Registered number: 04112320 (England and Wales)

Northern Powergrid (Yorkshire) plc

Annual Report and Financial Statements

for the Year Ended 31 December 2024

Northern Powergrid (Yorkshire) plc

Contents

Company Information 1

Strategic Report 2 to 18

Directors' Report 19 to 22

Independent Auditor's Report 23 to 28

Income Statement 29

Statement of Financial Position 30 to 31

Statement of Changes in Equity 32

Statement of Cash Flows 33

Notes to the Financial Statements 34 to 76

Northern Powergrid (Yorkshire) plc

Company Information

Directors

T H France

A P Jones

P A Jones

A J Maclennan

A R Marshall

P C Taylor

Company Secretary

J C Riley

Registered office

Lloyds Court

78 Grey Street

Newcastle upon Tyne

NE1 6AF

Registered number

04112320 (England and Wales)

Statutory Auditor

KPMG LLP

110 Quayside House

Newcastle upon Tyne

NE1 3DX

Page 1

Northern Powergrid (Yorkshire) plc

Strategic Report for the Year Ended 31 December 2024

The directors present the annual report and financial statements for the year ended 31 December 2024 of Northern

Powergrid (Yorkshire) plc (the "Company"), which have been drawn up and presented in accordance with the Companies

Act 2006.

BUSINESS MODEL

The Company is an authorised distributor under the Electricity Act 1989 and holds a licence granted by the Secretary of

State. As a distribution network operator ("DNO"), the Company is regulated by the Office of Gas and Electricity Markets

(“Ofgem”), which in turn, is governed by the Gas and Electricity Markets Authority (“GEMA”). Ofgem requires the

DNOs to operate within a regulatory framework known as a price control, the purpose of which is to protect the interests

of end consumers by setting an upper limit on the amount the DNOs can charge for the use of their networks. On 31 March

2024, the Company completed the first year of the RIIO-ED2 price control, which became effective on 1 April 2023, and

will conclude on 31 March 2028 (the “ED2 period”).

The principal activity of the Company is the distribution of electricity to approximately 2.3 million customers connected to

its electricity distribution network (the “Network”) throughout the areas of West Yorkshire, East Yorkshire, almost all of

South Yorkshire, together with parts of North Yorkshire, Derbyshire, Nottinghamshire, Lincolnshire and Lancashire. The

Company's Network includes over 55,000 kilometres of overhead and underground cables and over 36,000 substations.

Electricity is received from National Grid's transmission system and from generators connected directly to the Network,

and then distributed at voltages of up to 132 kilovolts.

Revenue generated by the Company is primarily controlled by a distribution price control formula which is set out in the

electricity distribution licence. The price control formula does not directly constrain profits from year-to-year but is a

control on revenue that operates independently of a significant portion of the Company’s costs. Allowed revenue is

recovered from electricity suppliers via the application of Distribution use of System charges. These charges account for

approximately 8% of the electricity end users' overall electricity bill. The Company’s opening base allowed revenue

(excluding the effects of incentive schemes, volume or legislative driven adjustment mechanisms, any contract liabilities

("deferred revenues") from the prior price control, and real price effects) has been set and therefore provides the Company

with some stability in terms of its income during the ED2 period. Opening base allowed revenues increased in line with

inflation (as measured by CPI-H).

STRATEGY

In common with Northern Powergrid Holdings Company and its subsidiaries (the “Northern Powergrid Group”), the

Company operates a strategy based on six core principles (the "Core Principles"), which comprise Financial Strength,

Customer Service, Operational Excellence, Employee Commitment, Environmental Respect and Regulatory Integrity. The

Core Principles (which are applied by the Northern Powergrid Group’s parent company, Berkshire Hathaway Energy

Company ("Berkshire Hathaway Energy"), set out the basis on which the Company generates shareholder value over the

longer-term and defines the standards by which the Northern Powergrid Group holds itself accountable. Each Core

Principle is defined by a strategic objective which is linked to the commitments made in the Company’s business plan

(available via the Northern Powergrid Group website) for the ED2 period (the “Business Plan”). The directors refer to the

values established by the Core Principles and the commitments contained within the Business Plan when considering the

consequence of decisions they make.

The delivery of the Business Plan is supported by an annual business plan (the “Annual Plan”) which is submitted to the

Northern Powergrid Group’s shareholder each financial year and is designed to phase progress towards the achievement of

each commitment over the ED2 period. This ensures that the deliverables in both plans can be measured effectively by

using a mix of financial and non-financial Key Performance Indicators (“KPIs”).

The Strategic Report focuses on each Core Principle and the performance of the associated KPIs throughout the year in

order to provide a summary of the success in achieving each strategic objective, progress made against certain Business

Plan commitments and performance in relation to the Annual Plan.

Page 2

Northern Powergrid (Yorkshire) plc

Strategic Report for the Year Ended 31 December 2024 (continued)

FINANCIAL STRENGTH

Strategic objective:

Strong finances that enable improvement and growth.

KPI

2024

Restated

2023

Operating profit (million)

£332.8 £200.0

Net cash from operating activities (million) £803.1 £652.6

Net cash used in investing activities (million) (£753.3) (£591.2)

Credit Rating (Standard & Poor's) A A

Business Plan commitment:

To build on the strong financial base by delivering embedded efficiencies equivalent to 11%

of forecast total expenditure.

Performance during the year:

The Company continued to maintain good control in respect of both its capital and

operating costs by effectively managing the financial risks that could have had an adverse impact on its business. At the

end of year-one of the ED2 period, the Company’s and Northern Powergrid (Northeast) plc’s (its “affiliate”) expenditure

was 9% higher than the prior Regulatory year, but 20% (£100.6 million) below phased total expenditure (totex)

allowances. Consequently, a number of work programmes were re-phased in support of achieving the 11% efficiency

savings.

Revenue:

The Company's revenue at £657.1 million was £133.3 million higher than the prior year (2023: £523.8 million)

primarily due to an increase in tariffs with the average tariff increasing by circa 50% when compared with 2023 tariffs,

driven by increased revenue allowances because of high inflation forecasts.

Operating profit and position at the year-end:

The Company's operating profit of £332.8 million was £132.8 million

more than the previous year (2023: £200.0 million), primarily reflecting higher revenue detailed above and lower Supplier

of Last Resort ("SoLR") payments amounting to £30 million.

The statement of financial position shows that, at 31 December 2024 the Company had total equity of £1,644.4 million

(2023: £1,832.4 million). The decrease in assets was reflective of the dividends paid during the year offset by profits

earned. The directors consider the Company to have a strong financial position which, when coupled with the preference

of its parent company, Berkshire Hathaway Energy for operating with lower levels of debt than equivalent companies in

the sector, creates a stable base for continued strong performance during the ED2 period.

Finance costs and investments:

Finance costs net of finance income at £52.3 million was £16.0 million higher than the

prior year (2023: £36.3 million) mainly reflecting higher interest paid to group undertakings and increased debt due to

bond issuance.

Cash flow:

The Company aims to collect from customers and pay suppliers within contracted terms. Any surplus cash

held is remitted to Yorkshire Electricity Group plc ("YEG"), a company in the Northern Powergrid Group, and invested

accordingly, generating a market rate of return for the Company. Movements in cash flows were as follows:

• Cash flow from operating activities at £803.1 million was £150.5 million higher revenue.

• The net cash used in investing activities at £753.3 million was £162.1 million higher than the previous year (2023:

£591.2m), reflecting higher transfers to intercompany accounts.

• The net cash outflow from financing activities at £49.8 million was £13.4 million lower than the previous year (2023:

£63.2m) mainly due to lower borrowings offset by higher interest paid.

Pensions:

The Company is a participating employer in the Northern Powergrid Group of the Electricity Supply Pension

Scheme (the "DB Scheme"), a defined benefit scheme. The Company also participates in the Northern Powergrid Pension

Scheme, which is a defined contribution scheme.

Insurance:

As part of its insurance and risk strategy, the Northern Powergrid Group has in place insurance policies, which

cover risks associated with employees, third party motor and public liability.

Page 3

Northern Powergrid (Yorkshire) plc

Strategic Report for the Year Ended 31 December 2024 (continued)

CUSTOMER SERVICE

Strategic objective:

Delivering exceptional customer service.

KPI 2024 2023

Broad Measure of Customer Satisfaction ("BMCS") 90.8% 89.8%

BMCS Rank (out of 14) 10 10

BMCS Power Cuts 88.2% 87.3%

BMCS General Enquiries 92.6% 93.1%

BMCS Connections 1 1

Business plan commitment:

To provide a best-in-class customer service offering.

Performance during the year:

In respect of BMCS performance, an independent market research company carried out

telephone surveys with the Company’s customers to find out how satisfied they were with services related to unplanned or

planned power cuts, quotations and subsequent connections, and general enquiries. An increase was recorded in overall

satisfaction scores at 90.8% compared to the prior year (89.8%). However, the overall BMCS rank remained static at 10

out of 14.

To further enhance the service provided to customers, initiatives from the Company’s customer service improvement plan

were implemented, including enhancing management routines for connections processes and reviewing the consistency of

customer communications across all channels. In addition, the proactive on-site support offered to customers impacted by

power cuts lasting more than four hours was refined.

Whilst overall performance has continued to improve, albeit with a slight reduction year-on-year for General Enquiries, it

is acknowledged that as the other DNOs also continue to invest in customer service, even making incremental

improvements in the BMCS ranking is challenging. Regardless, the Company will strive to continue to achieve its

Business Plan commitments during the ED2 period by continuing to focus on the ways it can improve the service it

provides to its customers.

Activity scheduled in support of this includes the development of guidance to highlight expectations when it comes to

managing key scenarios and customer interactions, increased focus on areas of poor Network performance, and a review of

the extra care support provided to the most vulnerable customers.

Connections to the network

Business plan commitments:

To deliver a cost-effective, efficient and personalised service for all connections customers,

with smarter, more flexible solutions that support the connection of low carbon technologies onto the Network in support

of the transition to net zero.

Performance during the year:

End-to-end lead time improvement continued to be challenging due to the increase in

connections volumes arising from low carbon technology uptake and additional applications. However, improvements in

small works, such as the new quotation system (reducing time to quote by 54%) and increased operational delivery

capacity (reducing time to deliver by 24%) allowed the Company to manage volumes whilst maintaining customer

satisfaction (91.7%).

For major connections, transmission network connection delays continued to pose a significant issue. Consequently, much

of the focus has been on industry reform to align with the Government’s Clean Power 2030 (CP30) Action Plan. The

Company held customer webinars in collaboration with National Grid Electricity Transmission and National Grid ESO, to

provide updates on the changes and the implementation improvements. In support, the availability and timeliness of

information for customers was improved through a Project Progression portal, an online self-service tool that allows

customers to view the progress of their project.

In terms of accelerating connections, 85 eligible customers were issued accelerated offers as part of the technical limits

initiative, reducing the average connection date by six years.

Page 4

Northern Powergrid (Yorkshire) plc

Strategic Report for the Year Ended 31 December 2024 (continued)

Corporate responsibility

Business Plan commitment:

To build effective relationships with stakeholders, especially those customers who are

vulnerable and hard to reach.

Performance during the year:

The Company continued to undertake engagement activity on the development and

delivery of the Distribution System Operator (“DSO”) plan, as well as supporting multiple stakeholders with their own

decarbonisation planning. Alongside, the four Business Plan Engagement Groups continued to oversee engagement in the

areas of resilience, meeting consumer needs, energy futures and our people, our communities.

The ongoing energy crisis and economic uncertainty continued to exacerbate the challenges facing vulnerable customers.

As a result, the Company and its affiliate grew the provision of their energy advice services to support 20,000 customers in

fuel poverty and a further 5,000 with support to increase the energy efficiency of their homes.

Additional support activity from the Company and its affiliate included a donation to Community Action Northumberland

to sponsor their Warm Hubs programme, the Net Zero Community Energy Fund provided grant funding to nine

organisations totalling £50,000, and the Company established the Community Energy Team to support community energy

groups. Alongside, the Company and all funded partners routinely promoted Priority Services Membership and shared

energy efficiency materials and winter preparedness information to customers.

Page 5

Northern Powergrid (Yorkshire) plc

Strategic Report for the Year Ended 31 December 2024 (continued)

OPERATIONAL EXCELLENCE

Strategic objective:

High-quality, efficient operators running a smart reliable energy system.

2023/24 2022/23

KPI Actual Target Actual Target

Customer minutes lost ("CML") 53.5 <48.6 52.1 <51.8

Customer interruptions ("CI") 55.2 <47.6 59.3 <60.9

2024 2023

Network investment (millions) £322.5 £288.6

High voltage restoration time (minutes) 75.0 73.4

Business Plan commitment:

To achieve 12% fewer unplanned power cuts and reduce the average length of unplanned

power cuts by 25%.

Performance during the year:

CML and CI are the KPIs set by Ofgem to measure (on a regulatory year basis) the quality

of supply and system performance. CML measures the average number of supply minutes lost for every connected

customer due to both planned and unplanned power cuts that last for three minutes or longer. CI measures the average

number of supply interruptions per every 100 connected customers due to planned and unplanned power cuts that last for

three minutes or longer. Performance was below target for CI and CML due to adverse weather conditions. Consequently,

the duration of the Company’s (together with its affiliate) power cuts increased by 6.4%.

From a high voltage restoration perspective, the Company averaged 75.0 minutes (2023: 73.4 minutes), after allowing for

severe weather incidents and other exemptions, which represented a decline from the prior year.

The Company invested £322.5 million during the year through its approved Network investment strategy (2023: £288.6

million), which was designed to improve Network performance and increase resilience. Various major projects were

undertaken to reinforce the primary Network, refurbish transformers, rebuild overhead lines, replace oil-filled cables,

change deteriorated poles, replace switchgear and install and commission new remote-control points.

Further network enhancements included the continued roll-out of the automatic power restoration system on the high

voltage network. At low voltage, the implementation of next generation technology devices continued with the addition of

sensors and monitoring which detect developing faults so that they can be proactively managed. Alongside, proposals were

submitted to Ofgem as part of the Storm Arwen re-opener to fund the upgrading the Network to enhance its resilience. The

Company and its affiliate achieved a successful outcome for 12 projects.

Looking ahead to 2025, initiatives will be implemented as part of the Network Performance Improvement Plan, including

the continuation of the risk-based vegetation management programme, the installation of fault management devices on the

low voltage Network and further developing the operational incident response model.

Page 6

Northern Powergrid (Yorkshire) plc

Strategic Report for the Year Ended 31 December 2024 (continued)

EMPLOYEE COMMITMENT

Strategic objective:

High-performing people doing rewarding jobs in a safe and secure workplace.

2024 2023

KPI Actual Target Actual Target

Northern Powergrid Group occupational safety and

health administration ("OSHA") rate 0.41 0.09 0.43 0.09

Preventable vehicle accidents (PVAs) 17 11 15 14

Lost time accidents 4 5

Contractor OSHA incidents 3 3 1 4

Medical treatment accidents 4 1 2 1

Operational incidents 12 4 7 4

Northern Powergrid Group absence rate 3.5% 3.4%

Health and safety

Business Plan commitment:

To maintain industry leading safety performance and achieve a 50% reduction in contractor

accident rates.

Performance during the year:

In common with the Berkshire Hathaway Energy group, the Northern Powergrid Group

measures its safety performance using the OSHA rate, which is a measure used to capture safety incidents down to minor

levels of medical treatment. The Northern Powergrid Group failed to meet its target of 0.09 having achieved an OSHA rate

of 0.41 (2023: 0.43), which equated to 11 recordable incidents against a goal of two or fewer. PVA performance was also

disappointing with 17 recorded against a target of 11 or fewer. In terms of the Business Plan commitment, the number of

contractor OSHA incidents increased year-on-year, leading to a number of improvement actions being initiated.

Whilst the majority of incidents were minor in nature (insect bites and slow reversing accidents), the year-on-year decline

reinforced the importance of the Company’s health and safety performance improvement plan which covered colleague

safety, contractor safety, health and well-being and public safety. Accordingly, initiatives undertaken and planned for 2025

included the continuation of driver training, commissioning a safety climate survey, the mobilisation of an assurance

programme on high risk activities, leveraging data from the vehicle telematics system and providing an independent

employee assistance service, which is a confidential, self-referral counselling and information service to assist with

personal or work-related problems and access to services including counselling and physiotherapy referrals.

During the year, the Company successfully completed two external surveillance visits on its ISO 45001 accreditation for

its occupational health and safety management system.

Page 7

Northern Powergrid (Yorkshire) plc

Strategic Report for the Year Ended 31 December 2024 (continued)

Employees

Business Plan commitment:

High-performing people doing rewarding jobs in a safe and secure workplace.

Performance during the year:

Focus remained on building capacity by increasing the intake of apprentices and

engineers, as well as enhancing working arrangements to ensure seamless customer support. This included adapting agile

working, focusing on the retention and attraction of talent, improving wellbeing and cultivating a healthy workplace, and

establishing working groups with the trade unions to foster stronger relationships.

Employee development continued via the CORE programme, designed to develop leadership and management skills, in

addition to leadership apprenticeships and an approach to identifying and developing individual contributors. Routine

training also continued in key areas such as customer service, cyber security and management development. The Company

also introduced a Core Leadership Expectations 360 programme for senior leaders to identify their specific areas of

improvement.

During the year, 89 new recruits (2023: 77) joined the Company and Northern Powergrid (Northeast) plc’s workforce

renewal programme. At 31 December 2024, Northern Powergrid (Yorkshire) plc had 1,276 employees (2023: 1,179).

Northern Powergrid Group’s gender pay gap report can be found via the Northern Powergrid Group’s corporate website.

Employee Engagement

The board and senior management team continue to keep employees and trade union representatives informed of and

involved as appropriate in developments that may impact them now or in the future. Consultation for collectively

bargained employees is agreed with trade union representatives in the form of a constitutional framework. In addition, the

Company utilises focus groups and colleague panels to consult on improvements and changes.

In support of this process, the Director of People and Change routinely reports to the board and the Health and Safety

Committee to ensure that the views of employees are considered and to facilitate the discussion of and any subsequent

decision making in respect of employee related concerns or issues.

During the year, the President and Chief Executive Officer, members of the board and members of the senior management

team provided regular updates on financial, organisational, safety and customer service performance. The executive

directors engaged directly with employees during operational and office-based site visits and induction events.

Communication with employees was delivered via various channels including text messages and virtual meetings,

alongside regular briefings, line manager conversations, meetings with trade union representatives and utilising the

Northern Powergrid Group's intranet.

The Berkshire Hathaway Energy code of business conduct ("Code of Conduct")

The Northern Powergrid Group has adopted the Code of Conduct, which details the commitment to ethics and compliance

with the law, provides reporting mechanisms for known or suspected ethical or legal violations, and establishes minimum

standards of behaviour expected of all employees. In support of this, a "speaking up" process is in place enabling all

employees to raise concerns of unethical acts, malpractice or impropriety (including bribery or corruption), and an

anonymous help line operated by an independent company is also available. All colleagues complete an annual online

training programme covering the requirements of the Code of Conduct. This also requires all employees to declare any

conflicts of interest and unspent criminal convictions.

Employment of disabled persons

The Company’s policy is to provide all protected groups, including disabled people, with equality at work in respect of

employment, training, career development and promotion, having regard to their aptitudes and abilities. Should any

member of staff become disabled during their employment, reasonable adjustments will be made, wherever possible.

Page 8

Northern Powergrid (Yorkshire) plc

Strategic Report for the Year Ended 31 December 2024 (continued)

ENVIRONMENTAL RESPECT

Strategic objective:

Leaders in environmental respect and low carbon technologies.

2024 2023

KPI Actual Target Actual Target

Total oil/fluid lost (litres)

13,047

<15,627

14,004

<16113

SF6 gas discharges (kg)

125.05

<35.4

99.74

<36.75

Environmental incidents

KWh Energy Consumed 22,749,136 23,188,013

Business carbon footprint Tonnes Per km² Tonnes Per km²

Fleet fuel use 1,993 0.18 2,003 0.18

Other (including fugitive emissions) 2,939 0.27 2,337 0.21

Total scope 1

4,932

0.45

4,340

0.39

Building electricity use 765 0.07 810 0.07

Substation electricity use 2,479 0.22 2,437 0.22

Total scope 2

3,244

0.29

3,247

0.29

Business fuel use 1,101 0.1 981 0.09

Contractor emissions 314 0.99 260 0.99

Total scope 3

1,415

1.0

1,241

1.08

Total carbon footprint (tonnes) 9,591 1.74 8,828 1.78

Notes:

KWh energy consumed relates to depot energy and fleet fuel usage.

The chosen business carbon footprint intensity ratio is based on the Company’s licence area which equals 10,902km².

The methodology adopted to calculate energy and business carbon footprint data is aligned with international standards, those required by Defra and

BEIS and is audited annually and certified through the Certified Emissions Measurement and Reduction Scheme for compliance with ISO 14064-1:2006.

* Contractor emissions are based on fuel usage and is the best available information at the time of publishing.

Page 9

Northern Powergrid (Yorkshire) plc

Strategic Report for the Year Ended 31 December 2024 (continued)

Business Plan commitment:

To minimise carbon emissions, pollution and waste and, where possible, seek to enhance the

local environments in which we operate.

Performance during the year:

The Company remains committed to using natural resources wisely and protecting the

environment for the benefit of future generations. This commitment is set out in the Environmental RESPECT

(Responsibility, Efficiency, Stewardship, Performance, Evaluation, Communication and Training) Policy, which is

delivered via the Environmental Action Plan and its twelve impact areas (including scope 1, 2 and 3 emissions, SF6 losses,

visual amenity, biodiversity and waste).

The Company’s overall business carbon footprint, scope 1 and 2 emissions (excluding losses) increased to 8,176 tonnes

during the year as a result of increased SF6 losses and other emissions. Whilst the Company and its affiliate reduced their

scope 1 and 2 emissions during ED1 and into the ED2 period, the current rate is slightly above the science-based target set

to achieve net zero, indicating that further action is required to reduce emissions.

Improvement initiatives include reducing emissions from the operational fleet by replacing diesel vehicles with Ultra Low

and Zero Emission Vehicles, exploring new technologies such as hydrogen fuel cells, using alternative, renewable fuels,

and enhancing energy efficiency by upgrading facilities at operational sites.

In relation to scope 3 emissions, the Company is working in partnership with the Supply Chain Sustainability School and

has adopted their carbon calculator to measure supply chain scope 3 emissions, thereby providing the basis to develop a

reduction strategy during 2025. In addition, the Company continues to work with other DNOs to ensure expertise and

learnings and a consistent methodology are shared.

The volume of SF6 losses (125.05kg) increased year-on-year due to a number of significant leaks. In response, the

Company continues its operational routines, responses to leaks and due to the work with the DNOs via the Energy

Networks Association (“ENA”), to share best practice and trial innovative new SF6-free technologies.

During the year, the total amount of fluid loss from the Network was 13,047 litres, which was significantly favourable to

the target of 15,627 litres. To continue to minimise losses, the Company is committed to replacing 3,400km of cable

during the ED2 period, and will pursue the use of perfluorocarbon tracer (to locate leaks) and self-healing technology.

To adhere to the requirement to identify and remove or remediate non-compliant equipment which may contain

Polychlorinated biphenyls (“PCBs”) by 31 December 2025, the Company and its affiliate have worked in collaboration

with the Environment Agency and ENA to develop a statistical model to determine which pole mounted transformers are

non-compliant. The process will be a priority throughout 2025, as approximately 5,900 transformers may be replaced

during the year.

In respect of the Company’s wider environmental impact, plans have been developed to achieve zero waste to landfill by

2035 and to divert 90% of waste from all of the Company’s operations by 2028. The Company’s Network operations are

the largest source of waste generation, with waste arising from excavations and other operations representing 97% of all of

the waste generated in 2024. Steps taken to enhance performance in this area include the recycling of materials, with the

Company planning to recycle and reuse 85% of total materials by 2028 including the increased volume produced as a

result of delivering Network investment plans and decarbonisation objectives.

Issues relating to the assessment and classification (as hazardous or non-hazardous) of material arising from unplanned

utility excavations, prior to transport from site and disposal, pose a significant challenge to the Company’s objective to

reduce waste to landfill. The utilities industry is currently working with Streetworks UK and the Environment Agency to

develop and implement a new industry-wide risk-based approach to managing such waste to combat these issues.

Page 10

Northern Powergrid (Yorkshire) plc

Strategic Report for the Year Ended 31 December 2024 (continued)

From a supply chain perspective, the Company will continue to work with suppliers to reduce packaging and ensure

environmentally friendly alternatives are used where possible. In support, an embodied carbon model will be used to aid

investment decisions including the sourcing of raw materials. At office locations, the use of waste segregation facilities

will be increased, and office supplies will wherever possible be low carbon, plastic free and fully recyclable or reusable.

The impact of the Company’s operations is mitigated where possible through a range of biodiversity, natural capital and

visual amenity programmes. This includes fulfilling the duty to seek to enhance designated areas such as National Parks,

as well as improving biodiversity at 200 sites throughout the ED2 period.

At this time, the Company has no plans to use carbon offsetting to achieve its targets in the ED2 period. The focus remains

on reducing physical carbon emissions, on the basis that additional investment in the Network to enable decarbonisation

offers much better value to customers. However, at an initiative level, where ad-hoc opportunities exist, the Company may

pursue these.

From an environmental compliance perspective, the Company operates a United Kingdom Accreditation Service scheme

for environmental management and is certified to standard ISO 14001:2015 which is designed to enhance environmental

performance, fulfil compliance obligations and achieve environmental objectives, all of which contribute to the

achievement of the Company’s KPIs. The Company’s carbon footprint reporting framework is certified under the Certified

Emissions Measurement and Reduction Scheme for compliance with ISO 14064-1:2006.

To date, the Company’s performance against a number of stretching KPIs to reduce carbon usage and minimise the effects

of the Company on stakeholders and the environment has been largely positive. However, it is acknowledged that

becoming carbon neutral by 2040, and working with suppliers and partners to accomplish this, is not without its challenges

and risks. Accordingly, the Company will continue to evolve its ambitions and enhance the implementation of

environmental plans throughout the ED2 Period. The phased targets associated with waste to landfill, recycling, noise

pollution and biodiversity and additional descriptions of all key measures can be found in annex 1.4 of the Business Plan, a

copy of which can be found via the Northern Powergrid Group’s website (our business plan).

Page 11

Northern Powergrid (Yorkshire) plc

Strategic Report for the Year Ended 31 December 2024 (continued)

Environmental Sustainability

Strategic focus:

Enable growth in customers connecting low carbon technologies and support pathways to net zero.

Performance during the year:

As the country takes action to reduce carbon emissions in line with the net zero target by

2050, the way in which electricity is produced and used is expected to have a substantial impact on the Network over time.

Accordingly, the Company continues to implement its DSO strategy, and act as a key facilitator in the country’s net zero

transition by placing decarbonisation at the heart of its investment and actions.

As the volume and total capacity of decentralised energy generation grows and given the greater range of load and

generation technologies now connected to the Network, the Company continued to develop and action innovative solutions

that will reduce the need for traditional and potentially expensive reinforcement.

In the past year, the Company engaged with the market for flexibility by tendering for flexibility services on the low

voltage and high voltage Network. Under these contracts, customers change their energy consumption and generation

patterns as an alternative to the Company carrying out Network reinforcements, thereby facilitating a more efficient and

greener Network. And to better understand how to prepare the Network for the future needs of its customers and the

potential pathways to net zero, the Company published its updated Distribution Future Energy Scenarios (available via the

Northern Powergrid Group’s corporate website).

From an innovation perspective, the Company runs a portfolio of projects in the priority areas of customer vulnerability,

resilience, and decarbonisation. Following the establishment of the Community DSO project in 2023, which was designed

to deliver trials of smart local energy systems to explore how consumer energy resources and flexibility can be utilised in

communities, a £3.2 million trial was awarded to a consortium of companies testing approaches to local balancing in an

Energy Community in Barnsley, South Yorkshire over an 18-month period.

Decarbonisation continues to be more central to the Company’s strategy, and the way in which the Company contributes

more broadly to the evolution of the energy industry and the stakeholders with whom it interacts. The Company has been

progressive in its ambition to reduce its own business carbon footprint. However, there is a greater opportunity to

contribute to decarbonisation by facilitating regional decarbonisation and investing in people, processes and systems in

order to actively manage the Network and to optimise the use of assets and generated energy in the region.

In delivering its Business Plan commitments, the Company continually engages stakeholders on its DSO Strategy to

achieve a number of outcomes and benefits including enabling open energy data sharing, transforming the way decisions

and plans are made, supporting the development of new flexible energy markets, increasing customer and Network

flexibility and facilitating a whole system energy system. The Company’s Energy Systems directorate centralises

responsibility for delivering DSO plans including major connections to the Network.

In conjunction with this activity, and with the support of the Independent Stakeholder Group (“ISG”), the Company has

operated its DSO Review Panel (“DRP”) for the purpose of making its decisions transparent and to allow the independent

members to comment on and challenge the Company’s major investment decisions.

Page 12

Northern Powergrid (Yorkshire) plc

Strategic Report for the Year Ended 31 December 2024 (continued)

REGULATORY INTEGRITY

Strategic objective:

Trustworthy, fair and balanced.

KPI:

Completion of a quarterly regulatory compliance affirmation process.

Business Plan commitment:

To manage the Company's business to the highest behavioural standards and adhere to a

policy of strict compliance with all relevant standards, legislation and regulatory conditions.

Performance during the year

: In order to assure compliance with distribution licence and other regulatory obligations,

the Company operates a regulatory compliance affirmation process. Responsible managers are required to review

compliance with approximately 3,300 obligations on a quarterly basis and report on any identified non-compliances or

perceived risks which are then addressed by members of the senior management team. To minimise the risk of the

Company breaching its licence conditions and other statutory requirements (which could lead to financial penalties), the

board reviews the outcomes of each exercise. Each quarterly regulatory compliance affirmation process was completed

satisfactorily during the year.

The Company submitted its annual Data Assurance Report to Ofgem in March 2025, which included risk assessments of

the regulatory returns to be submitted during the Regulatory Year ahead (April 2025 to March 2026), together with a

report detailing the assurance work carried out in the Regulatory Year ended 31 March 2025.

On 6 November 2024, Ofgem initiated the process for determining the arrangements for the next electricity distribution

price control period, which will begin on 1 April 2028, by issuing a consultation on the framework for ED3. Ofgem

envisages that ED3 will have a critical role in the path to achieving net zero by 2050, which could involve a significant

change in the level of network investment. In that respect, Ofgem has stated that it will aim to keep the costs of the

infrastructure needed for net zero as low as possible through maintaining a low cost of capital and driving further

efficiency. The Company submitted its response to the consultation on 15 January 2025 and the process will culminate

with Ofgem expected to issue its Draft Determinations in June 2027 and its Final Determinations in December 2027.

PRINCIPAL RISKS AND UNCERTAINTIES

The Northern Powergrid Group operates a structured and disciplined approach to the management of risk as part of its

overall risk management policy and in support of its financial reporting practices. A system is in place to facilitate the

identification of new and emerging opportunities and risks, including those associated with the achievement of the

Northern Powergrid Group’s strategic objectives and Core Principles. This includes regular reviews of the macro

environment as well as risks that arise from within functional business areas.

Once identified, key risks and their respective controls and mitigation plans are continually assessed and formally

reviewed on a quarterly basis by the Risk Advisory Board ("RAB") in order that they are managed to an acceptable level

in accordance with the Northern Powergrid Group’s risk appetite. The Northern Powergrid Group’s risk appetite is

determined by a process based on risks, issues and consequences. The level of tolerance varies in accordance with the

pursuit of objectives and with caution or acceptance adopted depending on whether risks can be influenced or mitigated

fully, partly or not at all. The RAB routinely reports its findings to the board to ensure the directors are sufficiently

appraised of the risk exposure associated with the pursuit of the Company’s long-term strategy.

The risk management programme includes regular reviews of the crisis management, disaster recovery and major incident

plans. To determine the level of disaster preparedness and responsiveness against threats to business continuity, risk

management plans and processes are periodically tested. This self-evaluation approach is reinforced by Berkshire

Hathaway Energy, which benchmarks risk management activities across its business units and shares significant lessons

learned. The business continuity and disaster recovery plans are tested regularly to ensure that as required, operational

performance can remain resilient and employees are able to perform their duties safely.

Page 13

Northern Powergrid (Yorkshire) plc

Strategic Report for the Year Ended 31 December 2024 (continued)

Principal Risks

During the year, 'Customer Service' was added as a risk and two risks were renamed to ‘enabling the energy transition’

(from transmission connection delays) and ‘regulatory framework’ (from the outcome of the regulatory price control). No

other notable changes have taken place. The Northern Powergrid Group’s principal risks are not ranked or prioritised in

any particular order. Given their sensitivity and ever-changing nature, the board has elected not to disclose the risk appetite

associated with each risk.

Cyber Security

Unauthorised access or compromise of the Information Technology or Operational Technology networks, resulting in loss

of network control and availability. Unauthorised access or loss of large volumes of data or sensitive data.

Mitigation

•

Robust cyber security risk mitigation programme is in place.

• Accreditation under the ISO 27001 Information Security standard for operational, customer, employee and financial

information.

• Compliant to the Network Information Security Directive and the Basic Cyber Assessment Frameworks.

•

Compliance with the Centre for Internet Security Critical Security Controls.

Regulatory and policy positioning

Decisions taken resulting in negative impacts to our business model.

Mitigation

•

Continued dialogue and engagement with Ofgem.

•

Active involvement in consultations on price controls.

• Robust budgetary and financial position.

• Optimising price control reopener mechanisms.

Network resilience

Loss of the Network due to significant weather events, targeted physical attack or catastrophic asset failure resulting in

sustained or widespread loss of essential supply.

Mitigation

•

Major incident and crisis management policies, plans and governance arrangements are in place.

•

An industry mutual aid agreement exists.

• Grid resilience programme and audits.

• Vulnerable site protocols.

Safety

Fatality or serious harm caused to an employee or a third party.

Mitigation

•

Overseen by the Health and Safety Committee.

•

Safety Health and Improvement Plan and associated policies and procedures.

•

Health and safety training, enhanced audit programme and inspection regimes are in place.

• ISO45001 safety management system in place.

Page 14

Northern Powergrid (Yorkshire) plc

Strategic Report for the Year Ended 31 December 2024 (continued)

Environment and climate protection

Failure to prevent network assets from having a significant negative impact on the environment.

Mitigation

•

Programme to reduce fluid loss, business carbon footprint and remove assets containing PCBs.

•

Environment improvement plan, Environment Action Plan and science-based targets.

•

Path to carbon neutrality by 2040.

•

Incident response, waste management and habitat protection programmes.

•

ISO14001 environmental management system in place.

Resource availability

Access to and availability of skilled resource resulting in an inability to deliver work programmes.

Mitigation

•

Mix of direct labour and contracted resource is used.

•

Workforce renewal programmes in place to recruit and retain employees.

•

Ongoing training and development builds internal capability.

•

Employee engagement and health and well-being initiatives.

•

Good relationships with trade unions representatives.

Enabling the energy transition

The Network either becomes, or is perceived to have become, an obstacle to decarbonisation and energy transition.

Mitigation

• Overseen by a steering group.

• Change programme in place to improve customer connection lead times and customer communication.

• Part of an industry work programme through the ENA.

• Policy team engages and with Government and Ofgem.

• Stakeholder engagement programme scrutinised by the ISG and DRP.

Efficiency and output performance

Failure to maintain cost and output performance competitiveness in the industry.

Mitigation

•

Robust business planning process.

•

Robust financial controls in place.

•

Monthly executive business performance review.

•

Comprehensive “Efficient Output Delivery” programme.

Financial risks

The exposure to interest rate, tax, liquidity and treasury risks.

Mitigation

• The Company is financed by long-term borrowings at fixed rates and has access to short-term borrowing facilities at

floating rates of interest.

• As at 31 December 2024, 100% of the Company's long-term borrowings were at fixed rates and the average maturity

for these borrowings was 13 years.

•

Financial covenant monitoring is in place.

Page 15

Northern Powergrid (Yorkshire) plc

Strategic Report for the Year Ended 31 December 2024 (continued)

Customer Service

Loss of reputation, finacial penalties.

Mitigation

• Customer service improvement plan

• Engagement with the ISG and DRP

• Industry collaboration

• Relationship with customer support partners and organisations

• Power of 10 (out of 10) initiative

• Employee training and development

Internal control

The Company's internal control environment exists to support the financial reporting process, including regular reporting,

a series of operational and financial policies, investigations undertaken by internal audit and a stringent process for

ensuring the implementation of internal audit recommendations. In addition, the Company utilises comprehensive business

planning procedures, regularly reviews KPIs to assess progress towards its goals, and the internal audit function provides

independent scrutiny. Financial controls include centralised treasury operations and established procedures for the

planning, approving and monitoring of major capital expenditure.

The RAB monitors the effectiveness of internal controls and reports on its findings to the board and Berkshire Hathaway

Energy. As part of the statutory reporting process, the Company’s external auditor reviews and tests a sample of internal

controls and reports their findings and recommendations for improvements to the board.

Controls which are applicable to financial decisions are governed via a schedule of delegations of authority which are

approved by the board (and applies to the Northern Powergrid Group) for the purpose of enabling the senior management

team to make decisions up to certain financial limits, above which point the decision making reverts to the directors. These

limits reflect the board’s level of risk appetite and are reviewed regularly.

In accordance with Berkshire Hathaway Energy’s requirements to comply with the Sarbanes-Oxley Act, the Company

undertakes a quarterly risk control assessment confirming that the effectiveness of the system of internal controls have

been reviewed during the year. A self-certification process is in place, in support of this review, requiring certain senior

managers to confirm that the system of internal control in their area of the business is operating effectively. Consequently,

the directors believe that a robust system of risk assessment and management is in place.

The Northern Powergrid Group does not have a specific human rights policy. However, in accordance with the Core

Principles, it remains fully committed to operating ethically and responsibly and with fairness and integrity. This is

implemented through its policies and procedures, which are applicable to all stakeholder groups and encompasses

employees’ health, safety and welfare, dealings with customers (particularly those who are vulnerable), the impact of the

Northern Powergrid Group on the environment and the contribution to sustainability.

To ensure that the Northern Powergrid Group maintains the highest level of ethical standards in the conduct of its business,

Berkshire Hathaway Energy's Code of Conduct has been adopted (See ‘Employees’). The Northern Powergrid Group has

robust procedures in place to meet the requirements of the Bribery Act 2010 for which every employee must undertake

annual training.

Section 172(1) statement

Decision-making at the Board

All matters which under the Company’s governance arrangements are reserved for decision by the directors are presented

at board meetings. Directors are briefed on any potential impacts and risks for customers, and other stakeholders and how

they are to be managed. The directors take these factors into account before making decisions, which together they believe

are in the best interests of the Company and its member.

Page 16

Northern Powergrid (Yorkshire) plc

Strategic Report for the Year Ended 31 December 2024 (continued)

Long-term sustainability

As referenced throughout the Strategic Report, the Company’s business model is to make sufficient profit in order to

invest in the Network thereby, ensuring the integrity of the electricity supply for its customers. To achieve this objective,

the Company delivers its service to fulfil the needs of the stakeholders with whom it interacts and in doing so, ensures all

business relationships are conducted in an open and transparent manner. Consequently, fostering business relationships is a

prerequisite of the activity performed by the Company in the pursuit of its goals and the long-term sustainability of the

Company is at the forefront of decision-making.

The Company’s policy in respect of engaging with stakeholders is governed by the Core Principles and the Code of

Conduct. The Core Principle of ‘Regulatory Integrity’ defines the Northern Powergrid Group’s commitment to comply

with all laws wherever it does business and the expectation that all employees (including directors) manage their activities

in a manner that is compliant with all standards, regulations and corporate policies. In addition, the Code of Conduct

requires adherence to the highest level of ethical conduct and fair dealings with all customers, suppliers and competitors.

Employees

As detailed in ‘Employee Commitment’, the Company works hard to ensure the health and safety of employees and to

provide them with opportunities for advancement alongside fair terms whilst remunerating appropriately. Activities

undertaken by the board in the year included reviewing health and safety performance, monitoring key appointment

changes and reviewing the Company’s gender pay gap report.

Customers

Customers, whether they are domestic or commercial, are the primary stakeholder group served by the Company and

therefore the services offered are all tailored to provide a benefit or enhance an experience. During the year, the board

regularly reviewed performance levels, closely monitored the response in respect of major storms and associated Network

resilience and engaged with the Chair of the ISG. Further detail of the Company’s relationship with customers and the

support programmes provided is discussed in ‘Customer Service’.

Producers and suppliers

The Company works closely with its supply chain and has measures in place to ensure the treatment of all supplies is fair

and equitable. Relations with suppliers is managed using a supplier registration system which supports a robust and

transparent procurement process and ensures strict compliance with the prevention of slavery and human trafficking. As a

consequence, the system allows the Company to make informed decisions which align with its values when awarding

contracts. When considering suppliers, the board advocates prompt payment practices, which are reviewed regularly by the

internal audit function, and the implementation of procedures to reduce the risk of modern slavery in supply chains - as set

out in the Company’s annual modern slavery statement (available via the Northern Powergrid Group website).

Financial stakeholders

Financial information is routinely made available to financial stakeholders, including relationship banks and bondholders.

Directors engage with stakeholders when entering into new financial arrangements. During the year, the board approved an

interim dividend, the annual, interim and Regulatory accounts and the tax strategy and met representatives from the

Company’s external auditor.

Community and environment

Each director is required to take all reasonable steps to minimise any detrimental impact the Company’s operations may

have on the environment (see ‘Environmental Respect’). The Company provides a range of charitable and community

activities to support customers with fuel poverty and safety around electricity (‘Corporate Responsibility’). During the

year, the directors routinely reviewed environmental performance and made decisions pursuant to Environmental Respect.

Regulator

The Company is in regular dialogue with Ofgem concerning new policy development and emerging risks or opportunities

within the sector. As outlined in ‘Regulatory Integrity’, to meet its licence conditions, the Company and the directors

provide regular reporting to Ofgem (including the annual regulatory certificates and Regulatory Accounts), contribute to

various regulatory consultations and monitor regulatory compliance. Given the implications on the Company’s long-term

strategy, the relationship with Ofgem and the evolving ED3 framework were regular items on the board agenda throughout

the year.

Acting fairly as between the Company’s owners

The Company has one class of ordinary shares which are all held by YEG, a company in the Northern Powergrid Group.

During the year the directors declared an interim dividend and approved the Business Plan. As outlined in ‘Strategy’, the

Northern Powergrid Group is owned by Berkshire Hathaway Energy. Further details of the shareholder relationship is set

out in the ‘Corporate Governance Statement’.

Page 17

Northern Powergrid (Yorkshire) plc

Strategic Report for the Year Ended 31 December 2024 (continued)

Non-financial and sustainability information statement

In accordance with Section 414CA(7) of the Companies Act 2006, the directors have elected to set out the information

required by Section 414CB (1) to (6) in the group annual report and audited consolidated financial statements of Northern

Powergrid Holdings Company, a copy of which, will be published on the Northern Powergrid Group's corporate website.

Approved by the Board on 11 June 2025 and signed on its behalf by:

A P Jones

Director

Page 18

Northern Powergrid (Yorkshire) plc

Directors' Report for the Year Ended 31 December 2024

The directors present their report together with the auditor's report and the financial statements financial statements for the

year ended 31 December 2024.

Dividends

During the year, an interim dividend of £400.0 million was paid (2023: £42.5 million). This was paid via intercompany

short-term loans. The directors recommend that no final dividend be paid in respect of the year (2023: £nil).

An interim dividend of £300.0 million was paid in February 2025.

The Company's dividend policy is that dividends will be paid only after having due regard to available distributable

reserves, available liquid funds and the financial resources and facilities needed to enable the Company to carry on its

business for at least the next year, with the Company’s long-term prospects and viability in mind. In addition, the level of

dividends is set to maintain sufficient equity in the Northern Powergrid Group so as not to jeopardise any investment grade

credit ratings. These strict parameters align with the conditions set out in the distribution licence and are considered

carefully by the board so as to ensure that the payment of any dividend does not cause the Company to breach any licence

obligations in the future.

Directors of the Company

The directors, who held office during the year and up to the date of signing, were as follows:

T H France

A J Maclennan

A R Marshall

A P Jones

P A Jones

P C Taylor

During the year none of the directors had an interest in any contract which was material to the business of the Company;

and up to the date of approval of the Report of the Directors, 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 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. With the

exception of the aforementioned £400.00 million dividend, there have been no significant events since the year end. The

directors intend that the Company will continue to implement the Business Plan during the remainder of the ED2 period,

and by delivering the strategic objectives linked to the Core Principles, the Company will continue to develop its business

by efficiently investing in the Network and improving the quality of supply and service provided to customers. The

Company intends to continue to expand its energy systems operations to allow its Network to form a key part of a whole

energy system, which fosters flexibility and facilitates decarbonisation.

Research and development

The Company supports a programme of research that is expected to contribute to higher standards of performance and a

more cost-effective operation of its business. During the year, the Company invested £1.4 million (2023: £2.3 million)

(Note 5 to the financial statements) in its research and development activities.

Financial instruments

Details of financial risks are included in the Principal Risks and Uncertainties (Strategic Report) and Note 28 to the

financial statements.

As at 31 December 2024 and during the year it was the Company's policy not to hold any derivative financial instruments.

Stakeholder engagement and environmental disclosures

In accordance with Paragraphs 10, 11 and 20 of Schedule 7 of the Large and Medium-sized Companies and Groups

(Accounts and Reports) Regulations 2008, details concerning the employment of disabled persons, the relationship and

engagement with employees and those with whom the Company does business, in addition to information concerning

greenhouse gas emissions can be found in the Section 172 Statement and the Strategic Report (Environmental Respect and

Employee Commitment).

Page 19

Northern Powergrid (Yorkshire) plc

Directors' Report for the Year Ended 31 December 2024 (continued)

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’ and ‘Internal control’ in the Strategic Report for details of internal control

and risk management systems.

Additional information concerning the Corporate Governance arrangements applicable to the Company, are set out in the

Annual Report and Accounts of Northern Electric plc.

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 (Chair)

• AP Jones - Finance Director

• M Knowles - Independent member

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Annual 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 are

required to prepare the financial statements in accordance with UK-adopted international accounting standards and

applicable law and have elected to prepare the parent Company financial statements on the same basis.

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 their profit or loss for that period. In preparing each of the

financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable, relevant and reliable;

• state whether they have been prepared in accordance with UK-adopted international accounting standards;

• 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 parent 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 its 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.

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.

Page 20

Northern Powergrid (Yorkshire) plc

Directors' Report for the Year Ended 31 December 2024 (continued)

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 strategic report includes a fair review of the development and performance of the business and the position of the

issuer, together with a description of the principal risks and uncertainties that they face.

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 is a stable electricity distribution business operating an essential public service and is regulated by

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 Company is profitable with strong underlying cash flows;

• 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;

• Northern Powergrid Holdings Company does not intend to seek repayment of the amounts due to the Northern

Powergrid Group, which at December 31, 2024 amounted to £161.2 million, during the going concern assessment

period and will continue to make funds available. 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 Company is financed by long-term borrowings with an average maturity of 13 years and has access to short-term

committed borrowing facilities of £119 million (undrawn at December 31, 2024) provided by Barclays Bank plc,

Lloyds Bank plc, HSBC UK Bank plc and Royal Bank of Canada;

• The Company benefits from strong investment-grade credit ratings and has access to a range of financing options

including the capital markets. A successful bond issued by the Company in April 2025, demonstrates that the

Company’s bonds remain attractive to investors and there is an active market with strong appetite to invest.

• Consideration was also given to the obligations contained in the Company's and Northern Powergrid (Northeast) plc's

distribution licences to provide Ofgem with annual certificates, confirming that the directors have a reasonable

expectation that the Company and Northern Powergrid (Northeast) plc will have sufficient financial and operational

resources available for the continuation of business for a period of at least 12 months. The board determined any

material variations to the assumptions used when providing those certificates were unlikely within the eight-year period

or beyond.

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.

Page 21

Northern Powergrid (Yorkshire) plc

Directors' Report for the Year Ended 31 December 2024 (continued)

Disclosure of information to the auditor

Each director has taken steps that they ought to have taken as a 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.

Reappointment 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 11 June 2025 and signed on its behalf by:

.........................................

A P Jones

Director

Page 22

Northern Powergrid (Yorkshire) plc

Independent Auditor's Report to the Members of Northern Powergrid (Yorkshire) plc

1 Our opinion is unmodified

We have audited the financial statements of Northern Powergrid (Yorkshire) Plc (“the Company”) for the year ended 31

December 2024 which comprise the Statement of Profit and Loss, Statement of Comprehensive Income, Statement of

Financial Position, Statement of Changes in Equity, Statement of Cash Flows, 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 profit for the year then

ended;

• have been properly prepared in accordance with UK-adopted international accounting standards; 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 18th September2024. 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.

Allocation of total costs between operating and capital expenditure and the assessment of what is directly

attributable to Property, Plant and Equipment

Expenditure allocated to property, plant and equipment: £69.4m

Refer to pages 35-37 (critical accounting estimates and judgements) and pages 34-78 (accounting policies and financial

disclosures).

The Risk - Accounting Treatment

The Company undertakes major capital projects, including enhancements to the distribution network.

The determination of costs as capital or operating expenditure, in line with IAS 16 Property, Plant and Equipment, depends

on the ability to distinguish between enhancement and maintenance works. Under IAS 16, expenditure is capitalised when

it is probable that the future economic benefits associated with the item will flow to the entity where such expenditure

enhances or increases capacity of the network.

We determined that there is an elevated level of judgement involved in determining the costs to be capitalised or expensed,

and an elevated level of estimation uncertainty involved, with a potential range of reasonable outcomes greater than our

materiality for the financial statements as a whole.

Page 23

Northern Powergrid (Yorkshire) plc

Independent Auditor's Report to the Members of Northern Powergrid (Yorkshire) 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:

Accounting analysis

: assessed the Company’s capitalisation policy for compliance with IAS 16.

Test of details

: critically assessed the capital nature of a sample of additions against the capitalisation policy;

Methodology implementation

: assessed the mathematical accuracy of the model used to calculate the level of expenditure

capitalised, for a sample of costs capitalised;

Test of details

: challenged the Company on the selection and application of methods and performed sensitivity analysis on

the percentage of expenditure that is capitalised, based on our understanding of the business and the nature of the costs;

and

Assess transparency

: assessed the adequacy of the Company’s disclosures with respect to its capitalisation policy,

including the judgement involved in determining whether expenditure is capital in nature and the estimation involved in

setting the capitalisation rate of 45.8%.

Our Results:

We found the Company’s capitalisation of expenditure 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 £8.5m, determined with reference to a benchmark

of Company profit before tax, normalised by averaging over the last three years due to fluctuations in the business cycle,

of £216.2m, of which it represents 3.9%.

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 £5.5m. 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, and our understanding of the level of identified misstatements during

the prior period.

We agreed to report to the Audit Committee any corrected or uncorrected identified misstatements exceeding £0.4m, in

addition to other identified misstatements that warranted reporting on qualitative grounds.

Our audit of the Company was undertaken to the materiality and performance materiality levels 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.

Page 24

Northern Powergrid (Yorkshire) plc

Independent Auditor's Report to the Members of Northern Powergrid (Yorkshire) plc

(continued)

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 are refinancing risks, uncertainties around inflationary rises in operating costs

and regulatory price control outcomes.

We considered whether these risks could plausibly affect the liquidity or covenant compliance in the going concern period

by comparing severe, but plausible downside scenarios that could arise from these risks individually and collectively

against the level of available financial resources and covenants thresholds indicated by the Company’s financial forecasts.

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 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;

• 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.

Page 25

Northern Powergrid (Yorkshire) plc

Independent Auditor's Report to the Members of Northern Powergrid (Yorkshire) plc

(continued)

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 overhead capitalisation assumption. On this audit we do not

believe there is a fraud risk related to revenue recognition because the lack of material judgement or estimation and, due to

the nature of the industry, the Company operates in a stable, regulated market where the energy volumes are monitored

and supplied by an independent third party. 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 revenue, cash, loans and borrowings, property plant and equipment,

and legal expenses.

• Assessing whether the judgements made in making accounting estimates are indicative of a potential bias.

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 others

management (as required by auditing standards), and from inspection of the Company’s regulatory and legal

correspondence and discussed with the directors and other management the policies and procedures regarding compliance

with laws and regulations.

As the Company is regulated, our assessment of risks involved gaining an understanding of the control environment

including the entity’s procedures for complying with regulatory requirements.

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, taxation legislation, and

regulatory requirements governing distribution revenue and we assessed the extent of compliance with these laws and

regulations as part of our procedures on the related financial statement items.

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Northern Powergrid (Yorkshire) plc

Independent Auditor's Report to the Members of Northern Powergrid (Yorkshire) plc

(continued)

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 or the loss of the Company’s license to operate. We identified the following areas as those most likely to have

such an effect: health and safety, data protection laws, anti-bribery, employment law, environmental, Ofgem regulations

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.

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.

Page 27

Northern Powergrid (Yorkshire) plc

Independent Auditor's Report to the Members of Northern Powergrid (Yorkshire) plc

(continued)

8 Respective responsibilitie

Directors’ responsibilities

As explained more fully in their statement set out on page 20, 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

11 June 2025

Page 28

Northern Powergrid (Yorkshire) plc

Income Statement for the Year Ended 31 December 2024

Note

2024

£ 000

(As restated)

2023

£ 000

Revenue

4 657,083 523,789

Cost of sales (25,755) (53,763)

Gross profit

631,328 470,026

Distribution costs

(211,922) (192,495)

Administrative expenses (86,574) (77,560)

Operating profit

5 332,832 199,971

(Loss)/ profit on disposal of PPE

(4) 154

Finance costs

6 (54,392) (36,984)

Finance income

2,081 665

Profit before tax

280,517 163,806

Income tax expense

(68,544) (36,352)

Profit for the year

211,973 127,454

Further detail of prior year adjustments affecting the Income Statement can be found in Note 3.

Statement of Comprehensive Income for the Year Ended 31 December 2024

2024

£ 000

2023

£ 000

Profit for the year from continuing operations 211,973 127,454

Total comprehensive income for the year

211,973 127,454

The notes on pages 34 to 76 form an integral part of these financial statements.

Page 29

Northern Powergrid (Yorkshire) plc

(Registration number: 04112320)

Statement of Financial Position as at 31 December 2024

Note

31 December

2024

£ 000

(As restated)

31 December

2023

£ 000

Assets

Non-current assets

Property, plant and equipment

11 4,255,149 4,065,963

Right of use assets

12 7,561 7,424

Intangible assets

65 30

4,262,775 4,073,417

Current assets

Inventories

14 - 1,384

Trade and other receivables

15 103,943 229,819

Income tax asset

- 1,130

Cash and cash equivalents

212 244

104,155 232,577

Total assets

4,366,930 4,305,994

Equity and liabilities

Equity

Share capital

17 (290,000) (290,000)

Retained earnings

(1,354,404) (1,542,431)

Total equity (1,644,404) (1,832,431)

Non-current liabilities

Long-term lease liabilities

(5,732) (5,302)

Loans and borrowings

(1,018,028) (1,216,999)

Provisions

21 - (555)

Deferred revenue from customer contracts

23 (902,331) (874,878)

Deferred tax liabilities

(195,070) (182,409)

(2,121,161) (2,280,143)

Current liabilities

Current portion of long-term lease liabilities

(2,296) (2,400)

Trade and other payables

22 (156,396) (129,834)

Loans and borrowings

19 (381,943) (19,769)

Income tax liability

(14,494) -

Deferred revenue from customer contracts

23 (43,285) (39,212)

Provisions

(2,951) (2,205)

(601,365) (193,420)

Total liabilities

(2,722,526) (2,473,563)

Total equity and liabilities

(4,366,930) (4,305,994)

Further detail of prior year adjustments affecting the Statement of Financial Position can be found in Note 3.

The notes on pages 34 to 76 form an integral part of these financial statements.

Page 30

Northern Powergrid (Yorkshire) plc

(Registration number: 04112320)

Statement of Financial Position as at 31 December 2024 (continued)

Approved by the Board of Directors on 11 June 2025 and signed on its behalf by:

A P Jones

Director

The notes on pages 34 to 76 form an integral part of these financial statements.

Page 31

Northern Powergrid (Yorkshire) plc

Statement of Changes in Equity for the Year Ended 31 December 2024

Note

Share capital

£ 000

Retained

earnings

£ 000

Total

£ 000

At 1 January 2024

290,000 1,542,431 1,832,431

Profit for the year - 211,973 211,973

Total comprehensive income

- 211,973 211,973

Dividends

- (400,000) (400,000)

At 31 December 2024

290,000 1,354,404 1,644,404

Share capital

£ 000

Retained

earnings

£ 000

Total

£ 000

At 1 January 2023

290,000 1,457,477 1,747,477

Profit for the year - 127,454 127,454

Total comprehensive income

- 127,454 127,454

Dividends

- (42,500) (42,500)

At 31 December 2023

290,000 1,542,431 1,832,431

The notes on pages 34 to 76 form an integral part of these financial statements.

Page 32

Northern Powergrid (Yorkshire) plc

Statement of Cash Flows for the Year Ended 31 December 2024

2024

£ 000

(As restated*)

2023

£ 000

Cash flows from operating activities

Cash receipts from customers 803,093 652,589

Net cash from operating activities

803,093 652,589

Cash flows from investing activities

Transfers to intercompany accounts (753,289) (838,668)

Net cash from investing activities

(753,289) (838,668)

Cash flows from financing activities

Proceeds from issuance of bonds

- 248,428

Transaction costs relating to loans and borrowings

- (1,431)

Interest paid

(46,335) (32,377)

Repayment of short-term borrowings (3,500) (30,340)

Net cash flows from financing activities

(49,835) 184,280

Net decrease in cash and cash equivalents

(32) (1,799)

Opening cash and cash equivalents

244 2,043

Closing cash and cash equivalents

212 244

*Further detail can be found under 'Restatement of Cash Flow Statement' in Note 3.

The notes on pages 34 to 76 form an integral part of these financial statements.

Page 33

Northern Powergrid (Yorkshire) 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 in accordance with UK adopted International Accounting Standards in

conformity with the requirements of the Companies Act 2006.

Summary of material 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. Accounting policies related to immaterial

transactions, other events or conditions themselves are immaterial and as such need not be disclosed.

The accounting estimates are defined as the monetary amounts in the financial statements that are subject to measurement

uncertainty.

Basis of preparation

The financial statements have been prepared in accordance with adopted IFRSs and under historical cost accounting rules.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It

also requires management to exercise its judgement in the process of applying the Company's accounting policies.

Climate change

The impact of climate change, including risks identified in the Strategic Report on page 14, on the Company's financial

statements has been considered. No material impact on the judgements and estimates made in the preparation of the

Company's financial statements has been identified

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 is a stable electricity distribution business operating an essential public service and is regulated by

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 Company is profitable with strong underlying cash flows;

• 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;

Page 34

Northern Powergrid (Yorkshire) plc

Notes to the Financial Statements for the Year Ended 31 December 2024 (continued)

2 Accounting policies (continued)