relate to
 
inter-company
 
loans
 
to
 
NWL,
 
which
 
are provided
 
on
 
the
 
same
terms and conditions as the external borrowings detailed in
 
note 8.
6.
 
Trade and other receivables
2025
2024
£000
£000
Interest owed by group undertakings
56,133
 
46,420
 
Called up share capital not paid
37
 
37
 
56,170
 
46,457
 
The terms and conditions of loans to group undertakings
 
are detailed in note 8.
7.
 
Trade and other payables
2025
2024
£000
£000
Interest accruals
56,133
 
46,420
 
 
 
 
 
 
 
 
 
 
 
Northumbrian Water Finance plc
Notes to the financial statements
for the year ended 31 March 2025
- 27 -
8.
 
Loans and borrowings
2025
2024
£000
£000
Non-current instalments due on external borrowings:
£350m Fixed Rate Bonds: due 29 April 2033 bearing interest
 
rate of
5.625%
345,324
 
344,897
 
£360m Fixed Rate Bonds: due 23 January 2042 bearing
 
interest rate of
5.125%
357,233
 
357,105
 
£150m Index linked Bonds: due 15 July 2036 bearing interest
 
rate of
2.033%
307,265
 
296,660
 
£60m Index linked Bonds: due 30 January 2041 bearing interest
 
rate of
1.6274%
121,011
 
116,849
 
£100m Index linked Bonds: due 16 July 2049 bearing interest
 
rate of
1.7118%
 
200,362
 
193,477
 
£100m Index linked Bonds: due 16 July 2053 bearing interest
 
rate of
1.7484%
200,355
 
193,470
 
£300m Fixed Rate Bonds: due 11
 
October 2026 bearing interest rate of
1.625%
299,579
 
299,321
 
£300m Fixed Rate Bonds: due 5 October 2027 bearing
 
interest rate of
2.375%
299,142
 
298,813
 
£100m CPI Index Linked Private Placement: due 29 October
 
2039
bearing interest rate of CPI + 0.242%
125,208
 
122,077
 
£400m Fixed Rate Bonds: due 31 October 2034 bearing
 
interest rate of
6.375%
392,241
 
391,662
 
£400m (2024: £350m): Fixed Rate Bonds: due 28 February
 
2031
bearing interest rate of 4.5%
394,356
 
346,961
 
£300m Fixed Rate Bonds: due 2 Oct 2037 bearing interest
 
rate of
 
5.5%
293,071
 
-
 
£100m CPI Linked Bond: due 5 Apr 2039 bearing an interest
 
rate of CPI
+ 2.49%
102,545
 
-
 
3,437,692
 
2,961,292
 
The difference
 
between the
 
principal value
 
of £3,468.3m
 
(2024: £2,983.6m)
 
and the carrying
 
value of
£3,437.7m (2024:
 
£2,961.3m) relates to unamortised issuance costs
 
of £30.6m (2024: £22.3m).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Northumbrian Water Finance plc
Notes to the financial statements
for the year ended 31 March 2025
- 28 -
9.
 
Share capital
2025
2024
Authorised:
£000
£000
50,000 Ordinary Shares of £1 each (2024: 50,000)
50
50
2025
2024
Allotted, called up and partly paid:
£000
£000
50,000 Ordinary Shares of £1 each (2024: 50,000)
50
50
On 21
 
November
 
2001 the
 
Company
 
issued
 
50,000 £1
 
shares
 
at par.
 
At the
 
balance
 
sheet
 
date 75p
per share remained unpaid.
 
The above shares rank pari passu in all respects.
10. Related parties
The
 
Company
 
is
 
an
 
indirectly
 
wholly
 
owned
 
subsidiary
 
of
 
NWGL,
 
whose
 
publicly
 
available
consolidated Financial Statements
 
include the Company.
 
Accordingly,
 
the Company is
 
exempt under
the
 
terms
 
of
 
FRS
 
101
 
from
 
disclosing
 
transactions
 
with
 
other
 
wholly
 
owned
 
members
 
of
 
the
 
Group
headed by NWGL.
11. Parent undertaking and controlling party
NWGL is,
 
in the
 
Directors’
 
opinion, the
 
Company’s
 
ultimate parent
 
undertaking and
 
controlling party,
and
 
is
 
the
 
parent
 
undertaking
 
of
 
the
 
largest
 
group
 
of
 
undertakings
 
for
 
which
 
group
 
Financial
Statements are drawn up, and of which the reporting
 
company is a member.
 
NWGL is incorporated in
England and
 
Wales.
 
Copies of
 
NWGL’s
 
group Financial
 
Statements are
 
available on
 
the website
 
at:
 
and from
 
its registered
 
office at
 
Northumbria House,
 
Abbey Road,
 
Pity Me,
 
Durham,
DH1 5FJ.
The Company’s immediate
 
parent undertaking is NWL
 
which is the parent
 
undertaking of the smallest
group of undertakings
 
for which group
 
Financial Statements
 
are drawn up,
 
and of which
 
the reporting
company
 
is
 
a
 
member.
 
NWL
 
is
 
incorporated
 
in
 
England
 
and
 
Wales.
 
Copies
 
of
 
NWL’s
 
group
Financial Statements
 
are available on
 
the website at:
 
and from
 
its registered office
 
at
Northumbria House, Abbey Road, Pity Me, Durham, DH1
 
5FJ.