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Registered number: 03070482 (England and Wales)
Northern Electric Finance plc
Annual Report and Financial Statements
for the Year Ended 31 December 2024

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Northern Electric Finance plc
Contents
Company Information 1
Strategic Report 2 to 3
Directors' Report 4 to 7
Independent Auditor's Report 8 to 12
Statement of Profit or Loss 13
Statement of Financial Position 14
Statement of Changes in Equity 15
Notes to the Financial Statements 16 to 27

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Northern Electric Finance plc
Company Information
Directors
A P Jones
T H France
P A Jones
Company Secretary
J C Riley
Registered office
Lloyds Court
78 Grey Street
Newcastle upon Tyne
NE1 6AF
Registered number
03070482 (England and Wales)
Auditor
KPMG LLP
110 Quayside House
Newcastle Upon Tyne
NE1 3DX
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Northern Electric Finance plc
Strategic Report for the Year Ended 31 December 2024
The directors present the annual reports and the audited financial statements for the year ended 31 December 2024 of
Northern Electric Finance plc (the "Company"), which have been drawn up and presented in accordance with the
Companies Act 2006.
BUSINESS MODEL
The Company is part of the Northern Powergrid Holdings Company and its subsidiaries group of companies (the
“Northern Powergrid Group”) and acts as a financing company. The principal activity of the Company is to meet its
obligations to make the interest payments required by the 2035 5.125% bonds and the 2049 2.75% bonds, both of which
are guaranteed by Northern Powergrid (Northeast) plc. Those payments for the year were made on 7 May 2024 and 24
May 2024 respectively.
The Company made loss after tax for the year of £37,000 (2023: loss of £21,000) mainly due to interest expenses
exceeding interest income (more information on finance income and costs can be found in Note 3).
SECTION 172(1) STATEMENT
The information pursuant to Section 414CA of the Companies Act 2006 which describes how the directors have had
regard to the matters set out in Section 172(1) (a) to (f) when performing their duty under Section 172 is set out below:
(a) the likely consequences of any decision in the long term:
Decisions are made with due regard to the principal activity of the Company and the wider impact upon the Northern
Powergrid Group.
(b)the interests of the Company's employees:
The Company does not have any employees.
(c) the need to foster the Company's business relationships with suppliers, customers and others:
The Company does not have customers or interact with suppliers. Relationships with bond holders are managed by the
Northern Powergrid Group’s treasury department and the relevant bond trustee.
(d) the impact of the Company's operations on the community and the environment:
The Company’s operation has negligible impact on the community and environment.
(e) the desirability of the Company maintaining a reputation for high standards of business conduct:
In common with Northern Powergrid Group, the Company has adopted the Berkshire Hathaway Energy Company’s Core
Principles which includes Regulatory Integrity. This requires that the Company’s affairs are managed in accordance with
the highest behavioural standards and adherence to a policy of strict compliance with all relevant standards, legislation and
regulatory conditions.
(f) the need to act fairly as between members of the Company:
The Company has one class of shares which are all held by Northern Powergrid (Northeast) plc, a company owned by the
Northern Powergrid Group.
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Northern Electric Finance plc
Strategic Report for the Year Ended 31 December 2024 (continued)
PRINCIPAL RISKS AND UNCERTAINTY
Details regarding the main features of the Northern Powergrid Group's internal control and risk management systems can
be found in the annual reports and financial statements of Northern Powergrid Holdings Company for the year to 31
December 2024. The principal risks and uncertainties specific to the Company are outlined as follows:
Risk/Uncertainty and Mitigations
Financial risks:
Failure to meet financial liabilities.
Mitigation
• Interest payments are provided for by Northern Powergrid (Northeast) plc.
• Northern Powergrid (Northeast) plc is financed by long-term borrowings at fixed rates and access to short-term
borrowing facilities at floating rates.
• As at 31 December 2024, 100% of Northern Powergrid (Northeast) plc’s long-term borrowings were at fixed rates and
the average maturity for these borrowings was 14 years.
• Northern Powergrid (Northeast) plc has financial covenant monitoring in place.
• Regulatory adjustments control the effect of taxation changes.
Approved by the Board on 27 May 2025 and signed on its behalf by:
A P Jones
Director
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Northern Electric Finance plc
Directors' Report for the Year Ended 31 December 2024
The directors present their report together with the auditor's report and the audited financial statements for the year ended
31 December 2024.
Dividends
During the year no interim dividend was paid (2023: £nil). The directors recommend that no final dividend be paid in
respect of the year (2023: £nil).
Directors of the Company
The directors, who held office during the year and to the date of signing were as follows;
A P Jones
P A Jones
T H France
During and as at the end of the year, none of the directors had any interest in any contract which was significant in relation
to the business of the Company and an indemnity contained in the Company's Articles of Association was in force for the
benefit of the directors of the Company and as directors of associated companies, which was a qualifying third-party
indemnity provision for the purposes of the Companies Act 2006.
Future developments
The financial position of the Company, as at 31 December 2024, is shown in the statement of financial position on page
14. There have been no significant events since the year end. There are no plans to change the existing business model.
Research and development
The Company does not undertake research and development.
Financial risk management
Details of financial risks are covered in Note 11, within the Notes to the financial statements.
Political donations
During the year, no contributions were made to political organisations (2023: £nil).
Corporate governance statement
The directors have elected to apply the exemption set out in Section 1B.1.6R of the Disclosure and Transparency Rules
(“DTR”). See ‘Principal risks and uncertainty’ for details of internal control and risk management systems.
In respect of the Company’s diversity policy, all appointments are based on merit with due regard for diversity, inclusion
and equal opportunity. The Northern Powergrid Group does not set diversity targets.
Audit committee
The board of Northern Powergrid Holdings Company has established an audit committee for the Northern Powergrid
Group under delegated terms of reference which carries out the functions required by DTR 7.1.3 R.
Committee members:
- J Reynolds - Non-executive Director - Northern Powergrid Holdings Company (Chair)
- A P Jones, Finance Director
- M Knowles - Independent member - Northern Powergrid Holdings Company
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Northern Electric Finance plc
Directors' Report for the Year Ended 31 December 2024 (continued)
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors are responsible for preparing the Strategic Report, the Directors’ Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law they have
elected to prepare the financial statements in accordance with UK accounting standards and applicable law (UK Generally
Accepted Accounting Practice), including 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 estimates that are reasonable and prudent;
• state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and
explained in the financial statements;
• assess the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern; and
• use the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or
have no realistic alternative but to do so.
The directors are responsible for keeping adequate accounting records that 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
enable them to ensure that the financial statements comply with the Companies Act 2006. They are responsible for such
internal control as they determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to
them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.
Responsibility statement of the directors in respect of the annual financial report
We confirm that to the best of our knowledge:
- the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the
consolidation taken as a whole; and
- the strategic report includes a fair review of the development and performance of the business and the position of the
issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks
and uncertainties that they face.
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Northern Electric Finance plc
Directors' Report for the Year Ended 31 December 2024 (continued)
Going Concern
A review of the Company's business activities during the year, together with details regarding its future development,
performance and position, its objectives, policies and processes for managing its capital, its financial risk management
objectives and details of its exposures to trading risk, credit risk and liquidity risk are set out in the Strategic Report, the
Directors' Report and the appropriate notes to the financial statements.
The directors have responsibility over performing a going concern assessment and when considering continuing to adopt
the going concern basis in preparing the annual reports and financial statements, they have considered a number of factors,
including:
•
The Company benefits from strong investment-grade credit ratings;
• The Company is financed by long-term borrowings with an average maturity of 17 years;
• The cash flow forecasts indicate that, in both the base and reasonably possible downside scenario, the Company will
require funding through the intercompany current account mechanism to meet its liabilities as they fall due for at least
12 months from the approval of the financial statements, the going concern assessment period;
• Northern Powergrid Holdings Company, being the ultimate UK parent company, has indicated its intention to continue
to make available such funds as are needed by the Company through the intercompany current account mechanism, as
with any company placing reliance on other group entities for financial support, the directors acknowledge that there
can be no certainty that this support will continue although, at the date of approval of these financial statements, they
have no reason to believe that it will not do so;
• The Northern Powergrid Group as a whole is financed both in its operating companies and in other entities through the
use of the current account mechanism. For that reason, financial health is also considered with reference to the
Northern Powergrid Group, the directors therefore take into consideration a number of factors affecting the wider
group:
• The Northern Powergrid Group's main subsidiaries, NPg Northeast and NPg Yorkshire, are stable electricity
distribution businesses operating an essential public service and are regulated by the Gas and Electricity Markets
Authority (“GEMA”). In carrying out its functions, GEMA has a statutory duty under the Electricity Act 1989 to
have regard to the need to secure that licence holders are able to finance the activities, which are the subject of
obligations under Part 1 of the Electricity Act 1989 (including the obligations imposed by the electricity
distribution licence) or by the Utilities Act 2000;
• The Northern Powergrid Group is financed by long-term borrowings with an average maturity of 17 years and has
access to short-term committed borrowing facilities of £242 million provided by Barclays Bank plc, Lloyds Bank
plc, HSBC UK Bank plc and Royal Bank of Canada;
• The Northern Powergrid Group benefits from strong investment-grade credit ratings which allow access to a range
of financing options including the capital markets. A successful bond issue by the Northern Powergrid Group in
April 2025, demonstrates that the Northern Powergrid Group’s bonds remain attractive to investors and there is an
active market with strong appetite to invest;
• The Northern Powergrid Group has prepared forecasts which consider reasonable possible changes in trading
performance, show that the Northern Powergrid Group has sufficient resources to settle its liabilities as they fall due
for at least the 12 months from the date of these accounts; and
• Consideration was also given to the obligations contained in NPg Northeast plc and NPg Yorkshire plc licences to
provide Ofgem with annual certificates, confirming that the directors have a reasonable expectation that the
Northern Powergrid Group will have sufficient financial and operational resources available for the continuation of
business for a period of at least 12 months.
Consequently, after making their assessment, the directors have a reasonable expectation that the Company has adequate
resources to continue in operational existence and meet its liabilities as they fall due for at least 12 months from the date of
approval of these financial statements. Accordingly, they continue to adopt the going concern basis in preparing the annual
report and financial statements.
Disclosure of information to the auditor
Each director has taken steps that they ought to have taken as director in order to make themselves aware of any relevant
audit information and to establish that the company's auditor is aware of that information. The directors confirm that there
is no relevant information that they know of and of which they know the auditor is unaware. This confirmation is given
and should be interpreted in accordance with the provisions of s418 of the Companies Act 2006.
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Northern Electric Finance plc
Directors' Report for the Year Ended 31 December 2024 (continued)
Appointment of auditor
KPMG will continue in office in accordance with the provisions in Section 487 of the Companies Act 2006 and has
indicated its willingness to do so.
Approved by the Board on 27 May 2025 and signed on its behalf by:
A P Jones
Director
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Northern Electric Finance plc
Independent Auditor's Report to the Members of Northern Electric Finance plc
1. Our opinion is unmodified
We have audited the financial statements of Northern Electric Finance plc (“the Company”) for the year ended 31
December 2024 which comprise the Statement of Profit or Loss, Statement of Financial Position, Statement of Changes in
Equity, and the related notes, including the accounting policies in note 2.
In our opinion the financial statements:
• give a true and fair view of the state of the Company’s affairs as at 31 December 2024 and of its loss for the year then
ended;
• have been properly prepared in accordance with UK accounting standards, including FRS 101 Reduced Disclosure
Framework; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities are described below. We believe that the audit evidence we have obtained is a sufficient and
appropriate basis for our opinion. Our audit opinion is consistent with our report to the audit committee.
We were first appointed as auditor by the shareholders on 21 February 2025. The period of total uninterrupted engagement
is for the one financial year ended 31 December 2024. We have fulfilled our ethical responsibilities under, and we remain
independent of the Company in accordance with, UK ethical requirements including the FRC Ethical Standard as applied
to listed public interest entities. No non-audit services prohibited by that standard were provided.
2. Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the
financial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud)
identified by us, including 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. We summarise below the key audit matters, in decreasing
order of audit significance, in arriving at our audit opinion above, together with our key audit procedures to address those
matters and, as required for public interest entities, our results from those procedures. These matters were addressed, and
our results are based on procedures undertaken, in the context of, and solely for the purpose of, our audit of the financial
statements as a whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and we do not
provide a separate opinion on these matters.
Recoverability of amounts due from group undertakings
Amounts due from group undertakings: (£300.6million; 2023: £305.6million)
Refer to page 19 (critical accounting estimates and judgements) and pages 16-27 (accounting policies and
financial disclosures).
The Risk (Low risk, high value)
The carrying amount of the intra-group debtor balance represents 99.5% (2023: 100%) of the Company’s total assets.
Their recoverability is not at a high risk of material misstatement or subject to significant judgement. However, due to
their materiality in the context of the Company financial statements, this is considered to be the area that had the greatest
effect on our overall Company audit.
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Northern Electric Finance plc
Independent Auditor's Report to the Members of Northern Electric Finance plc (continued)
Our response
We performed the tests below rather than seeking to rely on any of the Company’s controls because the nature of the
balance is such that we would expect to obtain audit evidence primarily through the detailed procedures described.
Our procedures included:
• Tests of detail: Assessing with reference to the relevant debtor’s draft balance sheet, whether they have a positive net
asset value and therefore coverage of the debt owed, as well as assessing whether the debtor company has historically been
profit-making.
• Evaluating ability of wider group to repay the receivable: critically evaluating the Company’s assessment of the ability of
the wider group to meet their obligations to the Company by inspecting the internally provided cash flow projections of the
group. This included evaluating the reasonableness of the key assumptions in those projections against our knowledge of
the group and experience of the industry in which it operates. We also assessed the probability of default of the
counterparty.
Our Results:
We found the amounts due from group undertakings to be acceptable.
3. Our application of materiality and an overview of the scope of our audit
Materiality for the Company financial statements as a whole was set at £2.4m, determined with reference to a benchmark
of total assets, of which it represents 0.8%.
In line with our audit methodology, our procedures on individual account balances and disclosures were performed to a
lower threshold, performance materiality, so as to reduce to an acceptable level the risk that individually immaterial
misstatements in individual account balances add up to a material amount across the financial statements as a whole.
Performance materiality was set at 65% of materiality for the financial statements as a whole, which equates to £1.56m.
We applied this percentage in our determination of performance materiality based on our understanding of the control
environment obtained as part of our first year audit. .
We agreed to report to the Audit Committee any corrected or uncorrected identified misstatements exceeding £0.12m, in
addition to other identified misstatements that warranted reporting on qualitative grounds.
Our audit of the Company was undertaken to the materiality level specified above and was performed by a single audit
team.
The scope of the audit work performed was predominately substantive as we placed limited reliance upon the Company’s
internal control over financial reporting.
4. Going concern
The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the
Company or to cease its operations, and as they have concluded that the Company’s financial position means that this is
realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over its
ability to continue as a going concern for at least a year from the date of approval of the financial statements (“the going
concern period”).
We used our knowledge of the Company, its industry, and the general economic environment to identify the inherent risks
to its business model and analysed how those risks might affect the Company’s financial resources or ability to continue
operations over the going concern period. The risks that we considered most likely to adversely affect the Company’s
available financial resources over this period was the inability for the Company’s intermediate parent Company, Northern
Powergrid Holdings Company Limited to provide continuing financial support during the going concern assessment
period, which would result in the inability of the Company to meet its own external debt obligations as they fall due.
We considered whether this risk could plausibly affect the liquidity in the going concern period by assessing the directors’
sensitivities over the level of available financial resources indicated by the Company’s financial forecasts taking account
of severe, but plausible adverse effects that could arise from these risks individually and collectively.
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Northern Electric Finance plc
Independent Auditor's Report to the Members of Northern Electric Finance plc (continued)
Given the purpose of the Company, and since the entity is reliant on financial support from its intermediate parent
Company, Northern Powergrid Holdings Company, we assessed the risk that this support would not be available. Our
procedures in relation to going concern are inherently linked with our key audit matter in relation to the recoverability of
the intercompany debtor. Our procedures on going concern also included:
• Inspecting letters received by the directors indicating the intermediate parent Company’s intention to provide this
support;
• Inspecting and critically assessing the internally provided cash flow projections over the going concern assessment
period for the wider group, and the level of available financial resources indicated by those financial projections to assess
the ability of the intermediate parent Company to make scheduled repayments to the Company, including repayments in
line with the Company’s external debt obligations; and
• Assessing the business reasons why the intermediate parent Company may or may not choose to provide this support.
We also assessed the completeness of the going concern disclosure.
Our conclusions based on this work:
•we consider that the directors’ use of the going concern basis of accounting in the preparation of the financial statements
is appropriate;
•we have not identified, and concur with the directors’ assessment that there is not, a material uncertainty related to events
or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going
concern for the going concern period; and
•we found the going concern disclosure in note 2 to be acceptable.
However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are
inconsistent with judgements that were reasonable at the time they were made, the above conclusions are not a guarantee
that the Company will continue in operation.
5. Fraud and breaches of laws and regulations - ability to detect
Identifying and responding to risks of material misstatement due to fraud.
To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that could indicate
an incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures
included:
• Enquiring of directors, the audit committee, and internal audit, and inspection of policy documentation as to the
Company’s high-level policies and procedures to prevent and detect fraud, including the internal audit function, and the
Company’s channel for “whistleblowing”, as well as whether they have knowledge of any actual, suspected or alleged
fraud.
• Reading Board minutes and attending Company audit committee meetings.
• Considering remuneration incentive schemes and performance targets for management and directors.
• Using analytical procedures to identify any unusual or unexpected relationships.
We communicated identified fraud risks throughout the audit team and remained alert to any indications of fraud
throughout the audit.
As required by auditing standards, and taking into account possible pressures to meet profit targets and our overall
knowledge of the control environment, we perform procedures to address the risk of management override of controls, in
particular the risk that Company management may be in a position to make inappropriate accounting entries and the risk of
bias in accounting estimates and judgements such as the assessment of recoverability of amounts due from group
undertakings. On this audit we do not believe there is a fraud risk related to revenue recognition because the there are no
revenue transactions.
We did not identify any additional fraud risks.
We performed procedures including:
• Identifying journal entries to test at the based on risk criteria and comparing the identified entries to supporting
documentation. These included unusual postings to cash, loans and borrowings, and legal expenses.
• Assessing whether the judgements made in making accounting estimates are indicative of a potential bias.
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Northern Electric Finance plc
Independent Auditor's Report to the Members of Northern Electric Finance plc (continued)
Identifying and responding to risks of material misstatement related to compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial
statements from our general commercial and sector experience, through discussion with the directors and other
management (as required by auditing standards) and discussed with the directors and other management the policies and
procedures regarding compliance with laws and regulations.
We communicated identified laws and regulations throughout our team and remained alert to any indications of
non-compliance throughout the audit.
The potential effect of these laws and regulations on the financial statements varies considerably.
Firstly, the Company is subject to laws and regulations that directly affect the financial statements including financial
reporting legislation (including related companies legislation), distributable profits legislation, and taxation legislation, and
we assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial
statement items.
Secondly, the Company is subject to many other laws and regulations where the consequences of non-compliance could
have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or
litigation. We identified the following areas as those most likely to have such an effect: data protection laws, anti-bribery,
and certain aspects of company legislation recognising the nature of the Company’s activities and its legal form.
Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to
enquiry of the directors and other management and inspection of regulatory and legal correspondence, if any. Therefore if
a breach of operational regulations is not disclosed to us or evident from relevant correspondence, an audit will not detect
that breach.
Context of the ability of the audit to detect fraud or breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have properly planned and performed our audit in accordance
with auditing standards. For example, the further removed non-compliance with laws and regulations is from the events
and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing
standards would identify it.
In addition, as with any audit, there remained a higher risk of non-detection of fraud, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed
to detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to
detect non-compliance with all laws and regulations.
6. We have nothing to report on the other information in the Annual Report
The directors are responsible for the other information presented in the Annual Report together with the financial
statements. Our opinion on the financial statements does not cover the other information and, accordingly, we do not
express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements
audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit
knowledge. Based solely on that work we have not identified material misstatements in the other information.
Strategic report and directors’ report
Based solely on our work on the other information:
• we have not identified material misstatements in the strategic report and the directors’ report;
• in our opinion the information given in those reports for the financial year is consistent with the financial statements; and
• in our opinion those reports have been prepared in accordance with the Companies Act 2006.
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Northern Electric Finance plc
Independent Auditor's Report to the Members of Northern Electric Finance plc (continued)
7. We have nothing to report on the other matters on which we are required to report by exception
Under the Companies Act 2006, we are required to report to you if, in our opinion:
• 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; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
We have nothing to report in these respects.
8. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 5, the directors are responsible for: the preparation of the
financial statements including being satisfied that they give a true and fair view; such internal control as they determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud
or error; 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 they either intend to liquidate the Company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
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 our opinion in an auditor’s report. Reasonable assurance is a high
level of assurance, but does not 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 aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.
9. The purpose of our audit work and to whom we owe our responsibilities
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.
Andrew Williamson (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
319 St Vincent Street,
Glasgow
G2 5AS
27th May 2025
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Northern Electric Finance plc
Statement of Profit or Loss for the Year Ended 31 December 2024
Note
2024
£ 000
2023
£ 000
Revenue
- -
Administrative expenses (28) (28)
Operating loss
(28) (28)
Finance costs
3 (12,488) (12,458)
Finance income
3
12,467 12,459
Loss before tax
(49) (27)
Income tax credit/(expense)
6
12 6
Loss for the year
(37) (21)
There has been no other comprehensive income during the year (2023: £nil).
The notes on pages 16 to 27 form an integral part of these financial statements.
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Northern Electric Finance plc
(Registration number: 03070482)
Statement of Financial Position as at 31 December 2024
Note
31 December
2024
£ 000
31 December
2023
£ 000
Assets
Non-current assets
Intercompany and other receivables
7 296,429 296,267
Current assets
Intercompany and other receivables
7
5,650 9,251
Total assets
302,079 305,518
Equity and liabilities
Equity
Share capital
8 (50) (50)
Retained losses 1,844 1,807
Total equity 1,794 1,757
Non-current liabilities
Loans and borrowings
10 (296,432) (296,271)
Current liabilities
Loans and borrowings
10 (7,441) (10,998)
Income tax liability - (6)
(7,441) (11,004)
Total liabilities (303,873) (307,275)
Total equity and liabilities
(302,079) (305,518)
Approved by the Board on 27 May 2025 and signed on its behalf by:
.........................................
A P Jones
Director
The notes on pages 16 to 27 form an integral part of these financial statements.
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Northern Electric Finance plc
Statement of Changes in Equity for the Year Ended 31 December 2024
Share capital
£ 000
Retained losses
£ 000
Total
£ 000
At 1 January 2024
50 (1,807) (1,757)
Loss for the year - (37) (37)
Total comprehensive expense - (37) (37)
At 31 December 2024
50 (1,844) (1,794)
Share capital
£ 000
Retained losses
£ 000
Total
£ 000
At 1 January 2023
50 (1,786) (1,736)
Loss for the year - (21) (21)
Total comprehensive expense - (21) (21)
At 31 December 2023
50 (1,807) (1,757)
The notes on pages 16 to 27 form an integral part of these financial statements.
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Northern Electric Finance plc
Notes to the Financial Statements for the Year Ended 31 December 2024
1 General information
The Company is a public company limited by share capital, incorporated under the Companies Act and domiciled in
England and Wales.
The address of its registered office is Lloyds Court, 78 Grey Street, Newcastle upon Tyne, NE1 6AF.
2 Accounting policies
Statement of compliance
The financial statements have been prepared and approved by the directors in accordance with Financial Reporting
Standard 101 Reduced Disclosure Framework (“FRS 101”) as issued by the International Accounting Standards Board
(IASB) in conformity with the requirements of the Companies Act 2006.
Under applicable law and regulations, the directors are also responsible for preparing a Strategic Report, Directors’ Report,
and Corporate Governance Statement that complies with that law and those regulations.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the
Company’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
In accordance with Disclosure Guidance and Transparency Rule (“DTR”) 4.1.16R, the financial statements will form part
of the annual financial report prepared under DTR 4.1.17R and 4.1.18R. The auditor’s report on these financial statements
provides no assurance over whether the annual financial report has been prepared in accordance with those requirements.
Summary of significant accounting policies and key accounting estimates
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated.
Basis of preparation
These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure
Framework (“FRS 101”).
In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements of
UK-adopted international accounting standards (“UK-adopted IFRS”), but makes amendments where necessary in order to
comply with Companies Act 2006 and has set out below where advantage of the FRS 101 disclosure exemptions has been
taken.
In the transition to FRS 101 from UK-adopted IFRS, the Company has made no measurement and recognition
adjustments.
Northern Powergrid Holdings Company includes the Company in its consolidated financial statements. The consolidated
financial statements of Northern Powergrid Holdings Company are prepared in accordance with International Financial
Reporting Standards and are available to the public and may be obtained from Lloyds Court, 78 Grey Street, Newcastle
Upon Tyne, NE1 6AF.
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Northern Electric Finance plc
Notes to the Financial Statements for the Year Ended 31 December 2024 (continued)
2 Accounting policies (continued)
In these financial statements, the Company has applied the exemptions available under FRS 101 in respect of the following
disclosures:
IAS 1: Presentation of Financial Statements
IAS 7: Statement of Cashflows
IAS 8: Basis of Preparation of Financial Statements
IAS 16: Property, Plant and Equipment
IAS 24: Related Party Disclosures
IAS 38: Intagibile Assets
IAS 40: Investment Property
IFRS 7: Financial Instrument Disclosures
IFRS 13: Fair Value Measurement
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Northern Electric Finance plc
Notes to the Financial Statements for the Year Ended 31 December 2024 (continued)
2 Accounting policies (continued)
Going Concern
The directors have responsibility over performing a going concern assessment and when considering continuing to adopt
the going concern basis in preparing the annual reports and financial statements, they have considered a number of factors,
including:
•
The Company benefits from strong investment-grade credit ratings;
• The Company is financed by long-term borrowings with an average maturity of 17 years;
• The cash flow forecasts indicate that, in both the base and reasonably possible downside scenario, the Company will
require funding through the intercompany current account mechanism to meet its liabilities as they fall due for at least
12 months from the approval of the financial statements, the going concern assessment period;
• Northern Powergrid Holdings Company, being the ultimate UK parent company, has indicated its intention to continue
to make available such funds as are needed by the Company through the intercompany current account mechanism, as
with any company placing reliance on other group entities for financial support, the directors acknowledge that there
can be no certainty that this support will continue although, at the date of approval of these financial statements, they
have no reason to believe that it will not do so;
• The Northern Powergrid Group as a whole is financed both in its operating companies and in other entities through the
use of the current account mechanism. For that reason, financial health is also considered with reference to the
Northern Powergrid Group, the directors therefore take into consideration a number of factors affecting the wider
group:
• The Northern Powergrid Group's main subsidiaries, NPg Northeast and NPg Yorkshire, are stable electricity
distribution businesses operating an essential public service and are regulated by the Gas and Electricity Markets
Authority (“GEMA”). In carrying out its functions, GEMA has a statutory duty under the Electricity Act 1989 to
have regard to the need to secure that licence holders are able to finance the activities, which are the subject of
obligations under Part 1 of the Electricity Act 1989 (including the obligations imposed by the electricity
distribution licence) or by the Utilities Act 2000;
• The Northern Powergrid Group is financed by long-term borrowings with an average maturity of 17 years and has
access to short-term committed borrowing facilities of £242 million provided by Barclays Bank plc, Lloyds Bank
plc, HSBC UK Bank plc and Royal Bank of Canada;
• The Northern Powergrid Group benefits from strong investment-grade credit ratings which allow access to a range
of financing options including the capital markets. A successful bond issue by the Northern Powergrid Group in
April 2025, demonstrates that the Northern Powergrid Group’s bonds remain attractive to investors and there is an
active market with strong appetite to invest;
• The Northern Powergrid Group has prepared forecasts which consider reasonable possible changes in trading
performance, show that the Northern Powergrid Group has sufficient resources to settle its liabilities as they fall due
for at least the 12 months from the date of these accounts; and
• Consideration was also given to the obligations contained in NPg Northeast plc and NPg Yorkshire plc licences to
provide Ofgem with annual certificates, confirming that the directors have a reasonable expectation that the
Northern Powergrid Group will have sufficient financial and operational resources available for the continuation of
business for a period of at least 12 months.
Consequently, after making their assessment, the directors have a reasonable expectation that the Company has adequate
resources to continue in operational existence and meet its liabilities as they fall due for at least 12 months from the date of
approval of these financial statements. Accordingly, they continue to adopt the going concern basis in preparing the annual
report and financial statements.
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Northern Electric Finance plc
Notes to the Financial Statements for the Year Ended 31 December 2024 (continued)
2 Accounting policies (continued)
Critical judgements in applying accounting policies
In the preparation of financial statements in conformity with FRS 101 the directors did not identify any critical accounting
judgements or key assumptions concerning the future and other key sources of estimation uncertainty at the end of the
reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year.
Key sources of estimation uncertainty
In the preparation of financial statements in conformity with FRS 101 the Directors did not identify any key assumptions
concerning the future and other key sources of estimation uncertainty at the end of the reporting period that may have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial
year.
Changes in accounting policy
New standards, interpretations and amendments effective
Effective for periods beginning on or after 1 January 2024
- Amendments to IAS 1: Disclosure of Accounts Policies
- Amendsments to IFRS 16: Leases
- Amendments to IAS 7: Statement of Cash Flows
- Amendments to IAS 21: The Effects of Changes in Foregin Exchange Rates
These amendments did not have a material impact on the financial statements.
The other amendments have had no material impact on the financial statements including the comparatives.
Finance income and expenses policy
Finance income from a financial asset is recognised when it is probable that the economic benefits will flow to the
Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to
the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial asset to that asset's net carrying amount on initial recognition.
All other borrowing expenses are recognised in profit or loss in the period which they are incurred.
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Northern Electric Finance plc
Notes to the Financial Statements for the Year Ended 31 December 2024 (continued)
2 Accounting policies (continued)
Tax
The tax credit for the period comprises current tax. Tax is recognised in profit or loss, except that a change attributable to
an item of income or expense recognised as other comprehensive income is also recognised directly in other
comprehensive income.
The current income tax credit is calculated on the basis of tax rates and laws that have been enacted or substantively
enacted by the reporting date in the countries where the Company operates and generates taxable income.
Intercompany loan receivables
Intercompany loan receivables are amounts due from related parties for services performed in the ordinary course of
business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are
classified as current assets. If not, they are presented as non-current assets.
Intercompany loan receivables are recognised initially at the transaction price. They are subsequently measured at
amortised cost using the effective interest method, less provision for impairment. A provision for the impairment of
intercompany receivables is established when there is objective evidence that the Company will not be able to collect all
amounts due according to the original terms of the receivables.
Borrowings
All borrowings are initially recorded at the amount of proceeds received, net of transaction costs. Borrowings are
subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount
due on redemption being recognised as a charge to the income statement over the period of the relevant borrowing.
Interest expense is recognised on the basis of the effective interest method and is included in finance costs.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the
liability for at least 12 months after the reporting date.
Share capital
Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources
received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of
money is material, the initial measurement is on a present value basis.
Financial instruments
Initial recognition
Financial assets and financial liabilities comprise all assets and liabilities reflected in the statement of financial position.
The Company recognises financial assets and financial liabilities in the statement of financial position when, and only
when, the Company becomes party to the contractual provisions of the financial instrument.
Financial assets are initially recognised at fair value. Financial liabilities are initially recognised at fair value, representing
the proceeds received net of premiums, discounts and transaction costs that are directly attributable to the financial
liability.
Subsequent to initial measurement, financial assets and financial liabilities are measured at amortised cost.
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Northern Electric Finance plc
Notes to the Financial Statements for the Year Ended 31 December 2024 (continued)
2 Accounting policies (continued)
Derecognition
Financial assets
The Company derecognises a financial asset when;
- the contractual rights to the cash flows from the financial asset expire;
- it transfers the right to receive the contractual cash flows in a transaction in which substantially all of the risks and
rewards of ownership of the financial asset are transferred; or
- the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain
control of the financial asset.
On derecognition of a financial asset, the difference between the carrying amount of the asset and the sum of the
consideration received is recognised as a gain or loss in the profit or loss.
Financial liabilities
The Company derecognises a financial liability when its contractual obligations are discharged, cancelled, or expire.
Modification of financial assets and financial liabilities
Financial assets
If the terms of a financial asset are modified, the Company evaluates whether the cash flows of the modified asset are
substantially different. If the cash flows are substantially different, then the contractual rights to the cash flows from the
original financial asset are deemed to expire. In this case the original financial asset is derecognised and a new financial
asset is recognised at amortised cost.
If the cash flows are not substantially different, then the modification does not result in derecognition of the financial asset.
In this case, the Company recalculates the gross carrying amount of the financial asset and recognises the amount arising
from adjusting the gross carrying amount as a modification gain or loss in the statement of income.
Financial liabilities
If the terms of a financial liabilities are modified, the Company evaluates whether the cash flows of the modified asset are
substantially different. If the cash flows are substantially different, then the contractual obligations from the cash flows
from the original financial liabilities are deemed to expire. In this case the original financial liabilities are derecognised
and new financial liabilities are recognised at amortised cost.
If the cash flows are not substantially different, then the modification does not result in derecognition of the financial
liabilities. In this case, the Company recalculates the gross carrying amount of the financial liabilities and recognises the
amount arising from adjusting the gross carrying amount as a modification gain or loss in the statement of income.
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Northern Electric Finance plc
Notes to the Financial Statements for the Year Ended 31 December 2024 (continued)
3 Finance income and costs
2024
£ 000
2023
£ 000
Finance income
Interest income from inter-company loans
12,467 12,459
Finance costs
Interest on borrowings
(12,364) (12,359)
Interest paid to group undertakings (124) (99)
Total finance costs (12,488) (12,458)
Net finance (costs)/income
(21) 1
4 Employees and directors
No directors' or key personnel remuneration was charged for the year (2023: £nil). There were no employees during the
year (2023: none).
At 31 December 2024 no directors accrued benefits under a defined benefit scheme (2023: none).
All remuneration and director emoluments costs are paid via the parent company, Northern Powergrid (Northeast) ltd.
5 Auditor's remuneration
2024
£ 000
2023
£ 000
Audit of the financial statements
27 21
No non audit services were provided during the financial year.
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Northern Electric Finance plc
Notes to the Financial Statements for the Year Ended 31 December 2024 (continued)
6 Income tax
Tax credited in the income statement
2024
£ 000
2023
£ 000
Current taxation
UK corporation tax
(12) (6)
The tax on profit before tax for the year is the same as the standard rate of corporation tax in the UK (2023 - the same as
the standard rate of corporation tax in the UK) of 25% for the whole of 2024. (2023 - 19/25%).
There are no timing differences and therefore no deferred tax in 2024 (2023: nil)
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Northern Electric Finance plc
Notes to the Financial Statements for the Year Ended 31 December 2024 (continued)
7 Intercompany and other receivables
31 December
2024
£ 000
31 December
2023
£ 000
Current trade and other receivables
Amounts due from group undertakings
5,650 9,251
Non-current trade and other receivables
Amounts due from group undertaking 296,429 296,267
302,079 305,518
The fair value of the trade and other receivables as at 31 December 2024 is estimated to be £242.6 million (2023: £268
million), determined in accordance with generally accepted pricing models based on discounted cash flow analysis using
prices from observable market transactions or dealer quotes for similar instruments. The valuation of assets set out above
is based on Level 2 inputs. None of these debts are past due or impaired at the statement of financial position date as the
directors do not consider there to be any doubt over their recoverability.
Amounts due from Northern Powergrid Group undertakings represents £300 million of long-term loans made to Northern
Powergrid (Northeast) plc, the Company's immediate parent. They are at fixed rates of interest ranging from 2.75% to
5.125% with maturities ranging from 2035 to 2049. Northern Powergrid (Northeast) plc maintains an investment grade
credit rating. The maximum risk exposure to the Company is the book value of these loans.
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Northern Electric Finance plc
Notes to the Financial Statements for the Year Ended 31 December 2024 (continued)
8 Share capital
Allotted, called up and fully paid shares
31 December
2024
31 December
2023
No. £ No. £
Ordinary Share Capital of £1 each
50,000 50,000 50,000 50,000
9 Reserves
Retained losses
£ 000
At 1 January 2024
(1,807)
Loss for the year (37)
Total comprehensive expense (37)
At 31 December 2024
(1,844)
Retained losses
£ 000
At 1 January 2023
(1,786)
Loss for the year
(21)
Total comprehensive expense (21)
At 31 December 2023
(1,807)
Retained Losses Reserves
The retained losses represent the accumulated losses of the company over the years. These losses arise from the company's
operations and are carried forward to future periods. The retained losses impact the equity of the company, reducing the
overall reserves available for distribution to shareholders.
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Northern Electric Finance plc
Notes to the Financial Statements for the Year Ended 31 December 2024 (continued)
10 Loans and borrowings
31 December
2024
£ 000
31 December
2023
£ 000
Non-current loans and borrowings
296,432 296,271
Current loans and borrowings 7,441 10,998
303,873 307,269
Book value Fair value
31 December
2024
£ 000
31 December
2023
£ 000
31 December
2024
£ 000
31 December
2023
£ 000
Intercompany
- 3,558 - 3,558
2035 - 5.125% bonds
153,647 153,550 150,467 158,526
2049 - 2.75% bonds 150,225 150,161 92,098 106,192
303,872 307,269 242,565 268,276
The fair value of the bonds is determined with reference to quoted market prices. The fair valuation of the borrowings is
based on level 1 inputs. At 31 December 2024, the Company had no undrawn committed borrowing facilities.
The Company's 5.125% 2035 bonds are guaranteed by Northern Powergrid (Northeast) plc and AMBAC Assurance UK
Limited. The Company's 2.75% 2049 bonds are guaranteed by Northern Powergrid (Northeast) plc. Borrowings are
measured at amortised cost using the effective interest method.
The covenants associated with the 2035 bonds issued by the Company include restrictions on the issuance of new
indebtedness and the making of distributions dependant on the scale of the ratio of Senior Total Net Debt to Regulatory
Asset Value ("RAV") of Northern Powergrid (Northeast) plc. The definition of Senior Total Net Debt excludes any
subordinated debt and any debt incurred on a non-recourse basis. In addition, it excludes interest payable, any fair value
adjustments and unamortised issue costs.
The liquidity risk, credit risk and market risk associated with these borrowings, and the management thereof, is covered
within Financial Risk Management on pages 27 to 27 of these financial statements.
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Northern Electric Finance plc
Notes to the Financial Statements for the Year Ended 31 December 2024 (continued)
11 Maturity analysis for financial liabilities
The following tables sets out the remaining undiscounted contractual cash flows of financial liabilities by type.
2024
Non-derivative liabilities
Total
outflow
£ 000
1-3 months
£ 000
3 months - 1
year
£ 000
1-5 years
£ 000
More than 5
years
£ 000
Non-interest bearing
- - - - -
Fixed interest rate liabilities 487,687 - 11,813 47,250 428,624
Total
487,687 - 11,813 47,250 428,624
2023
Non-derivative liabilities
Total
outflow
£ 000
1-3 months
£ 000
3 months -
1 year
£ 000
1-5 years
£ 000
More than 5
years
£ 000
Variable interest rate liabilities
3,557 3,557 - - -
Fixed interest rate liabilities 499,500 - 11,813 47,250 440,437
Total
503,057 3,557 11,813 47,250 440,437
12 Parent and ultimate parent undertaking
The Company's immediate parent is Northern Powergrid (Northeast) plc.
The ultimate parent is Berkshire Hathaway, Inc. These financial statements are available upon request from 3555 Farnam
Street, Omaha, Nebraska 68131.
Relationship between entity and parents
The parent of the largest group in which these financial statements are consolidated and the ultimate controlling party is
Berkshire Hathaway, Inc, incorporated in United States.
The registered address of Berkshire Hathaway, Inc is:
3555 Farnam Street, Omaha, Nebraska 68131.
The parent of the smallest group in which these financial statements are consolidated is Northern Powergrid (Northeast)
Plc, incorporated in United Kingdom.
The registered address of Northern Electric plc is:
Lloyds Court, 78 Grey Street, Newcastle upon Tyne, NE1 6AF.
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