Company Registration No. 02366949

ELECTRICITY NORTH WEST LIMITED

Annual Report and Consolidated Financial Statements

for the year ended 31 March 2025

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Introduction

Electricity North West Limited (“ENWL” or ‘’the Company’’) is the electricity distributor for the North

West of England. We are responsible for maintaining and upgrading the network of poles, wires,

transformers and cables which carry electricity from both the national grid and locally connected

generation to homes and businesses across the North West. Our job is to keep electricity flowing safely

and reliably to our customers’ homes and businesses, keeping the power on 24 hours a day, seven

days a week. We are proud of who we are, the essential role we play for our customers, the critical

role we play to support the move to net zero carbon, and the investment we make in the communities

we serve. We recognise the role that electricity, and the electricity distribution network operators

such as ourselves, play in leading and facilitating the net zero transition, managing power flows from

a range of sources as we move away from fossil fuels towards electricity for heating and transport.

We do all this while keeping costs as low as we can for our customers.

We are pleased to present the Annual Report and Consolidated Financial Statements of the Company

and its subsidiaries (together referred to as “the Group”) to shareholders for the year ended 31 March

2025. Further information on the Company can be found by visiting our website: www.enwl.co.uk.

The Company is limited by shares and incorporated and domiciled in England, the United Kingdom

under the Companies Act 2006.

Notice regarding limitations on directors’ liability under English Law

The information supplied in the Strategic Report and Directors’ Report has been drawn up and presented in accordance with English Law.

The liabilities of the directors in connection with these reports shall be subject to the limitations and restrictions provided by such law.

Strategic Report

In preparing the Strategic Report, the directors have complied with s414 of the Companies Act 2006. The Strategic Report has been prepared

for the Electricity North West Group as a whole comprising Electricity North West Limited (‘’the Company’’) and its non-trading subsidiaries

(together, ‘‘the Group’’).

Cautionary statement regarding forward-looking statements

The Chair’s Statement, Chief Executive Officer’s Statement and Strategic Report sections of the Annual Report and Consolidated Financial

Statements (‘‘the Annual Report’’) have been prepared solely to provide additional information to the shareholders to assess the Group

strategies and the potential for those to succeed. These sections and other sections of the Annual Report contain certain forward looking

statements that are subject to factors associated with, amongst other matters, the economic and business circumstances occurring within

the region and country in which the Group operates. It is believed that the expectations reflected in these statements are reasonable but

they may be affected by a wide range of variables which could cause actual results to differ materially from those anticipated at the date of

the Annual Report. The Group does not undertake any obligation to update or revise these forward-looking statements, except as may be

required by law or regulation.

Regulatory reporting and regulatory audits for the year ended 31 March 2025

Certain regulatory performance data contained in this Annual Report remain subject to regulatory audit by the Office of Gas and Electricity

Markets (‘’Ofgem’’). The final regulatory reporting pack for the year ended 31 March 2025 is not due for submission to Ofgem until July

2025, and will be reviewed by Ofgem after their submission.

Website and investor relations

The Company’s website, www.enwl.co.uk, gives additional information on the Company and Group. Notwithstanding the references we

make in this Annual Report to the website, none of the information made available on the website constitutes part of this Annual Report or

shall be deemed to be incorporated by reference herein. Interested institutional debt investors can also gain access to additional financial

information by visiting our website www.enwl.co.uk/about-us/investor-relations.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Contents

Chair’s Statement .................................................................................................................................... 4

Chief Executive Officer’s Statement ........................................................................................................ 6

Strategic Report..................................................................................................................................... 10

- Company Background ..................................................................................................................... 10

- Corporate Social Responsibility ...................................................................................................... 21

- Non-Financial and Sustainability Information Statement ............................................................... 23

- Key Performance Indicators ............................................................................................................ 32

- Financial Performance .................................................................................................................... 36

- Risk Management ........................................................................................................................... 43

Corporate Governance Report .............................................................................................................. 51

- The Board ....................................................................................................................................... 51

- Board Committees .......................................................................................................................... 59

- Report of the Audit and Risk Committee ........................................................................................ 59

- Report of the Audit and Compliance Committee............................................................................ 62

- Report of the Nominations Committee .......................................................................................... 63

- Report of the Remuneration Committee ........................................................................................ 63

- Report of the Safety, Health and Environment Committee ............................................................ 66

Directors’ Report ................................................................................................................................... 67

Directors’ Responsibilities Statement .................................................................................................... 70

Independent Auditor’s Report to the Members of Electricity North West Limited............................... 72

Financial Statements ............................................................................................................................. 84

- Consolidated and Company Statements of Profit or Loss and Other Comprehensive Income ....... 84

- Consolidated and Company Statements of Financial Position ........................................................ 85

- Consolidated Statement of Changes in Equity ................................................................................ 87

- Company Statement of Changes in Equity ...................................................................................... 88

- Consolidated and Company Statements of Cash Flows .................................................................. 89

Notes to the Financial Statements ........................................................................................................ 90

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Chair’s Statement

I am pleased to introduce the Annual Report

and Consolidated Financial Statements for

Electricity North West Limited (“ENWL”) for

the year ended 31 March 2025.

2024/25 has been a year of distinction for

ENWL – named “Utility of the Year” at the 2024

Utility Week Awards organised by Utility Week,

the leading publication in our industry. This

outstanding feat was achieved against a

backdrop of managing heavy storm activity on

the operations front, massive investment and

change in the cyber and IT functions, and

handling a highly complex and time intensive

corporate sale of the business. Whatever these

challenges, our customers’ needs and their

views always came first, and the Board is

pleased to report that both the customer

feedback and our customer performance in

tracker tables are extremely positive. Indeed,

ENWL achieved the largest ever improvement

in stakeholder engagement for vulnerable

customers ever recorded by the industry

regulator, the Office of Gas and Electricity

Markets (“Ofgem”). It is fair to report that

ENWL is clearly one of the best performing

DNO (distribution network operators) of the

fourteen DNOs as reviewed and rated by

Ofgem, and this is a great legacy to build upon

as ENWL moves to the next phase of its

corporate history.

Throughout all the challenges of the last year

the Board has been keen to ensure that the

safety record remains high, staff fatigue is

watched during such intense storm activity,

and that the staff are treated well in the pay

awards. The latter was achieved through an

industry leading three year package starting in

August 2024, and we are grateful to the trade

unions and their representatives for such a

positive process.

The operational, financial and cultural

achievements of the Executive and Senior

Management Team at ENWL would, in a

normal year, be commended.

However, these two groups – especially the

Executive Committee – have had to steer the

company through the hugely complex and time

consuming process of the sale of majority of

ENWL’s ultimate group shareholding to

Iberdrola, S.A. (“Iberdrola”), the Spanish

multinational electric utility company. I have

worked with both the Chief Executive officer

(CEO) and the Chief Financial Officer (CFO) on

the formally constituted liaison panel (which

met during the Competition and Markets

Authority (CMA) process, with the agreement

of the CMA) with the senior managers of

Iberdrola, and I have been impressed by the

management of the process.

The change of ultimate ownership for ENWL

will inevitably bring changes, but I am

delighted to report that our Japanese owners,

KDM Power Limited (“KDM”), will be

continuing as minority shareholders – and we

continue to draw upon their significant

expertise and guidance. In particular, Yamada

Masahide from Kansai Electric, has been

central to managing the successful sale process

and also working with the CEO to agree a new

collaboration agreement. We will continue to

share experiences and advice and indeed

personnel, and ENWL will expect to join the

Mayor’s delegation to Osaka again in summer

2025, after their very successful visit in late

2023.

The workload for my colleagues on the Board

has also been much higher than normal given

the corporate changes – but also due to the

additional focus that regulators and the

Government expect from Independent Non-

Executive Directors (“INEDs”). I would like to

thank Rob Holden, who contributed three

terms as an INED and led the Board’s audit and

accounts involvement. It would also be remiss

for me not to thank the other two INEDs: Anne

Baldock’s years at the top of the legal

profession helping us hugely in the recent

corporate transaction; and Susan Cocklin’s

background in IT helping us so much as we

come to terms with the increasing demands of

AI, cyber fraud and general IT challenges.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Chair’s Statement (continued)

All three INEDs left the Group and Company

following CMA’s clearance of the sale

transaction near the end of March 2025, with

our thanks for jobs well done.

Looking ahead there are probably two

essential challenges for the ENWL Board in

2025. Firstly, achieving the successful

integration of the business into the Iberdrola

Group - whilst not dropping our standards or

performance levels. The second is to ensure

that, as part of our licence obligations, we seek

and then deliver upon the financially very

significant Load-Related Expenditure and

Cyber Resilience re-opener programmes from

Ofgem.

I hold a privileged position of seeing most

aspects of the business and my final comment

this year is to highlight the tremendous

workload and the highest professional

standards that the CEO (Ian Smyth) and the

CFO (Chris Johns), who both sit on the Board,

have brought to ENWL. They managed to keep

the momentum on the operational side whilst

managing the corporate transaction, and all

the associated issues that require the most

careful and sensitive management.

Alistair Buchanan CBE

Chair

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Chief Executive Officer’s Statement

I am pleased to present the Annual Report and

Consolidated Financial Statements (“the

Annual Report"), for the year ended 31 March

2025.

We have now completed the second full year

of the delivery of RIIO-ED2, our current 5-year

price control period (April 2023 to March

2028), and I am pleased to report the business

continues to perform strongly against the 5

year business plan. This has been a year of

significant change for the business. Our

strategy “From Good to Great” has continued

to deliver continuous improvement in all areas

of the business. In addition, we have

embedded and built on the capital delivery

model, which was implemented last year, and

this has transformed the execution of our

capital programme. We have seen a step

change in the scale of the investment we are

making against our allowances. We have also

continued to make significant changes through

the delivery of our Cyber Security programme

to better protect the network and the

business. Last year we achieved basic

compliance with the National Information

Security cyber assessment framework and this

year we are on track to achieving compliance

with the enhanced framework requirements

which we expect to achieve in December,

assuring the resilience of the business against

multi-vector threats and attacks.

These changes have been achieved in the

context of both a complex and successful sale

of the business and a number of significant

extreme weather events which have not been

experienced before. The business successfully

changed hands as the private equity

shareholders exchanged ownership with

strategic utility owner/operators, Iberdrola.

Kansai, the Japanese utility, retained their

ownership albeit at a reduced level. The

business then successfully navigated a CMA

investigation jointly with our new shareholders

who took control of the business on 20 March

as the CMA investigation completed.

Storm Éowyn, in January 2025, was the largest

storm we have experienced, outstripping

Storm Arwen of 2021, and was a harsh test of

the developments we have made as a business.

Our improved storm resilience and response

was evident through transformed restoration

times for customers compared to Storm

Arwen, despite a substantial increase in the

number of customers adversely impacted and

off supply.

Our success this year was endorsed externally

by our industry when we won “Utility of the

Year” and “Innovator of the Year” awards in

December 2024. These achievements

energised the whole organisation as we faced

the storms with renewed vigour. Importantly,

on 7 April 2025 Ofgem, our regulator,

published their assessment of the

performance of all of the distribution network

operators (DNOs) for the first year of RIIO-ED2.

I am very pleased to report, that ENWL is the

only DNO to receive a perfect score across all

eight assessment criteria used by Ofgem to

assess performance. This is the first time in

eight years that any DNO has achieved this

standard. Ofgem’s assessment of cost

performance also places ENWL at the frontier

of efficiency. At the end of the second year of

RIIO-ED2, ENWL is the best performing DNO

averaged across the Ofgem performance

measures and is setting the frontier for

performance as we move into the baseline

year for ED3 business planning.

Our strategy “From Good to Great” is

delivering. Employee safety and engagement is

the highest it has ever been. We are the most

reliable and most innovative network. Our

customer service is the highest it has ever

been, and we are one of the top performers in

cost efficiency. However, there remains much

to do as we look ahead to the coming year. The

first priority is to ensure the successful

integration of ENWL within the Iberdrola group

which includes a change to accounting year

from fiscal to calendar year and aligning the

business to new corporate governance and

reporting standards, policies and procedures.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Chief Executive Officer’s Statement

(continued)

Our second priority is to ensure the continued

success of the business through maintaining

our journey from good to great. This year we

will launch “Social DSO”, our unique approach

to distribution system operation which aims to

ensure no one is left behind in the energy

transition. We will also mobilise our ED3

programme as we start to look ahead to the

next price control period and securing the scale

of investment required to ensure the

ambitions of the government in Clean Power

2030, the communities of the North West and

the employees of ENWL are achieved at pace.

With new shareholders and part of a larger

group, we look ahead with excitement ready to

take the initiative the Energy Transition

provides.

Delivering our “licence to operate”

Our legitimacy as an enterprise is derived not

just from Ofgem, our regulator, but directly

from the employees, customers and

communities we serve. This starts with safety

and this year we have seen the benefit of

further developments we have made in this

area; the business delivered 14 months

without a Lost Time Injury (“LTI”) which is an

increase on the best performance we saw in

the previous year. Unfortunately, we had one

LTI in January 2025, but we have not

experienced any further LTIs since then. We

are focused on continually innovating to

improve our safety performance so we can

remain at the frontier of safety performance in

our sector.

Our core focus as a business is always the

customers and communities that we serve to

ensure that we understand and continue to

respond to their needs and to enable us to

legitimately deliver our licence to operate.

It has continued to be a difficult time for our

communities with energy costs remaining at

the high level that we have seen over the last

few years, which serves to only increase the

importance of the service we provide to the

most vulnerable and poorest members of our

community. We have continued to increase

support to customers in vulnerable

circumstances, further developing our Take

Charge campaign with our strategic partners to

support initiatives on fuel poverty and energy

efficiency. Our aim to be one of the lowest cost

providers has ensured we maintain the

support of the largest commercial and public

sector organisations in our area.

Our focus on our customers has led to further

improvements in our customer satisfaction,

resulting in our highest ever score of 92.9%

which is a 0.9% improvement on last year’s

score. The focus on our vulnerable customers

is also endorsed through our performance on

the new vulnerability incentives (as part of the

Customer Satisfaction Fuel Poverty incentive),

and our customers have rated our service

94.5%.

Delivering a reliable network for our

customers

Our primary obligation is to deliver a safe,

reliable supply of electricity. Extreme weather

this year presented new challenges which

meant we did not meet our Customer

Interruptions (“CIs”) and Customer Minutes

Lost (“CMLs”) internal targets. However, the

improvements we have made in the last few

years in our storm resilience and response

have allowed us to perform much better

during Storm Éowyn. This was the largest

storm we have experienced since Storm

Arwen, and we restored power to 110,000

properties quicker than in Arwen despite there

being 15,000 more properties off supply. As

part of our customer response efforts, we

knocked on over 1,500 doors and proactively

contacted 25,000 vulnerable customers to

offer our support.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Chief Executive Officer’s Statement

(continued)

Re-openers are a significant feature of the

RIIO-ED2 regulatory framework, and we have

continued to be very successful in our re-

opener applications. The Storm Arwen re-

opener provides additional investment which

will allow us to continue to enhance the storm

resilience of the network. We are also investing

in resilience in relation to technological threats

which have been funded through the Cyber re-

openers.

Delivering stewardship and investment to

enable net zero

Our approach to asset management,

innovation and capital investment and delivery

is pragmatic and targeted. Our activities are

targeted to improve the performance of the

network, develop and reinforce the network

efficiently and deliver shareholder value.

Our biggest challenge last year was capital

delivery as, like all other DNOs, mobilisation

was slower than we planned. The changes

made last year have been embedded in this

second year of the price control, to enable a

much-improved capital delivery and

commercial services function, which has been

able to deliver a much larger capital

programme. Capital delivery will need to

continue to increase throughout RIIO-ED2 and

into ED3. We will continue to work on

improvements to our processes and enhance

our collaboration with strategic partners so we

can secure the resources and materials needed

to deliver these large programmes of work.

A key output of some or our forward planning

has been our recently submitted Load-Related

Expenditure re-opener application which will

allow us to make a significant investment of

over £200m in the network to deliver

additional capacity which is now needed due to

new connections and the growth we are seeing

in demand and generation.

The North West is one of the fastest growing

regions in the UK and as part of this application

we conducted extensive stakeholder

engagement to ensure we understand our

stakeholders’ plans so that our network can

support this growth and enable

decarbonisation to help deliver the UK’s net

zero target. Securing this investment will allow

us to mobilise supply chains and start ramping

up our delivery to meet the expected increases

in demand over this and future price controls.

Innovation is essential to maintain our sector

leading network performance and reliability

levels, and to meet the increasing demands on

electricity from the decarbonisation of energy,

at an affordable cost. We continue to develop

and deliver our cutting-edge engineering

innovations such as CLASS, Smart Street and

LineSIGHT that will keep the network reliable,

efficient and safe.

Delivering a resilient and diverse workforce

Our employee engagement is quantifiably

assessed annually in the Climate Survey, which

is undertaken by an independent, respected,

expert organisation. The agreement score of

83.9% is our highest ever and achieved despite

the background of significant change in the

business this year. Gender pay gap overall

increased slightly from 11.6% to 11.9%.

Importantly, we do not have a gender pay gap

for employees aged under 25, and we have a

much smaller pay gap (approx. 6%) for those

between the ages of 25 to 35, which bodes well

for the future shape of our workforce. The

recent revisions to parental pay places us at

the frontier for benefits for maternity and

primary care givers in our sector and ensures

we are well placed to retain the diversity

reflective of the communities we serve. In

August 2024, working closely with our union

partners, we secured a three year pay deal,

recognising the importance of stability and

security for our valued workforce.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Chief Executive Officer’s Statement

(continued)

Financial performance in the year

The financial performance for the Company

continues to be strong, supported by the cost

efficiencies and incentive revenue earnings

that we have delivered in the year. Overall, our

revenue has grown by £77.7m to £654.4m, net

of the collection of Supplier of Last Resort

levies from which we make no profit, with the

full amount paid to suppliers immediately on

collection of the levy. Supported by the

increase in revenues, we have increased the

levels of capital investment, improving

network resilience and capacity. Total capital

expenditure during the year was £374m, £83m

higher than the prior year.

Our income statement continues to show the

impacts of the macro-economic environment

on non-cash items in our accounts. In

particular, we have seen significant accounting

fair value gains on our derivative instruments

(£41.6m fair value gain in the year, compared

to £102.3m fair value gain in the prior year)

which results in a non-cash increase (2024:

increase) in profit before tax. A portion of this

non-cash fair value movement was offset by

the cash payment of accretion in prior year of

£87.0m with no accretion payments in the

current year, with the remainder reflecting

volatility in the markets and, in particular, in

interest and inflation forecasts.

The sale process, which started last financial

year, came to its conclusion in October 2024

with the sale of 88% of the business to

Iberdrola, S.A.; the transaction was then

referred for CMA review and an Initial

Enforcement Order was issued by the CMA

preventing the integration of the two

businesses during the review process. On 20

March 2025, the CMA completed its review

and published its decision to approve the

transaction. That brought the CMA and

regulatory review process to a conclusion. The

Initial Enforcement Order was also lifted. We

now embark on a new journey as part of the

Iberdrola family with confidence that we will

deliver exceptional value for our new

shareholders and the group.

In conclusion

The business is in a very strong place going into

the third year of the price control. We have

performed at a high standard this year and our

frontier performance in our sector has been

externally recognised at the Utility Week

awards. We are now putting more of our focus

into looking forward to RIIO-ED3 and starting

to develop our plans and strategy for the next

price control so we can build on our current

performance levels and continually improve

the service we provide to all our stakeholders.

Ian Smyth

Chief Executive Officer

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report

Electricity North West Limited (“ENWL”) is a

private company limited by shares and

incorporated and domiciled in England, the

United Kingdom, under the Companies Act

2006. Ultimate ownership of ENWL changed in

the year and it is now 88% owned by Iberdrola,

S.A., one of the largest utility companies in the

world and a leader in renewable energy (see

Note 31 for more detail). The immediate

parent company remains North West

Electricity Networks plc (“NWEN plc”), an

intermediary holding and financing company

within the North West Electricity Networks

(Jersey) Limited (“NWEN (Jersey)”) group, part

of the wider group headed by lberdrola, S.A.

Company Background

ENWL is the electricity distribution network

operator (“DNO”) for the North West of

England, one of 14 DNO’s in the UK regulated

by the Gas and Electricity Markets Authority,

which operates through the Office of Gas and

Electricity Markets (“Ofgem”).

The Company serves approximately 5 million

customers at 2.4 million domestic and

industrial locations, has around 2,200

employees and provides a safe and reliable

electricity supply, 24 hours a day, seven days a

week.

ENWL owns, invests in, operates and maintains

the network of poles, wires, transformers and

cables which carry electricity from both the

national grid and locally connected generation

to homes and businesses across the North

West, together with the telecommunications

network that controls the network remotely.

The role we play in serving our communities

continues to evolve as we seek to transition to

a low carbon economy and electricity

generation becomes more distributed across

our network. We have moved from a fairly

linear network operating model:

To one that is far more complex and multi

directional at the distribution level, managing

power flows from a range of sources in a wider

system:

How we charge customers

We charge customers through their electricity

suppliers, in the case of domestic and small

customers, or directly in the case of larger

customers.

The prices that we charge are regulated by

Ofgem, but we recognise that ultimately it is

our customers that fund the business and its

investments in the network.

ENWL’s costs account for around 12% of the

typical domestic electricity bill charged by

suppliers to North West customers, equivalent

to £124 per home for the year ended 31 March

2025; this compares to an average DNO

customer bill impact of £142 per home for the

same financial year.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Regulatory framework

The prices the Company can charge customers

are regulated by Ofgem through its RIIO model;

Revenue = Incentives + Innovation + Outputs.

This model determines how much the

Company can charge customers to fund

network investment and operating costs in a

regulatory price control period, linking that to

the performance of the Company.

The price control in operation for the year

ended 31 March 2025 was RIIO-ED2, running

for a 5-year period from 1 April 2023 to 31

March 2028.

The base income in each year is largely fixed,

to cover the operating costs of the Company

and provide a return to investors. Allowed

revenue is then adjusted up or down

depending on performance against regulatory

outputs and incentive mechanisms.

These mechanisms incentivise excellent

customer service, stakeholder engagement,

delivery for connections customers and

network reliability, the latter based upon

minimising the number of interruptions that

customers suffer (CIs) and the average length

of those interruptions (CMLs). Performance

against the incentives is assessed annually and

any positive or negative adjustments are fed

into a process which modifies revenues for

subsequent years.

The RIIO model encourages cost reductions,

through innovation and efficiency, promoting

the delivery of a well-maintained and

efficiently invested network for the long-term.

Cost savings are shared between customers,

via price reductions, and shareholders.

In addition to the RIIO framework, the

Company charges separately for new

connections to, and diversions of, the network.

This activity is also regulated by Ofgem.

Investment and innovation are aimed at

ensuring the development and availability of

appropriate technology to meet the changing

demands of electricity supply and the

challenge of achieving a low carbon future, at

a price customers can afford.

External Factors

RIIO-ED2 and net zero transition

The RIIO-ED2 regulatory period is marked by a

significant increase in expenditure compared

to the previous regulatory period, with the

potential for further increases through

regulatory ‘uncertainty mechanisms’.

Delivering this increased investment in the

network and supporting the transition to net

zero are key challenges for the Company.

The net zero transition will result in increased

network demands by 2050, driven by both

renewable generation connections and electric

vehicles and heat pumps demands. A key

challenge in RIIO-ED2 is to provide the capacity

for customers to adopt these technologies, at

a price that is affordable.

The RIIO-ED2 business plan (provided on

Company’s website www.enwl.co.uk) sets out

a clear vision around net zero and how we will

ensure that the network is not a barrier to

connecting electric vehicles or other low

carbon technologies. It also sets out plans to

improve network reliability and resilience and

to look after customers in vulnerable

circumstances, at the lowest cost achievable.

Energy prices and supplier administrations

The unprecedented rise in energy prices since

2021 has put energy markets under severe

strain, with significant numbers of energy

suppliers entering administration. Although

the position has stabilised, we are still

collecting Supplier of Last Resort (“SoLR”)

charges through our revenue, as directed by

Ofgem. For the year ended 31 March 2025,

revenue includes SoLR levies of £0.8m (2024:

£22.0m). For more information see Note 4.

Political and economic backdrop

The ongoing political and economic volatility,

particularly the events in Ukraine, continues to

be monitored. Although there has been

limited direct impact, supply chain

management remains an area of focus and the

planned increase in stock levels to mitigate

supply chain risk has been maintained.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

External Factors (continued)

Having considered the factors noted above,

there are no material impacts on either the

going concern statement (pages 40 to 41), or

the period covered by the viability statement

(page 41).

Purpose, Vision and Principles

We have a Purpose statement, Vision

statement, set of Principles and focus areas

embedded within the business ethos to steer

business performance.

Our Purpose statement ‘Together we have the

energy to transform our communities’ reflects

the essential role we play in the North West

and in the lives of our customers,

acknowledging how our role is changing

alongside the needs of our customers.

Transforming our communities is at the heart

of our Purpose, ensuring we take a responsible

approach in everything we do, including how

we treat and support:

• our customers;

• our environment;

• our communities; and

• our people.

Our Vision is to ‘Lead the North West to Net

Zero’. We do not say that lightly. The climate

challenge is the greatest of our age and

networks are uniquely positioned to enable

the transition from fossil fuels to low carbon

electricity to power our homes, businesses,

transport and heating.

As the DNO for the North West of England, we

are key to leading the region to net zero. We

are focusing on three things to make it happen,

at the lowest cost to customers:

1. Investing and innovating to make sure the

network is fit for the future;

2. Helping domestic customers and

businesses play their part, making new

connections as quick and easy as possible

while ensuring no one is left behind; and

3. Continuing to improve the reliability of the

network, which is fundamental as we all

become even more reliant on electricity.

Our Purpose and Vision are supported by our

Principles, setting the cultural framework

within which we operate.

The Principles, ‘We are switched on; We are

adaptable; We take pride’, capture the

cultural framework required for the Group to

deliver the Purpose and Vision.

The Group has four key focus areas: ‘Health,

Safety & Environment; Network Reliability;

Customer; and People’.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Health, Safety and Environment

The Company operates in a high hazard

industry and the safety of its people and

customers, and the protection of the

environment, will always remain key priorities.

During the year, we have strengthened the

team leadership with key appointments

enhancing our capabilities in this area.

Operational safety

The Company ensures that all people are well

trained and able to operate safely, backed by

policy driven procedures and compliance

assurance, alongside a behavioural approach

that seeks to ensure that all staff and

contractors approach any task with a strong

behavioural attitude to safety.

In the year ended 31 March 2025, we have

continued to review and improve our safety

management system which is certified to the

international standard ISO 45001.

We finished the year ended 31 March 2025

with a lost time injury frequency rate of 0.011

(2024: 0.023) having had one LTI (2024: two).

This low incident rate reflects the sustained

improvement since we embarked on a

company-wide initiative to create an enhanced

safety culture. The total reportable incident

rate was 0.146 (2024: 0.034), an increase on

the previous year driven by 13 RIDDOR

reportable HAVS cases from historical

exposure to hand-arm vibration. Other than

those there was just one other RIDDOR

reportable injury.

We are never complacent about safety. In the

year to 31 March 2026, we will embed an

updated plan to further improve our safety

record, including working closely with our

contract partners and the new owners.

As our safety journey continues, we are

increasingly focused on the quality of, and

learning from, safety observations and positive

challenges, rather than focusing on the volume

of these. Safety observations in the year were

recorded at 14,524 (2024: 11,647), with 2,785

positive challenges (2024: 2,778).

Asset safety

The safety of the Company’s employees,

delivery partners and the public from the

inherent risks of electrical assets is assured

through the Company’s ongoing asset

investment programme and the associated

asset risk management policies which define

the programme scope.

During the year ended 31 March 2025, the

Company continued to invest to reduce further

risks associated with link box failures and with

rising and lateral mains in multi occupancy

properties, such as blocks of flats.

Our link box inspection programme assesses

the risk of the asset which then, where

necessary, informs an intervention such as

blast mitigation protection, replacement or the

removal of the asset.

We continue to use innovation to target the

potential risks associated with electricity

supplies in multi occupancy properties. We

have installed innovative monitoring

equipment which helps identify abnormalities

and inform replacement decisions.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Health, Safety and Environment (continued)

Environmental performance

The Company is dedicated to achieving the

highest standards of environmental

performance, not only by minimising the risks

created by our activities, but also through

targeted investment in outputs that deliver a

positive environmental impact. To achieve our

environmental objectives, we monitor

environmental related investments to ensure

that we are on track. We do, however, face

certain challenges in balancing a reduction in

the adverse environmental impacts of our

operations with the need to meet customer

and regulator demands to grow the network

and maintain supply.

In terms of our own direct operational impact

on the environment, our principal

performance indicator is the level of carbon

dioxide emissions equivalent (tCO

e). This

measure covers the environmental impact

both from the use of fossil fuels in vehicles and

generators and of energy in buildings, as well

as the impact of Sulphur Hexafluoride (SF

), a

greenhouse gas historically used as insulation

in electrical equipment. The table on page 15

shows an analysis of our Scope 1, 2 and 3

emissions over the current and prior year.

Our “Leading the North West to zero carbon

plan” sets out our target as a 3% reduction year

on year to decrease our emissions in line with

our SBTi trajectory, page 15 outlines analysis of

the year to 31 March 2025 performance . This

includes some of the actions that we are taking

to decarbonise our operations but also

provides exemplars, research evidence and

business case information to inform the

investment decisions that stakeholders need

to take to decarbonise.

We have been working closely with key

stakeholders across the region and have

produced decarbonisation pathways for

Greater Manchester, Cumbria and Lancashire.

We continue to facilitate the journey to net

zero by preparing the electricity network for

the rapid uptake of electric vehicles (“EVs”)

and the associated charging infrastructure

needed to support this. The accelerating

uptake in low carbon technologies will

ultimately result in a lot more demand being

placed on our network, and our main challenge

is to manage the change and keep the costs as

low as we can while ensuring that our network

remains resilient, reliable and meets

customers’ needs.

Recognising our critical role in leading

decarbonisation, we have made two of our

depots and two substations carbon neutral

using a range of low carbon technologies.

These modifications have the dual benefit of

reducing our own carbon emissions and can be

used as exemplars to other businesses across

the region, sharing our learnings. Our goal for

RIIO-ED2 is to decarbonise one of our twelve

depots each year or to make efficiency savings

that target our biggest emission sources from

our estate.

We have rolled out EV charging points at all our

depots and we are incentivising colleagues to

change to EVs. We have also engaged with

local authorities and businesses across the

region to support them with this transition,

promoting the mass adoption of EV

technology.

The transition to carbon neutrality is as much

about behavioural change as it is about

technologies. In that regard, we became the

first Bronze accredited carbon literate DNO

and achieved silver accreditation in 2022. We

have developed a strategy to achieve our goal

to achieve Gold accreditation over the course

of RIIO-ED2 and, as a first step, are refining the

training to be delivered to our operational

teams as well as exploring partnership

opportunities to deliver Carbon Literacy

training to stakeholders.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Health, Safety and Environment (continued)

Business carbon footprint

2025

tCO

2024

tCO

Scope 1

Operational transport

4,453

4,448

Fugitive emissions

1,460

663

Fuel combustion

137

292

6,050

5,403

Scope 2

Buildings energy usage

3,593

3,630

Scope 3

Contractor Transport

Fuel

1,452

1,445

Company/Lease,

Personal Cars

679

589

Rail

Air

Generator Fuel

2,576

2,888

Commuting

955

N/A

Upstream Fuel and

Transport (Well-to-

Tank)

1,309

N/A

T&D and WTT

Purchased Electricity

1,183

N/A

8,239

4,966

Business Carbon

Footprint (excl. losses)

17,882

13,999

Electrical losses

328,413

304,723

Business Carbon

Footprint (incl. losses)

346,295

318,722

Prior year presentation has been amended in line with the new

SBTi methodology adopted in financial year 2025.

The reported electrical losses figure is a snapshot of received

data as of the date of this report and will change as further

settlement reconciliation runs are carried out (up to 28 months

after each relevant settlement date).

The Company’s business carbon footprint

(excluding losses) for the year was 17,882

tCO

e, which is an increase of 28% from the

previous year (2024: 13,999 tCO

e). This

increase was due to the Company’s transition

to a validated Science-based target (“SBTi”)

that expanded the emissions reported on.

To support the SBTi commitments the table

above has been amended to ensure more

robust reporting and accounting for carbon

emissions, which required the realignment of

emissions covered by scopes 1, 2 and 3.

Despite this adjustment the Group has

performed well against the 63% target for our

carbon emission reduction commitment by

2035. The Business Carbon Footprint uplift

SBTi equivalent for prior year would have been

18,428 tCO2e. Compared to the 17,882 tCO2e

in year ended 31 March 2025, this would

equate to a 3% reduction year on year. The

baseline reporting year for our SBTi was FY20

and we committed to the SBTi target in August

2023 with reporting expanded to include

scopes 1, 2 and 3 emissions from the beginning

of FY25. In terms of the reduction against

baseline it was 22.5% reduction compared to

the baseline year.

During the year, the Company continued to

implement energy efficiency measures,

through the refurbishment of its buildings, and

the replacement of fleet vehicles and company

cars with more efficient vehicles. Fugitive

emissions increased to 1,460 tCO

e (2024: 663

tCO

e) due to an improved inspection

methodology for asset inspections.

Around 17,353,706 kWh of electricity, equal to

around 3,593 tCO

e, was purchased by the

Company for its own use, including for the

purposes of transportation. This tCO

e figure

was calculated by multiplying the total

consumption in kWh by the UK Government

Conversion Factors for greenhouse gas

emissions.

There was around 26,127,503 kWh of energy

consumed from the consumption of fuel for

operational transport. This is calculated by

multiplying the litres of gas oil and diesel

consumed by the conversion factor provided in

the UK Government Conversion Factors for

greenhouse gas emissions.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Health, Safety and Environment (continued)

Business carbon footprint (continued)

To reduce our carbon footprint with respect to

operational transport, we are developing a

carbon reduction road map to maximise the

benefit of EV options for our liveried fleet.

The Company’s annual emissions are

equivalent to 7.71 tCO

e per employee (2024:

6.36 tCO

e), an increase of 1.35 tCO

e per

employee against last year’s emissions. It is

worth nothing that because there was no SBTi

uplift in FY24 if that year’s data was adjusted

to align with the SBTi the annual total would

have been 18,428 tCO2e with 2,201 employees

and would be equivalent to 8.37 tCO

e per

employee so would in fact be an 7.9%

reduction.

Electricity losses are measured as the

difference between energy entering the

network (from generation) and energy exiting

the network (for demand). Whilst it is

impossible to eliminate these losses, we do

take steps to minimise them and we will be

taking measures to reduce losses as part of our

commitment to decarbonise our operations.

This is done through installing more efficient

assets in our network, particularly low loss

transformers and cables and through our

revenue protection activities, addressing the

issue of electricity theft. However, as

electricity demand over the network starts to

increase, maintaining losses at current

absolute levels will be impossible to achieve,

with the level of emissions being determined

by the amount of renewable generation in the

mix.

Network Reliability

Our customers and stakeholders continue to

feedback that our fundamental role is to keep

power flowing through the network, reliably.

This becomes ever more important as

customer dependence upon electricity

continues to grow as we move to a low carbon

future. Network reliability continued to be high

with a network availability of 99.995% (2024:

99.995%). The year ended 31 March 2025 is

the second year of RIIO-ED2 with more

stretching targets for reliability set by Ofgem.

Reliable electricity supply is achieved by a

combination of the following:

• Investment to improve network health and

the reliability of the underlying asset base;

• Minimising the impact of interruptions by

ensuring all our systems work effectively

and restore supply within 3 minutes; and

• Physical attendance on site to operate,

restore or repair the network to restore

supplies, where required.

In the year ended 31 March 2025, the average

number of interruptions per 100 customers

(CIs) was 26.07 (2024:26.20). This outperforms

the Ofgem target 29.74 and represents the

Company’s second best ever performance. The

average number of minutes for which

customers were without supply during the

year (CMLs) to 31 March 2025 was 27.09

(2024:26.80) and this is adverse to Ofgem

target of 26.87.

Our network is designed and maintained to

withstand the external environment and other

risks to ensure it continues to operate reliably.

Reliability performance this year has been

challenged by a higher than normal volume of

weather-related faults resulting in increased

volumes of interruptions.

In FY25, there were 7 named storms in total

(2024: 13). Through learnings from prior years,

storm response improvements have been

made to significantly bolster preparation

protocols and responses. This has delivered

some best-ever ENWL responses during these

events.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Network Reliability (continued)

The exceptional event mechanism in our

licence protects DNOs from extreme external

events. We have submitted three exceptional

event claims; two category one and one

category two storm claims to Ofgem in line

with the exceptional event claim process in

2025. Storm Éowyn was the largest storm to

impact our region in the last ten years.

Despite the challenging weather impacts,

there have been further improvements in the

number of customers restored by automation

on both the high voltage and low voltage

networks. This performance has been driven

through a combination of investment in

automation and network resilience, as well as

improvements in pro-active operational

response. In the year, an additional 511

automation devices have been installed, which

has further bolstered our response. Also, there

has been a 43% increase in tree-cutting

resulting in 14,901 spans being cleared, thus

creating a more reliable network during

weather events.

This year further development of our network

management system (NMS) has been

implemented to improve the software

algorithm to restore customers through

automation avoiding CIs and CMLs impact.

This year there has been a significant

deployment of PRESense and LineSIGHT

equipment, connected through to our NMS

system, improving visibility of our network,

thus improving our ability to respond to

interruptions. Smart meters have been fully

integrated into NMS this year providing

visibility of the status of customers and further

enabling a proactive enhanced response.

Most customers enjoy excellent levels of

reliability, but we recognise that there is

variability in the level of service, with a small

minority experiencing a level of service

significantly worse than average, usually due to

their location or localised network issues. We

continue to invest in schemes that aim to

reduce, in the long-term, the numbers of worst

served customers (“WSC”).

The number of customers meeting this Ofgem

definition increased by 24 in the year ended 31

March 2025 to 930 (2024: 906). In RIIO-ED2,

Ofgem has defined a WSC as being one who

has experienced 12 or more unplanned HV

interruptions over a three-year period with no

less than two interruptions in any one year.

We continue to focus on our ambition to have

no customers meeting the Ofgem definition by

2028. To achieve this, we are delivering a major

proactive investment programme, delivering

substantive and sustained improvements in

performance to 27 circuits which have

previously qualified against the RIIO-ED2

threshold, benefiting 2,939 WSCs and 39,343

customers overall. Alongside this, we continue

with our tactical intervention programme,

which seeks to address any newly emerging

WSC performance issues.

Investment in an affordable and sustainable

network

In the year ended 31 March 2025, out of the

total capital expenditure of £374.0m (2024:

£290.9m) £173.2m was invested directly in

network assets (2024: £122.4m). In addition to

investment to improve the automation of the

network and to maintain safety and

environmental compliance, we have this year

significantly increased investment in additional

capacity to enable future demand aligned to

the net zero transition.

The current network has been installed over

many decades and a significant proportion of

the investment programme continues to relate

to replacing existing equipment at, or

approaching, the end of its life with modern

equivalents.

Innovation is essential to maintain our sector

leading network performance and reliability

levels and to meet the increasing demands on

electricity from the decarbonisation of energy,

at an affordable cost. We continue to develop

and deliver our cutting-edge engineering

innovation projects such as CLASS, Smart

Street and LineSIGHT that will keep the

network reliable, efficient and safe.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Customer

Supporting customers in vulnerable

circumstances is core to our customer strategy.

Our “Electricity Users in Vulnerable

Circumstances Strategy” ensures that the

support we are giving customers in our region

is focused appropriately.

We have continued to increase support to

customers in vulnerable circumstances,

further developing our Take Charge campaign

with Citizens Advice Manchester (“CAM”) and

Energy Saving Trust (“EST”). CAM and EST act

as our strategic partners to support fuel

poverty and energy efficiency, leveraging all

available financial support and grants to

enhance customers lives. We have continued

the support provided last year and have

delivered to 50,218 customers since the start

of RIIO-ED2. As part of the Customer

Satisfaction Fuel Poverty incentive, our

customers have rated the service 94.5% (2024:

95.3%).

We maintain our Extra Care register, to identify

those customers who are most dependent on

our services and deliver prioritised support to

them in a power cut. This year, we continued

to promote awareness of our free Extra Care

service and increase accessibility to it,

including collaboration with funded partners

has also improved our view and reach of those

who are vulnerable.

We have over 935,000 households on our

increased registration in the year from 82% to

95.7% of those eligible in the region. Once

again, 386 colleagues from across the business

supported the Contact Centre to contact our

most vulnerable customers 27,681 by phone

and 2,209 through door knocking to ensure we

have the most up to date information on them

to enable the most appropriate support.

Through the continued use of partnerships,

associated referrals have increased to the

highest level to date with 150,111 customers

benefiting from the extra support provided.

Delivering excellent customer service is

incredibly important to us. Our overall

customer satisfaction score at the end of

January 2025 has seen a 0.9% increase

compared to last year at 92.9% (2024: 92.0%)

and ranked fourth DNO within the league

tables (licence area) and second overall DNO.

A roadmap of key actions focused around

reducing customer effort, simplification,

owning what we do are developed from

customer feedback and root causes analysis.

The volume of complaints received have

reduced in comparison to last year, with the

top three reasons relating to faults, multiple

interruptions, and notification of a planned

supply interruption. The overall complaints

performance metric is delivering 2.04, against

Ofgem’s target of 2.8.

The complaint metric reflects the percentage

of complaints resolved within 24 hours,

combined with the percentage of complaints

resolved within 31 days.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

People

The Company is one of the major employers in

the North West of England, employing

approximately 2,200 people in the region. We

also work with carefully selected local delivery

partners and the supply chain to deliver our

investment plan, providing even wider levels of

employment for the region. We are committed

to building careers for our people, providing

secure, long-term employment in an inclusive

environment where everyone feels a sense of

belonging.

The Climate Survey is the measure we use to

quantify ‘how it feels to work here’ and, in

turn, makes the link between this ‘feeling’ and

how we perform. Annual surveys are

undertaken to measure engagement and levels

of agreement with our identified climate

priorities.

Colleague engagement scores in our

November 2024 survey were the highest ever

recorded by the organisation, with an

engagement rate of 83.9%. This was our

second successive highest score and a

significant improvement on prior year (82.8%).

Our colleagues rated health and safety, pride

and customer focus highest.

Following our original Investors in People

certification in April 2022, we have continued

on our good to great journey to make

significant continuous improvements in how

we engage, lead and support our people and

are extremely proud to have recently been

awarded ‘Silver’ accreditation only 2 years on

from our initial review.

We are committed to being an employer of

choice, creating a great place to work and

influencing diversity and inclusion (“D&I”) in

the energy sector. Our D&I vision is to “create

a sense of belonging for our colleagues and

truly reflect the communities we serve”. This

vision is underpinned by four key areas of

strategic focus (belonging, talent, leadership

and community), supporting inclusion in

everything we do.

Included in our people strategy is a

commitment to attract, develop and retain the

best talent to support our business strategy.

We have a particular focus on increasing

gender and ethnicity diversity in the business,

so we are reflective of the communities we

serve and harness the many benefits of diverse

teams.

Despite industry challenges around attracting

more females into our business, our gender

pay gap of 11.9% is better than the UK average

(13.1%).

Our attempts to attract more women into our

Company is a challenge experienced by many

in our industry. A part of our strategy is to

attract diverse talent through our award-

winning apprenticeship scheme. We are

pleased to report that in 2024, we have the

highest number of females in our apprentice

cohort of 28% (2024: 22%) than previous years.

Our programme has a 90% pass rate and to

date 100% of successful apprentices have been

offered full time employment with us following

completion of the apprenticeship.

We continue to strive to increase applications

from women for all our roles, last year we held

our first ‘Women at ENWL’ careers event and

plan to host more in 2025.

We continue to enhance our employee value

proposition to support our attraction strategy;

In September 2024 we enhanced our family

friendly policies which provided a significant

increase in company benefits for primary and

secondary parents, including additional

support for neonatal care and those seeking

fertility treatment.

We have experienced good progress attracting

applicants from ethnic diverse backgrounds,

over 15% of our offers are to people from

ethnically marginalised backgrounds year to

date. Ethnicity representation in our Company

has increased from 4.1% (March 2021) to 6.7%

(December 2024).

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

People (continued)

Our colleague resource groups are maturing

with over 250 members across 9 groups. Our

colleague network groups play an instrumental

role in shaping our culture, and each group has

their own objectives and plans which are

aligned to our D&I strategy.

We have continued to build on our community

partnerships to build our brand awareness,

promote Science, Technology, Engineering and

Math (STEM) careers and ensure our job

opportunities are widely shared. We have

expanded our outreach into areas that are

difficult to recruit, for example Cumbria, and

are strengthening our presence at career and

STEM events in these areas.

We work with schools and colleges to inspire

younger generations into STEM careers. This

year we have facilitated work experience for an

all-girls school and are also running ‘Workplace

safaris’ in partnership with Greater

Manchester Combined authority. This

programme includes inviting a school to spend

half a day at our training academy where

students can learn more about who we are and

the great career opportunities available. We

ask schools who are participating to bring

along groups with at least 40% female

students.

We work with our supplier network to

champion diversity and inclusion. In addition

to including diversity and inclusion in our

procurement process, last year we facilitated a

round table event with our suppliers to

encourage inclusive action in our networks.

Our efforts to create a diverse and inclusive

workforce have been recognised by various

institutions. We have been awarded the

Bronze Inclusive Employers standard. We

continue to be a Gold Forces Friendly company

and are proud to be a Disability Confident

employer.

We have been an accredited Real Living Wage

Employer since 2019 and contract with our

supply chain to honour the real living wage

commitments for their people. We are also

proud to be a member of the Greater

Manchester Combined Authority Good

Employer Charter, and a founding partner of

the Utilities National Work Group on Modern

Slavery.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Corporate Social Responsibility

Our Responsibility Framework

Sometimes referred to as ESG (environment,

social, governance) or social contract, our

Responsible Business Framework (“the

Framework”) sets out our ambition for our

people and partners, our environment and our

communities.

Under the Framework we have a number of

goals which are important to our business, our

stakeholders and our colleagues. Each goal is

comprised of a series of commitments and

measures which are reported in our annual

Responsible Business Report.

The responsibility framework does not exist in

isolation. While it does not seek to include and

measure our core business and services as a

network operator, it does bring together a

number of the activities and strategies already

embedded and reported in our operations and

the business plan. In doing so it provides an

overarching indication of our activities as a

socially responsible business and how we

operate within our communities.

During the year, we have reviewed the

Framework and enhanced its alignment to the

United Nations Sustainable Development

Goals (“UNSDG”), continued to promote and

embed the Framework, and shared our

approach with our stakeholder advisory panel.

As we continue to drive forward areas of The

Framework we relaunched our primary and

secondary school education programmes.

Workshops are now available in schools across

the North West for primary and secondary

aged pupils linking national curriculum and

STEM topics (science, technology, engineering

and maths) such as circuits, important safety

messages and careers information. Our

programme creates a pathway to our skills and

recruitment programme and this September

we welcomed a further 40 apprentices

including operational engineers, design

engineers, civil engineer, mechanics, cyber

specialists and IT engineers. Since launching in

2017, more than 230 apprentices have been

trained and developed by ENWL.

We continue to make good progress with our

environmental actions, including reducing

carbon emissions and enhancing biodiversity.

In April, we completed the planting of 11,000

trees in Carlisle in partnership with

Raise:Cumbria Community Forest with work to

plant a further 10,000 trees also taking place

on additional sites during the spring 2025 tree

planting window. Our environmental action

plan, which forms part of our regulatory

business plan is on target to achieve our

business commitments for ED2.

Separately, in compliance with safety

requirements and agreed with the Health and

Safety Executive, our specialist vegetation

management teams are on target to remove

dangerous or high-risk vegetation which are in

proximity to our assets.

We continue to work with partners to support

customers in vulnerable circumstances

encourage eligible people to sign up to the

Extra Care register for additional support in the

event of a power-cut. This year we have

continued to support community and local

energy schemes across the North West with

our Powering our Communities Fund and

launched Take Charge a scheme to help those

in fuel poverty with debt advice and provide

support to those at risk of being left behind in

the energy transition.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Corporate Social Responsibility

(continued)

Stakeholder engagement

We are committed to stakeholder engagement

and recognise it is core to understanding our

region, supporting our communities and

meeting the requirements of our licence.

Our stakeholder engagement programme is

embedded in our business activities. We

reinforced the stakeholder advisory panel

structure for RIIO-ED2, enshrining the Ofgem

requirement for enduring customer and

stakeholder input in decision making. Our

stakeholder advisory panels, focusing on

regional business and domestic customers and

topics such as environment, along with the

Independent Oversight Panel have provided

expert insight into our business plan delivery

and reopener applications. Guidance from

Ofgem has provided greater clarity on the

stakeholder input and oversight required as we

start to develop the RII0-ED3 business plan and

the critical role that stakeholder engagement

will play in its development.

We now have six independently chaired panels

(Stakeholder Insight, Economic Growth,

Customers in Vulnerable Circumstances,

Environment and Sustainability, Distribution

System Operation (DSO) and Digital Futures),

which are all attended by a member of our

Executive Leadership Team. The panels meet

quarterly, are comprised of regional experts

and representatives of significant stakeholder

groups and provide a role as critical friend

helping to track progress against the business

plan commitments. Over 150 stakeholders

regularly give their time and experience to our

advisory panels.

The panel chairs come together in a quarterly

Independent Oversight Group (IOG), following

which, the independent chair meets with

ENWL’s CEO and Chair to raise any concerns

and opportunities directly. The IOG chair is also

a member of a wider group of independent

energy stakeholder group chairs, ensuring

national coordination.

Our annual regional stakeholder workshops

took place in November 2024 in Penrith,

Preston and Manchester. The collaboration

events aimed at local authorities and housing

associations, provided an opportunity to

explore how long-term capacity planning

aligned to local strategic economic plans and

the benefits of coordinated local area energy

planning. Additionally, there was an

opportunity to explore the connection process

and opportunities to improve the process

further.

Additional topic-specific stakeholder

engagement took place during FY25, including

events relating to the connections process,

community and local energy, net zero and

decarbonisation support, flexibility services

and DSO.

We have again undertaken an independent

stakeholder satisfaction survey to continue to

review and improve our performance. This

year we have continued to show increased

levels of overall satisfaction at 82% (2024:

79%). Nearly 180 participants responded with

a specific focus this year on expanding

participation among public sector groups. The

survey continued to indicate a strong

correlation between meaningful engagement

and frequency, and overall satisfaction, with

57% (2024: 49%) of stakeholders considering

themselves to be advocates for ENWL. Those

with dedicated contacts have the highest

satisfaction, highlighting the importance of

these relationships. Being time poor was the

biggest barrier to engagement and

stakeholders are looking for engagement to be

tailored to their needs. Stakeholder Advisory

Panel members continue to have the strongest

relationship with ENWL, confirming that the

new panel structure is working well. This

insight and information received on

stakeholder priorities and topics for

engagement will continue to feed into our

approach going forward.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Non-Financial and Sustainability

Information Statement

A description of the principal risks relating to

the following non-financial information is

contained elsewhere in the Strategic Report, as

indicated below:

• Environmental matters – see pages 14 to 16,

• Employees – see pages 19 and 20,

• Community issues and social matters – see

pages 21 and 22,

• Respect for human rights – see page 30,

• Anti-corruption and bribery matters – see

page 31.

Climate related disclosures

Introduction and overview

This is the Group’s second year of reporting in

respect of section 414CB of the Companies Act

2006. In the year to 31 March 2025 the Group

continued to make further progress in relation

to compliance with this reporting.

This statement includes the climate-related

financial disclosures for the Group. The Group

has a responsibility to provide a safe, reliable

and resilient electricity distribution network in

the North West of England; this activity

necessarily both impacts and is impacted by

the environment and climate change.

The Group has developed three focus areas for

its approach to climate change:

• Our Mitigation – reducing the Group’s

emissions to help reduce the scale of

climate change in the future;

• Customers’ Mitigation – helping the

Group’s customers to reduce their

emissions by providing infrastructure which

enables them to be part of the net zero

economy; and

• Adaptation – ensuring the Group’s network

continues to perform effectively and

efficiently as climate changes.

In this second year of reporting, the main focus

has been on the adaptation of the network, but

where mitigation measures are being taken,

those have also been referred to. The Group

plans to expand the reporting in relation to

mitigation measures in future versions of this

statement.

The Group reports under Defra’s Climate

Change Adaptation Reporting requirements

established by the Climate Change Act 2008,

submitting reports in 2011, 2015, 2021 and

2024 as required; these reports are available on

our website. In preparing these reports, the

Group was part of an Energy Networks

Association (ENA) working group that

developed an industry wide report on the

threats to networks from climate change and

the associated industry responses, with input

from experts from the Met Office and academia.

The working group identified 15 risks, all

relating to changing weather patterns and

temperatures. We have assessed these risks to

identify which are relevant to our distribution

area and have used these as the basis for the

climate-related elements of our risk registers

(see the Risk Management section below). Full

reports are available on the website:

https://www.enwl.co.uk/future-

energy/distribution-system-operation

The climate-related risks and opportunities

facing the Group are summarised in two

published documents, the ’Climate Change

Adaptation Report’ (as referenced above) and

the ‘Climate Resilience Strategy’. Both

documents were developed through a

consultative process, bringing together expert

knowledge from within the Group and insights

from stakeholders, industry peers, climate

experts and academia. We are committed to

updating these reports as our understanding of

climate-related risks and resilience continues

to develop.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Non-Financial and Sustainability

Information Statement (continued)

In the year of reporting, the Group secured

funding for additional adaptation measures in

the form of the RIIO-ED2 Storm Arwen re-

opener application. Storm events are

identified as the highest risks in the Climate

Change Adaptation reports and Ofgem

awarded the Group an additional £40m of

funding for a package of network resilience-

related measures in December 2024.

The Group continues to be committed to the

development of our network to enable

customers to adopt low carbon technologies as

set out in our business plan for the RIIO-ED2

period titled ‘Our Plan to Lead the North West

to Net Zero: 2023-2028’.

Governance

This section describes the governance

arrangements of the Group in relation to

assessing and managing climate-related risks

and opportunities, in accordance with s414CB

(a) of the Companies Act 2006.

ENWL’s Board has overall responsibility for the

alignment of strategy and risk in all areas,

including climate-related matters. During the

year the Board has delegated oversight of

matters relating to risk to the Audit and

Compliance Committee (see pages 59 to 62),

and matters relating to environmental strategy

to the Safety, Health and Environment

Committee (see page 66).

The Chief Executive Officer and Executive

Leadership Team (ELT) also have

responsibilities in relation to strategy and risk.

More information on the governance of risk

can be found on pages 43 to 50 of the Risk

Management section.

Once potential projects to improve the

resilience of the network or facilitate growth in

the use of low carbon technologies have been

identified, they are subject to a well-defined

and documented approval process, including a

Company Investment Committee (CIC) chaired

by the Chief Financial Officer.

All investment decisions, whether directly

climate-related or not, go through this process

and the potential climate impact of each

project is reviewed as part of the assessment.

The Group is also subject to scrutiny from the

regulator, Ofgem, with a range of conditions

under the Electricity Distribution Licence that

are required to be met.

Risk Management

This section describes how the Group

identifies, assesses and manages climate-

related risks and opportunities, including how

those processes are integrated into the overall

risk management process, in accordance with

s414CB (b) and (c) of the Companies Act 2006.

The Group maintains directorate level risk

registers and a corporate level risk register.

These registers are reviewed quarterly, with

any risks assessed as requiring management by

ELT moved from the directorate level registers

to the corporate level register. More

information on the corporate risk register and

the risk management framework can be found

on pages 43 to 50 of the Risk Management

section. The identification, management and

assessment of climate-related risks are fully

integrated into this process.

Once identified, climate-related risks are

assessed with reference to a range of weather

scenarios and the specifications of the assets

on our network to identify areas of particular

risk.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Non-Financial and Sustainability Information Statement (continued)

Climate-related risks and opportunities

This section provides a description of the principal climate-related risks and opportunities arising in

connection with the Group’s operations, along with the time periods against which they have been

assessed, in accordance with s414CB (d) and (e) of the Companies Act 2006.

As referred to above, in this second year of reporting, the main focus has been on the adaptation of

the network to ensure it continues to perform effectively and efficiently as climate changes. If we fail

to address these risks, the consequence could be increasingly frequent and prolonged interruptions

to supply.

Physical Risk: Increased frequency of extreme weather events and changing long-term climate trends

Time horizon: short (less than 5 years) to long-term (10+ years)

Likelihood: High

Potential Impact

Response/ mitigation

Storm: impact – high, residual risk - medium

The Group has already been affected by the

increasing frequency and severity of severe

weather events resulting from climate

change. In the year-ended 31 March 2025,

there were seven named storms each of

which resulted in damage to the network

and interruption of supply for customers.

Flood: impact – high, residual risk - low

Storms have caused flooding in our

substations and wind damage to our

network, either directly or by blowing trees,

branches or other debris into our overhead

lines.

Vegetation: impact – medium, residual risk -

low

In addition to the increased prevalence of

storms, the Group has identified the

increased rate of vegetation growth as a risk

to the performance of the network.

High Temp: impact – low, residual risk - low

The Group has not identified a credible

scenario where high temperatures would

stop the network performing.

Our strategy includes an action plan with the aim of

increasing the resilience of the network. The action

plan is reviewed each year by our Environment and

Sustainability Advisory Panel, a stakeholder led group.

We included resilience funding in our RIIO-ED2

submission to support this action plan.

As the flooding risk is viewed as immediate, we have

implemented a programme to protect all our major

substations against 1-in-100 year flood risk, with the

largest sites protected to 1-in-1000 year risk in line with

national guidance. In the year ended 31 March 2025

we completed flood mitigation works at 11 major sites

against a planned programme of 31 in the RIIO-ED2

period. This will ensure full compliance against the

industry flood protection specification. We are

confident in completing this programme of work by

2028.

We anticipate that whilst the performance of some of

our assets will deteriorate as the climate changes, this

will be gradual and managed as part of our network

investment programme. In assessing the risks to the

network, we have used a range of UKCP09 and UKCP18

climate projections that look to the end of the century

to assess the replacement and refurbishment

requirements for the assets on our network.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Non-Financial and Sustainability Information Statement (continued)

Transition Risk: net zero transition and the uncertainty in the extent of electricity demand growth

Time horizon: medium (5-10 years) to long term (10+ years)

Likelihood: Moderate

Potential Impact

Response/ mitigation

There is a risk of not meeting the

accelerated demand on the network

resulting from the uptake of low carbon

technologies driven by the political agenda

and the unpredictability of consumer

behaviour.

If the Group underestimates demand, there

is a risk that the distribution network may

not be sufficiently upgraded to deliver the

net zero targets set by the government. In

the opposite scenario where demand is

overestimated there may be a risk of

surplus assets being built at a cost to the

consumer where those assets may have low

utilisation.

Innovation is key to the success of our organisation and

is where novel techniques and potential solutions,

whether they be technological or commercial, are

analysed, developed, trialled and ultimately

transformed into practical solutions to deliver a better,

zero carbon service for our customers; improve

network performance and safety; and deliver ever

more efficient ways of working.

At the core of our innovation strategy is delivering

value to customers through maximising the use of

existing assets and offering new services and choice for

the future. We are generating value for customers now

by deploying proven technology providing innovative

solutions to real problems.

Transition Opportunity: Increased demand for electricity in response to decarbonisation will open

new markets and will create opportunities to invest in the network.

Time horizon: short (less than 5 years) to long term (10+ years)

Likelihood: High

Potential Impact

Response/ mitigation

Growth in electricity demand to support the

net zero plans for the local and national

economy will create opportunities for the

Group to invest further in the existing

network, to upgrade its assets and to

explore new markets. Investment in the

network will increase the Regulated Asset

Value (RAV), allowing us to earn higher

returns under the regulatory framework.

In January 2025, we made an application to Ofgem for

an additional £266.4m of allowances under the

provisions of the Load-Related re-Opener, specifically

to address network changes required to satisfy

anticipated demand requirements associated with the

net zero transition.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Non-Financial and Sustainability

Information Statement (continued)

Business model and strategy

This section outlines the resilience of the

Company’s business model and strategy,

taking into consideration different climate-

related scenarios, in accordance with s414CB

(f) of the Companies Act 2006.

The Company has published its ‘Climate

Resilience Strategy’ (see the Introduction and

overview section above). This strategy

includes an action plan aimed at increasing the

resilience of the network and is reviewed

annually. The RIIO-ED2 submission included an

element for resilience funding to support this

action plan.

An assessment of the resilience of the strategy

has been undertaken using a range of

scenarios. The scenarios used for electricity

and gas risk data is based on the Met Office’s

predicted 4°C degree scenario which is

suggested to occur by close of the current

century if global emissions continue unabated

at their current rate. We have not identified

any credible scenario that would force us to

change our business model or our strategy.

We do not expect climate change to have a

significant impact on our business model, as

the regulated electricity distribution network

operator in the North West of England.

Metrics and targets

This section refers to the targets and key

performance indicators (KPIs) used by the

Company to manage climate-related risks and

to realise climate-related opportunities, in

accordance with s414CB (g) and (h) of the

Companies Act 2006.

In order to support the net zero transition of

the UK economy by 2050 at an affordable cost

we expect a number of targets to be achieved

in term of innovation and investment in the

network to increase capacity.

Environmental protection continues to be one

of our core values, and we remain committed

to achieving the highest possible standards of

environmental performance. The year ended

31 March 2025 saw an improvement on our

carbon emission reduction trajectory aligned

to our verified Science-based target

commitment based on the equivalent for prior

year (see page 15), due to various carbon

reduction activities undertaken by the Group.

Actions to reduce our carbon footprint will

continue to be implemented to continue the

carbon reduction trajectory of recent years

(see page 15).

We minimise emissions by monitoring our

carbon emission footprint (refer to pages 15

and 16 for more detail) and oil loss, and are

investing to remove potentially damaging

equipment, and to enhance the environment

by undergrounding overhead cables.

Further information on the environmental

performance can be found on page 14.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Section 172 Statement

Introduction

Throughout this Annual Report, we illustrate

how the Board recognises the broader context

in which the Company operates, including the

consideration of: the long-term consequences

of decisions, the interests of our employees,

fostering strong relationships with customers

and other stakeholders, the impact of our

activities on our communities and

environment, maintaining a reputation for

high standards of business and the need to act

fairly as between our shareholders.

This Statement provides specific examples of

how the Company approaches these wider

considerations in its decision making.

Statement by the directors in performance of

their statutory duties in accordance with s172

Companies Act 2006

The Board of Directors consider, both

individually and together, that they have acted

in a way they consider in good faith would be

most likely to promote the success of the

Company for the benefit of its members as a

whole (having regard to the stakeholders and

matters set out in s172(1)(a-f) of the

Companies Act 2006) in decisions taken during

the year ended 31 March 2025.

Long term decision-making

Our business is about the long-term, to create

the right electricity infrastructure for the world

of tomorrow. We are very aware that what we

do now will have an impact in the future. Given

that context, we pick out some examples of

how that longer term thinking has influenced

our decision making.

The RIIO-ED2 price control period

The Board played a key role in the

development of our RIIO-ED2 business plan

and have supported and monitored its delivery

during the first two years of the period,

recognising the crucial importance of

delivering against targets to allow the business

to meet its ambitious plans, up to 2028 and

beyond.

At all times, the Board look to balance the

needs of all its stakeholders and recognised the

Company’s role in enabling the significant

changes required by long-term goals such as

net zero.

Supply chain continuity

Like all businesses, we continue to feel the

impact of pressures on our supply chains and

resources caused by global events such as the

war in Ukraine. In response, we have ensured

that we take the necessary actions and

maintain sufficient stock to mitigate these

challenges. Whilst this can increase related

costs and can accelerate the timing of incurring

those costs, these decisions have meant that

we have been able to continue to undertake

our operations and investment programmes

without disruption.

Our people

As directors, we are always aware of the

importance and efforts of our people. We

consider them in everything we do. This is

discussed further in the People section of the

Strategic Report on pages 19 to 20.

Safety

The safety of our people and the public is our

highest priority. We continually monitor safety

performance and safety culture, including

through a tailored set of performance

measures and via regular engagement on

safety with our people through colleague

surveys.

Diversity and inclusion

As explained in more detail in the People

section of the Strategic Report on pages 19 to

20, we are constantly striving to ensure that we

create a sense of belonging for our colleagues

and truly reflect the communities we serve

through our diversity and inclusion strategy.

The Board regularly discusses the progress of

our strategy and initiatives in this area.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Section 172 Statement (continued)

Employee engagement

We are proud to maintain Investors in People

certification, recognising our efforts to

becoming an employer of choice in the North

West. We continue to work with Investors in

People (“IIP”) to seek opportunities to

continually improve our colleagues’

experiences of working at ENWL, and we were

awarded silver status as an IIP company in

September 2024.

Annual colleague climate surveys are

undertaken to measure engagement and levels

of agreement with the Company’s identified

climate priorities. The results from the survey

and management approach to improving the

climate are outlined in the People section of

the Strategic Report on pages 19 to 20.

We recognise the value that trade unions bring

to our organisation and work closely with them

on key issues. This supplements wider

engagement activities that we undertake to

involve and inform colleagues in what is

happening across the organisation.

Future skills

We recognise the importance of investing in

our people to ensure that we develop existing

and future skills, behaviours and capabilities

across the organisation. Information on

training courses delivered in the year is

included in the Strategic Report on page 30.

Customer service focus

Delivering excellent customer service is part of

our ‘licence to operate’ and an area that the

Board monitors closely to ensure our service

levels continuously improve. Providing

additional support to electricity users in

vulnerable circumstances and fuel poverty is

core to our customer strategy.

Further information on Customers is contained

on page 18 of the Strategic Report.

Stakeholder relationships

Our relationships with stakeholders are

discussed extensively throughout this Annual

Report with more detailed information in the

Corporate and Social Responsibility section of

the Strategic Report on pages 21 to 22.

Shareholders

As highlighted in our Corporate Governance

Report (see pages 51 to 66), our business

benefits from the involvement of our

shareholders; not least, due to their

representation on the Board and through the

workshops and other meetings in which they

participate.

Impact of our operations

Our Purpose “Together we have the energy to

transform our communities” reflects the

essential role we play in the North West and in

the lives of our customers, acknowledging how

our role is changing alongside our customers’

needs.

Throughout the Annual Report, we discuss the

impact of our operations on our wider

communities, in particular by supporting

customers in vulnerable circumstances.

Leading the transition to net zero

The net zero transition will result in very

significant increases in network demand. As

the region’s electricity network operator, we

have a vital role to play, providing the capacity

to allow customers to adopt low carbon

technologies, at a price that is affordable.

Further information, including approach to the

decarbonisation of our own operations is

discussed in the Environment section of the

Strategic Report on pages 14 to 16.

The Board is very aware of its stewardship role

and the importance of protecting the North

West’s natural environment. We have put

these considerations at the heart of our

delivery plans for the RIIO-ED2 period and

beyond. Further information is contained in

our Corporate and Social Responsibility

statement on pages 21 to 22.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Section 172 Statement (continued)

Ethical business conduct

We expect the highest standards of conduct in

our business. This extends beyond our

Company and its people to all organisations

who work with us. During the year, the Audit

and Risk Committee in particular has overseen

the implementation of a number of new

policies and monitored ongoing compliance

with relevant legal and regulatory

requirements.

Supplier Compliance

As a business, we recognise that our customers

expect us to check the credentials of the

suppliers who work on our behalf. This is not

just about confirming that we select the right

contractors to do a given job, it is also about

making sure that the people employed by

them have completed the necessary checks to

work with us and our customers. We are now

working under a refreshed supplier vetting

processes and ongoing compliance

procedures.

Further information, including our Speak Up

policy and procedures and Code of Conduct are

discussed in the Anti-corruption and anti-

bribery section of the Strategic Report on page

31.

Workforce composition and gender diversity

Information on the composition of the

workforce at the year end is summarised

below:

Turnover

2025 – 167 leavers (2024: 163 leavers)

Training courses delivered

2025 – 1,597 (2024: 1,171)

Training course attendee sessions

2025 – 33,558

(2024: 19,132)

These figures include e-learning courses,

operational and non-operational training.

Workforce

(Male/ Female)

2025

Number

2024

Number

Total employees

1,670/ 564

(75%/25%)

1,602/ 541

(75%/25%)

Senior managers

36/ 11

(77%/23%)

32/ 14

(70%/30%)

Executive leadership

team

6/ 2

(75%/25%)

6/ 2

(75%/25%)

Non-Executive

Directors

6/0

(100%/0%)

7/ 2

(78%/22%)

The Executive leadership team figure includes two

Executive directors.

Respect for Human Rights

The Group operates exclusively in the UK and,

as such, is subject to the European Convention

on Human Rights, the UK Human Rights Act

1998 and the Modern Slavery Act 2015. The

Group seeks to anticipate, prevent and mitigate

any potential negative human rights impacts as

well as enhance positive impacts through

policies and procedures regarding employment,

equality and diversity, treating customers fairly

and information security.

The Group is a founding partner of the Utilities

National Work Group on Modern Slavery and

we achieved our Forces Friendly Gold award this

year. The Modern Slavery Act Compliance

Statement is available on the website:

www.enwl.co.uk/misc/modern-slavery-act-

compliance-statement.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Section 172 Statement (continued)

Anti-corruption and anti-bribery

We are proud of our strong commitment to

high ethical standards in the way we work. We

take a zero-tolerance approach to bribery and

corruption, and are committed to acting

professionally, fairly and with integrity in all

business dealings and relationships wherever

we operate, implementing and enforcing

effective systems to counter bribery. It is

important our regulators and stakeholders

have absolute confidence in the arrangements

and integrity of the organisation.

The Company operates a number of policies

governing anti-bribery and anti-corruption

matters: Anti-Corruption and Bribery Policy,

Corporate Hospitality & Gifts Policy and

Conflict of Interest Policy. We have a revised

‘Ethics in our Business’ document in place. This

includes our Ethical Framework, setting out

our expectations for all those working with us,

and a decision-making tool to assist colleagues

if faced with an ethical dilemma.

Alongside this, we have recently launched an

updated Speak Up (Whistleblowing) policy,

providing colleagues with a number of

channels to raise and escalate any concerns

they may have. An e-learning package was also

made available for all colleagues during the

year to increase understanding and awareness

of these important policies.

To support our Speak Up policy, we have in

place a confidential independent reporting

line, provided by Safecall.

We conduct regular Competition Law training

sessions for our colleagues. The completion of

these sessions is meticulously monitored to

ensure that our colleagues remain fully aware

of the latest legal requirements and adhere to

the highest standards of compliance.

All of our corporate ethics policies apply to all

employees and officers of ENWL and form part

of our Code of Conduct. Other individuals

performing functions for the Company, such as

temporary workers and contractors, are also

required to adhere to our policies.

Environment

Environmental protection continues to be one

of our core values, and we remain committed

to achieving the highest possible standards of

environmental performance. The year ended

31 March 2025 saw a reduction in our carbon

emissions, based on our Science-based target

trajectory to 2035 (see page 15). This decrease

was achieved through continued improvement

in building energy efficiency improvements

and through a more maturely developed

decarbonisation strategy. Actions to reduce

our carbon footprint will continue to be

implemented to continue the carbon reduction

trajectory of recent years (see page 26).

We minimise emissions and oil loss, and are

investing to remove potentially damaging

equipment, and to enhance the environment

by undergrounding overhead cables.

Further information on the environmental

performance can be found on page 14.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Key Performance Indicators

KPI

Definition and comment

Performance

Safety

Lost time

incident

frequency

rate

Definition: The total number of reportable

incidents in the year divided by the number of

hours worked in that year (by employees and

contractors), multiplied by 100,000 hours.

Performance: Reflecting the increased focus on

safety, the Company saw a reduction in lost time

incidents in the year. There was one lost time

incidents in the year, with the corresponding lost

time incident frequency rate of 0.011 (2024: 0.023).

0.011

Customer

Overall

customer

satisfaction

Definition: The overall customer satisfaction score

is a composite score from Ofgem surveys that

assesses levels of customer satisfaction for

connections quotations and delivery, interruptions

and general enquiries.

Performance: Overall satisfaction increased to

92.9% for the year, up from 92.0% in the prior year.

The score for the year was the highest in six years,

and reflecting the ongoing focus on improvements

to customer service.

92.9%

Reliability

Customer

interrup-

tions (CIs)

Definition: CIs represent the number of

interruptions our customers experience. It is

calculated by taking the total number of customers

affected divided by the total number of customers

connected to the network, multiplied by 100. It

excludes interruptions during exceptional events,

although there were none of these in the year.

Performance: The result of 26.1 for the year

outperforms the Ofgem target of 29.74 and

represents the Company’s second best ever

performance.

26.1 CIs

Customer

minutes lost

(CMLs)

Definition: CMLs represent the time customers are

without power in the event of an interruption. It is

calculated by taking the sum of the customer

minutes lost for all restoration stages for all

incidents, excluding exceptional events, and

dividing by the number of connected customers.

Performance: The result of 27.1 for the year is

adverse to the Ofgem target of 26.87 due to higher

than normal volume of weather-related faults and

the increase of planned supply interruption due to

capital investment growing.

27.1CMLs

The year ended 31 March 2025 figure is yet to be audited by Ofgem.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Key Performance Indicators (continued)

KPI

Definition and comment

Performance

People

Colleague

engagement

Definition: Colleague engagement is measured

via an employee survey which, through a series

of questions, provides details of overall

colleague engagement and how colleagues feel

about the ‘working climate’.

Performance: Overall colleague engagement

achieved an agreement score of 83.9% for the

year, a 1.1% increase from 82.8% last year, and

the highest in the last five years.

83.9% Agreement score

Sustainability

Carbon

footprint

(excluding

electrical

losses)

Definition: Carbon footprint measures the

impact of our operations on the environment

and is calculated in line with Ofgem guidance.

The calculation excludes electrical losses arising

from the operation of the network which cannot

be directly controlled or accurately measured.

Performance: To support the SBTi commitments

carbon footprint calculation methodology has

been changed leading to the nominal increase of

3,883 tCO2e on FY24. The Business Carbon

Footprint uplift SBTi equivalent for prior year

would have been 18,428 tCO2e, resulting in a 3%

reduction year on year.

17,882 tCO

Cost efficiency

Total

Expenditure

(Totex)

Definition: Totex is a key financial measure for

the business. It is a regulatory abbreviation

which stands for total expenditure. It includes

the money we spend on running our business

day-to-day, and the amount we invest in new

assets through our network investment

programme. We aim to deliver efficiencies in

Totex which we share with our customers and

which reduces customers’ bills.

Performance: Totex for the year ending 31

March 2025 was £449.5m compared to an

equivalent Ofgem allowance of £454.4m in

outturn prices largely due to phasing of planned

network investment programmes. Expenditure

was higher than the previous year due to

increased operational and support costs and

higher investment in operational assets.

£449.5m

Totex is calculated on a regulatory basis and reported to Ofgem annually on 31 July. For management reporting purposes an approximate

calculation of Totex is prepared to track performance. The final regulatory Totex figure may differ from this approximation when detailed

cost allocations are performed. The numbers for earlier years have been updated to reflect the annual submission to Ofgem.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Key Performance Indicators (continued)

KPI

Definition and comment

Performance

Financial KPIs

Revenue

(excluding

collection of

Supplier of

Last Resort

(SoLR levies)

Definition: Revenue is determined by Ofgem to allow

recovery of efficient costs to maintain and improve

the network, as determined as part of the price

control process. Actual revenue can vary as demand

over the network varies against forecast. Additional

revenue is generated through charges for new

connections, along with incentive revenues earned

for delivering improved performance.

As a result of SoLR claims approved by Ofgem, our

allowed revenue for the year ended 31 March 2025

was £0.8m (2024: £22.0m) higher than it would

otherwise have been, with the collection of this levy,

which is immediately paid to suppliers. Revenue in

the KPI table has been presented excluding the value

of SoLR levies collected.

Performance: Revenues have increased from the

prior year, primarily due to increases in Distribution

Use of System (DUoS) revenue. This reflects inflation

and other adjustments to allowed revenue including

the impact from incentive revenues previously

earned. The revenue over recovery for the year was

£26.5m (2024: £43.8m under recovery) compared to

allowed revenues, with the over recovery reflecting

variability against forecast consumption volumes.

This will be corrected through adjustments in pricing

in future periods.

£653.6m

Profit before

tax and fair

value

movements

(“PBTFV”)

Definition: The PBTFV of £206.8m is the profit before

tax of £248.4m (2024: £161.8m) after deducting the

£41.6m fair value gain (2024: £102.3m), per Note 9.

Performance: PBTFV has increased to £206.8m

(2024: £59.5m), mainly a result of the savings on the

accretion paid on index-linked swaps in prior year

(see Note 9) and an increase in revenue. PBTFV

excludes the significant capital investment that we

make in the network each year. Financial

performance is better understood through

comparing Totex with adjusted allowances.

£206.8m

Capital

expenditure

Definition: This represents investment in the

network to maintain its reliability and resilience for

future customers. The figure includes total additions

to property, plant and equipment and software.

Performance: We continue to invest to improve the

capacity and reliability of the network. Investment

increased this year as a number of major investment

programmes were completed.

£374.0m

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Key Performance Indicators (continued)

KPI

Definition and comment

Performance

Financial KPIs

RAV gearing

Definition: Regulated Asset Value (RAV) gearing is

measured as borrowings at nominal value, plus

inflation-linked debt accretion where applicable,

net of cash and short-term deposits divided by the

estimated RAV of £2,873.9m at March 2025

(2024: £2,684.6m), using the definition in our

Financing Agreements.

Performance: The RAV gearing is in line with

target and under the Ofgem guided level of 65%.

54.8%

Net debt

Definition: Net debt includes the total

borrowings, net of cash and cash equivalents and

money market deposits, as per Note 34.

Performance: The £53.5m increase in net debt

was primarily due to the combined effect of net

cash outflows of £47.8m and the indexation of

index-linked debt of £9.6m. (See page 37)

£1,433.7m

Interest

cover

Definition: Interest cover is the number of times

the net interest expense, adjusted for indexation

and capitalisation of borrowing costs, is covered

by operating profit from continuing operations, as

defined by the Financing Agreements.

Performance: Interest cover has remained at the

same level as in prior year due to the comparable

increase in both operating profit and in the

interest expense.

4.5 times

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Financial Performance

Overall performance reporting

Revenue is derived through the allowed

revenue set for the regulatory period, adjusted

for a number of factors including under/over

recovery of revenue in earlier years,

movements in inflation and performance

incentives earned. Under the RIIO framework,

revenue is the cash funding mechanism for the

business, including current investment

requirements as well as the repayment of past

investments, rather than the simple

recognition of income resulting from activities

that financial statements usually reflect.

Consequently, operating profit presented in

these financial statements represents the

combination of revenue that is only partly

related to actual activity during the year, less

those operating costs actually incurred, but

excluding capital expenditure.

Whilst the statutory measure that is most

closely aligned to the return to shareholders is

cash flow before financing activities, this has a

limited correlation to actual economic returns,

as a result of the factors noted above.

Financial reporting measures

Revenue

Revenue has increased by £56.3m, to £654.4m

(2024: £598.1m). Predominantly all revenue is

Distribution Use of System (DUoS) revenue,

which has increased due to the increase in

demand, inflation and allowed revenue

adjustments relating to the under recovery of

revenue in previous years.

The allowed revenue set by Ofgem is

recovered against an estimated level of

electricity demand across the network. Given

the difficulty of predicting this demand, there

is either an over or an under recovery against

planned revenue each year. In the year, there

was an over recovery of £26.5m (2024: £43.8m

under recovery), reflecting variability against

forecast consumption volumes. This over

recovery is reflected in the reported revenue

for the year and will be corrected through

adjustments to revenue to be received in two

years’ time, in accordance with Ofgem’s price

setting mechanism.

As a result of SoLR claims approved by Ofgem,

revenue was £0.8m higher (2024: £22.0m)

than it would otherwise have been. For more

information, see Note 4.

Profit before tax and fair value movements

Profit before tax and fair value movements,

comprised of profit before income tax of

£248.4m (2024: £161.8m profit) less fair value

gains of £41.6m (2024: £102.3m gains) (Note

9), has increased to £206.8m (2024: £59.5m),

£147.3m higher than prior year. This is mainly

due to the £56.3m higher revenue and the

£87.0m accretion payment in prior year, with

no accretion paid in the current year.

Accretion payments do not occur each year,

with the next due in July 2027; see Note 9 for

more details.

Profit before tax and fair value movements

provides a closer indication of underlying

performance due to the exclusion of the fair

value movements on derivatives, which do not

directly relate to the operations of the

business.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Financial Performance (continued)

Taxation

Corporation tax is calculated at 25% (2024:

25%) of the estimated assessable profit for the

year.

Deferred tax is calculated using the rate at

which timing differences are expected to

reverse. Accordingly, the deferred tax has

been calculated on the basis that they will

reverse in future at the 25% (2024: 25%) rate.

The overall taxation charge for the year has

increased by £20.2m to £61.9m (2024:

£41.7m).

Property, plant and equipment and software

The Group’s business is asset intensive. The

Group allocates significant financial resources

to the renewal of its network in order to

maintain services, improve reliability and

customer service, and to meet the changing

demands of the UK energy sector.

The total original cost of the Group’s property,

plant and equipment at 31 March 2025 was

£6,499.1m (2024: £6,147.5m), with a net book

value of £4,004.8m (2024: £3,785.8m). In the

year ended 31 March 2025, the Group invested

£361.8m (2024: £279.8m) in property, plant

and equipment in a large number of projects to

reinforce and improve the network (Note 11).

The Group also invested £15.2m (2024:

£11.1m) in IT systems (Note 13).

New investment is financed through a

combination of operating cash flows and debt

funding.

Cash flow before financing activities

Net cash outflow before financing activities

was £22.2m (2024: £255.8m inflow), a

difference of £278.0m. A significant element

of this difference relates to the movements on

money market deposits greater than three

months; £305.7m was returned to cash in the

prior year, with no movements in the current

year. The remaining £27.7m is a result of the

higher capital investment spend, net of the

higher inflows from operating activities,

primarily driven by the increase in revenue.

Net debt

Net debt was £1,433.7m (2024: £1,380.2m)

(Note 34). The £53.5m increase was primarily

due to the combined effect of net cash

outflows affecting net debt of £47.8m and the

indexation of index-linked debt of £9.6m.

Included in the total borrowings figure of

£1,565.8m (2024: £1,570.0m) are inter-

company loans totalling £833.4m (2024:

£831.7m), with maturity dates ranging from

March 2028 to November 2032.

Of the external debt, the following amounts

are due to be repaid in the next 12 months:

£456.4m (2024: £nil) in relation to the £250m

and £200m 8.875% 2026 bonds, £9.4m (2024:

£9.1m) under the European Investment Bank

(EIB) loans, and £2.0m (2024: £1.8m) of lease

liabilities.

All other borrowings are repayable after more

than one year and include bonds with long-

term maturities of £201.2m (2024: £656.9m),

bank loans of £59.7m (2024: £67.4m) and lease

liabilities of £3.7m (2024: £3.1m).

Note 19 provides more details on the

borrowings.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Financial Performance (continued)

Treasury policy and operations

During the year the Group’s treasury function

operated under Board-approved policies

without acting as a profit centre or engaging in

speculative trading activities. Its primary

objectives are to secure adequate funding in

accordance with the treasury policy and

maintain targeted headroom on key financial

ratios.

Long-term borrowings are mainly at fixed rates

that provide certainty of future cash flows or

are indexed to inflation (RPI) to match the

inflation-linked accretion to the Regulatory

Asset Value (RAV) (Ofgem have now changed

this to a Consumer Price Index including owner

occupiers’ housing costs (CPIH) basis). The

Group also holds a floating rate debt facility.

Derivative instruments are used to convert a

portion of the fixed rates to RPI-linked cash

flows, in order to better match the Ofgem debt

allowance structure (noting that Ofgem have

now changed this to a CPIH basis).

The proportion of post-hedging borrowings at

fixed, floating and index-linked rates of

interest is maintained in line with target levels

set in the Treasury Policy and is monitored by

the Board.

Cash flows are in sterling, other than sundry

purchases of plant denominated in foreign

currencies and some assets of the defined

benefit pension scheme managed by the

pension scheme investment managers. The

Group has no material exposure to foreign

currency exchange movements.

Liquidity

The Group’s funding position continues to be

strong, through focussed management of

liquidity and working capital. Budgets for the

year ending 31 March 2026, forecasts to the

end of the current regulatory period in 2028

and longer-term forecasts to 2058 are used to

assess the liquidity needs of the Group.

These forecasts demonstrate the availability of

sufficient liquidity, and headroom against all

financial compliance ratios.

Short-term liquidity requirements are met

from operating cash flows, cash balances,

short-term deposits and committed undrawn

borrowing facilities. Utilisation of undrawn

facilities is with reference to RAV gearing

restrictions; actual and forecast RAV gearing is

monitored by the Board. At 31 March 2025,

cash balances were £132.1m (2024: £189.8m)

and unutilised committed facilities were

£250.0m (2024: £50.0m), comprised of a

revolving credit facility (RCF) expiring in April

2027.

Where a liquidity need cannot be met from

existing resources, for example refinancing

existing debt or demand for additional

borrowing, the Group’s treasury function

starts the process of raising new debt at least

12 months ahead of the requirement. The

Group’s long-term debt has a range of

maturities to avoid a concentration of

refinancing risk. In the next 12 months, the

£250m and £200m 8.875% 2026 bonds are due

to mature, in March 2026. At the date these

financial statements were approved, the

intention was to refinance these using the

financial support pledged by Scottish Power UK

plc (see below). There are no further re-

financing obligations due in the next 12

months.

On 16 June 2025 Scottish Power UK plc

provided North West Electricity Networks

(Jersey) Limited (“NWEN (Jersey)”) with a

letter of support detailing the financial support

it has committed to the group headed by

NWEN (Jersey). An amount of £500.0m is

available and can be utilised by NWEN (Jersey)

and any of its subsidiaries, including the

Company. This commitment will remain in

place until the earlier of the NWEN (Jersey)

group securing alternative financing, or 12

months from the date of approval of these

financial statements, and will incur a charge of

20 basis points per annum whilst in place.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Financial Performance (continued)

Credit rating agencies

The Group issues debt in the public bond

markets and maintains credit ratings with

leading credit rating agencies, which were

formally reviewed and affirmed.

At 31 March 2025, ENWL was rated BBB+ with

stable outlook by Standard and Poor’s (“S&P”),

Baa1 with stable outlook by Moody’s Investors

Service (“Moody’s”) and BBB+ with stable

outlook by Fitch Ratings (“Fitch”).

The short-term debt ratings were A-2 and F2

with S&P and Fitch respectively.

Further details are available to credit investors

in the Financial Investor Relations section of

the Company’s website www.enwl.co.uk.

Derivatives

The Group uses two main groups of derivatives

to economically hedge exposure to

fluctuations in market rates over the medium

to long-term; interest rates swaps to manage

interest rate risk and inflation swaps to convert

fixed rate debt to index-linked borrowing in

order to better match the Ofgem debt

allowance methodology. All derivatives relate

directly to underlying debt. At 31 March 2024

and 2025 there were no formal hedge

accounting relationships in the Group.

Fair values

The derivatives are accounted for at fair value

through profit or loss. The unrealised fair value

movements are non-cash and will reverse over

the life of the derivative but can be significant

and result in material volatility in profit or loss.

In the current year, net fair value gains of

£41.6m have been recognised (2024: gains of

£102.3m), with the prior year being notably

higher primarily due to the fair value gain

associated with the £87.0m accretion payment

and no accretion payments in the current year

(Note 9). The fair value movements reflect

scheduled payments, volatility in the markets,

in particular, in expectations of future interest

and inflation rates.

Defined benefit pension

At 31 March 2025, the Group’s defined benefit

pension scheme had a net surplus, calculated

under IAS19 Employee Benefits, of £56.1m

(2024: £39.0m), resulting in a re-measurement

gain of £14.1m (2024: loss of £6.8m) booked

directly to other comprehensive income. The

increase in the surplus is mainly due to a

reduction in the defined benefit obligation.

This reduction was driven by favourable

market movements, including higher discount

rates and lower long-term inflation, and

changes in demographic assumptions,

particularly mortality improvements.

The most recent triennial funding valuation of

the scheme was carried out as at 31 March

2022 and identified a shortfall of £19.4m

against the Pension Trustee Board’s statutory

funding objective. A subsequent triennial

valuation as at 31 March 2025 is currently

underway; however, the process remains at an

early stage, and preliminary results are not

anticipated until the second half of 2025. In

addition to the timing of the two valuations,

the contributions made in the period and the

return on assets, the main difference is due to

the different assumptions used by IAS19 and

the funding valuation. In the event of

underfunding, the Group must agree a deficit

recovery plan with the Trustee Board within

statutory deadlines.

Dividends and dividend policy

During the year the Group’s dividend policy

was to distribute the maximum amount of

available cash to shareholders each financial

year on a semi-annual basis, after taking into

account forecast business needs, the Group’s

liquidity, gearing and rating policies,

restrictions of external and internal financing

arrangements, applicable law and ENWL’s

licence obligations. This policy will be subject

to review in the next financial year. During the

year, the Company paid dividends totalling

£45.4m (2024: £30.4m) (Note 30). The

directors do not propose a final dividend for

the year ended 31 March 2025.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Financial Performance (continued)

Going concern

When considering whether to continue to

adopt the going concern basis in preparing

these financial statements, the directors have

taken into account a number of factors,

including the following:

• The Company’s electricity distribution

licence includes the obligation in standard

licence condition 40 to maintain an

investment grade issuer credit rating,

which has been met.

• Under section 3A of the Electricity Act

1989, the Gas and Electricity Markets

Authority has a duty, in carrying out its

functions, to have regard to the need to

secure that licence holders are able to

finance their activities, which are the

subject of obligations imposed by or under

Part 1 of the Electricity Act 1989 or the

Utilities Act 2000.

• Management has prepared, and the

directors have reviewed and approved

Group budgets for the year ending 31

March 2026. These budgets include profit

projections and cash flow forecasts,

including covenant compliance

considerations. Inherent in forecasting is

an element of uncertainty and key

sensitivities are considered when budgets

are approved, including possible changes

in inflation and under recoveries of

allowed revenue as plausible downside

scenarios.

• Management has prepared forecasts

covering the current RIIO-ED2 regulatory

period which runs to April 2028, reflecting

the latest forecast of regulatory revenues,

performance and uncertainty

mechanisms. Forecasts demonstrate that

there is sufficient headroom on key

covenants and that there are sufficient

financial resources available to the Group

within the forecast period.

• Management has prepared liquidity

forecasts on a monthly basis, and

performed inflation sensitivities on

forecasts to June 2026, being at least 12

months from the date of approval of these

financial statements.

• Short-term liquidity requirements are

forecast to be met from the Group’s

operating cash flows and short-term

deposit balances. At 31 March 2025, there

was further available liquidity of £250.0m

in the form of committed, undrawn

borrowing facilities, available for at least

12 months from the date of approval of

these financial statements.

• During the 12 months from the date of

approval of these financial statements, the

£450m 8.875% 2026 bond is due for

repayment in March 2026, and £9.4m of

scheduled repayments are due against the

two EIB loans. In addition to the

committed, undrawn facility mentioned

above, the Group is also a beneficiary of

the £500.0m committed financial support

from Scottish Power UK plc (see below).

There are no further re-financing

obligations due in the next 12 months.

• Though the Group is largely financed by

long-term funding, any uncommitted

financing has been removed from the

assessment.

• Management prepared and considered

key sensitivities to the business plan model

when assessing going concern. These

sensitivities include incentive penalties,

macro-economic factors including inflation

at +/-1%, DUoS revenue under collection

and severe weather events.

• External factors are also considered such

as, cost of living and high energy prices,

interest rates, the Ukraine conflict and

impact on supply chain, and energy prices

and supplier administration.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Financial Performance (continued)

Going concern (continued)

In addition to the above, on 16 June 2025

Scottish Power UK plc provided North West

Electricity Networks (Jersey) Limited (“NWEN

(Jersey)”) with a letter of support detailing the

financial support it has committed to the group

headed by NWEN (Jersey). An amount of

£500.0m is available and can be utilised by

NWEN (Jersey) and any of its subsidiaries,

including the Company. This commitment will

remain in place until the earlier of the NWEN

(Jersey) group securing alternative financing,

or 12 months from the date of approval of

these financial statements, and will incur a

charge of 20 basis points per annum whilst in

place.

The directors have a reasonable expectation

that the Company and the Group have

adequate resources to continue in operational

existence and meet their obligations as they

fall due for the foreseeable future. In making

this assessment, the directors have considered

the foreseeable future to be a period of at least

12 months from the date of approval of the

financial statements, per the Financial

Reporting Council (FRC) guidelines.

Accordingly, they continue to adopt the going

concern basis in preparing the Annual Report

and Consolidated Financial Statements.

Viability statement

In accordance with provision 31 of the 2018 UK

Corporate Governance Code, the directors

have assessed viability over a period longer

than that required for going concern and have

chosen the period to 31 March 2028.

Whilst the Board has no reason to believe the

Group will not be viable over a longer period,

the period over which the Board considers it

possible to form a reasonable expectation as to

the Group’s longer-term viability, based on the

risk and sensitivity analysis undertaken, is the

period to 31 March 2028.

The Board has considered whether it is aware

of any specific relevant factors and notes in

particular the RIIO-ED2 regulatory framework,

Ofgem consultations and work on detailed

aspects of the regulatory settlement, including

the treatment of inflation.

The Board has considered the current

economic environment including the volatility

in interest rates and supply chain disruption,

the political environment including impacts

from the ongoing war in Ukraine in making the

viability assessment.

In reaching its conclusion, the Board has taken

into account Ofgem’s statutory duty to secure

that companies can finance their functions and

has assumed that there will be no changes to

the regulatory framework or Government

policy that will affect the Company’s viability.

The directors have conducted a robust

assessment of the principal risks facing the

Group and believe that the Group is in a strong

position to manage these risks.

In arriving at their conclusion, the directors

have considered the Group’s forecast financial

performance and cash flow, including the

Group’s ability to refinance maturing debts,

over the viability period to 2028. Headroom to

compliance ratios over the viability period has

been considered, as has the extent to which

deviations from forecast financial performance

may impact that headroom. The directors

have considered this headroom in assessing

the Group’s long-term viability.

On the basis of this assessment, and assuming

that the principal risks are managed or

mitigated as expected, the directors have a

reasonable expectation that the Company will

continue in operation and meet its liabilities as

they fall due over the three-year period of their

assessment.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Financial Performance (continued)

Fair, balanced & understandable

The directors have reviewed the thorough

assurance process in place within the Group

with regards to the preparation, verification

and approval of financial reports. This process

includes:

• Detailed review and appropriate

challenge from key internal Group

functions, such as Risk, Control and

Assurance, senior managers and the Chief

Financial Officer;

• Formal sign-offs from the business area

senior managers, the finance managers

and CFO;

• Audit and Compliance Committee

oversight, involving a review of key

financial reporting judgements, review

and appropriate challenge on matters

such as any changes to material

accounting policies and practices,

significant adjustments and the going

concern assumption;

• The involvement of qualified, professional

employees with an appropriate level of

expertise and experience throughout the

business; and

• Engagement of a professional and

experienced external auditor, a

framework for full transparent disclosure

of information during the audit process

and post-audit evaluation.

As a result of these processes together with

the information and assurance provided by

the day-to-day internal control processes, the

information provided by the Executive

Leadership Team of ENWL and the in-depth

reporting required by Ofgem, both the Audit

and Compliance Committee of ENWL and the

Board are satisfied that the Annual Report and

Consolidated Financial Statements taken as a

whole, provide a fair, balanced and

understandable assessment of the Group’s

position at 31 March 2025.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Risk Management

The Board, CEO and ELT are responsible for the

alignment of strategy and risk, and for

maintaining a sound system of risk

management and internal controls. Our

processes and systems are always evolving

with the needs of our business and have been

developed in accordance with the FRC’s

Guidance on Risk Management, Internal

Control and Related Financial and Business

Reporting.

Our Corporate Risk Register currently

encompasses a broad spectrum of risks. These

risks are evaluated in the context of our

corporate goals – Sustainability, Safety,

Financeability/Affordability, Systems and

Data, Customer/Reliability, and People. They

are monitored by a company-wide network of

Risk Champions and Coordinators. In addition,

there are risks in relation to Global Events and

Regulation.

The Company's approach to risk appetite goes

to the heart of achieving our Company goals.

As with any business, the achievement of our

goals necessitates a certain level of risk being

taken. The key is ensuring that such a scale of

change is managed with a good understanding

of the risks involved, in a manner consistent

with the Company strategy, and importantly

making sure that these risks are managed

within agreed risk appetites.

The Company has a framework in place to

define the appetite for risk which is reviewed

annually by the ELT and agreed upon by the

Board. The framework enables the Board to

demonstrate its risk appetite for the overall

strategic direction of the business and maps

risk appetite for each of our company goals at

a tactical and operational level.

Risks are only accepted when within the risk

appetite criteria, and when further mitigation

of the risk is not considered cost effective (or is

not possible).

Risk appetite varies in these areas, but in line

with the framework, the Company generally

operates within a 'cautious' to ‘averse’ risk

range, given that the achievement of the

stretching business plan would not be possible

without a level of measured risk taking. In

Sustainability, an 'averse' risk appetite is

adopted, given our desire to ensure that the

company maintains its reputation for

compliance and an ethical way of doing

business, as well as the role the Company has

in the low carbon transition.

In relation to Safety, the Company adopts an

‘averse’ risk position, placing the highest

priority on safety in all operations.

Appropriate working practices that protect our

employees, contractors and the general public

are a key priority for the business and an

important part of ensuring that we undertake

our activities safely.

Similarly, in regard to Financeability/

Affordability an ‘averse’ risk appetite has been

adopted to safeguard financial stability and

protect customers from unnecessary cost

pressures. By focusing on cost efficiency and

prudent investment, ENWL ensures that

network improvements and operational

expenses are managed responsibly.

In relation to Systems and Data the Board

adopts an ‘averse’ risk appetite to ensure the

highest levels of security, integrity, and

reliability in its digital infrastructure.

Protecting sensitive customer information and

maintaining uninterrupted network operations

are crucial priorities.

In relation to Customer/Reliability, a 'very

cautious' risk appetite is adopted to ensure

consistent performance and minimise

disruptions. By prioritising robust network

resilience and proactive customer service,

ENWL aims to meet regulatory performance

standards reflecting our commitment to

maintaining high levels of trust and reliability.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Risk Management (continued)

For People, the Company recognises the value

of its people and the organisational climate in

order to deliver effectively for our customers,

so a cautious approach is adopted.

The key features of the risk management

system include:

• Clear risk management strategy approved

by the Board.

• Risk appetite framework, approved

annually by the Board, in place that forms

a key driver of the strategic business plan.

• Board oversight in identifying and

understanding significant risks (and

opportunities) to the Group in achieving

strategic objectives.

• Dedicated Board and Executive

Committees to oversee the management

of risks for the Group.

• Appropriate operational and non-

operational risks being managed within a

corporate risk system.

• Target risk scores are in place for

corporate risks, with actions in place for

risk owners to progress towards achieving

the target risk scores.

• The underpinning of the corporate

across the business with a network of Risk

Champions and Co-ordinators which

enhance the business-wide monitoring

process.

• Development of comprehensive crisis and

reputation management plans to address

potential emergencies and maintain

public trust.

• Regular training and development

programmes for staff to ensure a strong

risk-aware culture throughout the

organisation.

• Collaboration with external stakeholders,

including regulatory bodies and industry

partners, to stay ahead of emerging risks

and regulatory changes.

Principal risks and uncertainties

In addition to the usual operational risks, such

as failing to meet customer expectations, the

most significant risks we currently face include

wider global events, cybersecurity threats, and

potential changes to the regulatory regime.

Climate change has the potential to increase

risks and uncertainties for us in relation to our

business resilience and our ability to meet the

expectations of our customers. We continue to

actively consider what this might mean for our

own activities, as well as supporting our

customers in developing their own plans to

mitigate these risks. The increased frequency

and severity of extreme weather events, such

as storms and floods, pose a threat to our

infrastructure and can lead to significant

service disruptions. Additionally, rising

temperatures may impact the efficiency and

lifespan of our equipment, necessitating

ongoing adaptation and resilience measures.

However, we have robust strategies in place to

manage these uncertainties, including

comprehensive climate adaptation plans,

regular infrastructure assessments, and

proactive maintenance schedules. Our

commitment to continuous improvement and

collaboration with industry partners ensures

that we remain well-prepared to address these

challenges effectively.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Risk Management (continued)

Risk

Mitigations

Global Events and

Regulat

ion

Global Events and supply chain:

Certain aspects of ENWL’s

activities could be susceptible to

the impact of wider global

events, including geo-political

tensions, the conflicts in Ukraine

and in the Middle East. These

events coupled with the UK

Government’s response

measures continue to disrupt

global supply chains. Our supply

chain continues to face

challenges arising from these

events, including inflation and

economic disruption, which also

present uncertainties for the

business

• ENWL is recognised as a Critical National Infrastructure

provider and is in regular dialogue with both the UK

Government and the Regulator to maximise the effect of

the mitigation measures on its abilities to provide an

essential service to its customers.

• Comprehensive scenario planning and business

continuity plans to evaluate ENWL's response to

potential global disruptions, including geopolitical crises,

natural disasters, and economic shocks.

• Control measures have been implemented to the extent

possible to minimise the potential impact of the

situation on ENWL’s activities and are monitored by

members of the ELT.

• Reduction in dependency on single suppliers or regions

by sourcing materials and services form a broader

network of providers.

• Implementing supplier Risk Assessments to evaluate the

supplier stability, geopolitical exposure and resilience in

order to identify vulnerabilities and develop contingency

plans.

• Forward work planning and advance ordering of

materials, such as transformers, where there are

constraints in the availability of materials or component

parts and extended delivery lead times.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Risk Management (continued)

Risk

Mitigations

Global

Events and Regulation

Regulation and compliance risk:

The Company is subject to a high

degree of political, regulatory

and legislative intervention,

which can impact both the

current RIIO-ED2 period, and

future regulatory settlements.

The legal and compliance

framework can change, leading

to additional compliance

obligations, market conditions,

and reporting requirements. A

changing political focus on the

sector can have a significant

effect on profitability or risk.

Compliance failure leading to an

adverse effect on the business.

• The Company has dedicated Regulation and Legal

departments that provide advice and guidance

regarding the interpretation of political, regulatory and

legislative change.

• There is ongoing engagement by the Company with the

Regulator and Government.

• There is regular engagement with the Board on political

and regulatory developments which may impact the

Company.

• Transparent reporting to ensure accurate and timely

submissions of regulatory reports demonstrating

accountability.

• Overall governance and control framework in place,

including established compliance routines and

accountabilities, owned by the Executive Leadership

Team and ultimately the Board.

• Ongoing training and awareness provided to ensure

regulatory requirements and compliance best practices

are understood and adhered to.

• Specialist teams in place to ensure compliance and

assurance is carried out.

• An internal audit programme focusing on the Group’s

key risk areas, including fraud, regulatory compliance

and business processes.

Sustainability

Responding to major events:

Events outside of our control, for

example extreme weather or

medical emergencies, affecting

large areas, may negatively

impact the business.

• Established Incident Response Group – we have

dedicated teams with clear roles and responsibilities to

co-ordinate swift and effective responses during a major

event.

• Regular simulation exercises completed to train and test

the resilience of our response to major incidents.

• Collaboration with External Partners – we have strong

relationships with emergency services, local authorities

and other utilities to ensure a coordinated response to

large scale incidents.

• The Company has comprehensive contingency plans for

network emergencies, including key contract resources

such as mobile generators and overhead line teams.

• Business continuity plans are in place and are tested and

follow a robust testing schedule to identify areas of

further improvement.

• Maintenance of inventory levels to cover larger events.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Risk Management (continued)

Risk

Mitigations

Sustainability

Programme delivery including

change programmes:

Delays in the investment

programme or major business

change activity leading to an

adverse impact on the Company,

particularly relating to customer

interruptions (CIs) and customer

minutes lost performance

(CMLs).

• Established governance controls in place to oversee the

delivery of business change.

• Processes in place to support delivery of change

programmes, management of risks and achievement of

business benefits.

• For activity impacting CI and CML performance, the

following mitigation measures are in place:

o Fault response times and team performance are

closely monitored including time to despatch and

mobilise response teams;

o Supply interruptions are planned to minimise

customer impact;

o Network automation to minimise the effect of

faults;

• Significant expenditure on routine maintenance to

reduce the causes of network interruption.

• Regular post investment appraisals to confirm effective

delivery of programmes and maintain lessons learnt.

• Stakeholder engagement – maintaining regular

communications with contactors, regulators and internal

teams to align expectations and address issues promptly.

Safety

Health, Safety and the

Environment:

Risk associated with unsafe

working practices, man-made or

naturally occurring hazards that

could cause harm to employees

or the wider public, or the

environment.

• Board Health, Safety and Environment Committee

oversees this area.

• Extensive policy and procedures to ensure a safe system

of work and environmental management.

• Behavioural safety training programme across all areas

of the organisation.

• Simple ‘Golden Rules’ to ensure strong safety approach

throughout the Company’s operations.

• Robust ‘lessons learned’ exercises conducted to identify

root causes when safety or environmental issues occur.

• Robust authorisation processes, policies and procedures

to control who works on the network and the activities

that they perform.

• Annual programme of audits and an inspection regime.

• Well-established hazard and safety observation

(including near miss) reporting in place.

• Regular engagement with employees and contractors to

foster a culture of safety and environmental

responsibility.

• Collaboration with external experts and organisations to

stay updated on best practices and emerging risks.

• Development of comprehensive emergency response

plans to address potential environmental and safety

incidents.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Risk Management (continued)

Risk

Mitigations

Financeability/

Affordability

Financial risks:

The business is subject to

treasury, tax, inflation and

liquidity risk exposures, and

under performance of the

pension scheme investments,

market impacts and/or an

increase in the scheme liabilities

which would give rise to higher

contributions.

• A formal treasury policy is in place to manage exposure

to counterparty, liquidity and market risk, overseen by

the Audit and Risk Committee.

• A well-established monthly banking covenant

monitoring process.

• Monitoring of inflation calculations on allowances,

compared to the actual inflation suffered on treasury

instruments and operations.

• Tax risk scoring.

• Active monitoring of the pension scheme’s investments

carried out on a quarterly basis.

• The pension scheme Trustee engages professional legal,

actuarial and investment advice for all decisions taken

and regularly consults with the Company, who also

engage professional advisors.

Investability: Inability to

maintain sufficient equity and

financial attractiveness to

secure the necessary funding for

critical infrastructure

investments.

• Regular engagement with credit rating agencies to

maintain a strong credit rating.

• Clear and transparent financial reports to stakeholders,

highlighting the company's financial health and

investment potential.

• Comprehensive financial planning and analysis

processes to forecast future funding needs and identify

potential financial risks.

• Active engagement in advocacy efforts to influence

favourable regulatory changes that support investment

in critical infrastructure.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Risk Management (continued)

Systems and Data

Cyber and physical security

threat:

Breach of our security regime

and access to key network

security systems by an

internal/external party leading

to disruption or loss of critical

systems, assets or data breach.

• Dedicated qualified personnel allocated to Cyber and IT

security.

• A comprehensive investment programme to address any

potential weaknesses and respond to arising threats.

• A training programme in place to inform all users of the

risks of email and social engineering attacks.

• A cyber risk assessment methodology implemented

within the Group.

• Pre-employment screening and ongoing checks for all

colleagues, with enhanced requirements for critical roles

such as System Administrators.

• A strong governance and inspection regime to protect

infrastructure assets and operational capacity.

• Physical and technological security measures, including

encryption of key laptops, preventing the loss of data.

• Data Centre infrastructure providing enhanced security

monitoring and management tools, ‘next generation’

firewalls and network traffic analysis.

• Ongoing security patching of critical systems.

• Ongoing renewal and replacement programmes to

ensure hardware and software is refreshed on

appropriate timescales.

• Periodic internal and external security reviews.

• Key systems IT disaster recovery testing.

• Use of e-learning to promote awareness of Cyber issues

for all employees.

• Enhanced access controls and CCTV networks to

strengthen physical security.

• Integration of advanced threat detection processes to

identify and mitigate potential cyber risks proactively.

• Routine phishing simulations to assess the effectiveness

of phishing awareness campaigns.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Strategic Report (continued)

Risk Management (continued)

Risk

Mitigations

Customer/ Reliability

Network Performance and

resilience:

Aging infrastructure rising

demand, and extreme weather

events threaten network

stability, risking outages and

service disruptions

• Established customer engagement plans to maintain

regular communication during outages, providing real-

time updates, and offer support to vulnerable customers

to maintain trust and satisfaction.

• Investment in infrastructure upgrades to reinforce

critical infrastructure to enhance reliability and reduce

vulnerability to faults.

• Deploying smart grid technologies using automation

systems to detect and respond to issues in real-time,

minimising outage impacts.

• A programme of improvement activities described in

more detail on page 18 is being co-ordinated by the

Executive Leadership Team to optimise the Company’s

position against all elements of the customer

satisfaction measure.

• Robust plans in place to achieve other commitment

targets, or outperform where possible.

• Controls in place regarding the ongoing reporting of

performance against targets.

People

Developing our people:

Having an inadequately skilled

and experienced workforce to

deliver current and future

business objectives.

• Resource and succession plans are in place, which are

subject to periodic Executive and Board level review.

• Training delivered throughout the Company to ensure

employees are equipped to do their roles safely,

competently and effectively.

• Robust resourcing model is in place to meet business

needs and mitigate potential difficulty in attracting the

resources we may need across RIIO-ED2 and ED3.

• Extensive policies are in place regarding ethical conduct

within the business, including Anti-Bribery and

Corruption; Conflict of Interests; Ethics; Equality;

Internal Control and Governance; Modern Slavery and

Speak Up (Whistleblowing).

• Employee engagement – fostering a positive workplace

culture to improve retention and motivate staff to

achieve business objectives.

The Strategic Report, outlined on pages 10 to 50, has been approved by the Board of Directors and

signed on behalf of the Board on 16 June 2025.

Chris Johns

Director

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Corporate Governance Report

During the year ended 31 March 2025 under The

Companies (Miscellaneous Reporting)

Regulations 2018, the Company has chosen to

report on how the principles and provisions of

the UK Corporate Governance Code (“the

Code”) have been applied during the year. There

are some limited areas of non-compliance, all of

which are considered appropriate to the

privately owned status of the Company and are

explained on pages 57 to 58.

The Board

Board Members as at 31 March 2025 are as

below:

Alistair Buchanan, CBE

Independent Non-Executive Director

Appointed on 25 July 2018

Alistair Buchanan has over 25 years’ experience

in the energy industry, including 10 years as

Chief Executive of Ofgem. In 2013 he joined

KPMG as Partner and UK Chair of Power &

Utilities, returning to the firm where he trained

as a Chartered Accountant. During his career,

Alistair became an award-winning energy sector

analyst and head of research for banks in New

York and London. With experience at Board level

on various companies, he currently also serves

as the Chair of the leading period orchestra “The

Mozartists”.

Keith Anderson

Non-Executive Director

Appointed on 22 March 2025

Keith Anderson is Chief Executive Officer for

Scottish Power and he also sits on the Scottish

Power Board, where he was appointed in

February 2012. Keith has full responsibility for

the Scottish Power’s activities in the UK

including the £24bn investment plan to 2028

designed to strengthen the position of the

company as the Utility of the Future. Under the

previous Government, Keith was a member of

the Prime Minister’s Business Council and the

UK Investment Council.

Prior to joining Scottish Power, Keith worked

with some major financial institutions including

The Royal Bank of Scotland and Standard Life, as

well as working as a management consultant

with Ernst & Young LLP.

Harold Hutchinson

Independent Non-Executive Director

Appointed on 22 October 2024

Harold Hutchinson was born in Belfast and has

degrees from the University of St. Andrews,

Scotland (M.A. Hons. Economics/French), and

University of Oxford (M.Phil. Economics). He

spent his early career in academia as a lecturer

in economics at St. Andrews University. He was

subsequently a top-rated research analyst in the

energy and utilities sectors for over 25 years at

various investment banks, most recently at

Investec Bank plc, where he was a Managing

director in the Listed Client Group and Head of

UK Equity Research. Currently, he is a Senior

Adviser in Alternative Energy at Investec Bank

plc. In addition, he is a Trustee and Director at

the Regulatory Policy Institute, Oxford, an

educational charity dedicated to the promotion

of regulatory and market research for the public

benefit.

Charles Langan

Non-Executive Director

Appointed on 22 March 2025

Charles Langan was appointed Scottish Power’s

Chief Financial Officer in July 2024, responsible

for providing strategic financial leadership of

Scottish Power and day-to-day management of

the Finance function. Charles is also responsible

for the IT, Security, Procurement and General

Services functions. Since joining Scottish Power

in 2005, Charles has held several senior finance

positions both in the UK and Spain.

Charles is a member of the Institute of Chartered

Accountants of Scotland and has a degree in

Accountancy and Finance from the University of

Strathclyde. Prior to joining Scottish Power,

Charles worked at Ernst & Young LLP.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Corporate Governance Report (continued)

The Board (continued)

David Mesonero

Non-Executive Director

Appointed on 22 March 2025

David Mesonero is currently the Global Head of

Corporate Development and M&A of Iberdrola,

S.A. He is member of The Board of Directors of

Iberdrola Mexico, Iberdrola Energía

Internacional, and its Audit Committee. He is a

member of the Finance Committee of

Neoenergia and a member of the Board of these

societies: Windar Renewable and Wallbox.

Prior to his role in Iberdrola, David was CFO of

Prisa Group, and CFO at Siemens Gamesa

Renewable Energy. He has a background as a

strategic consultant and investment banker and

specializes in capital markets and in designing

different financing structures.

Masahide Yamada

Non-Executive Director

Appointed on 7 July 2022

Masahide Yamada is employed by the Kansai

Electric Power Company Inc. which is an electric

utility with its operational area of Kansai region,

Japan. He is the General Manager for Asset

Management, Americas and Europe Region,

International Business Division. Masahide has 10

years’ experience in the field of power

distribution, with more than 10 years’

experience in overseas investment in power

assets including as a Finance Director of a

hydropower project in the Republic of

Indonesia, and some experience with Strategy,

Planning and Budget Management.

Ian Smyth

Executive Director - Group CEO

Appointed on 5 September 2022

Ian Smyth has been Group CEO of Electricity

North West Limited since 2022. Prior to

Electricity North West, Ian was a Director of UK

Power Networks, a Managing Director of

Navigant a global advisory and dispute

resolution consultancy and the lead partner of

the Utilities and Regulated Industries practice

for LCP. He has been a consultant for Ernst &

Young LLP. Ian has worked internationally for

governments, regulators and utilities across

electricity, gas and water. Ian has a BA(Hons) in

philosophy, psychology and artificial intelligence

from Manchester Metropolitan University and

an MSc in Cognitive Science from the University

of Birmingham.

Chris Johns

Executive Director - Group CFO

Appointed on 25 May 2023

Chris Johns joined Electricity North West Limited

as Group CFO (Chief Financial Officer) in May

2023. Chris is a Chartered Accountant and has

previously been CFO of Yorkshire Water, a role

he held from June 2020. He has also previously

held the roles of Finance Director of both

Northumbrian Water Group and Northern Gas

Networks.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Corporate Governance Report (continued)

The Board (continued)

Shareholder appointed and shareholder

nominated directors

Keith Anderson, Charles Langan, David

Mesonero (all appointed to the Board on 22

March 2025) and Masahide Yamada are

shareholder appointed directors.

Beatrice Araujo and Harold Hutchinson (both

appointed to the Board on 22 October 2024)

were shareholder nominated directors.

Beatrice Araujo resigned from the Board on 21

March 2025.

Harold Hutchinson converted to an Independent

Non-Executive director effective from 21 March

2025, and furthermore named to Ofgem as

fulfilling the role of a Sufficiently Independent

director as required by Ofgem.

Mitsuo Wada was a shareholder appointed

director until he resigned on 21 March 2025.

Michiko Hara was the appointed alternate

director for Mitsuo Wada during his time as a

Board member. Michiko Hara resigned on 21

March 2025.

Makoto Murata is the appointed alternate

director for Masahide Yamada.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Corporate Governance Report (continued)

The Board (continued)

Attendance at Board meetings

At the discretion of the Board, senior management were invited to attend meetings when appropriate

specific items were subject to discussions. Where a director was unable to attend a Board meeting,

their views were canvassed by the Chair prior to the meeting.

The table below shows Board attendance, and Board Committee attendance for committee members

only. Informal meetings to discuss board member replacements are not included, nor are attendances

by directors at committee meetings where they are not formal members.

Board Member

Attended / Scheduled

ENWL

Board

Audit and

Risk

Committee

Remuneration

Committee

Nominations

Committee

Safety, Health

and Environment

Committee

Keith Anderson

1/1

Beatrice Araujo

3/4

1/2

1/1

Anne Baldock

8/8

5/6

4/4

1/1

3/3

Alistair Buchanan

9/9

4/4

1/1

Susan Cooklin

7/8

6/6

3/3

Rob Holden

8/8

6/6

Harold Hutchinson

5/5

2/2

Chris Johns

9/9

Siôn Jones

2/4

1/2

0/1

Charles Langan

1/1

David Mesonero

1/1

Peter O’Flaherty

4/4

2/2

1/1

Genping Pan

2/4

1/2

0/1

Ian Smyth

9/9

3/3

Mitsuo Wada

7/8

0/2

Masahide Yamada

8/9

4/4

1/1

2/3

Appointed as director on 22 March 2025 and attended the only Board meeting during the period.

Appointed as director on 22 March 2025 and resigned on 21 March 2025 but had attended 3 of the 4 Board meetings during the period.

Resigned as director on 21 March 2025 but had attended all previous Board meetings during the year until this date.

Resigned as director on 21 March 2025 but had attended 7 of the 8 Board meetings during the year until this date.

Resigned as director on 21 March 2025 but had attended all previous Board meetings during the year until this date.

Appointed as director on 22 October 2024 and had attended all of the Board meetings during the period.

Resigned as director on 22 October 2024 but had attended 2 of the 4 Board meetings during the year until this date.

Appointed as director on 22 March 2025 and attended the only Board meeting during the period.

Resigned as director on 22 October 2024 but had attended all previous Board meetings during the year until this date.

Resigned as director on 22 October 2024 but had attended 2 of the 4 Board meetings during the year until this date.

Resigned as director on 21 March 2025 but had attended 7 of the 8 Board meetings during the year until this date.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Corporate Governance Report (continued)

The Board (continued)

The Audit and Risk Committee was terminated

by the directors of the Board on 23 March 2025,

and replaced by the Audit and Compliance

Committee with effect from the same date. The

Remuneration Committee, Nominations

Committee and Safety, Health and Environment

Committee were terminated by the directors of

the Board on 23 March 2025 with all of their

respective powers, duties, and obligations

returning to the Board of Directors as necessary.

Diversity

The Board supports diversity in its broadest

sense and accordingly aims to ensure that its

number is made up of a diverse range of

experience, independence and expertise

appropriate to the industry in which it operates,

its operational business model and the extensive

financial, governance, regulatory risk

management and legal expertise required.

Diversity of the Board continues to be assessed

on a case-by-case basis as vacancies arise.

Composition

The Board comprises two Non-Executive

Directors (including the Chair) considered under

the Code to be Independent, and four Non-

Executive Directors representing the

shareholders, together with two Executive

directors. The Directors’ biographies are on

pages 51 to 52.

The two Independent Non-Executive directors,

Alistair Buchanan and Harold Hutchinson, have

been named to Ofgem as fulfilling the role of

Sufficiently Independent directors as required

by Ofgem. The role of the Sufficiently

Independent director was introduced from 1

April 2014 as part of a range of enhancements

made to the ring-fence conditions in the

Company’s licence to protect consumers, should

a distribution operator experience financial

distress.

The individual directors are regularly asked to

confirm that they are able to discharge their

responsibilities on appointment and thereafter,

in light of any other commitments or outside

appointments they may have.

Leadership

The Board provides leadership of the Company,

ensuring it continues to balance the needs of

stakeholders while delivering the Company’s

strategy. Individually the directors act in a way

that they consider will promote the long-term

success of the Company.

The role of the Chair and the CEO is separate,

defined by clear role descriptions set out in

writing and agreed by the Board.

The Chair is responsible for the leadership and

governance of the Board, and the CEO for the

operational management of the Company and

implementation of the strategy on the Board’s

behalf. The CEO is assisted by his ELT that

comprises the operational unit directors.

Advice

All directors are able to consult with the

Company Secretary, and the appointment and

removal of the Company Secretary is a matter

reserved for the Board.

Any individual director, or the Board as a whole,

may take independent professional advice

relating to any aspect of their duties at the

Company’s expense.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Corporate Governance Report (continued)

The Board (continued)

How the Board operates

The Board’s role is to promote the long-term

success of the Company and provide leadership

within a framework of effective controls. The

Board is responsible for approving the strategy

and for ensuring that there are suitable

resources to achieve it. In doing so, the Board

takes into account all stakeholders, including its

shareholders, employees, suppliers and the

communities in which it operates.

The Board has matters specifically reserved for

its decision, including the approval of budgets

and financial results, assessment of new Board

appointments, dividend decisions, litigation

which is material to the Group, and directors’

remuneration. From 23 March 2025 these

matters are now dealt with by North West

Electricity Networks (UK) Limited Board.

Training

The Chair is responsible for ensuring that all

directors update their skills, knowledge and

familiarity of the Company.

Directors regularly receive reports facilitating

greater awareness and understanding of the

Company, its regulatory environment and the

industry. The Board aims to have at least two

workshops and one strategy meeting a year

aimed at developing a greater understanding of

the Company’s finances and operations and to

explore strategic matters in detail.

Committee members received detailed

presentations at meetings focusing on areas of

relevance to the Committee and Board

members are invited to workshops with

shareholder representatives who are able to

delve into areas of interest in greater detail.

The Chair is also responsible for ensuring that all

new directors receive a tailored induction

programme that reflects their experience and

position as either an Executive or Non-Executive

director. This involves meetings with the Board,

the Company Secretary, other members of the

Executive and Senior Leadership Teams and site

visits. Additional documentation is provided as

appropriate.

Appointments

The two independent Non-Executive directors

are provided with a detailed letter of

appointment.

The four other Non-Executive directors are

appointed by the Company’s shareholders as

their representatives.

Conflicts of interest

The Board has appropriate processes in place to

assess and manage any potential conflicts of

interest. As part of these procedures the Board:

• Considers conflicts of interest as part of the

agenda for all meetings.

• Asks directors annually if there are any

changes to their conflict of interest

declarations, including appointments to the

Boards of other entities.

• Keeps records and Board minutes regarding

any decisions made.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Corporate Governance Report (continued)

The Board (continued)

Areas of non-compliance with the Code

There are some areas where the Company did

not comply with the Code during the year, all of

which are due to its privately-owned status and

are discussed below. The Company has

endeavoured to comply with the spirit of the

Code; nevertheless, as outlined below,

compliance with certain provisions is either

impractical or inappropriate.

Senior Independent Director

The Board has not appointed a Non-Executive

director as a Senior Independent director under

the Code. The Board meets the objectives

behind this requirement through its shareholder

representation on the Board.

Composition of the Board

The Code states that half the Board should be

independent Non-Executive directors. In light of

the composition of the Board explained above

on pages 57 to 58, the Company does not satisfy

this requirement. However, as the Company is

privately-owned and all shareholders are

represented on the Board, it is felt that the

needs of shareholders are met through their

presence on the Board.

The Board considers that the two Independent

Non-Executive directors offer an appropriate

perspective, meaningful individual participation

and effective collective decision making.

Annual election of directors

The Board does not require its directors to be re-

elected annually as the shareholder

representation on the Board allows the

opportunity to challenge a director’s

performance directly rather than at an Annual

General Meeting.

Publication of the terms and conditions of Non-

Executive Directors

As a privately-owned company, the Company is

not required to provide a remuneration report

in line with the Large and Medium Sized

Companies and Groups (Accounts and Reports)

(Amendment) Regulations 2013.

The purpose of the remuneration report is to

enable shareholders to exercise judgement over

directors’ remuneration. With the presence of

shareholder representatives on the

Remuneration Committee, this purpose is met

directly.

Engagement with stakeholders

As a privately-owned company, the Company

does not have a large or dispersed shareholder

base with which to communicate formally, nor

are there any minority shareholders. Therefore,

Annual General Meetings are not held.

Shareholders

The Group works closely with its shareholders

and see their stewardship commitments as a key

feature of their investment philosophy.

They are committed to maintaining the integrity

and quality of the markets in which they operate

and allocate investment capital to productive

purposes, while protecting and enhancing their

clients’ capital over the longer term.

Workforce

The Board has not utilised the methods in the

Code for engagement with the workforce.

However, the workforce has a strong Trade

Union representation and regular meetings of

engagement take place both with

representatives and directly through workforce

meetings with the leadership team.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Corporate Governance Report (continued)

The Board (continued)

Areas of non-compliance with the Code

(continued)

Stakeholders

The Company has strong and open relationships

with stakeholders, including Ofgem, MPs and

central government, local government, and

emergency services. There are a number of key

relationships and a vast range of public sector

stakeholders. The Company also engages across

the industry with electricity suppliers,

employees, contractors and other utilities, along

with research of customers’ opinions. Due to the

regulated nature of the industry the Company

has less flexibility to determine some of its

engagement mechanisms with stakeholders.

Our stakeholder engagement strategy is

outlined on page 22.

Board evaluation

The Code requires boards to conduct an annual

evaluation of their effectiveness, with such

evaluation being externally facilitated every

three years for FTSE 350 companies. Although

the Company does not undertake an annual

exercise, externally led board evaluations are

performed on a periodic basis as deemed

appropriate. The last one conducted by

Lintstock Limited was in 2021. The Chair of the

Board will consider later in 2025 when may be

an appropriate date to undertake the next

effectiveness evaluation.

Internal audit team

The Company’s internal audit team provides

independent, objective assurance and advisory

services designed to improve the Company’s

(and members of its group where applicable)

operations. Internal audit activity helps the

business achieve its objectives by evaluating and

improving the effectiveness of risk

management, control and governance

processes.

Nomination Committee

The Code requires a majority of the members of

the Nomination Committee to be independent

Non-Executive directors.

Notwithstanding that the Company’s

Nomination Committee is not so constituted,

during the year the Board considered that the

Committee had the necessary mix of skills,

expertise and experience to discharge its role of

leading the process for appointments and

ensuring appropriate plans were in place for

succession to the Board and senior management

positions. Additionally, it is felt that the interests

of shareholders have been properly reflected by

means of their representation of the

Committee.

Remuneration Committee

The Code also states that the Remuneration

Committee should comprise only independent

Non-Executive directors.

Again, as the Company is privately-owned and

has no external shareholders, during the year

the Board believes that the interests of

shareholders had been appropriately

represented on the Committee and that the

Committee was suitably constituted to

discharge its functions in relation to the

alignment of remuneration policies and

practices to the long-term sustainable success of

the Company.

The Nomination and Remuneration Committees

were terminated by the Board on 23 March 2025

with all of their respective powers, duties, and

obligations returning to the Board of Directors

as necessary.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Corporate Governance Report (continued)

Board Committees

During the year the Board had delegated the

detailed oversight of certain items to four

standing Committees and three ad hoc

Committees until they were terminated by the

Board on 23 March 2025 with all of their

respective powers, duties, and obligations

returning to the ENWL Board of Directors as

necessary.

The Audit and Risk Committee was terminated

by the directors of the Board on 23 March 2025,

and was replaced by the Audit and Compliance

Committee with effect from the same date.

Standard Committees which generally met

on a regular pre-planned cycle

Audit and Risk Committee

Remuneration Committee

Nominations Committee

Safety, Health, and Environment Committee

Ad hoc Committees meeting as required to

deal with their specific areas of business

Use of Systems Pricing Committee

Finance Committee

Sustainable Financing Committee

The minutes of each Committee are made

available to the Board.

The Use of Systems Pricing Committee met

annually (or more frequently as necessary) to

discuss customer bills. The Finance Committee

met on an ad hoc basis, to approve detail about

system pricing contained in Licence Condition 14

and financing transactions respectively. The

Sustainable Financing Committee met on an ad

hoc basis, to advise the Company on eligible

green spend, in accordance with the Company’s

Green Financing Framework.

Report of the Audit and Risk Committee

The Audit and Risk Committee was terminated

by the Board on 23 March 2025, and replaced by

the Audit and Compliance Committee with

effect from the same date.

The role and responsibilities of the Committee

were set out in its Terms of Reference which

were reviewed by the Committee and approved

by the Board annually and were amended on 23

March 2025.

Membership and meetings

The Committee members were all Non-

Executive directors. The Board was satisfied that

the Committee Chair, Rob Holden, as a

Chartered Accountant, had relevant financial

experience. The Committee as a whole had

experience relevant to the sector in which the

Company operates. Attendance by individual

members is detailed on page 54.

The role of the Committee

The key responsibilities of the Audit and Risk

Committee were to:

• Monitor the integrity of the financial

statements, including annual and half-yearly

reports and to report to the Board significant

financial reporting issues and judgements

which they contain.

• Monitor the independence, effectiveness

and remuneration of the external auditor.

• Review the adequacy and effectiveness of

the Company’s internal financial controls and

internal control and risk management stems

and compliance with the Code.

• Monitor the effectiveness of the Company’s

internal audit function.

• Ensure that the Group’s treasury function is

effective and approve treasury transactions

in line with the Treasury policy.

• Conduct audit tender processes and make

recommendations regarding the

appointment and removal of the external

auditor and any engagement terms. Monitor

and ensure the appropriate use of the

external auditor for any non-audit services.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Corporate Governance Report (continued)

Report of the Audit and Risk Committee

(continued)

The significant matters considered by the

Committee during the year included:

• The initial review of the 31 March 2025

Annual Report and Consolidated Financial

Statements and the review of the FY25 half-

year report.

• Evaluation of external audit work by

PricewaterhouseCoopers LLP (“PwC”)

(including the initial discussion of fees and

management response to audit reports) and

developing the future audit programme.

• Review and evaluation of the auditor

independence following the Iberdrola

acquisition.

• Review of the going concern basis of

preparation and the letter of support

provided by Scottish Power UK Plc.

• Review and discussion on internal risk

management controls and enhanced

governance frameworks.

• Review of Treasury operations and Data

Protection Officer's reports.

The following notes for the Audit and Risk

Committee shall also apply to the Audit and

Compliance Committee, as detailed below on

page 62.

Committee effectiveness

The Committee formally reviewed its Terms of

Reference and its membership during the year

to ensure both remain fit for purpose and were

considered effective by the Board.

Internal control framework

The Committee, on behalf of the Board, was

responsible for reviewing the Company’s

internal control framework. This review is

consistent with the Code and covers all material

areas of the Group, including risk management

and compliance with controls. Further details of

risk management and internal controls are set

out on pages 43 to 50.

Whistleblowing arrangements

The Committee is responsible for reviewing the

Company’s Disclosure (Whistleblowing) policy

and any concerns raised through these channels

and management actions taken in response. A

revised policy was approved by the Audit and

Risk Committee in January 2021 and a new

Speak Up policy was approved in December

2021 and has been reviewed annually

thereafter. A confidential service is provided by

an external company whereby employees can

raise concerns by email or telephone in

confidence. Any matters reported are

investigated and escalated as appropriate.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Corporate Governance Report (continued)

Report of the Audit and Risk Committee

(continued)

External audit

The external auditors are engaged to express an

opinion on the Company and Group financial

statements. The audit includes the review and

testing of the data contained in the financial

statements to the extent necessary for

expressing an audit opinion on the truth and

fairness of the financial statements. This year’s

audit is undertaken by PwC, who will be stepping

down as independent auditors, and auditors of

Iberdrola Group who will be proposed for

appointment as the statutory auditor of the

Company.

In accordance with UK regulations, the

Company’s auditor adheres to a mandatory

rotation policy and a new Group lead

engagement partner is appointed once their

predecessors have completed a term of five

years.

To assess the independence and effectiveness of

the external audit process, the Committee

reviewed the audit approach and strategy and

the final PwC report to the Committee, as well

as receiving verbal feedback from the Board.

Auditor independence and the provision of

non-audit services

The Company has a formal policy on the use of

the auditor for non-audit work and the awarding

of such work is managed in order to ensure that

the auditor is able to conduct an independent

audit, and is perceived to be independent by our

stakeholders.

As a result of the acquisition of the NWEN

(Jersey) group by Iberdrola in October 2024, a

complex issue has arisen with regards to the

independence of PwC as auditors for the NWEN

(Jersey) group, including the Company, as PwC

provides critical non-audit services to companies

in the wider Iberdrola group. A market search

was carried out, however no suitable alternative

auditor was found. As a result, the Transitional

Relief set out in Paragraph 1.27 of the FRC

Ethical Standards 2019 was used to allow PwC to

complete the audit for the year ended 31 March

2025. Although Iberdrola acquired 88% of the

NWEN (Jersey) equity on the 22 October 2024,

the CMA’s Initial Enforcement Order (“IEO”)

prevented Iberdrola from influencing the

operations or business of the NWEN (Jersey)

group, including the Company. Based on this it

was concluded that Iberdrola was only a

controlling entity after the CMA released the

restrictions of the IEO on the 20 March 2025,

and at this point the 3-month period under the

Transitional Relief would commence. The PwC

audit has been concluded within this period.

In keeping with professional ethical standards,

PwC also confirmed their independence to the

Committee with regards to the NWEN (Jersey)

group and set out the supporting evidence in

their report to the Committee prior to the

publication of the Annual Report and

Consolidated Financial Statements.

The non-audit services provided by the statutory

auditor during the year to the NWEN (Jersey)

group were in connection to Ofgem regulatory

requirements and financial covenant

compliance.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Corporate Governance Report (continued)

Report of the Audit and Risk Committee

(continued)

Fair, balanced and understandable

The Audit and Risk Committee was requested to

assist the Board in confirming that the Annual

Report is fair, balanced and understandable. As

part of its review, the Audit and Risk Committee

took into account the preparation process for

the Annual Report and Consolidated Financial

Statements:

• Detailed review and appropriate challenge

from key internal Group functions, such as

Risk, Control and Assurance, senior

managers and the CFO.

• Formal signoffs from the business area

senior managers, the finance managers and

CFO.

• Audit and Risk Committee oversight,

involving a review of key financial reporting

judgements, review and appropriate

challenge on matters such as any changes

to material accounting policies and

practices during the year, significant

adjustments and the going concern

assumption.

• The involvement of qualified, professional

employees with an appropriate level of

expertise and experience throughout the

business.

• Engagement of a professional and

experienced external auditor, a framework

for full transparent disclosure of

information during the audit process and

post audit evaluation.

The Directors’ Statement on a fair, balanced and

understandable Annual Report and

Consolidated Financial Statements is set out on

pages 70 to 71.

Report of the Audit and Compliance

Committee

The Audit and Compliance Committee replaced

the Audit and Risk Committee, which was

terminated by the Board on 23 March 2025.

The role and responsibilities of the Committee

are set out in its Terms of Reference.

Membership and meetings

The Committee members are all Non-Executive

directors. The Board is satisfied that the

Committee Chair, Harold Hutchinson, has

relevant knowledge and financial experience.

The Committee as a whole have experience

relevant to the sector in which the Company

operates.

No meetings of the Committee were held during

the part of the financial year since it was

established. A minimum of four Committee

meetings are scheduled for the year

commencing 1 April 2025.

The role of the Committee

The key responsibilities of the Audit and

Compliance Committee are to:

• Monitor the financial and non-financial

information preparation process for the

Company;

• Oversee the independence, activities and

efficiency of the internal audit function;

• Oversee and review the activities of the

Company’s compliance unit;

• Monitor the statutory audit of the annual

report and accounts of the Company; and

• Monitor the independence of the Group’s

external auditor and recommend to the

Board the appointment of the external

auditor and their associated terms of

engagement.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Corporate Governance Report (continued)

Report of the Nominations Committee

The role and responsibilities of the Committee

were set out in its Terms of Reference. The

Committee’s responsibilities included keeping

under review the composition of the Board and

senior executives, identifying and nominating

candidates for approval by the Board to fill any

vacancies and succession planning for directors

and other senior executives.

The Nominations Committee was terminated by

the Board on 23 March 2025 with all of its

powers, duties, and obligations returning to the

Board of Directors as necessary.

Membership and meetings

The Committee Chair was Alistair Buchanan,

Independent Non-Executive director.

Composition of the Committee and attendance

by individual members at meetings is detailed

on page 54. The Chief Executive Officer and

external advisors attend meetings at the

invitation of the Chair of the Committee.

The Nominations Committee held one meeting

during the year.

Diversity

As described in the Corporate Governance

report on page 55, the Board is committed to

diversity in its broadest sense and the

Nominations Committee ensured this remained

central to recruitment and succession planning.

The Committee typically undertook an annual

review to assess the Company’s planning for

succession to executive and senior management

roles.

Report of the Remuneration Committee

The Committee’s role was to determine the

remuneration structure for the Executive

directors and Board to ensure that it balances

appropriate reward with the creation of long-

term value, customer performance and

sustainability of the network.

It was also responsible for the review of the

remuneration of other members of the ELT to

ensure the structure and levels of remuneration

appropriately incentivise these individuals to

achieve the Company’s strategic objectives.

As required by the Code, the Company engages

directors on terms which do not reward poor

performance and, where necessary, require

directors to mitigate their losses.

Whilst the Company does not currently directly

engage its workforce in relation to executive

remuneration, there is information available

internally and externally regarding the key terms

of such remuneration.

When the Company’s CEO attended (by the

Committee’s invitation) the Committee meeting

held during the year, the CEO did not attend any

discussions in which he was individually

discussed.

Membership and meetings

The composition of the Committee and

attendance by individual members is detailed on

page 54.

The key areas of focus for the Remuneration

Committee during the year were:

• Company performance update and

executive incentive plan update.

• Executive bonus approvals and director

remuneration.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Corporate Governance Report (continued)

Report of the Remuneration Committee (continued)

Role of the Committee

The Committee reviewed and approved the overall remuneration policies for employees below director

level but did not set remuneration for these individuals. This oversight role allowed the Committee to

take into account pay policies and employment conditions across the Group.

The Committee has reviewed the appropriateness of the remuneration structure for the RIIO-ED2

regulatory period and, subject to some changes, determined that it continues to promote the long-term

success of the Company.

Share options are not offered as an incentive to either Executive or Non-Executive directors as the

Company is privately-owned.

Nature of remuneration of Executive directors

The table below sets out the nature of the remuneration of the Executive directors:

Element

Purpose and link to strategy

Framework

Basic Salary

Basic salary provides the core reward

for the role. Salaries are set at a

sufficient level to attract and retain

high calibre individuals who can deliver

the Group’s strategic objectives.

External advice is taken on all

remuneration to ensure that it remains

effective and appropriate. Levels of

basic salary are benchmarked and will

also reflect the director’s experience

and time at director level.

Benefits

Other benefits provided are designed,

as with basic salary, to provide a

competitive but not excessive reward

package.

In addition to basic salary, directors are

provided with a car allowance and are

offered private medical insurance.

Executive

Incentive Plan

(“EIP”)

Executive directors are members of the

Executive Incentive Plan. This aims to

reward both in-year performance and

incentivise strategic and innovative

behaviours over the longer-term,

aligned to shareholder objectives,

including customer performance.

Following Health & Safety best

practice, safety is considered to be an

essential part of any role. Therefore,

directors receive no Health & Safety

related incentives.

The EIP works on a balanced scorecard

approach, with measures scored on an

annual basis but set in line with longer

term ambitions, and bonus payouts in

part deferred into subsequent years, to

promote a strategic focus and

sustainable performance.

Pension

Directors are offered the same level of

defined contribution benefits as all

other employees, or a taxable payment

in lieu.

No director is a member of the defined

benefit scheme which is now closed to

new members.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Corporate Governance Report (continued)

Report of the Remuneration Committee

(continued)

CEO pay ratio

In line with statutory requirements, effective for

financial years commencing on or after 1 January

2019, companies with more than 250 employees

and which are quoted on the UK Official List are

required to publish information on their CEO pay

ratio. The requirement is to publish total CEO

remuneration compared to the 25

, 50

and 75

percentile total remuneration of full-time

equivalent UK employees.

There are three methodologies that companies

can choose to report their pay ratio, known as

Option A, B and C. The government preference,

and most accurate reporting method, is Option A.

Electricity North West Limited have elected to

use this method, consistent with previous years,

which enables us to compare total remuneration

for the financial year ended 31 March 2025, in

line with the pay gap requirements.

The following tables set out this information for

total remuneration

(which is inclusive of bonus,

long term executive incentive payments,

additional allowances or payments, benefit in

kind and employer pension contributions).

Bonus payments are linked closely to Company

performance and the timing of maturity of long-

term incentive arrangements, so may fluctuate

year on year. We have, therefore, also included a

comparison of total remuneration excluding

bonus and long-term incentive awards.

As per Table 1: The total CEO pay gap has

increased from 2024. The increase is primarily

due to the closure and subsequent payout of the

executive long-term incentive plan, and linked to

that closure, incentive payments accrued this

year and in prior years (that would normally be

payable next year) were paid “in year”.

The remuneration of employees who did not receive a full year’s

pay have been excluded to ensure the comparison is fair and

The closure of the executive incentive plan was

linked to the recent company sale process.

Payments and fees received by the CEO from the

NWEN (Jersey) group linked to the sale are not

applicable to this calculation as they are deemed

exceptional in nature.

TABLE 1

percentile

2025 Pay

excluding

bonus

1:11

1:8

1:6

2025 Total

remuneration

1:54

1:40

1:30

2024 Pay

excluding

bonus

1:11

1:8

1:6

2024 Total

remuneration

1:22

1:16

1:12

Employee remuneration amounts for each

percentile are shown in Table 2 below.

TABLE 2

percentile

2025 Pay

excluding

bonus

£49,070

£66,877

£88,568

2025 Total

remuneration

£50,947

£69,261

£92,694

2024 Pay

excluding

bonus

£44,756

£62,148

£84,529

2024 Total

remuneration

£46,219

£64,113

£87,661

equitable. For example, employees on reduced pay due to statutory

absence those with part year service have been excluded.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Corporate Governance Report (continued)

Report of the Safety, Health and

Environment Committee

The Committee developed the Company’s safety,

health and environment strategies, agreed

targets and monitored Company performance in

these areas. It regularly challenged the executive

and the safety, health and environment team to

look at new initiatives and work with other

organisations.

The Safety, Health and Environment Committee

was terminated by the Board on 23 March 2025

with all of its powers, duties, and obligations

returning to the Board of Directors as necessary.

Membership and meetings

The Committee Chair was Susan Cooklin,

Independent Non-Executive director until she

resigned on 21 March 2025. Composition of the

Committee and attendance by individual

members is detailed on page 54.

Meetings were also attended by executives in

charge of operationally focused directorates.

The role of the Committee

The Committee has delegated authority from the

Board set out in its Terms of Reference.

The primary purpose of the Committee was to:

• Set the corporate safety, health and

environment strategy, objectives, targets

and programmes.

• Monitor performance in these areas with a

view to:

- minimising risk;

- ensuring legal compliance;

- responding to significant events; and

- ensuring significant resources are

allocated for the control of safety,

health and environmental risks.

• Report to the Board developments, trends

and/or forthcoming legislation in relation to

the safety, health and environmental

matters which may be relevant to the

Company’s operations, assets or employees.

• Review the Company’s external reporting in

this area and regulatory disclosures.

At every meeting, the Committee received and

discussed in detail a Safety, Health and

Environment performance report for the

preceding period. Amongst other things, this

report covered case studies, key issues and

developments.

Additionally, the Committee considered relevant

risks (including a review of risk that forms part of

the Board’s overall annual exercise) and oversaw

the Company’s mitigation strategies.

This financial year the Committee focussed on

health and wellbeing activities. It also discussed

the goals of the Environmental Action Plan which

formed part of the previous RIIO-ED2 business

plan. The Fatigue Risk Management Plan was also

discussed for the wellbeing of employees, as was

other safety, health and environment challenges

facing the business.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Directors’ Report

The directors present their Annual Report and Consolidated Financial Statements of Electricity North

West Limited (“the Company”) and its subsidiaries (together referred to as “the Group”) for the year

ended 31 March 2025.

General information

The Company is a private company limited by

shares and incorporated and domiciled in

England, the United Kingdom under the

Companies Act 2006. The principal activity of

the Company is as an electricity distribution

company within the North West Electricity

Networks (Jersey) Limited (“NWEN (Jersey)”)

group, part of the wider group headed by

lberdrola, S.A., one of the largest utility

companies in the world and a leader in

renewable energy.

Information contained in Strategic Report

As permitted by section 414C of the Companies

Act 2006, certain information required to be

included in the Directors’ Report has been

included in the Strategic Report. Specifically,

this relates to:

• risk management, pages 43 to 50;

• how the directors have had regard to the

need to foster business relationships with

stakeholders, page 22;

• employee matters, pages 19 to 20;

• greenhouse gas emissions, pages 14 to 16;

and

• future developments, page 11.

Parent, ultimate parent and controlling party

The immediate parent undertaking is North

West Electricity Networks plc, a company

incorporated and registered in the United

Kingdom.

At 31 March 2024, the ultimate parent

undertaking and ultimate controlling party was

NWEN (Jersey), a company incorporated and

registered in Jersey.

On 22 October 2024, Scottish Power Energy

Networks Holdings Limited (“Scottish Power”),

part of the group headed by Iberdrola, S.A.,

acquired 88% of the shares of NWEN (Jersey),

with the remaining 12% of the shares retained

by KDM Power Limited.

The transaction was subject to review by the

Competition and Markets Authority (“CMA”)

pursuant to the regulations applicable to

mergers of energy network companies in the

United Kingdom; the CMA imposed an Initial

Enforcement Order (“IEO”) preventing any

integration until CMA approval was granted.

CMA approval was granted, and the IEO lifted,

on 20 March 2025.

In the period from 22 October 2024 to 20 March

2025, despite Scottish Power’s 88% equity

ownership of NWEN (Jersey), Scottish Power

did not control NWEN (Jersey), nor therefore

the Company, due to the restrictions in the IEO.

Scottish Power gained control of NWEN (Jersey)

on 20 March 2025, when the CMA approval was

granted and the IEO lifted.

At 31 March 2025, the directors regard

Iberdrola, S.A., a company incorporated and

registered in Spain, as the ultimate parent

undertaking and the ultimate controlling party.

Dividends

Details of the Group’s dividend policy can be

found in the Strategic Report, page 39.

During the year, the Company paid dividends

totalling £45.4m (2024: £30.4m) (Note 30).

The directors do not propose a final dividend for

the year ended 31 March 2025.

Capital structure

The Company’s capital structure is set out in

Note 29.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Directors’ Report (continued)

Financial instruments

The use of financial instruments and their

related risks are disclosed in the Financial

Review and Risk sections of the Strategic Report

on pages 39 and 48, and in Note 21.

Financial risk management

Disclosure around the Group’s principal risks

can be found in the Principal Risks and

Uncertainties section of the Strategic Report on

page 44, and in Note 22.

Employees

The Group’s policies on employee consultation

and involvement, the treatment of disabled

employees and on equality and diversity across

all areas of the business are contained within

the People section of the Strategic Report on

pages 19 to 20.

Greenhouse gas emissions and energy use

Further details on greenhouse gas emissions

are provided in the Business Carbon Footprint

section of the Strategic Report on pages 14 to

16.

Research and development

The Group is committed to developing

innovative and cost-effective solutions for

providing high quality services and reliability to

customers, and for the benefit of the wider

sector and the development of the network, as

further detailed in the Strategic Report. During

the year ended 31 March 2025 the Group

incurred £2.4m of expenditure on research and

development (2024: £1.9m), see Note 5.

Future developments

Details of the future developments of the

Company and Group can be found in the Chief

Executive Officer’s Statement and the Strategic

Report on page 11.

Events after the Balance Sheet date

On 16 June 2025 Scottish Power UK plc

provided North West Electricity Networks

(Jersey) Limited (“NWEN (Jersey)”) with a letter

of support detailing the financial support it has

committed to the group headed by NWEN

(Jersey). An amount of £500.0m is available and

can be utilised by NWEN (Jersey) and any of its

subsidiaries, including the Company. This

commitment will remain in place until the

earlier of the NWEN (Jersey) group securing

alternative financing, or 12 months from the

date of approval of these financial statements,

and will incur a charge of 20 basis points per

annum whilst in place.

Corporate governance

The Group has established a governance

framework for monitoring and overseeing

strategy, conduct of business standards and

operations of the entire business. Details of the

internal control and risk management systems

which govern the Group and Company are

outlined in the Corporate Governance Report

on pages 51 to 66.

Directors’ and officers’ insurance

The NWEN (Jersey) group maintains an

appropriate level of directors’ and officers’

liability insurance, whereby directors and

officers are indemnified against liabilities to the

extent permitted by the Companies Act.

The insurance is a group policy, held in the

name of the ultimate parent, Iberdrola, S.A.,

and is for the benefit of that company and all its

subsidiaries. NWEN (Jersey) and all its

subsidiaries were added to the policy on 22

October 2024, the date Iberdrola, S.A. acquired

its shareholding in NWEN (Jersey). Prior to this

date, NWEN (Jersey) arranged a policy in its

own name which has subsequently been

cancelled.

In addition, on 23 March 2025 the ENW board

by way of written resolution approved the grant

to the directors of a qualifying third-party

indemnity provision.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Directors’ Report (continued)

Directors

The directors of the Company who were in

office during the year were:

Executive Directors

• Chris Johns

• Ian Smyth

Non-executive Directors

• Keith Anderson (appointed 22 March 2025)

• Beatrice Araujo (appointed 22 October

2024, resigned 21 March 2025)

• Anne Baldock (resigned 21 March 2025)

• Alistair Buchanan

• Susan Cooklin (resigned 21 March 2025)

• Rob Holden (resigned 21 March 2025)

• Harold Hutchinson (appointed 22 October

2024)

• Sion Jones (resigned 22 October 2024)

• Charles Langan (appointed 22 March 2025)

• David Mesonero (appointed 22 March 2025)

• Peter O’Flaherty (resigned 22 October 2024)

• Genping Pan (resigned 22 October 2024)

• Mitsuo Wada (resigned 21 March 2025)

• Masahide Yamada

Alternate Directors

• Aisha Hamid (resigned 22 October 2024)

• Michiko Hara (appointed 4 July 2024,

resigned 21 March 2025)

• Makoto Murata

• Tatsuhiro Tamura (resigned 4 July 2024)

• Hailin Yu (resigned 22 October 2024)

Directors served for the whole year, and to the

date of this report, except where otherwise

indicated.

At no time during the year did any director have

a material interest in any contract or

arrangement which was significant in relation

to the Group’s business.

Independent auditor

PricewaterhouseCoopers LLP, Statutory

Auditor, Manchester, United Kingdom is acting

as independent auditor for the current year, but

will then step down. KPMG LLP, the

independent auditor of Iberdrola, S.A. and its

subsidiaries, will be proposed for appointment

as the statutory auditor of the Group and

Company.

Statement by the directors in performance of

their statutory duties in accordance with

s172(1) Companies Act 2006

The Board of Directors of the Company

consider, both individually and together, that

they have acted in a way they consider to be in

good faith and would be most likely to promote

the success of the Company for the benefit of

its members as a whole (having regard to the

stakeholders and matters set out in s172(1)(a-f)

of the Companies Act 2006) in decisions taken

during the year ended 31 March 2025. More

details can be found on page 28 of the Strategic

Report.

Registered address

The Company is registered in England, the

United Kingdom, at the following address:

Electricity North West Limited

Borron Street

Stockport

England

SK1 2JD

Registered number: 02366949

Approved by the Board on 16 June 2025 and

signed on its behalf by:

Chris Johns

Director

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Directors’ Responsibilities Statement

The directors are responsible for preparing the

Annual Report and Consolidated Financial

Statements and the financial statements in

accordance with applicable law and regulation.

Company law requires the directors to prepare

financial statements for each financial year.

Under that law the directors have prepared the

group and the company financial statements in

accordance with UK-adopted international

accounting standards.

Under company law, 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 group and company

and of the profit or loss of the group and

company for that period. In preparing the

financial statements, the directors are required

to:

• select suitable accounting policies and then

apply them consistently;

• state whether applicable UK-adopted

international accounting standards have

been followed, subject to any material

departures disclosed and explained in the

financial statements;

• make judgements and accounting estimates

that are reasonable and prudent; and

• prepare the financial statements on the

going concern basis unless it is inappropriate

to presume that the group and company will

continue in business.

The directors are responsible for safeguarding

the assets of the group and company and hence

for taking reasonable steps for the prevention

and detection of fraud and other irregularities.

The directors are also responsible for keeping

adequate accounting records that are sufficient

to show and explain the group’s and company’s

transactions and disclose with reasonable

accuracy at any time the financial position of

the group and company and enable them to

ensure that the financial statements comply

with the Companies Act 2006.

The directors are responsible for the

maintenance and integrity of the company’s

website. Legislation in the United Kingdom

governing the preparation and dissemination of

financial statements may differ from legislation

in other jurisdictions.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Directors’ Responsibilities Statement

(continued)

Directors’ confirmations

The directors consider that the Annual Report

and Consolidated Financial Statements and

accounts, taken as a whole, is fair, balanced and

understandable and provides the information

necessary for shareholders to assess the

group’s and company’s position and

performance, business model and strategy.

Each of the directors, whose names and

functions are listed in Directors' Report confirm

that, to the best of their knowledge:

• the group and company financial

statements, which have been prepared in

accordance with UK-adopted international

accounting standards and IFRSs issued by

IASB, give a true and fair view of the assets,

liabilities, financial position and profit of the

group and profit of the company; and

• the Strategic Report includes a fair review of

the development and performance of the

business and the position of the group and

company, together with a description of the

principal risks and uncertainties that it faces.

In the case of each director in office at the date

the directors’ report is approved:

• so far as the director is aware, there is no

relevant audit information of which the

group’s and company’s auditors are

unaware; and

• they have taken all the 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 group’s

and company’s auditors are aware of that

information.

Approved by the Board of Directors on 16 June

2025 and is signed on its behalf by:

Chris Johns

Director

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Independent auditors’ report to the

members of Electricity North West

Limited

Report on the audit of the financial statements

Opinion

In our opinion, Electricity North West Limited’s Group financial statements and Company financial

statements (the “financial statements”):

• give a true and fair view of the state of the Group’s and of the Company’s affairs as at

31 March 2025 and of the Group’s and Company’s profit and the Group’s and Company’s cash

flows 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.

We have audited the financial statements, included within the Annual Report and Consolidated

Financial Statements (the “Annual Report”), which comprise: the Consolidated and Company

Statements of Financial Position as at 31 March 2025; the Consolidated and Company Statements of

Profit or Loss and Other Comprehensive Income, the Consolidated Statement of Changes in Equity,

the Company Statement of Changes in Equity, and the Consolidated and Company Statements of Cash

Flows for the year then ended; and the notes to the financial statements, comprising material

accounting policy information and other explanatory information.

Our opinion is consistent with our reporting to the Audit and Compliance Committee.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and

applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’

responsibilities for the audit of the financial statements section of our report. We believe that the

audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We remained independent of the Group in accordance with the ethical requirements that are relevant

to our audit of the financial statements in the UK, which includes the FRC’s Ethical Standard, as

applicable to listed public interest entities, and we have fulfilled our other ethical responsibilities in

accordance with these requirements.

To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s

Ethical Standard were not provided.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Independent Auditor’s Report to the Members of Electricity North

West Limited (continued)

Other than those disclosed in Note 5 - Operating Profit, in the Notes to the Financial Statements, we

have provided no non-audit services to the Company or its controlled undertakings in the period under

audit.

Our audit approach

Overview

Audit scope

• The Group is organised into three components, located in the UK. The Group financial statements

are a consolidation of these components and the consolidation journals.

• Of the 3 components, we have identified one component which we considered to be significant

based on size and therefore required an audit of its complete financial information, this component

is Electricity North West Limited. We also audited material consolidation journals.

• Electricity North West Limited contributed 100 per cent of the Group's consolidated revenue.

• The remaining two components are considered to be inconsequential components, as such we

performed no additional audit procedures over these entities.

Key audit matters

• Valuation of Derivative Financial Instruments (Group and Company)

• Capitalisation of Costs (Group and Company)

• Valuation of Defined Benefit Pension Obligations (Group and Company)

Materiality

• Overall Group materiality: £7,300,000 (2024: £5,700,000) based on 5% of three years average of

profit before tax, derivative fair value movements and accretion charges.

• Overall Company materiality: £7,300,000 (2024: £5,700,000) based on 5% of three years average

of profit before tax, derivative fair value movements and accretion charges.

• Performance materiality: £5,500,000 (2024: £4,275,000) (Group) and £5,500,000 (2024:

£4,275,000) (Company).

The scope of our audit

As part of designing our audit, we determined materiality and assessed the risks of material

misstatement in the financial statements.

Key audit matters

Key audit matters are those matters that, in the auditors’ professional judgement, were of most

significance in the audit of the financial statements of the current period and include the most

significant assessed risks of material misstatement (whether or not due to fraud) identified by the

auditors, 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. These matters, and any

comments we make on the results of our procedures thereon, were addressed in the context of our

audit of the financial statements as a whole, and in forming our opinion thereon, and we do not

provide a separate opinion on these matters.

This is not a complete list of all risks identified by our audit.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Independent Auditor’s Report to the Members of Electricity North

West Limited (continued)

Material uncertainty related to going concern and the valuation of defined benefit pension assets,

which were key audit matters last year, are no longer included because of the conclusion of the

Strategic Review undertaken by the shareholders of the Company's former ultimate parent

undertaking, North West Electricity Networks (Jersey) Limited ("NWEN (Jersey)"), which resulted in

the sale of 88% of the shares of NWEN (Jersey) to the Group headed by Iberdrola SA. As a result, the

conditions giving rise to a material uncertainty related to going concern in the prior year are no longer

present. In addition, the valuation of defined benefit pension assets is no longer considered to be a

key audit matter because of a reduction in our assessed level of audit risk associated with this area.

Otherwise, the key audit matters below are consistent with last year.

Key audit matter

How our audit addressed the key

audit matter

Valuation of Derivative Financial Instruments (Group and Company)

Refer to Note 20 in the Group and Company financial statements.

The Group and Company hold derivative financial instruments with

both external and sister Company counterparties.

At 31 March 2025 instruments held with external parties comprised

derivative liabilities of £326.1m and derivative assets of £43.8m,

whilst those held with sister companies comprised derivative

liabilities and assets of £192.2m each.

These instruments are measured at fair value through profit and loss.

The valuations are complex, and made up of underlying risk free

valuations, overlaid with credit risk adjustments (the 'risk

adjustments'). We consider there to be a heightened risk of valuation

error with respect to the risk adjustments due to fewer observable

inputs and a higher level of estimation uncertainty.

The risk adjustment have the effect of reducing the overall value of

the derivative liabilities by £64.0m.

To assess the appropriateness of the valuation

of derivative financial instruments, we

performed the following:

> We assessed the reasonableness of the risk

adjustments using independently sourced data

points and models;

> We understood the underlying control

environment applied to the valuation of the

instruments;

> We tested the models and key assumptions

used by management to value derivatives;

> We assessed the adequacy of the disclosures

within the financial statements, including the

disclosure requirements related to the Level 3

inputs used for valuing the credit risk

adjustment; and

> We prepared independent valuations for

derivatives within the portfolio as at 31 March

2025 on a pre and post credit risk basis,

including independently calculating individual

credit risk adjustments.

We concluded that valuations of derivatives,

including the determination of credit risk

adjustments within the valuations, were in line

with ranges and thresholds we independently

determined using independently sourced data

points.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Independent Auditor’s Report to the Members of Electricity North

West Limited (continued)

Capitalisation of Costs (Group and Company)

Refer to Notes 3 and 11 in the Group and Company financial

statements.

The Group continues to make significant capital investment in

Property, plant and equipment, principally in relation to the

development of the distribution network. For the year ended 31

March 2025 capital additions totalled £361.8m.

These additions include £152.5m of capitalised overhead costs,

of which £105.7m relates to capitalised employee costs. Certain

categories of overhead costs are capitalised based on

judgemental percentage rates.

This year, our testing has focused on partly capitalised areas

where the capitalisation rate has changed the most from prior

year, whether increasing or decreasing. This is where we believe

the significant risk resides.

The risk is that the capitalisation rates used do not appropriately

reflect the nature of activities to which the underlying costs relate,

resulting in an incorrect apportionment of overhead costs

between Property, plant and equipment on the Consolidated and

Company Statements of Financial Position and expenses

recognised in the Consolidated and Company Statements of

Profit or Loss and Other Comprehensive Income.

To assess the appropriateness of and nature of costs

capitalised into Property, plant and equipment in the

year, we conducted the following procedures:

> We discussed with management to understand the

process by which capitalisation rates are determined

and how costs are then appropriately accounted for

when incurred;

> We understood how activities by cost centre are

used to determine the percentage of costs

capitalised;

> We sampled a selection of the cost categories, with

a focus on the cost centres that have experienced

the most movement in capitalisation rate since FY24;

> We compared rates to historical trends and industry

peers for reasonableness. We have considered the

overall trend in the level of costs capitalised, taking

into account relevant developments impacting the

Company and Group, for example the increased

network investment required to meet net-zero

commitments;

> We verified the accuracy of the disclosures

included within the financial statements, as well as

performing testing over the sensitivity disclosures;

> We performed procedures to confirm that costs are

appropriately allocated to the cost centre or centres

to which they relate; and

> We have selected cost centres for testing based on

the risk assessment set and undertook procedures to

corroborate the nature of activities performed under

each cost category to assess the appropriateness of

the capitalisation rates applied.

We have concluded that management has applied

appropriate estimates to determine the overall level

of costs to be capitalised for the year, including in

relation to those costs capitalised based on a

judgemental proportion of costs, where we

considered there to be a heightened level of audit

risk.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Independent Auditor’s Report to the Members of Electricity North

West Limited (continued)

Valuation of Defined Benefit Pension Obligations (Group

and Company)

Refer to Note 23 in the Group and Company financial

statements. The net defined benefit pension surplus at

31 March 2025 was £56.1m, comprising gross assets of

£825.2m and gross liabilities of £769.1m.

The determination of the value of liabilities requires the

application of an actuarial valuation method, the

attribution of benefits to periods of service, and the use

of significant actuarial assumptions including in

particular the discount rate, inflation rates and the

average life expectancy of members.

To assess the appropriateness of the values of obligations in

the defined benefit pension scheme, we performed the

following:

> We assessed the reasonableness of membership data

used in valuing the defined benefit pension obligation;

> In regard to active members, we have utilised testing from

prior period given the triennial valuation data is rolled

forward;

> We reviewed the competency, independence, objectivity

and capability of management’s expert used in setting the

liability assumptions; and

> We considered the adequacy of the Group's disclosures in

respect of reporting the key assumptions and sensitivities of

assumptions.

Based on the results of our testing, we found the liability

assumptions made in the valuation of the UK defined benefit

pension scheme resulted in an overall acceptable valuation,

taking into account the materiality level applied. We also

consider the disclosures made in the financial statements to

be appropriate.

How we tailored the audit scope

We tailored the scope of our audit to ensure that we performed enough work to be able to give an

opinion on the financial statements as a whole, taking into account the structure of the Group and the

Company, the accounting processes and controls, and the industry in which they operate.

The Group owns and operates the North West electricity distribution network, meaning that it is a

Distribution Network Operator. There is one cash generating unit within the Group.

The Group is organised into three components, located in the UK, being the Company, and two

dormant subsidiary companies (Electricity North West Number 1 Company Limited and ENW (ESPS)

Pensions Trustees Limited). The Group financial statements are a combination of these components

and consolidation journals.

Of the three components, we have identified one component, Electricity North West Limited, which

we considered to be significant based on size and therefore required an audit of its complete financial

information. We also audited material consolidation journals.

Electricity North West Limited contributed 100 per cent of the Group's consolidated revenue.

All audit work on the Group and the Company was performed by the Group engagement team.

The remaining two components are considered to be inconsequential components.

The impact of climate risk on our audit

As part of our audit we made enquiries of management to understand the process management

adopted to assess the extent of the potential impact of climate risk on the Group’s financial

statements and support the disclosures made within the Annual Report.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Independent Auditor’s Report to the Members of Electricity North

West Limited (continued)

We used our knowledge of the Group, to challenge the completeness of management’s climate risk

assessment by challenging the consistency of management’s climate impact assessment with internal

climate plans and board minutes, including whether the time horizons management have used take

account of all relevant aspects of climate change such as transition risks and reading the entity’s

website and communications for details of climate related impacts.

Using our knowledge of the business we evaluated management’s risk assessment, its estimates as

set out in Note 3 of the financial statements and resulting disclosures, where significant. We

considered the only financial statement areas to be potentially materially impacted by climate risk to

be the directors' impairment assessment and capitalisation of costs. We tailored our audit approach

to respond to the audit risk identified in these areas. In particular, we challenged management on how

carbon reduction commitments have impacted the assumptions within the discounted cash flows

prepared by management that are used in the Group's impairment analysis, and the level of costs

capitalised into Property, Plant and Equipment.

We also considered the consistency of the disclosures in relation to climate change within the Annual

Report with the financial statements and our knowledge obtained from our audit.

Our procedures did not identify any other material impacts in the context of our audit of the financial

statements as a whole, or our key audit matters for the year ended 31 March 2025.

Materiality

The scope of our audit was influenced by our application of materiality. We set certain quantitative

thresholds for materiality. These, together with qualitative considerations, helped us to determine the

scope of our audit and the nature, timing and extent of our audit procedures on the individual financial

statement line items and disclosures and in evaluating the effect of misstatements, both individually

and in aggregate on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a

whole as follows:

Financial statements - Group

Financial statements - Company

Overall

materiality

£7,300,000 (2024: £5,700,000).

How we

determined

5% of three years average of profit before tax,

derivative fair value movements and accretion

charges

5% of three years average of profit before tax,

derivative fair value movements and accretion

charges

Rationale for

benchmark

applied

Profit before tax and fair value movements is a

primary measure reported to shareholders to

indicate the underlying performance of the Group

and Company. We have also excluded the

impact of accretion charges, as we do not

consider these to relate directly to the underlying

operations and performance of the Group and

Company. The use of a three year average is

considered appropriate as this reduces volatility

caused by under or over recoveries of electricity

distribution revenue in a specific financial year.

Profit before tax and fair value movements is a

primary measure reported to shareholders to

indicate the underlying performance of the

Company. We have also excluded the impact of

accretion charges, as we do not consider these

to relate directly to the underlying operations and

performance of the Company. The use of a three

year average is considered appropriate as this

reduces volatility caused by under or over

recoveries of electricity distribution revenue in a

specific financial year.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Independent Auditor’s Report to the Members of Electricity North

West Limited (continued)

For each component in the scope of our Group audit, we allocated a materiality that is less than our

overall Group materiality. The range of materiality allocated across components was £6,090,000,

being the component materiality level applied to the sole audit of the financial information of the

component, Electricity North West Limited.

We use performance materiality to reduce to an appropriately low level the probability that the

aggregate of uncorrected and undetected misstatements exceeds overall materiality. Specifically, we

use performance materiality in determining the scope of our audit and the nature and extent of our

testing of account balances, classes of transactions and disclosures, for example in determining

sample sizes. Our performance materiality was 75% (2024: 75%) of overall materiality, amounting to

£5,500,000 (2024: £4,275,000) for the Group financial statements and £5,500,000 (2024: £4,275,000)

for the Company financial statements.

In determining the performance materiality, we considered a number of factors - the history of

misstatements, risk assessment and aggregation risk and the effectiveness of controls - and concluded

that an amount at the upper end of our normal range was appropriate.

We agreed with the Audit and Compliance Committee that we would report to them misstatements

identified during our audit above £0.32m (Group audit) (2024: £0.28m) and £0.32m (Company audit)

(2024: £0.28m) as well as misstatements below those amounts that, in our view, warranted reporting

for qualitative reasons.

Conclusions relating to going concern

Our evaluation of the directors’ assessment of the Group's and the Company’s ability to continue to

adopt the going concern basis of accounting included:

• Evaluating management's forecast base case and downside scenarios and challenging the

appropriateness of underlying assumptions;

• Reviewing management accounts for the financial period to date and comparing those with

management's scenarios;

• Evaluating the historical accuracy of management forecasts;

• Testing the mathematical integrity of management's going concern forecast models;

• Reviewing the disclosures made in respect of going concern included in the financial statements;

• Reviewing the letter of support provided by Scottish Power UK plc and assessing the Directors'

evaluation of Scottish Power UK plc's ability to provide financial support up to the level required

under all forecast scenarios; and

• Assessing whether the Company has sufficient liquidity to act as a guarantor of related parties and

challenging the available support by applying severe but plausible sensitivities.

Based on the work we have performed, we have not identified any material uncertainties relating to

events or conditions that, individually or collectively, may cast significant doubt on the Group's and

the Company’s ability to continue as a going concern for a period of at least twelve months from when

the financial statements are authorised for issue.

In auditing the financial statements, we have concluded that the directors’ use of the going concern

basis of accounting in the preparation of the financial statements is appropriate.

However, because not all future events or conditions can be predicted, this conclusion is not a

guarantee as to the Group's and the Company's ability to continue as a going concern.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Independent Auditor’s Report to the Members of Electricity North

West Limited (continued)

In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code,

we have nothing material to add or draw attention to in relation to the directors’ statement in the

financial statements about whether the directors considered it appropriate to adopt the going concern

basis of accounting.

Our responsibilities and the responsibilities of the directors with respect to going concern are

described in the relevant sections of this report.

Reporting on other information

The other information comprises all of the information in the Annual Report other than the financial

statements and our auditors’ report thereon. The directors are responsible for the other information.

Our opinion on the financial statements does not cover the other information and, accordingly, we do

not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any

form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the other

information and, in doing so, consider whether the other information is materially inconsistent with

the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially

misstated. If we identify an apparent material inconsistency or material misstatement, we are

required to perform procedures to conclude whether there is a material misstatement of the financial

statements or a material misstatement of the other information. If, based on the work we have

performed, we conclude that there is a material misstatement of this other information, we are

required to report that fact. We have nothing to report based on these responsibilities.

With respect to the Strategic report and Directors' Report, we also considered whether the disclosures

required by the UK Companies Act 2006 have been included.

Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to

report certain opinions and matters as described below.

Strategic report and Directors' Report

In our opinion, based on the work undertaken in the course of the audit, the information given in the

Strategic report and Directors' Report for the year ended 31 March 2025 is consistent with the

financial statements and has been prepared in accordance with applicable legal requirements.

In light of the knowledge and understanding of the Group and Company and their environment

obtained in the course of the audit, we did not identify any material misstatements in the Strategic

report and Directors' Report.

Corporate governance statement

ISAs (UK) require us to review the directors’ statements in relation to going concern, longer-term

viability and that part of the corporate governance statement relating to the Company’s compliance

with the provisions of the UK Corporate Governance Code, which the Listing Rules of the Financial

Conduct Authority specify for review by the auditor. Our additional responsibilities with respect to the

corporate governance statement as other information are described in the Reporting on other

information section of this report.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Independent Auditor’s Report to the Members of Electricity North

West Limited (continued)

Based on the work undertaken as part of our audit, we have concluded that each of the following

elements of the corporate governance statement, included within the Strategic Report, Directors'

Report and Corporate Governance Report is materially consistent with the financial statements and

our knowledge obtained during the audit, and we have nothing material to add or draw attention to

in relation to:

• The directors’ confirmation that they have carried out a robust assessment of the emerging and

principal risks;

• The disclosures in the Annual Report that describe those principal risks, what procedures are in

place to identify emerging risks and an explanation of how these are being managed or mitigated;

• The directors’ statement in the financial statements about whether they considered it appropriate

to adopt the going concern basis of accounting in preparing them, and their identification of any

material uncertainties to the Group’s and Company’s ability to continue to do so over a period of

at least twelve months from the date of approval of the financial statements;

• The directors’ explanation as to their assessment of the Group's and Company’s prospects, the

period this assessment covers and why the period is appropriate; and

• The directors’ statement as to whether they have a reasonable expectation that the Company will

be able to continue in operation and meet its liabilities as they fall due over the period of its

assessment, including any related disclosures drawing attention to any necessary qualifications or

assumptions.

Our review of the directors’ statement regarding the longer-term viability of the Group and Company

was substantially less in scope than an audit and only consisted of making inquiries and considering

the directors’ process supporting their statement; checking that the statement is in alignment with

the relevant provisions of the UK Corporate Governance Code; and considering whether the statement

is consistent with the financial statements and our knowledge and understanding of the Group and

Company and their environment obtained in the course of the audit.

In addition, based on the work undertaken as part of our audit, we have concluded that each of the

following elements of the corporate governance statement is materially consistent with the financial

statements and our knowledge obtained during the audit:

• The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced

and understandable, and provides the information necessary for the members to assess the

Group’s and Company's position, performance, business model and strategy;

• The section of the Annual Report that describes the review of effectiveness of risk management

and internal control systems; and

• The section of the Annual Report describing the work of the Audit and Compliance Committee.

We have nothing to report in respect of our responsibility to report when the directors’ statement

relating to the Company’s compliance with the Code does not properly disclose a departure from a

relevant provision of the Code specified under the Listing Rules for review by the auditors.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Independent Auditor’s Report to the Members of Electricity North

West Limited (continued)

Responsibilities for the financial statements and the audit

Responsibilities of the directors for the financial statements

As explained more fully in the Directors' Responsibilities Statement, the directors are responsible for

the preparation of the financial statements in accordance with the applicable framework and for being

satisfied that they give a true and fair view. The directors are also 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.

In preparing the financial statements, the directors are responsible for assessing the Group’s and the

Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going

concern and using the going concern basis of accounting unless the directors either intend to liquidate

the Group or the Company or to cease operations, or have no realistic alternative but to do so.

Auditors’ responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole

are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report

that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee

that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when

it exists. Misstatements can arise from fraud or error and are considered material if, individually or in

the aggregate, they could reasonably be expected to influence the economic decisions of users taken

on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design

procedures in line with our responsibilities, outlined above, to detect material misstatements in

respect of irregularities, including fraud. The extent to which our procedures are capable of detecting

irregularities, including fraud, is detailed below.

Based on our understanding of the Group and industry, we identified that the principal risks of non-

compliance with laws and regulations related to Health and Safety regulation and regulations

applicable to the operation of electricity distribution networks in the UK, and we considered the extent

to which non-compliance might have a material effect on the financial statements. We also considered

those laws and regulations that have a direct impact on the financial statements such as the

Companies Act 2006 and applicable tax laws. We evaluated management’s incentives and

opportunities for fraudulent manipulation of the financial statements (including the risk of override

of controls), and determined that the principal risks were related to inappropriate journal entries to

improve financial performance, and management bias within accounting estimates and judgements.

Audit procedures performed by the engagement team included:

• challenging assumptions and judgements made by management in their significant accounting

estimates;

• discussions with the Audit and Compliance Committee, management and internal audit including

consideration of known or suspected instances of non-compliance with laws and regulation or

fraud;

• reviewing minutes of meetings of those charged with governance;

• auditing the calculations supporting tax balances and disclosures;

• identifying and testing journal entries, in particular any journal entries posted with unusual account

combinations; and

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Independent Auditor’s Report to the Members of Electricity North

West Limited (continued)

• reviewing financial statements disclosures and testing to supporting documentation, where

appropriate, to assess compliance with applicable laws and regulations.

There are inherent limitations in the audit procedures described above. We are less likely to become

aware of instances of non-compliance with laws and regulations that are not closely related to events

and transactions reflected in the financial statements. Also, the risk of not detecting a material

misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud

may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or

through collusion.

Our audit testing might include testing complete populations of certain transactions and balances,

possibly using data auditing techniques. However, it typically involves selecting a limited number of

items for testing, rather than testing complete populations. We will often seek to target particular

items for testing based on their size or risk characteristics. In other cases, we will use audit sampling

to enable us to draw a conclusion about the population from which the sample is selected.

A further description of our responsibilities for the audit of the financial statements is located on the

FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’

report.

Use of this report

This report, including the opinions, has been prepared for and only for the Company’s members as a

body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose.

We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any

other person to whom this report is shown or into whose hands it may come save where expressly

agreed by our prior consent in writing.

Other required reporting

Companies Act 2006 exception reporting

Under the Companies Act 2006 we are required to report to you if, in our opinion:

• we have not obtained all the information and explanations we require for our audit; or

• adequate accounting records have not been kept by the Company, or returns adequate for our

audit have not been received from branches not visited by us; or

• certain disclosures of directors’ remuneration specified by law are not made; or

• the Company financial statements are not in agreement with the accounting records and returns.

We have no exceptions to report arising from this responsibility.

Appointment

Following the recommendation of the Audit and Compliance Committee, we were appointed by the

members on 16 September 2022 to audit the financial statements for the year ended 31 March 2023

and subsequent financial periods. The period of total uninterrupted engagement is 3 years, covering

the years ended 31 March 2023 to 31 March 2025.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Independent Auditor’s Report to the Members of Electricity North

West Limited (continued)

Other matter

The Company is required by the Financial Conduct Authority Disclosure Guidance and Transparency

Rules to include these financial statements in an annual financial report prepared under the structured

digital format required by DTR 4.1.15R - 4.1.18R and filed on the National Storage Mechanism of the

Financial Conduct Authority. This auditors’ report provides no assurance over whether the structured

digital format annual financial report has been prepared in accordance with those requirements.

Simon White (Senior Statutory Auditor)

for and on behalf of PricewaterhouseCoopers LLP

Chartered Accountants and Statutory Auditors

Manchester

16 June 2025

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Financial Statements

Consolidated and Company Statements of Profit or Loss and Other Comprehensive

Income

For the year ended 31 March 2025

		Group and	Group and
		Company	Company
		2025	2024
	Note	£m	£m
Revenue	4	654.4	598.1
Employee costs	5,6	(80.0)	(76.7)
Depreciation and amortisation expense	5	(157.0)	(146.7)
Other operating costs		(136.6)	(145.6)
Total operating costs		(373.6)	(369.0)
Operating profit	5	280.8	229.1
Finance income	8	6.7	21.0
Finance costs	9	(39.1)	(88.3)
Profit before income tax		248.4	161.8
Income tax expense	10	(61.9)	(41.7)
Profit for the financial year	28	186.5	120.1
Other comprehensive income/(expense):
Items that will not be reclassified to profit or loss:
Remeasurement of retirement benefit scheme	23	14.1	(6.8)
Deferred tax on remeasurement of retirement benefit scheme	25	(3.5)	1.7
Other comprehensive income/(expense) for the financial year	28	10.6	(5.1)
Total comprehensive income for the financial year		197.1	115.0

The results for the current and prior year are derived from continuing operations.

The above consolidated and company statements of profit or loss and other comprehensive income

should be read in conjunction with the notes which form part of these financial statements.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Consolidated and Company Statements of Financial Position

As at 31 March 2025

		Group	Company	Group	Company
		2025	2025	2024	2024
	Note	£m	£m	£m	£m
ASSETS
Non-current assets
Property, plant and equipment	11	4,004.8	4,004.8	3,785.8	3,785.8
Intangible assets and goodwill	13	53.1	53.1	52.1	52.1
Investment in subsidiaries	14	-	15.4	-	15.4
Derivative assets	20	236.0	236.0	245.6	245.6
Retirement benefit surplus	23	56.1	56.1	39.0	39.0
Total non-current assets		4,350.0	4,365.4	4,122.5	4,137.9
Current assets
Inventories	15	56.7	56.7	49.3	49.3
Trade and other receivables	16	100.9	100.9	102.5	102.5
Cash and cash equivalents	17	132.1	132.1	189.8	189.8
Total current assets		289.7	289.7	341.6	341.6
Total assets		4,639.7	4,655.1	4,464.1	4,479.5

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Consolidated and Company Statements of Financial Position (continued)

As at 31 March 2025

		Group	Company	Group	Company
		2025	2025	2024	2024
	Note	£m	£m	£m	£m
LIABILITIES
Current liabilities
Trade and other payables	18	(187.3)	(203.0)	(163.5)	(179.2)
Current income tax liability		(8.7)	(8.7)	(18.5)	(18.5)
Borrowings	19	(467.8)	(467.8)	(10.9)	(10.9)
Customer contributions	24	(67.1)	(67.1)	(81.0)	(81.0)
Provisions	26	(2.5)	(2.5)	(0.5)	(0.5)
Total current liabilities		(733.4)	(749.1)	(274.4)	(290.1)
Non-current liabilities
Borrowings	19	(1,098.0)	(1,098.0)	(1,559.1)	(1,559.1)
Derivative liabilities	20	(518.3)	(518.3)	(569.5)	(569.5)
Customer contributions	24	(749.9)	(749.9)	(720.3)	(720.3)
Deferred tax	25	(308.9)	(308.9)	(262.2)	(262.2)
Provisions	26	(1.1)	(1.1)	(0.2)	(0.2)
Total non-current liabilities		(2,676.2)	(2,676.2)	(3,111.3)	(3,111.3)
Total liabilities		(3,409. 6)	(3,425.3)	(3,385.7)	(3,401.4)
Net assets		1,230.1	1,229.8	1,078.4	1,078.1
EQUITY
Share capital	27,28	238.4	238.4	238.4	238.4
Share premium account	28	4.4	4.4	4.4	4.4
Revaluation reserve	28	68.0	68.0	70.0	70.0
Capital redemption reserve	28	8.6	8.6	8.6	8.6
Retained earnings	28	910.7	910.4	757.0	756.7
Total equity	28	1,230.1	1,229.8	1,078.4	1,078.1

The above consolidated and company statements of financial position should be read in conjunction

with the notes which form part of these financial statements.

The financial statements were approved and authorised for issue by the Board of directors on 16 June

2025 and were signed on its behalf by:

Chris Johns

Director

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Consolidated Statement of Changes in Equity

For the year ended 31 March 2025

Share capital

(Note

27)

Share premium

account

Revaluation reserve

Capital redemption

reserve

Retained earnings

Total

equity

	£m	£m	£m	£m	£m	£m
At 1 April 2023	238.4	4.4	72.0	8.6	670.4	993.8
Profit for the financial year	-	-	-	-	120.1	120.1
Other comprehensive expense for the financial	-	-	-	-	(5.1)	(5.1)
year
Transfer from revaluation reserve	-	-	(2.0)	-	2.0	-
Total comprehensive income for the financial	-	-	(2.0)	-	117.0	115.0
year
Dividends (Note 30 & 32)	-	-	-	-	(30.4)	(30.4)
At 31 March 2024 and 1 April 2024	238.4	4.4	70.0	8.6	757.0	1,078.4
Profit for the financial year	-	-	-	-	186.5	186.5
Other comprehensive income for the financial
year	-	-	-	-	10.6	10.6
Transfer from revaluation reserve	-	-	(2.0)	-	2.0	-
Total comprehensive income for the financial
year	-	-	(2.0)	-	199.1	197.1
Dividends (Note 30 & 32)	-	-	-	-	(45.4)	(45.4)
At 31 March 2025	238.4	4.4	68.0	8.6	910.7	1,230.1

The above consolidated statement of changes in equity should be read in conjunction with the notes

which form part of these financial statements.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Company Statement of Changes in Equity

For the year ended 31 March 2025

Share capital

(Note

27)

premium

account

Revaluation reserve

Capital redemption

reserve

Retained earnings

Total

equity

£m

At 1 April 2023

238.4

4.4

72.0

8.6

670.1

993.5

Profit for the financial year

120.1

Other comprehensive expense for the financial

year

(5.1)

Transfer from revaluation reserve

(2.0)

2.0

Total comprehensive income for the financial

year

(2.0)

117.0

115.0

Dividends (Note 30 & 32)

(30.4)

At 31 March 2024 and 1 April 2024

238.4

4.4

70.0

8.6

756.7

1,078.1

Profit for the financial year

186.5

Other comprehensive income for the financial

year

10.6

Transfer from revaluation reserve

(2.0)

2.0

Total comprehensive income for the financial

year

(2.0)

199.1

197.1

Dividends (Note 30 & 32)

(45.4)

At 31 March 2025

238.4

4.4

68.0

8.6

910.4

1,229.8

The above company statement of changes in equity should be read in conjunction with the notes

which form part of these financial statements.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Consolidated and Company Statements of Cash Flows

For the year ended 31 March 2025

		Group and	Group and
		Company	Company
		2025	2024
	Note	£m	£m
Operating activities
Cash generated from operations	34	412.2	311.3
Customer contributions received	24	37.5	57.1
Interest paid		(79.8)	(75.4)
Interest portion of lease liabilities	19	(0.3)	(0.3)
Accretion on index-linked swaps	9	-	(87.0)
Income taxes (paid)/received		(28.6)	6.2
Net cash generated from operating activities		341.0	211.9
Investing activities
Interest received and similar income		6.9	22.6
Transfer from money market deposits over three months		-	305.7
Purchase of property, plant and equipment		(355.4)	(273.5)
Purchase of intangible assets	13	(15.2)	(11.1)
Proceeds from sale of property, plant and equipment		0.5	0.2
Net cash (used in)/generated from investing activities		(363.2)	43.9
Net cash flow before financing activities		(22.2)	255.8
Financing activities
Repayment of external borrowings	19	(9.3)	(232.9)
Repayment of lease liabilities	19	(1.9)	(1.8)
Increase in loan from parent	19	1.3	13.3
Movement on cash collateral held		19.8	12.0
Dividends paid	30,32	(45.4)	(30.4)
Net cash used in financing activities		(35.5)	(239.8)
Net (decrease)/increase in cash and cash equivalents		(57.7)	16.0
Cash and cash equivalents at the beginning of the year		189.8	173.8
Cash and cash equivalents at the end of the year	17	132.1	189.8

The above consolidated and company statements of cash flows should be read in conjunction with

the notes which form part of these financial statements.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Notes to the Financial Statements

Electricity North West Limited is a private company, incorporated and domiciled in the United

Kingdom . Its registered office and principal place of business is at Electricity North West, Borron

Street, Stockport, England, SK1 2JD .

The financial statements are presented in sterling, which is the functional currency of the Company

and Group. All values are stated in million pounds (£m) unless otherwise indicated.

The financial statements are prepared on the going concern basis. Further detail on the going concern

assessment is contained in the Strategic Report, pages 40 to 41, and Note 2.

1. Adoption of new and amended standards

New and amended standards adopted by the Group and Company

In the current year, the Group and Company has applied the following amendments to IFRS Standards

issued by the International Accounting Standards Board (IASB) for an accounting period that begins

on or after 1 January 2024; their adoption has not had any material impact on the disclosures or the

amounts reported in these financial statements:

• Amendments to IAS 1: Classification of Liabilities as Current or Non-current and Non-current

Liabilities with Covenants;

• Amendments to IFRS 16: Lease Liability in a Sale and Leaseback; and

• Amendments to IAS 7 and IFRS 7: Supplier finance arrangements.

New and amended standards not yet adopted

At the date of authorisation of these financial statements, the Group and Company has not applied

the following new and revised IFRS Standards that have been issued but are not yet effective:

• Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates, effective from year

ending 31 March 2026 but is not applicable to the Group and Company;

• Amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures,

effective from year ending 31 March 2027 but is not applicable to the Group and Company;

• Amendments to IFRS 18 Presentation and Disclosure in Financial Statements, effective from

year ending 31 March 2028 ; and

• Amendments to IFRS 19 Subsidiaries without Public Accountability: Disclosures, effective from

year ending 31 March 2028 but is not applicable to the Group and Company.

The directors do not expect that the adoption of the amendments listed above will have a material

impact on the financial statements of the Group and Company in future periods.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Notes to the Financial Statements (continued)

2. Material accounting policy information

The material accounting policies adopted in the preparation of these financial statements are set out

below. These policies have been applied consistently in the current and prior year.

Basis of preparation

The Group and Company financial statements have been prepared in accordance with United Kingdom

adopted international accounting standards and with the requirements of the Companies Act 2006 as

applicable to companies reporting under those standards.

The financial statements have been prepared on the historical cost basis, except for certain financial

instruments that are measured at fair value, retirement benefit scheme and certain property, plant

and equipment that were revalued in 1997. Historical cost is generally based on the fair value of the

consideration given in exchange for goods and services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly

transaction between market participants at the measurement date, regardless of whether that price

is directly observable or estimated using another valuation technique. More details on the fair value

measurements of financial instruments are given in Note 21.

Going concern

When considering whether to continue to adopt the going concern basis in preparing these financial

statements, the directors have taken into account a number of factors, including the following:

• The Company’s electricity distribution licence includes the obligation in standard licence

condition 40 to maintain an investment grade issuer credit rating, which has been met.

• Under section 3A of the Electricity Act 1989, the Gas and Electricity Markets Authority has a duty,

in carrying out its functions, to have regard to the need to secure that licence holders are able to

finance their activities, which are the subject of obligations imposed by or under Part 1 of the

Electricity Act 1989 or the Utilities Act 2000.

• Management has prepared, and the directors have reviewed and approved, Group budgets for

the year ending 31 March 2026. These budgets include profit projections and cash flow forecasts,

including covenant compliance considerations. Inherent in forecasting is an element of

uncertainty and key sensitivities are considered when budgets are approved, including possible

changes in inflation and under recoveries of allowed revenue as plausible downside scenarios.

• Management has prepared forecasts covering the current RIIO-ED2 regulatory period which runs

to April 2028, reflecting the latest forecast of regulatory revenues, performance and uncertainty

mechanisms. Forecasts demonstrate that there is sufficient headroom on key covenants and that

there are sufficient financial resources available to the Group within the forecast period.

• Management has prepared liquidity forecasts on a monthly basis, and performed inflation

sensitivities on forecasts to June 2026, being at least 12 months from the date of approval of the

financial statements.

• Short-term liquidity requirements are forecast to be met from the Group’s operating cash flows

and short-term deposit balances. At 31 March 2025, there was further liquidity available of

£250.0m in the form of committed, undrawn borrowing facilities, available for at least 12 months

from the date of approval of these financial statements.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Notes to the Financial Statements (continued)

2. Material accounting policy information

Going concern (continued)

• During the 12 months from the date of approval of these financial statements, the £450m 8.875%

2026 bond is due for repayment in March 2026, and £9.4m of scheduled repayments are due

against the two EIB loans. In addition to the committed, undrawn facility mentioned above, the

Group is also a beneficiary of the £500.0m committed financial support from Scottish Power UK

plc (see below). There are no further re-financing obligations due in the next 12 months.

• Though the Group is largely financed by long-term funding, any forecast, uncommitted financing

has been removed from the assessment.

• Management prepared and considered key sensitivities to the business plan model when

assessing going concern. These sensitivities include incentive penalties, macro-economic factors

including inflation at +/-1%, DUoS revenue under collection and severe weather events.

• External factors are also considered such as, cost of living and high energy prices, interest rates,

the Ukraine conflict and impact on supply chain, and energy prices and supplier administration.

In addition to the above, on 16 June 2025 Scottish Power UK plc provided North West Electricity

Networks (Jersey) Limited (“NWEN (Jersey)”) with a letter of support detailing the financial support it

has committed to the group headed by NWEN (Jersey). An amount of £500.0m is available and can

be utilised by NWEN (Jersey) and any of its subsidiaries, including the Company. This commitment will

remain in place until the earlier of the NWEN (Jersey) group securing alternative financing, or 12

months from the date of approval of these financial statements, and will incur a charge of 20 basis

points per annum whilst in place.

After making appropriate enquiries, and with consideration of the guidance published by the Financial

Reporting Council (FRC), the directors have a reasonable expectation that the Company and the Group

have adequate resources to continue in operational existence and meet their obligations as they fall

due for the foreseeable future. In making this assessment, the directors have considered the

foreseeable future to be a period of at least 12 months from the date of approval of these financial

statements, per the FRC guidelines. Accordingly, they continue to adopt the going concern basis in

preparing the Annual Report and Consolidated Financial Statements.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Notes to the Financial Statements (continued)

2. Material accounting policy information (continued)

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and

entities controlled by the Company (its subsidiaries), made up to 31 March each year.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases

when the Company loses control of the subsidiary. There have been no acquisitions or disposals of

subsidiaries in the current or prior year.

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to,

or has rights to, variable returns from its involvement with the entity and has the ability to affect those

returns through its power over the entity. In assessing control, the Group takes into consideration

potential voting rights. The acquisition date is the date on which control is transferred to the acquirer.

The financial statements of subsidiaries are included in the consolidated financial statements from the

date that control commences until the date that control ceases.

Accounting policies are consistent in all Group companies.

All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions

between Group members are eliminated on consolidation.

Business combinations and goodwill

Acquisitions of subsidiaries are accounted for using the acquisition method. The consideration

transferred in a business combination is measured at fair value, which is calculated as the sum of the

acquisition-date fair value of assets transferred by the Group, liabilities incurred by the Group to the

former owners of the acquiree and the equity interest issued by the Group in exchange for control of

the acquiree. Acquisition related costs are recognised in profit or loss as incurred.

Goodwill is measured as the excess of the consideration transferred and acquisition date fair value of

any previous equity interest in the acquired entity over the net of the acquisition-date amounts of the

identifiable assets acquired and liabilities assumed and is recognised as an asset.

Goodwill is allocated to cash-generating units and is not amortised, but is reviewed for impairment

annually, or more frequently when there is an indication that it may be impaired.

Investments in subsidiaries (Company only)

Investments in subsidiary undertakings are stated at cost, including any capital contributions to

subsidiaries, less any provisions for permanent diminution in value. Dividends received and receivable

are credited to profit or loss to the extent that they represent a realised profit for the Company.

Capitalisation of overheads

The costs are initially expensed to profit or loss with a portion being capitalised based on

management's assessment of the costs incurred that are directly linked to the capital work performed.

This includes internal expenditure, such as staff costs incurred in implementing and supporting the

capital projects, which are capitalised along with an appropriate proportion of overheads. The internal

expenditure is capitalised only if it can be demonstrated that it is directly attributable to the asset,

provides probable economic benefit to the Group and can be reliably measured. The nature of costs

capitalised is a key judgement and this is based on an analysis of total costs that are considered as

directly attributable to capital work. An analysis of total cost split between capital and expense is

performed and reviewed on an annual basis.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Notes to the Financial Statements (continued)

2. Material accounting policy information (continued)

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable primarily for the

distribution of electricity in the normal course of business, net of VAT.

Revenue from the distribution of electricity

The Company provides services under the Distribution Connection and Use of System Agreement

(DCUSA) with its customers and derives the majority of its revenue from Distribution Use of System

(DUoS) services. The recognition of revenue from the distribution of electricity is based on actual

volumes distributed through the network and includes an assessment of the volume of unbilled energy

distributed as at the year end. There is a single performance obligation whereby the Company is

required to deliver electricity using its distribution network. The performance obligation is satisfied

over time as the customer simultaneously receives and consumes the benefits and the Company has

the right to payment for the services provided. Revenue includes unbilled income recognised relating

to volumes distributed through the network but not yet invoiced at year end.

Electricity distribution revenue is determined in accordance with the regulatory licence. Where

revenue received or receivable in the year differs from the allowed revenue permitted by regulatory

agreement, adjustments will be made to future prices to reflect this over/under recovery. This will be

taken into account in future financial year’s allowed revenue. No accounting adjustments are

therefore made for the over/under recoveries in the year that they arise or in the year in which they

are recovered.

Incentive income earned or adjustments for under/over-spend against totex allowances , are not

adjusted within revenue reported in the year within which they arise. These adjustments are factored

into allowed revenue for future periods and consequently recognised as revenue when the associated

volumes are distributed and the performance obligation is met.

Government levies

Where the Company is directed to collect or pay levies by the Regulator, Ofgem, those levies are

accounted for under IFRIC 21: Levies. In accordance with IFRIC 21, levies such as Supplier of Last Resort

(SoLR) payment levies, are recognised progressively when an obligating event takes place. SoLR levies

are directed from time to time by Ofgem, with specified payment and collection periods. In accordance

with IFRIC 21 the liability associated with the levy is triggered progressively as the associated income

becomes billable, being the defined obligating event.

Revenue from SoLR levies and the associated costs are therefore recognised proportionately over time

in profit or loss, with the levy collection being reflected in revenue and the corresponding payment of

the levy in operating costs.

Connections revenue

Connections revenue includes contract revenue for diversions and disconnections from the network

and is recognised by reference to the proportion of total costs of providing the service. The

performance obligation relates to completion of work per the terms of the contract. Consideration

received in advance of recognising the associated revenue from customers is recorded within contract

liabilities (deferred income). Customer contributions are treated as non-refundable once certain

milestones have been met. Any assets constructed in order to deliver the service are capitalised and

depreciated over their useful life.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Notes to the Financial Statements (continued)

2. Material accounting policy information (continued)

Revenue recognition (continued)

Customer contributions

Customer contributions received towards distribution system assets are contract liabilities until the

performance obligations are completed. The amounts are deferred and credited to profit or loss over

the estimated weighted average useful life of the underlying assets. The performance obligation is

considered to be the provision of an ongoing network connection to the customers.

The performance obligation is regarded as satisfied over time as the Company creates a bespoke asset

for which they have no alternative use other than to provide electricity to the customer’s premises.

The Company has an enforceable right to payment for the performance completed to date.

Refundable customer contributions received in respect of property, plant and equipment are initially

held as a liability within customer contributions. These amounts may be refunded to customers if the

works do not go ahead, otherwise they will be credited to customer contributions and amortised to

revenue over the life of the project.

Dividend income

Dividend income is recognised when the Company’s right to receive payment is established.

Finance income

Interest income is accrued on a time basis, by reference to the principal outstanding and the effective

interest rate.

Leases

The Group assesses whether a contract is, or contains a lease, at inception of the contract. The Group

recognises a right-of-use asset and a corresponding lease liability with respect to all lease

arrangements in which it is the lessee, except for short-term leases and leases of low value assets. For

these leases, the Group recognises the lease payments as an operating expense on a straight-line basis

over the term of the lease unless another systematic basis is more representative of the time pattern

in which economic benefits from the leased assets are consumed.

The lease liability is initially measured at the present value of the lease payments that are not paid at

the commencement date, discounted by using either the rate implicit in the lease, or our incremental

borrowing rate.

The lease liability is subsequently measured by increasing the carrying amount to reflect interest on

the lease liability and by reducing the carrying amount to reflect the lease payments made.

The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease

payments made at or before the commencement day, less any lease incentives received and any initial

direct costs. They are subsequently measured at cost less accumulated depreciation and impairment

losses.

Right-of-use assets are depreciated over the shorter period of lease term and useful life of the

underlying asset. The depreciation starts at the commencement date of the lease.

The Group applies IAS 36: Impairment of assets to determine whether a right-of-use asset is impaired

and accounts for any identified impairment loss as described in the ‘Property, Plant and Equipment’

policy.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Notes to the Financial Statements (continued)

2. Material accounting policy information (continued)

Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying

assets, which are assets that necessarily take a substantial period of time to get ready for their

intended use or sale, are added to the cost of those assets, until such time as the assets are

substantially ready for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

Retirement benefit costs

Payments to the defined contribution retirement benefit scheme are recognised as an expense when

employees have rendered service entitling them to the contributions.

The defined benefit pensions scheme is provided through a division of the Electricity Supply Pension

Scheme (ESPS). The most recent actuarial valuation for the scheme for funding purposes was carried

out at 31 March 2022; agreed actuarial valuations are carried out thereafter at intervals of not more

than three years. A subsequent triennial valuation as at 31 March 2025 is currently underway;

however, the process remains at an early stage, and preliminary results are not anticipated until the

second half of 2025.

Results are affected by the actuarial assumptions used, which are disclosed in Note 23. Actual

experience may differ from the assumptions made, for example, due to changing market and

economic conditions and longer or shorter lives of participants.

Defined benefit costs are split into three categories:

• current service cost, past service cost and gains and losses on curtailments and settlements,

recognised in employee costs (see Note 6) in the income statement;

• net interest expense or income, recognised within finance costs (see Note 9) in profit or loss;

and

• re-measurement comprising actuarial gains and losses and the return on scheme assets

(excluding interest) are recognised immediately in the statement of financial position with a

charge or credit to other comprehensive income in the period in which they occur.

Defined benefit assets are measured at fair value while liabilities are measured at present value. The

difference between the two amounts is recognised as a surplus or obligation in the statement of

financial position.

IFRIC14 IAS 19: The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their

Interaction was published by the interpretations committee of the International Accounting Standards

Board in July 2007 and was adopted during the year ended 31 March 2008. IFRIC14 provides guidance

on the extent to which a pension scheme surplus should be recognised as an asset and may also

require additional liabilities to be recognised where minimum funding requirements exist. Legal

opinion was obtained that a pension surplus could be recovered on wind up of the scheme and could,

therefore, be recognised, along with associated liabilities.

The Group has concluded that, when a defined benefit asset exists, it can recognise the full amount of

this surplus on the grounds that it could gain sufficient economic benefit from the refund of the surplus

assets that would be available to it following the final payment to the last beneficiary of the Scheme.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Notes to the Financial Statements (continued)

2. Material accounting policy information (continued)

Taxation

The tax expense represents the sum of current and deferred tax charges for the financial year,

adjusted for prior year items.

Current taxation

Current tax is based on taxable profit for the year and is calculated using tax rates and laws that have

been enacted or substantively enacted by the balance sheet date. Taxable profit differs from the net

profit as reported in profit or loss because it excludes items of income or expense that are taxable or

deductible in other years, and it further excludes items that are never taxable or deductible.

Deferred taxation

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying

amounts of assets and liabilities in the financial statements and the corresponding tax bases used in

the computation of taxable profit and is accounted for using the balance sheet liability method.

Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax

assets are recognised to the extent that it is probable that taxable profits will be available against

which deductible temporary differences can be utilised. Such assets and liabilities are not recognised

if the temporary difference arises from the initial recognition of goodwill or from the initial recognition

(other than in a business combination) of other assets and liabilities in a transaction that affects

neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in

subsidiaries, except where the Group is able to control the reversal of the temporary difference and

it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is

settled, or the asset is realised based on tax rates and laws that have been enacted or substantively

enacted at the balance sheet date.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the

extent that it is no longer probable that sufficient taxable profits will be available to allow all or part

of the asset to be recovered. Deferred tax is charged or credited to profit or loss, except when it

relates to items charged or credited in other comprehensive income, in which case the deferred tax is

also dealt with in other comprehensive income.

Intangible assets

Intangible assets with finite useful economic lives are measured initially at cost and are amortised on

a straight-line basis over their estimated useful lives. The carrying amount is reduced by any provision

for impairment where necessary.

Amortisation periods for categories of intangible assets are:

Computer software 1-12 years

Intangible assets under construction are not amortised. Amortisation commences from the date the

intangible asset is available for use.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Notes to the Financial Statements (continued)

2. Material accounting policy information (continued)

Property, plant and equipment

Property, plant and equipment comprise: operational structures; non-operational land and buildings;

fixtures, equipment, vehicles and other assets, and right of use assets.

Operational structures

Infrastructure assets are depreciated by writing off their cost, less the estimated residual value, evenly

over their useful lives, which range from 5 to 84 years. Employee costs incurred in implementing the

capital schemes of the Group are capitalised within operational structure assets.

In 1997 the Company undertook a revaluation of certain assets following a business combination. This

resulted in the creation of a revaluation reserve of £234.9m. The additional depreciation, as a result

of the revaluation, is transferred from the revaluation reserve to retained earnings on an annual basis.

Assets other than operational structures

All other property, plant and equipment is stated at historical cost less accumulated depreciation and

accumulated impairment losses.

Historical cost includes expenditure that is directly attributable to the acquisition of the items and

includes costs directly attributable to making the asset capable of operating as intended. Subsequent

costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,

only when it is probable that future economic benefits associated with the item will flow to the Group

and the cost of the item can be measured reliably. All other repairs and maintenance are charged to

profit or loss during the financial year in which they are incurred.

Assets under construction are carried at cost, less any recognised impairment loss. Such assets are

classified to the appropriate categories of property, plant and equipment when completed and ready

for intended use. When the asset is capitalised during the year, any spend in the year is directly

classified to the appropriate categories of property, plant and equipment. Depreciation on these

assets, on the same basis as other assets, commences when the assets are commissioned.

Freehold land and assets in the course of construction are not depreciated until the asset is available

for use.

Depreciation is provided on other assets on a straight-line basis over its expected useful life as follows:

Non-operational land and buildings 30-84 years

Fixtures, equipment, vehicles and other 2-40 years

Right of use assets 3-60 years

Depreciation methods and useful lives are re-assessed annually and, if necessary, changes are

accounted for prospectively.

The gain or loss arising on the disposal or retirement of an asset is determined as the difference

between the sale proceeds and the carrying amount of the asset and is recognised in profit or loss.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

Notes to the Financial Statements (continued)

2. Material accounting policy information (continued)

Impairment of tangible and intangible assets

Tangible and intangible assets are assessed for impairment at each balance sheet date to determine

whether there is any indication that those assets have suffered an impairment loss. If any such

indication exists, the recoverable amount of the asset is estimated to determine the extent of the

impairment loss, if any. Where the asset does not generate cash flows that are independent from

other assets, the Group estimates the recoverable amount of the cash-generating unit to which the

asset belongs.

An intangible asset with an indefinite useful life and goodwill acquired in a business combination are

required to be tested for impairment at least annually and whenever there is an indication that the

asset may be impaired. For the purposes of impairment testing the Group have determined that there

is only one cash generating unit (CGU), therefore we test annually for impairment on all non-current

assets.

The recoverable amount is the higher of fair value less costs of disposal and value in use. The fair

value less costs of disposal (FVLCD) represents the net present value of expected future cash flows,

discounted using a rate that reflects current market assessments of the time value of money and the

risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying

amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable

amount. An impairment loss is recognised immediately in profit or loss.

Where an impairment loss subsequently reverses, the reversal is recognised immediately in profit or

loss and the carrying amount of the asset is increased to the revised estimate of its recoverable

amount, but not so as to exceed the carrying amount that would have been determined had no

impairment loss been recognised in prior years. Goodwill and other indefinite assets are never

reversed.

Research and development

Research costs are recognised in profit or loss as incurred. Development expenditure on an individual

project is recognised as an intangible asset when the Group can demonstrate: the technical feasibility

of completing the intangible asset so that it will be available for use, its intention to complete and its

ability to use the asset, how the asset will generate future economic benefits, the availability of

resources to complete the asset and the ability to reliably measure the expenditure incurred during

development.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is based on weighted average

cost or actual cost and includes expenditure incurred in acquiring the inventories, conversion costs

and other costs in bringing them to their present location and condition. Net realisable value

represents the estimated selling price, net of estimated costs of selling.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

100

Notes to the Financial Statements (continued)

2. Material accounting policy information (continued)

Financial instruments

Financial assets and financial liabilities are recognised in the balance sheet when the Group becomes

a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are

directly attributable to the acquisition or issue of financial assets and financial liabilities (other than

financial assets and financial liabilities at fair value through profit or loss are added or deducted from

the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.

Transaction costs, directly attributable to the acquisition of financial assets or financial liabilities at fair

value through profit or loss, are recognised immediately in profit or loss.

If the transaction price differs from fair value at initial recognition, the Group will account for such

difference as follows:

• if fair value is evidenced by a quoted price in an active market for an identical asset or liability

or based on a valuation technique that uses only data from observable markets, then the

difference is recognised as a gain or loss on initial recognition (i.e. day 1 profit or loss); and

• in all other cases, the fair value will be adjusted to bring it in line with the transaction price

(i.e. day 1 profit or loss will be deferred by including it in the initial carrying amount of the

asset or liability).

After initial recognition, the deferred gain or loss will be released to profit or loss such that it reaches

a value of zero at the time when the contract can be valued using active market quotes or verifiable

objective market information. The Group policy for the amortisation of day 1 gain or loss is to release

it in a reasonable fashion based on the facts and circumstances (e.g. using a straight-line amortisation).

Financial assets

All regular way purchases or sales of financial assets are recognised and derecognised on a trade date

basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery

of assets within the time frame established by regulation or convention in the marketplace.

All recognised financial assets are measured subsequently in their entirety at either amortised cost or

fair value, depending on the classification of the financial assets.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

101

Notes to the Financial Statements (continued)

2. Material accounting policy information (continued)

Classification of financial assets

Financial assets that meet the following conditions are measured subsequently at amortised cost:

• the financial asset is held within a business model whose objective is to hold financial assets

in order to collect contractual cash flows; and

• the contractual terms of the financial asset give rise on specified dates to cash flows that are

solely payments of principal and interest on the principal amount outstanding.

Financial assets that meet the following conditions are measured subsequently at fair value through

other comprehensive income (FVTOCI):

• the financial asset is held within a business model whose objective is achieved by both

collecting contractual cash flows and selling the financial assets; and

• the contractual terms of the financial asset give rise on specified dates to cash flows that are

solely payments of principal and interest on the principal amount outstanding.

The Company and Group have no financial assets at FVTOCI.

By default, all other financial assets are measured subsequently at fair value through profit or loss

(FVTPL).

Amortised cost and effective interest method

The effective interest method is a method of calculating the amortised cost of a debt instrument and

of allocating interest income over the relevant period.

The effective interest rate is the rate that exactly discounts estimated future cash receipts (including

all fees and points paid or received that form an integral part of the effective interest rate, transaction

costs and other premiums or discounts) excluding expected credit losses, through the expected life of

the debt instrument, or, where appropriate, a shorter period, to the gross carrying amount of the debt

instrument on initial recognition.

The amortised cost of a financial asset is the amount at which the financial asset is measured at initial

recognition minus the principal repayments, plus the cumulative amortisation using the effective

interest method of any difference between that initial amount and the maturity amount, adjusted for

any loss allowance. The gross carrying amount of a financial asset is the amortised cost of a financial

asset before adjusting for any loss allowance.

Income is recognised using the effective interest method for debt instruments measured subsequently

at amortised cost and at FVTOCI. For financial assets other than purchased or originated credit-

impaired financial assets, interest income is calculated by applying the effective interest rate to the

gross carrying amount of a financial asset, except for financial assets that have subsequently become

credit-impaired. The Group has no financial assets purchased or originated credit-impaired, or that

have subsequently become credit-impaired.

Interest income is recognised in profit or loss and is included in the ‘Finance income’ line item.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

102

Notes to the Financial Statements (continued)

2. Material accounting policy information (continued)

Financial assets at FVTPL

Financial assets that do not meet the criteria for being measured at amortised cost or FVTOCI are

measured at FVTPL. Specifically, the financial assets held by the Group classified as at FVTPL are

derivatives and are stated at fair value, with any fair value gains or losses recognised in profit or loss

to the extent they are not part of a designated hedge accounting relationship. Fair value is determined

in the manner described in Note 21.

Impairment of financial assets

The Group recognises a loss allowance for expected credit losses on investments in debt instruments

that are measured at amortised cost or at FVTOCI, trade receivables and contract assets; the Group

holds no lease receivables or financial guarantee assets. The amount of expected credit losses is

updated at each reporting date to reflect changes in credit risk since initial recognition of the

respective financial instrument.

The Group always recognises lifetime expected credit losses (ECL) for trade receivables and contract

assets. The expected credit losses on these financial assets are estimated using a provision matrix

based on the Group’s historical credit loss experience, adjusted for factors that are specific to the

debtors, general economic conditions and an assessment of both the current as well as the forecast

direction of conditions at the reporting date, including time value of money where appropriate.

For all other financial instruments, the Group recognises lifetime ECL when there has been a significant

increase in credit risk since initial recognition. However, if the credit risk on the financial instrument

has not increased significantly since initial recognition, the Group measures the loss allowance for that

financial instrument at an amount equal to 12-month ECL.

Lifetime ECL represents the expected credit losses that will result from all possible default events over

the life of a financial instrument. In contrast, 12-month ECL represents the portion of lifetime ECL that

is expected to result from default events on a financial instrument that are possible within 12 months

after the reporting date.

a) Significant increase in credit risk

In assessing whether the credit risk on a financial instrument has increased significantly since initial

recognition, the Group compares the risk of a default occurring on the financial instrument at the

reporting date with the risk of a default occurring on the financial instrument at the date of initial

recognition. In making this assessment, the Group considers both quantitative and qualitative

information that is reasonable and supportable, including historical experience and forward-looking

information that is available without undue cost or effort.

Irrespective of the outcome of the above assessment, the Group presumes that the credit risk on a

financial asset has increased significantly since initial recognition when contractual payments are

more than 30 days past due, unless the Group has reasonable and supportable information that

demonstrates otherwise.

Despite the foregoing, the Group assumes that the credit risk on a financial instrument has not

increased significantly since initial recognition if the financial instrument is determined to have low

credit risk at the reporting date. A financial instrument is determined to have low credit risk if the

financial instrument has a low risk of default and the debtor has a strong capacity to meet its

contractual cash flow obligations in the near-term.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

103

Notes to the Financial Statements (continued)

2. Material accounting policy information (continued)

Impairment of financial assets (continued)

The Group regularly monitors the effectiveness of the criteria used to identify whether there has been

a significant increase in credit risk and revises them as appropriate to ensure that the criteria are

capable of identifying a significant increase in credit risk before the amount becomes past due.

b) Definition of default

The Group considers that default has occurred when a financial asset is more than 90 days past due,

unless the Group has reasonable and supportable information to demonstrate that a more lagging

default criterion is more appropriate.

c) Credit-impaired financial assets

A financial asset is credit-impaired when one or more events that have a detrimental impact on the

estimated future cash flows of that financial asset have occurred.

d) Measurement and recognition of expected credit losses

The measurement of expected credit losses is a function of the probability of default, loss given default

and the exposure at default. The assessment of the probability of default and loss given default is

based on historical data adjusted by forward-looking information. The exposure at default is

represented by the assets’ gross carrying amount at the reporting date.

For financial assets, the expected credit loss is estimated as the difference between all contractual

cash flows that are due to the Group in accordance with the contract and all the cash flows that the

Group expects to receive, discounted at the original effective interest rate.

If the Group has measured the loss allowance for a financial instrument at an amount equal to lifetime

ECL in the previous reporting period but determines at the current reporting date that the conditions

for lifetime ECL are no longer met, the Group measures the loss allowance at an amount equal to 12-

month ECL at the current reporting date, except for assets for which the simplified approach was used.

The Group recognises an impairment gain or loss in profit or loss for all financial instruments with a

corresponding adjustment to their carrying amount through a loss allowance account.

Derecognition of financial assets

The Group derecognises a financial asset only when the contractual rights to the cash flows from the

asset expire, or when it transfers the financial asset and substantially all the risks and rewards of

ownership of the asset to another entity.

On derecognition of a financial asset measured at amortised cost, the difference between the asset’s

carrying amount and the sum of the consideration received and receivable is recognised in profit or

loss.

Cash and cash equivalents

Cash and cash equivalents include cash at bank, deposits, other short-term highly liquid investments

which are readily convertible into known amounts of cash and have an original maturity of three

months or less and which are subject to an insignificant risk of change in value. The restrictions on

cash held in ring-fenced bank accounts in relation to regulatory projects do not change the nature of

the assets, only the purpose for which they can be used, thus these assets are included in cash and

cash equivalents.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

104

Notes to the Financial Statements (continued)

2. Material accounting policy information (continued)

Money market deposits

Money market deposits with terms to maturity in excess of three months are not included as cash or

cash equivalents and are separately disclosed on the face of the statement of financial position.

Financial liabilities and equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with

the substance of the contractual arrangements and the definitions of a financial liability and an equity

instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after

deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds

received, net of direct issue costs.

Financial liabilities

All financial liabilities are measured subsequently at amortised cost using the effective interest

method or at FVTPL.

Financial liabilities measured subsequently at FVTPL

Financial liabilities at FVTPL are measured at fair value, with any gains or losses arising on changes in

fair value recognised in profit or loss to the extent that they are not part of a designated hedging

relationship. The Group has no financial liabilities designated at FVTPL. Fair values is determined in

the manner described in Note 20.

Financial liabilities measured subsequently at amortised cost

Financial liabilities that are not at FVTPL are measured subsequently at amortised cost using the

effective interest method.

The effective interest method is a method of calculating the amortised cost of a financial liability and

of allocating interest expense over the relevant period. The effective interest rate is the rate that

exactly discounts estimated future cash payments (including all fees and points paid or received that

form an integral part of the effective interest rate, transaction costs and other premiums and

discounts) through the expected life of the financial liability, or (where appropriate) a shorter period,

to the amortised cost of a financial liability.

Trade payables

Trade payables are initially recorded at fair value and subsequently at amortised cost.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

105

Notes to the Financial Statements (continued)

2. Material accounting policy information (continued)

Derecognition of financial liabilities

The Group derecognises financial liabilities when, and only when, the Group’s obligations are

discharged, cancelled or have expired. The difference between the carrying amount of the financial

liability derecognised and the consideration paid and payable is recognised in profit or loss.

When the Group exchanges with the existing lender one debt instrument into another one with the

substantially different terms, such exchange is accounted for as an extinguishment of the original

financial liability and the recognition of a new financial liability. Similarly, the Group accounts for

substantial modification of terms of an existing liability, or part of it, as an extinguishment of the

original financial liability and the recognition of a new liability. It is assumed that the terms are

substantially different if the discounted present value of the cash flows under the new terms, including

any fees paid net of any fees received and discounted using the original effective rate is at least 10%

different from the discounted present value of the remaining cash flows of the original financial

liability.

Derivative financial instruments

The Group enters into a variety of derivative financial instruments to manage its exposure to interest

rate and inflation risk. Further details of derivatives are disclosed in Note 20.

Derivatives are recognised initially at fair value at the date a derivative contract is entered into and

are subsequently re-measured to their fair value at each reporting date. The resulting gain or loss is

recognised in profit or loss, in finance expenses, immediately unless the derivative is designated in a

hedging relationship.

A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a

negative fair value is recognised as a financial liability. A derivative is presented as a non-current asset

or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is

not expected to be realised or settled within 12 months. Other derivatives are presented as current

assets or current liabilities.

Embedded derivatives

An embedded derivative is a component of a hybrid contract that also includes a non-derivative host,

with the effect that some of the cash flows of the combined instrument vary in a way similar to a

stand-alone derivative.

Derivatives embedded in hybrid contracts with a financial asset host within the scope of IFRS 9:

Financial Instruments are not separated. The entire hybrid contract is classified and subsequently

measured as either amortised cost or fair value as appropriate.

Derivatives embedded in hybrid contracts with hosts that are not financial assets within the scope of

IFRS 9 are treated as separate derivatives when they meet the definition of a derivative, their risks

and characteristics are not closely related to those of the host contracts and the host contracts are

not measured at FVTPL.

An embedded derivative is presented as a non-current asset or non-current liability if the remaining

maturity of the hybrid instrument to which the embedded derivative relates is more than 12 months

and is not expected to be realised or settled within 12 months.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

106

Notes to the Financial Statements (continued)

2. Material accounting policy information (continued)

Hedge accounting

The Group considers hedge accounting when entering any new derivative, however, there are

currently no formal hedge accounting relationships in the Group.

Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result

of a past event, it is probable that the Group will be required to settle that obligation and a reliable

estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the

present obligation at the reporting date, taking into account the risks and uncertainties surrounding

the obligation. Where a provision is measured using the cash flows estimated to settle the present

obligation, its carrying amount is the present value of those cash flows (when the effect of the time

value of money is material).

Contract liability

Contract liabilities are recognised when a customer has paid an amount of consideration prior to the

Group performing the transfer of the related good or service to the customer. An example would be

for deferred revenue in relation to receipts in advance from our capital projects, diversions and service

connections.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

107

Notes to the Financial Statements (continued)

3. Critical accounting judgements and key sources of estimation uncertainty

In the application of the Group’s accounting policies, which are described in Note 2, the directors are

required to make judgements (other than those involving estimations) that have a significant impact

on the amounts recognised and to make estimates and assumptions about the carrying amounts of

assets and liabilities that are not readily apparent from other sources. The estimates and associated

assumptions are based on historical experience and other factors that are considered to be relevant.

Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting

estimates are recognised in the period in which the estimate is revised if the revision affects only that

period; or in the period of the revision and future periods if the revision affects both current and future

periods.

Critical judgements in applying the Group’s accounting policies

The following are the critical judgements, apart from those involving estimations (which are presented

separately below), that the directors have made in applying the Group’s accounting policies and that

have the most significant effect on the amounts recognised in the financial statements.

Capitalisation of overheads – nature of costs capitalised

The Group recognises infrastructure assets where the expenditures incurred enhance or increase the

capacity of the network. Capital projects often contain a combination of enhancement and

maintenance activity which are not distinct and, therefore the allocation of costs between capital and

operating expenditure requires a level of judgement. The costs are initially expensed to profit or loss

with a portion being capitalised based on management’s assessment of the costs incurred that are

directly linked to the capital work performed. Any expenditure classed as maintenance is expensed

in the period incurred. The nature of costs to be included for capitalisation is a key judgement and is

based on an analysis of activities directly attributable to capital work.

Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty that may

have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities

within the next financial year, are outlined below.

Capitalisation of overheads – capitalisation rate

The Group recognises infrastructure assets where the expenditures incurred enhance or increase the

capacity of the network. The capitalisation rate is a key estimate as it is based on an analysis of total

costs and total labour costs, split between capital and expense. This includes an estimation of time

spent by support function staff. The capitalisation rate is reviewed on an annual basis. See Note 6 for

details on value of employee costs capitalised in the year.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

108

Notes to the Financial Statements (continued)

3. Critical accounting judgements and key sources of estimation uncertainty (continued)

Key sources of estimation uncertainty (continued)

Capitalisation of overheads – capitalisation rate (continued)

The following table shows the pre-tax amount by which the impact on profit or loss would be adjusted

for the given change in capitalisation rate; an increase in rate would result in a gain in profit or loss

and vice versa.

	2025	2024
Gain/(loss)	£m	£m
Change in rate +/- 1%	1.4/(1.4)	1.4/(1.4)
Change in rate +/- 5%	7.1/(7.1)	6.8/(6.8)

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

109

Notes to the Financial Statements (continued)

3. Critical accounting judgements and key sources of estimation uncertainty (continued)

Key sources of estimation uncertainty (continued)

Impairment of tangible and intangible assets (including goodwill)

During the year, the Group was acquired by Scottish Power Energy Networks Limited, part of the group

headed by Iberdrola, S.A., with an implied enterprise value significantly in excess of the carrying value

of the relevant assets. Given there have been no significant events or changes between the acquisition

date and year end date that suggest a material deterioration in the value of assets, it can be concluded

that there are no indications of impairment at 31 March 2025.

Management are required to assess the impairment of intangibles and goodwill annually. As these

are part of the single cash generating unit that has been identified, management assesses the

recoverability of tangible and intangible assets together, on an annual basis. Determining whether

any of those assets are impaired requires an estimation of the recoverable amount of the asset to the

Group, with the recoverable amount being the higher of fair value less cost of disposal and value in

use. This calculation requires the Group to estimate the future cash flows expected to arise from the

asset and a suitable discount rate in order to calculate present value for the asset and compare that

to its carrying value. This concluded that no impairment loss is required against those assets (2024:

nil). Details of the impairment loss testing is set out in Note 11.

Fair value of derivative financial instruments

In estimating the fair value of derivative financial instruments, the Group uses market-observable data

(Level 1 and 2 inputs) to the extent it is available. Where such data is not available, certain estimates

(Level 3 inputs) regarding inputs to the valuation are required to be made. The inputs regarding the

Group’s credit risk are deemed to be Level 3 inputs, as there are no observable credit related inputs

for the Group at commonly quoted intervals or otherwise interpolated for substantially the full term

of the instruments. The credit risk profile of the Group has been based on a UK utility credit curve

provided by a third-party data provider. It is this assumption that is deemed to be Level 3. Level 3

inputs form a significant part of the fair value of the financial instruments held by the Group.

Information about the valuation techniques, inputs used and sensitivities are disclosed in Note 20 and

Note 22.

Retirement benefit schemes

The Group’s defined benefit obligation is derived using various assumptions, as disclosed in Note 23.

Results can be affected significantly by the assumptions used, which management decide based on

advice by a firm of actuaries.

Where available, market data is used to value assets, however for some less liquid assets, up-to-date

data is not available, certain estimates regarding inputs to the valuation are required to be made, as

disclosed in Note 23, along with sensitivities of certain key inputs.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

110

Notes to the Financial Statements (continued)

4. Revenue

	2025	2024
Group and Company	£m	£m
Revenue	654.4	598.1

Predominantly all Group revenue arise from one operating segment, electricity distribution in the

North West of England and associated activities. This is regularly reviewed by the Chief Executive

Officer and Executive Leadership Team.

Included within the above are revenues from four customers (2024: three), each of which represented

more than 10% of the total revenue. Revenue from these customers totalled £320.7m (2024:

£207.8m), which includes £94.8m from Customer A (2024: £82.5m), £72.4m from Customer B (2024:

£63.9m), £74.8m from Customer C (2024: £61.4m) and £78.7m from Customer D (2024: £50.9m). No

other customer represented more than 10% of revenues either this year or in the prior year.

Where the Company is directed to collect or pay levies by the Regulator, Ofgem, those levies are

accounted for under IFRIC21. For the year ended 31 March 2025, revenue includes £0.8m of SoLR

levies (2024: £22.0m). However, immediately at the point the levy becomes billable, the entire value

of the levy is paid over to suppliers, with the Company making no profit from its role in the process.

The costs of the levy are shown as an operating expense (Note 5).

In the current year, £21.8m (2024: £20.9m) of customer contributions have been amortised through

revenue in line with IFRS 15 (Note 24 and 34).

Of the revenue recognised in the year, £3.9m (2024: £2.3m) was included in the contract liability at

the beginning of the year.

5. Operating profit

The following items have been included in arriving at operating profit:

Group and Company	2025	2024
Expense/(income)	£m	£m
Employee costs (Note 6)	80.0	76.7
Depreciation and amortisation expense:
Depreciation of property, plant and equipment 1 (Note 11 & 34)	142.8	132.5
Amortisation of intangible assets (Note 13 & 34)	14.2	14.2
	157.0	146.7
Supplier of Last Resort levy costs (Note 4)	0.8	22.0
Profit on disposal of property, plant and equipment (Note 34)	(0.5)	(0.2)
Research and development	2.4	1.9

This includes £1.9m (2024: £1.8m) depreciation of right of use assets (Note 11).

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

111

Notes to the Financial Statements (continued)

5. Operating profit (continued)

During the year, the fees payable to the Company’s auditor and its associates were as follows:

	2025	2024
Group and Company	£m	£m
Audit of the Group and Company financial statements 1	0.5	0.4
Audit-related assurance services	0.1	0.1
Total fees	0.6	0.5

All these fees relate to the Company; no fees were payable in relation to the subsidiaries of the

Company as they are dormant. The fees for the current year include £31,881 of overrun fees in relation

to the prior year (2024: £97,924).

Non-audit related services to the Group and Company were £17,172 (2024: £16,200).

6. Employee costs

	2025	2024
Group and Company	£m	£m
Wages and salaries	149.9	137.1
Social security costs	17.1	15.8
Pension costs – defined benefit schemes (Note 23)	7.5	7.9
Pension costs – defined contribution schemes (Note 23)	11.2	9.9
Total employee costs (including directors’ remuneration)	185.7	170.7
Costs transferred directly to fixed assets	(105.7)	(94.0)
Charged to operating costs (Note 5)	80.0	76.7

All employees and employee costs relate to the Company.

The average monthly number of employees during the year (including Executive directors):

	2025	2024
Group and Company	Number	Number
Craft, Technical and Engineering	1,152	1,114
Administration	1,035	989
Average number of employees	2,187	2,103

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

112

Notes to the Financial Statements (continued)

7. Directors’ remuneration

The number of directors during the year is set out and analysed by category in the table below:

	2025	2024
Group and Company	Number	Number
Remunerated directors	8	7
Non-remunerated directors*	8	6
Total number of directors	16	13

*There were 5 alternate directors (2024: 4 alternate directors) in addition to this as stated in page 69.

The compensation paid or payable to directors is shown in the table below:

	2025	2024
	£m	£m
Salaries and other short-term employee benefits	1.7	1.4
Accrued bonus	1.8	0.9
Amounts receivable under long-term incentive schemes	-	0.7
Total emoluments solely in relation to services provided to the Company	3.5	3.0
Additional amounts of bonuses in relation to the sale of the NWEN
(Jersey) group and continuing employment by the company*	2.0	-
Total emoluments (Note 32)	5.5	3.0

*These amounts were borne by other Group companies and not recharged to the company itself.

The aggregate emoluments of the directors in 2025 amounted to £5.5m (2024: £3.0m). Emoluments

comprise salaries, fees, taxable benefits, and the value of short-term and long-term incentive awards.

The aggregated emoluments of the highest paid director in 2025 in respect of services to the Group

amounted to £2.8m (2024: £1.6m). Under the Executive Incentive Plan bonuses are awarded and

either paid in the following financial year (accrued bonus) or paid in subsequent years (amounts

receivable under long-term incentive schemes); no shares were received or receivable by any director.

In the year additional bonus payments and fees amounting to £2.0m were receivable by the directors

in relation to the sale of the NWEN (Jersey) group, including the Company, and were paid by NWEN

(Jersey) Limited. The additional payments and fees in relation to the highest paid director was £1.1m.

As at 31 March 2024 and 2025, there were no amounts payable for post-employment benefits, other

long-term benefits and termination benefits. The pension contributions for the highest paid director

for the year ended 31 March 2025 were £nil (2024: £nil). The accrued pension at 31 March 2025 for

the highest paid director was £nil (2024: £nil).

As at 31 March 2024 and 2025 the directors had no interests in the ordinary shares of the Company.

8. Finance income

	2025	2024
Group and Company	£m	£m
Interest receivable on short-term bank deposits	6.7	21.0

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

113

Notes to the Financial Statements (continued)

9. Finance costs

	2025	2024
Group and Company	£m	£m
Finance costs (excluding unrealised fair value movements):
Interest on group borrowings at amortised cost (Note 32)	30.0	29.6
Interest on external borrowings at amortised cost	39.3	41.2
Net interest settlements on derivatives at fair value	5.9	5.4
Indexation of index-linked debt (Note 19 & 34)	9.6	31.0
Accretion paid on index-linked swaps	-	87.0
Reimbursement of inter-company loan impairment (Note 22 & 32)	(0.2)	(0.4)
Interest on leases (Note 19)	0.3	0.3
Net interest income on pension plan	(2.1)	(2.2)
Amount capitalised 1 (Note 11)	(2.1)	(1.3)
	80.7	190.6
Fair value movements on financial instruments 2 :
Inter-company derivative asset (Note 32)	24.9	95.2
Inter-company derivative liability (Note 32)	(24.9)	(95.2)
Derivative assets	(15.3)	(13.4)
Derivative liabilities	(26.3)	(88.9)
	(41.6)	(102.3)
Total finance costs	39.1	88.3

The amount of borrowing costs capitalised was determined using a capitalisation rate of 4.87% (2024:

4.13%), derived from the total general borrowing costs for the year divided by the average total

general borrowings outstanding during the year.

Details on the valuation techniques used to derive the fair value can be found in Note 20.

There have been £nil (2024: £87.0m) accretion payments on the index-linked swaps in the year; these

are scheduled five-yearly, seven-yearly and ten-yearly with the next payment due in July 2027. The

amount of accretion accrued over the year was £17.5m (2024: £24.9m), split as follows:

	Five-yearly	Seven-yearly	Ten-yearly	Total
Group and Company	£m	£m	£m	£m
Accumulated Accretion
1 April 2023	8.1	79.1	39.2	126.4
Accrued in year	5.9	11.8	7.2	24.9
Paid in year	-	(87.0)	-	(87.0)
31 March 2024	14.0	3.9	46.4	64.3
Accrued in year	4.1	8.4	5.0	17.5
Paid in year	-	-	-	-
31 March 2025	18.1	12.3	51.4	81.8

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

114

Notes to the Financial Statements (continued)

10. Income tax expense

	2025	2024
Group and Company	£m	£m
Current tax:
Current year	18.6	21.0
Adjustment in respect of prior year	0.1	(5.9)
	18.7	15.1
Deferred tax: (Note 25)
Current year	44.4	18.7
Adjustments in respect of prior year	(1.2)	7.9
	43.2	26.6
Income tax expense	61.9	41.7

Corporation tax is calculated at 25% (2024: 25%) of the estimated assessable profit for the year.

Deferred tax is calculated at 25% (2024: 25%), being the rate at which it is expected to reverse. There

is no unrecognised deferred tax in the Group.

The table below reconciles the notional tax charge at the UK corporation tax rate to the effective tax

rate for the year:

	2025	2024
Group and Company	£m	£m
Profit before income tax	248.4	161.8
Tax at the UK corporation tax rate of 25% (2024: 25%)	62.1	40.5
Non-taxable expense/(income)	0.9	(0.8)
Adjustments in respect of prior year	(1.1)	2.0
Income tax expense	61.9	41.7

Pillar Two model rules

The ultimate parent company of the Group is Iberdrola, S.A., a company based in Spain. Iberdrola,

S.A. is the parent company of a global group within the scope of the Organisation for Economic Co-

operation and Development’s Pillar Two model rules and is, therefore, responsible for calculating the

multinational top up tax for the Iberdrola group. The Iberdrola group is not within the scope of multi-

national top-up tax.

The UK has enacted legislation to incorporate the Pillar Two model rules with effect from 1 January

2024. This includes domestic top up tax (“DTT”) legislation. From 20 March 2025, the date Iberdrola,

S.A. gained control of the Group, the Group will be consolidated into the Iberdrola group and falls into

the scope of the Pillar Two and DTT rules. An assessment has been undertaken to determine if there

is a risk of exposure to UK DTT for the period from 20 March 2025 to 31 March 2025. Based on the

prescribed rules in the Pillar Two legislation, the calculated UK effective tax rate is assessed to be

above 15% and thus no UK DTT charge is expected. The Group has applied the exception available in

IAS 12 ‘Income Taxes: International Tax Reform – Pillar Two Model Rules’ and has not recognised or

disclosed information about deferred tax assets and liabilities related to Pillar Two income taxes.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

115

Notes to the Financial Statements (continued)

11. Property, plant and equipment

		Non-	Fixtures,
		operational	equipment,	Assets Right of use
	Operational	land and vehicles and		under	assets
	Structures	buildings		other construction	(Note 19)	Total
Group and Company	£m	£m	£m	£m	£m	£m
Cost or valuation
At 1 April 2023	5,471.7	38.6	206.0	149.7	7.3	5,873.3
Additions	185.9	1.2	19.2	70.9	2.6	279.8
Transfers	56.6	0.4	18.4	(75.4)	-	-
Disposals	(3.2)	-	(1.1)	-	(1.3)	(5.6)
At 31 March 2024	5,711.0	40.2	242.5	145.2	8.6	6,147.5
Additions	229.2	0.7	17.4	111.4	3.1	361.8
Transfers	58.3	0.3	3.2	(61.8)	-	-
Disposals	(5.9)	-	(2.3)	-	(2.0)	(10.2)
At 31 March 2025	5,992.6	41.2	260.8	194.8	9.7	6,499.1
Accumulated depreciation
At 1 April 2023	2,059.2	14.4	157.9	-	3.3	2,234.8
Charge for the year	114.0	1.2	15.5	-	1.8	132.5
Disposals	(3.2)	-	(1.1)	-	(1.3)	(5.6)
At 31 March 2024	2,170.0	15.6	172.3	-	3.8	2,361.7
Charge for the year	121.1	1.2	18.6	-	1.9	142.8
Disposals	(5.9)	-	(2.3)	-	(2.0)	(10.2)
At 31 March 2025	2,285.2	16.8	188.6	-	3.7	2,494.3
Net book value
At 31 March 2025	3,707.4	24.4	72.2	194.8	6.0	4,004.8
At 31 March 2024	3,541.0	24.6	70.2	145.2	4.8	3,785.8

At 31 March 2025, the Group and Company had entered into contractual commitments for the

acquisition of property, plant and equipment amounting to £75.8m (2024: £39.3m) (Note 33).

During the year, the Group and Company had cash outflow amounting to £355.4m (2024: £273.5m)

on additions to property, plant and equipment. Included in this figure are capitalised borrowing costs

of £2.1m (2024: £1.3m) (Note 9), determined using a capitalisation rate of 4.87% (2024: 4.13%).

At 31 March 2025, had the property, plant and equipment of the Group been carried at historical cost

less accumulated depreciation and accumulated impairment losses, the carrying amount would have

been £3,914.0m (2024: £3,692.6m). The revaluation reserve is disclosed in Note 28, net of deferred

tax. The revaluation reserve arose following a review after North West Water’s acquisition of Norweb,

in 1997.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

116

Notes to the Financial Statements (continued)

11. Property, plant and equipment (continued)

Impairment testing of intangible assets and property plant and equipment

During the year, the Group was acquired by Scottish Power Energy Networks Limited, part of the group

headed by Iberdrola, S.A., with an implied enterprise value significantly in excess of the carrying value

of the relevant assets. Given there have been no significant events or changes between the acquisition

date and year end date that suggest a material deterioration in the value of assets, it can be concluded

that there are no indications of impairment at 31 March 2025.

However, intangible assets with an indefinite useful life and goodwill acquired in a business

combination are required to be tested for impairment at least annually and whenever there is an

indication that the asset may be impaired. For the purposes of impairment testing the Group have

determined that there is only one cash generating unit (CGU), therefore we test annually for

impairment on all non-current assets.

An asset’s recoverable amount is the higher of fair value less costs of disposal and value in use. In

assessing the fair value less costs of disposal (FVLCD) the estimated future cash flows are discounted

to their present value using a discount rate that reflects current market assessments of the time value

of money and the risks specific to the asset for which the estimates of future cash flows have not been

adjusted. The discount rate is calculated at the year-end solely from external sources of information.

The carrying value of the CGU at 31 March 2025 was £3,240.9m (2024: £3,036.6m) including goodwill

of £10.1m (2024: £10.1m) excluding customer contributions of £817.0m (2024: £801.3m). The FVLCD

was calculated at £4,200.5m (2024: £4,568.8m). The key assumptions for the FVLCD calculations are

those regarding discount rates and the outcomes of future Ofgem price control settlements. The post-

tax discount rate for the year ended 31 March 2025 was 6.73% (2024: 6.00%).

It is considered appropriate to assess the cash flows over a 33-year period as this reflects the long-

term nature of the operation of the electricity distribution network and the importance of the

operations of the business in supporting the UK transition to net zero. The Group has prepared cash

flow forecasts for a 33-year period, including a terminal value, which represents the planning horizon

used for management purposes, being aligned to the end of a RIIO regulatory period. The terminal

value assumes a disposal of the assets for 1.56x Regulated Asset Value (RAV) at that point, and the

assumption of 1.56x is reflective of net proceeds on disposal.

Other than the mandated RIIO-ED2 requirements there is no real growth in expenditure is assumed in

projecting cash flows beyond the period covered by the most recent budgets/forecast, however, the

impact of inflation is included at 2% per annum, being the government’s long-term CPI inflation target

and in line with Ofgem methodology for costs and revenues.

In assessing the carrying value of the group’s tangible and intangible assets, we have sensitised our

forecasts to factor in changes to key assumptions, such as an increase in the discount rate of 0.5% and

removal of incentive income. No reasonably possible changes to inputs to the impairment test

performed were identified as resulting in an impairment.

Based on the impairment testing performed, management believe that sufficient headroom exists

between the FVLCD and the carrying value of the assets such that no impairment loss is required to

be booked.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

117

Notes to the Financial Statements (continued)

12. Leases

	2025	2024
Group and Company	£m	£m
Right of use assets at net book value:
Land and buildings	3.1	2.0
Telecoms	0.1	0.1
Vehicles	2.8	2.7
Total (Note 11)	6.0	4.8
Lease liabilities:
Land and buildings	(2.7)	(1.9)
Telecoms	(0.1)	(0.1)
Vehicles	(2.9)	(2.9)
Total (Note 19)	(5.7)	(4.9)

The amount of short-term and low value leases expensed in the year was £0.7m (2024: £0.4m).

The Company’s leasing activities include land and buildings used for office space and substations,

telecoms fibre-optic cables for technical equipment communications, and vehicles for the use of

employees.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be

readily determined, the incremental borrowing rate is used. The lease liabilities have been discounted

at 5% (2024: 5%) for land and buildings, and telecoms; and at 6% (2024: 6%) for vehicles.

The following is an analysis of the maturity profile of the lease liabilities.

	<1	1 – 2	2 – 3	3 – 4	>4	Total
	year	years	years	years	years
Group and Company	£m	£m	£m	£m	£m	£m
At 31 March 2025	(2.0)	(1.3)	(0.7)	(0.4)	(1.3)	(5.7)
At 31 March 2024	(1.8)	(1.3)	(0.5)	(0.6)	(0.7)	(4.9)

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

118

Notes to the Financial Statements (continued)

13. Intangible assets and goodwill

		Computer	Assets under
	Goodwill	software	construction	Total
Group and Company	£m	£m	£m	£m
Cost:
At 1 April 2023	10.1	139.1	13.8	163.0
Additions	-	5.5	5.6	11.1
Transfers	-	10.3	(10.3)	-
At 31 March 2024	10.1	154.9	9.1	174.1
Additions	-	5.5	9.7	15.2
Transfers	-	7.3	(7.3)	-
Disposals	-	(70.6)	-	(70.6)
At 31 March 2025	10.1	97.1	11.5	118.7
Accumulated amortisation:
At 1 April 2023	-	107.8	-	107.8
Charge for the year	-	14.2	-	14.2
At 31 March 2024	-	122.0	-	122.0
Charge for the year	-	14.2	-	14.2
Disposals	-	(70.6)	-	(70.6)
At 31 March 2025	-	65.6	-	65.6
Net book value
At 31 March 2025	10.1	31.5	11.5	53.1
At 31 March 2024	10.1	32.9	9.1	52.1

In the Company, goodwill arose on the acquisition of assets and liabilities of Electricity North West

Number 1 Company Limited in the year ended 31 March 2011. This value reflects the excess of the

investment over the fair value of the trade and assets at the date of acquisition.

At 31 March 2025, the Group and Company had entered into contractual commitments for the

acquisition of software amounting to £9.6m (2024: £2.1m) (Note 33).

At each balance sheet date, the Group reviews the carrying amounts of its goodwill and intangible

assets to determine whether there is any indication that those assets have suffered an impairment

loss (Note 11).

Included in the net book value of computer software is £7.8m (2024: £12.9m) for an asset relating to

the network management system which has 2 years (2024: 3 years) of amortisation remaining.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

119

Notes to the Financial Statements (continued)

14. Investment in subsidiaries

	2025	2024
Company	£m	£m
Cost and net book value	15.4	15.4

Investment in subsidiaries is stated at cost less any provisions for permanent diminution in value. Cost

of investment relates wholly to the shareholding in the Company’s direct subsidiary, Electricity North

West Number 1 Company Limited.

Details of the investments at 31 March 2024 and 2025, all of which were incorporated in the UK and

have a principal place of business in the UK, are as follows:

					Proportion	Nature of
Company				Description of holding	held	business
Subsidiary undertakings
Electricity North West Number 1				Ordinary shares of £1 each	100%	Dormant
Company Limited
ENW	(ESPS)	Pensions	Trustees	Ordinary shares of £1 each	100%	Dormant
Limited

There have been no changes to these shareholdings during the year. The address of the registered

office of the investments above is Borron Street, Stockport, Cheshire, SK1 2JD.

15. Inventories

	2025	2024
Group and Company	£m	£m
Raw material and consumables	56.7	49.3

The cost of inventories recognised as an expense in the year was £2.9m (2024: £3.4m). Write-downs

of inventories to net realisable value amounted to £0.3m (2024: £0.1m).

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

120

Notes to the Financial Statements (continued)

16. Trade and other receivables

	2025	2024
Group and Company	£m	£m
Trade receivables	7.5	12.7
Amounts owed by group undertakings (Note 32)	7.4	5.8
Accrued income	65.1	61.3
Financial assets (Note 21)	80.0	79.8
Prepayments	20.9	22.7
Non-financial assets	20.9	22.7
Total trade and other receivables	100.9	102.5

The average credit period taken on trade receivables is 14 days (2024: 14 days). At 31 March 2025,

£4.5m (2024: £6.5m) of the trade receivables were past due, with £2.8m over 30 days past due (2024:

£4.7m).

Trade receivables and inter-company receivables do not accrue interest and are stated net of expected

credit losses (ECL). The recoverability of these assets is assessed using the simplified approach under

IFRS 9, based on lifetime ECL, with reference to known specific circumstances, past default experience

and an assessment of the current economic environment.

The table below shows the movement on the ECL:

	2025	2024
Group and Company	£m	£m
At 1 April	0.8	4.1
Amounts written off in the year	(0.1)	(3.3)
At 31 March	0.7	0.8

Credit risk in relation to trade receivables is considered to be relatively low, with each customer being

contractually required to provide collateral in the form of a cash deposit, subject to the amounts due

and their credit rating. As at 31 March 2025, £2.7m (2024: £2.9m) of cash had been received as

security (see Note 18).

Under the terms of the contract, the maximum unsecured credit that the Group may be required to

give per customer is 2% of the Regulatory Asset Value (RAV) of the Company. The RAV is calculated

in accordance with Ofgem methodology. At 31 March 2025, the RAV was £2,873.9m (2024:

£2,684.6m) and has been indexed using the CPIH for March 2025. At 31 March 2025, £460.3m (2024:

£366.2m) of unsecured credit limits had been granted to customers and the highest unsecured credit

limit given to any single customer was £10.2m (2024: £9.6m). All customers granted the maximum

amount of unsecured cover must have a credit rating of at least BBB+ from Standard and Poor’s and

Baa1 from Moody’s Investor Services, or a guarantee from a parent company of an equivalent rating.

Alternatively, the customer must be able to prove their creditworthiness on an ongoing basis.

Whilst the loss of a principal customer could have a significant impact on the Group, the exposure to

such credit losses is mitigated by the protection Ofgem provides to cover such losses. Nonetheless,

credit management processes are in place and the credit worthiness of each customer is closely

monitored.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

121

Notes to the Financial Statements (continued)

17. Cash and cash equivalents

	2025	2024
Group and Company	£m	£m
Cash in bank accounts	9.1	20.0
Cash in liquidity funds	123.0	120.4
Cash in short-term money market deposits under 3 months	-	49.4
Total cash and cash equivalents (Note 21, 22 & 34)	132.1	189.8
Weighted average interest rate	4.51%	5.33%
Weighted average term	8.5 days	23.9 days

Cash and cash equivalents comprise cash at bank, deposits and other short-term highly liquid

investments which are readily convertible into known amounts of cash and have an original maturity

of three months or less, net of any bank overdrafts which are payable on demand. At 31 March 2025,

there was no formal bank overdraft facility in place (2024: same).

18. Trade and other payables

	Group Company		Group Company
	2025	2025	2024	2024
	£m	£m	£m	£m
Trade payables (Note 22)	18.8	18.8	18.4	18.4
Amounts owed to group undertakings (Note 32)	13.4	13.4	13.5	13.5
Amounts owed to subsidiary undertaking (Note 32)	-	15.5	-	15.5
Accruals	76.7	76.9	76.5	76.7
Refundable customer deposits (Note 22)	2.7	2.7	2.9	2.9
Cash collateral (Note 20)	31.8	31.8	12.0	12.0
Financial liabilities (Note 21)	143.4	159.1	123.3	139.0
Contract liabilities	20.1	20.1	10.0	10.0
Other taxation and social security	9.8	9.8	15.2	15.2
Deferred income	14.0	14.0	15.0	15.0
Non-financial liabilities:	43.9	43.9	40.2	40.2
Total trade and other payables	187.3	203.0	163.5	179.2

Trade payables and accruals principally comprise amounts outstanding for capital purchases and

ongoing costs. The average credit period in the year was 22.9 days from receipt of invoice (2024: 21.4

days). The directors consider that the carrying amount of trade and other payables approximates to

their fair value.

Refundable customer deposits are cash deposits held as a security in relation to distribution of

electricity customers.

Contract liabilities have increased due to the acceptance of high value projects. Of the revenue

recognised in the year, £3.9m (2024: £2.3m) was included in the contract liability at the beginning of

the year (Note 4).

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

122

Notes to the Financial Statements (continued)

19. Borrowings

This note provides information about the contractual terms of the Group’s borrowings. For more

information about the Group’s financial risk management and exposure to credit risk, liquidity risk and

market risk see Note 22.

The carrying values by category of borrowing were as follows:

	2025	2024
Group and Company	£m	£m
Current liabilities:
Bonds (Note 21)	456.4	-
Bank and other term borrowings (Note 22)	9.4	9.1
Lease liabilities (Note 12)	2.0	1.8
	467.8	10.9
Non-current liabilities:
Bonds (Note 22)	201.2	656.9
Bank and other term borrowings (Note 22)	59.7	67.4
Lease liabilities (Note 12)	3.7	3.1
Amounts owed to parent undertaking (Note 22 & 32)	111.1	109.8
Amounts owed to group undertaking (Note 22 & 32)	722.3	721.9
	1,098.0	1,559.1
Borrowings (Note 21 & 34)	1,565.8	1,570.0

The carrying values and key terms by instrument were as follows:

				2025	2024
	Nominal	Interest	Maturity	Carrying	Carrying
	value	rate		value	value
Group and Company	£m		year	£m	£m
Bond	200.0	8.875%	2026	199.5	199.0
Bond	250.0	8.875%	2026	256.9	263.6
Index-linked bond	100.0	1.4746%+RPI	2046	201.2	194.3
Index-linked loan	50.0	0.38% +RPI	2032	32.9	36.2
Index-linked loan	50.0	0%+RPI	2033	37.1	40.3
Revolving credit facility	250.0	Sonia+0.50%	2027	(0.9)	-
Lease liabilities (Note 12)	-	-	-	5.7	4.9
Amounts owed to parent undertaking	175.0	4.11%	2028	111.1	109.8
Amounts owed to group undertaking	300.0	1.415%	2030	299.1	299.0
Amounts owed to group undertaking	425.0	4.893%	2032	423.2	422.9
Borrowings (Note 21 & 34)				1,565.8	1,570.0

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

123

Notes to the Financial Statements (continued)

19. Borrowings (continued)

At 31 March 2024 and 2025, all borrowings were unsecured and in sterling, and there were no formal

bank overdraft facilities in place. All borrowings were measured at amortised cost. See Note 21 for

more information on the fair value of the Group’s borrowings.

The Group has complied with all financial covenants under its financing agreements during the current

and prior year.

The following table provides a reconciliation of the opening and closing borrowings amounts. Where

applicable, interest on these amounts is included in accruals within trade and other payables on the

balance sheet and is, therefore, excluded from this table.

	2025	2024
Group and Company	£m	£m
At 1 April	1,570.0	1,763.1
Repayments of external borrowings	(9.3)	(232.9)
Lease liabilities capital repayment	(1.9)	(1.8)
Lease liabilities interest repayment	(0.3)	(0.3)
Lease liabilities interest charged (Note 9)	0.3	0.3
New lease liabilities (Note 34)	2.7	2.6
Increase in loan from parent	1.3	13.3
Indexation (Note 9 & 34)	9.6	31.0
Transaction costs on new external borrowings (Note 34)	(1.3)	(0.1)
Amortisation of transaction costs, bond discounts and premiums	(5.3)	(5.2)
(Note 34)
At 31 March (Note 21 & 34)	1,565.8	1,570.0

The Group’s committed undrawn borrowing facilities were as follows:

	2025	2024
Group and Company	£m	£m
£50m revolving credit facility – expiry December 2024	-	50.0
£250m revolving credit facility – expiry April 2027	250.0	-

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

124

Notes to the Financial Statements (continued)

20. Derivatives

This note provides information about the derivative financial instruments held by the Group, including

information on the methods and assumptions used in determining the fair value of these instruments.

The Board has authorised the use of derivatives by the Group to reduce the risk of loss arising from

changes in market risks, and for economic hedging reasons. Derivatives are used to hedge interest

rate risk and to change the basis of interest cash flows from fixed to either an alternative fixed profile,

or to an RPI inflation-linked basis to match the inflation-linked revenue profile (noting that Ofgem

have now changed this to a CPIH basis). The Board approves all new derivatives. The Group does not

use derivatives for speculative purposes. The accounting policy for derivatives is provided in Note 2

and more information on market risk is included in Note 22.

At 31 March 2024 and 2025, the Group and Company’s derivatives are not designated in formal hedge

accounting relationships and are measured at fair value through profit or loss (FVTPL).

The Group has the following derivatives in the following line items in the statement of financial

position:

	2025	2024
Group and Company	£m	£m
Non-current assets:
Inter-company derivative asset	192.2	217.1
Inflation-linked swaps	43.8	28.5
Derivative assets (Note 21)	236.0	245.6
Non-current liabilities:
Inter-company derivative liability	(192.2)	(217.1)
Inflation-linked swaps	(286.7)	(310.9)
Interest rate swaps – fixed to floating	(39.4)	(41.5)
Derivative liabilities (Note 21)	(518.3)	(569.5)

The table below summarises the key terms of the various external derivatives held by the Group at 31

March 2025; each category includes multiple instruments and the rates stated are the aggregate rate

for that category. The table excludes the inter-company derivative asset and the inter-company

derivative liability as the cash flows on these instruments net to £nil.

Notional	Number	Type	Maturity	Pay Leg	Receive Leg	Accretion
£200m	14	Index-linked	2038	3.56%+RPI,	6m Sonia,	5-yearly,
				semi-annual	semi-annual	next due July 2027
						7-yearly,
						next due July 2030
£100m 1	4	Index-linked	2050	1.51%+RPI,	8.875%,	10-yearly,
				semi-annual	annual	next due Sept 2030
£200m	1	Fix/ float	2030	6m Sonia,	0.283%,	None
				semi-annual	Semi-annual

8.875% up to and including the 26 March 2026 payment date, then changes to 6m Sonia for the

remaining term of the instruments.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

125

Notes to the Financial Statements (continued)

20. Derivatives (continued)

In the Group and Company, no new derivatives were entered during the year, neither were any

derivatives closed out during the year.

The inter-company derivative asset and inter-company derivative liability are held by the Company,

with ENW Finance plc as counterparty. The first is a back-to-back swap, mirroring in aggregate the

terms of the £200m 2038 notional external index-linked swaps noted above. The second is a mirror

of that back-to-back swap, the terms of which are defined in an inter-company loan agreement

between the two entities, creating an embedded derivative that is bifurcated from the host contract

and recorded as a separate instrument in the Company. The cash flows and fair value of these two

instruments net to £nil in the Company.

Whilst all derivatives are net-settled, no balances meet the offsetting criteria in IAS 32 paragraph 42

and all are, therefore, shown gross.

The Company has two one-way credit support annexes (CSAs) in place that define the terms for the

provision of cash collateral by the counterparty; under the CSAs, no cash collateral is required to be

provided by the Company. At 31 March 2025, £31.8m (2024: £12.0m) cash collateral was held under

these CSAs (Note 18). The cash collateral does not meet the offsetting criteria in IAS 32 paragraph 42,

but it would be set off against the net amount of the derivatives in the case of default and insolvency

or bankruptcy, in accordance with the CSAs.

The following table presents the recognised financial instruments that are subject to the CSAs but not

offset in the financial statements. The ‘net amount’ shows the amount in the Company’s statement

of financial position if all set-off rights were exercised.

		Amounts
		subject to	Financial
		Gross master netting	instrument
	amount	arrangements	collateral	Net amount
Group and Company	£m	£m	£m	£m
At 31 March 2025:
Inter-company derivative asset	192.2	(192.2)	-	-
Inter-company derivative liability	(192.2)	192.2	-	-
Derivative assets	43.8	(12.0)	(31.8)	-
Derivative liabilities	(326.1)	12.0	-	(314.1)
	(282.3)	-	(31.8)	(314.1)
Other collateral not included above	-	-	-	-
Total	(282.3)	-	(31.8)	(314.1)
At 31 March 2024:
Inter-company derivative asset	217.1	(217.1)	-	-
Inter-company derivative liability	(217.1)	217.1	-	-
Derivative assets	28.5	(19.6)	(8.9)	-
Derivative liabilities	(352.4)	19.6	-	(332.8)
	(323.9)	-	(8.9)	(332.8)
Other collateral not included above	-	-	(3.1)	(3.1)
Total	(323.9)	-	(12.0)	(335.9)

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

126

Notes to the Financial Statements (continued)

20. Derivatives (continued)

Recognised fair value measurements

All of the financial instruments recognised at fair value in the statement of financial position are

derivatives; these are measured at fair value through profit or loss and those fair value measurements

occur on a recurring basis.

Fair value hierarchy

Financial instruments that are recognised in the statement of financial position at fair value are

classified into three levels, as prescribed under accounting standards, based on the degree to which

the inputs used in determining the fair value are observable:

• Level 1: includes financial instruments traded in an active market and the fair value is derived

from quoted market prices (unadjusted);

• Level 2: includes financial instruments not traded in an active market and the fair value is

determined using valuation techniques that maximise the use of observable market data and

rely as little as possible on entity-specific estimates. If all significant inputs are observable,

the financial instrument is included in level 2; and

• Level 3: if one or more significant inputs is not based on observable market data, the financial

instrument is included in level 3. This is the case for the majority of derivatives held by the

Group.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

127

Notes to the Financial Statements (continued)

20. Derivatives (continued)

The following table presents the Group’s financial instruments that are measured and recognised at

fair value, grouped into the three levels outlined above to provide an indication as to the reliability of

the inputs used in determining the fair value. Each category includes multiple instruments.

	Level 1	Level 2	Level 3	Total
Group and Company	£m	£m	£m	£m
At 31 March 2025
Derivative assets:
Inter-company derivative asset	-	-	192.2	192.2
Inflation-linked swaps	-	31.2	12.6	43.8
	-	31.2	204.8	236.0
Derivative liabilities:
Inter-company derivative liability	-	-	(192.2)	(192.2)
Inflation-linked swaps	-	-	(286.7)	(286.7)
Interest rate swaps – fixed to floating	-	(39.4)	-	(39.4)
	-	(39.4)	(478.9)	(518.3)
Total	-	(8.2)	(274.1)	(282.3)
At 31 March 2024
Derivative assets:
Inter-company derivative asset	-	-	217.1	217.1
Inflation-linked swaps	-	20.9	7.6	28.5
	-	20.9	224.7	245.6
Derivative liabilities:
Inter-company derivative liability	-	-	(217.1)	(217.1)
Inflation-linked swaps	-	-	(310.9)	(310.9)
Interest rate swaps – fixed to floating	-	(41.5)	-	(41.5)
	-	(41.5)	(528.0)	(569.5)
Total	-	(20.6)	(303.3)	(323.9)

There were no transfers between levels 1 and 2 during the current or prior year. For transfers into

and out of level 3, see overleaf.

Any transfers between levels are deemed to have occurred at the beginning of the reporting period.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

128

Notes to the Financial Statements (continued)

20. Derivatives (continued)

The following table provides a reconciliation of the fair value amounts disclosed as Level 3.

	2025	2024
Group and Company	£m	£m
At 1 April	(303.3)	(368.1)
Transfers into Level 3 from Level 2	-	(15.9)
Transfers from Level 3 into Level 2	3.2	(11.6)
Total gains in profit or loss:
- On transfers into Level 3 from Level 2	-	9.5
- On instruments carried forward in Level 3	26.0	82.8
At 31 March	(274.1)	(303.3)

The transfers were principally due to a change in the significance of the unobservable inputs used to

derive the Group’s credit curve for the bilateral credit valuation adjustment (BCVA), as described in

the section below.

The following table shows the sensitivity of the fair value of derivatives to the Level 3 inputs,

determined by applying a 10bps shift to the own credit curve used to calculate the BCVA. These

sensitivities have been performed on a portfolio basis to incorporate the effect of the CSAs (see

above).

	2025	2025	2024	2024
	-10bps	+10bps	-10bps	+10bps
Group and Company	£m	£m	£m	£m
Impact on derivative portfolio	(3.0)	2.9	(3.7)	3.5

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

129

Notes to the Financial Statements (continued)

20. Derivatives (continued)

Valuation techniques used to determine fair value

Where available, quoted market prices have been used to determine fair values (Level 1 inputs).

Where not available, fair values have been calculated by discounting estimated future cash flows

based on observable interest and RPI curves sourced from market available data (Level 2 inputs). In

accordance with IFRS 13, an adjustment for non-performance risk (XVA) has then been made to give

the fair value.

The XVA has been quantified by calculating a bilateral credit valuation adjustment (BCVA) based on

both the credit risk profile of the counterparty and the credit risk profile of the relevant group entity,

using market-available data where possible, and stochastic modelling.

Whilst the inputs to the BCVA calculations in relation to the counterparty credit risk meet the criteria

for Level 2 inputs, the inputs regarding the Group’s own credit risk are deemed to be Level 3 inputs,

as there are no observable credit related inputs for the Group at commonly quoted intervals or

otherwise interpolated for substantially the full term of the instruments. The credit risk profile of the

Group has been based on a UK utility credit curve provided by a third-party data provider. It is this

assumption that is deemed to be Level 3.

For certain derivatives, the Level 3 inputs form an insignificant part of the fair value and, therefore,

these derivatives are disclosed as Level 2. Otherwise, the derivatives are disclosed as Level 3.

At 31 March 2025, in the statement of financial position, the net adjustment for non-performance risk

was a £64.0m debit (2024: £74.9m debit), of which £64.7m debit (2024: £73.5m debit) was classed as

Level 3, and £0.7m credit (2024: £1.4m debit) was classed as Level 2.

On entering certain derivatives, the valuation technique used resulted in a fair value loss. As this was

neither evidenced by a quoted price nor based on a valuation technique using only data from

observable markets, this loss on initial recognition was not recognised. This was supported by the

transaction price of £nil. This difference is being recognised in profit or loss on a straight-line basis

over the life of the derivatives. At 31 March 2025, the aggregate difference yet to be recognised was

£42.6m (2024: £45.0m). The movement in the year all relates to the straight-line release to profit or

loss.

The following table provides an analysis of the component parts of the fair value of the derivative

assets and derivative liabilities.

	2025	2024
Group and Company	£m	£m
Fair value of derivatives pre IFRS 13 adjustment	321.8	302.6
XVA adjustment	(34.7)	(40.0)
Day 1 adjustment	(51.1)	(17.0)
Derivative assets (Note 21)	236.0	245.6
Fair value of derivatives pre IFRS 13 adjustment	(710.7)	(746.4)
XVA adjustment	98.7	114.9
Day 1 adjustment	93.7	62.0
Derivative liabilities (Note 21)	(518.3)	(569.5)

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

130

Notes to the Financial Statements (continued)

21. Financial instruments

This note provides an overview of the financial instruments held by the Group, with references to

other notes that include more specific information about each type of financial instrument.

The Group holds the following categories of financial instruments:

	Group	Company	Group	Company
	2025	2025	2024	2024
	£m	£m	£m	£m
Financial assets:
Derivative assets (Note 20)	236.0	236.0	245.6	245.6
Trade and other receivables (Note 16)	80.0	80.0	79.8	79.8
Cash and cash equivalents (Note 17)	132.1	132.1	189.8	189.8
	448.1	448.1	515.2	515.2
Financial liabilities:
Trade and other payables (Note 18)	(143.4)	(159.1)	(123.3)	(139.0)
Borrowings (Note 19)	(1,565.8)	(1,565.8)	(1,570.0)	(1,570.0)
Derivative liabilities (Note 20)	(518.3)	(518.3)	(569.5)	(569.5)
	(2,227.5)	(2,243.2)	(2,262.8)	(2,278.5)

The Group’s exposure to various risks associated with the financial instruments is outlined in Note 22.

The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each

class of financial assets in the table above.

Fair value of financial instruments

All financial instruments are held at amortised cost, except derivatives that are at fair value through

profit or loss. Information about the methods and assumptions used in determining the fair value of

derivatives is included in Note 20.

The Group has a number of financial instruments which are not measured at fair value in the

statement of financial position. For the majority of these instruments, the fair values are not

materially different to their carrying values, since the interest receivable/payable is either close to

current market rates or the instruments are short-term in nature, such as cash and cash equivalents,

money market deposits, trade and other receivables, and trade and other payables.

The instruments for which significant differences were identified, in either the current or prior periods,

are presented in the following table.

	2025	2025	2024	2024
	Carrying	Fair	Carrying	Fair
	value	value	value	value
Group and Company	£m	£m	£m	£m
Financial liabilities:
Bonds 1 (Note 19)	(657.6)	(623.6)	(656.9)	(650.9)
Bank and other term borrowings 2 (Note 19)	(69.1)	(65.9)	(76.5)	(74.8)
Amounts owed to group undertaking 1 (Note 19)	(722.3)	(672.5)	(721.9)	(685.8)

These fair value are derived from quoted market prices and, therefore, meet the Level 1 criteria.

These fair value are based on discounted cash flows using a current borrowing rate. They are classified as

Level 3 due to the use of unobservable inputs, including own credit risk.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

131

Notes to the Financial Statements (continued)

22. Financial risk management

This note explains the Group’s exposure to financial risks and how these risks could affect the Group’s

future financial performance. Current year profit and loss information has been included where

relevant to add further context.

The principal financial risks to which the Group is exposed and which arise in the normal course of

business include market risk, in particular interest rate risk and inflation risk, credit risk and liquidity

risk.

The Group has a formal risk management structure, designed to identify and analyse risks. There are

financial risk management policies and controls in place, including the use of risk limits, mandates,

and monitoring and reporting requirements, supported by reliable and up-to-date systems. The risk

management policies and systems are reviewed annually and amended to reflect changes in market

conditions and the associated levels of risk, as appropriate. The processes for managing risk and the

methods used to measure risk have not changed since the prior year.

It is the responsibility of the Board to set, approve and review the risk management policies,

procedures and controls. The Audit and Compliance Committee is responsible for independently

overseeing the financial risk management activities of the Group. The Group treasury function, which

is authorised to conduct the day-to-day treasury activities of the Group, reports on a regular basis to

the Audit and Compliance Committee.

Market risk

Market risk is the risk that future cash flows of a financial instrument, or the fair value of a financial

instrument, will fluctuate because of changes in market prices. Market prices include foreign

exchange rates, interest rates, inflation, equity and commodity prices. The main types of market risk

to which the Group is exposed are interest rate risk and inflation risk; the Group has no significant

foreign exchange, equity or commodity exposure.

The Board has authorised the use of derivative financial instruments to reduce the risk of loss arising

from changes in market risks, and for economic hedging reasons. Derivatives are used to hedge

interest rate risk and to change the basis of interest cash flows from fixed to either an alternative fixed

profile, or to an RPI inflation-linked basis to match the inflation-linked revenue profile (noting that

Ofgem have now changed this to a CPIH basis). The Board approves all new derivatives. The Group

and Company do not use derivatives for speculative purposes. More information on the derivatives

held by the Group is provided in Note 20.

Interest rate risk

The Group’s floating rate borrowings (see Note 19) and derivatives (see Note 20) are exposed to a risk

of change in cash flows due to changes in interest rates. The Group’s derivatives are exposed to a risk

of change in their fair value due to changes in interest rates. Investments in short-term receivables

and payables are not exposed to interest rate risk due to their short-term nature.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

132

Notes to the Financial Statements (continued)

22. Financial risk management (continued)

Sensitivity analysis on interest

Although the following analysis provides an indication of the Group’s exposure to interest rate risk,

such analysis is limited due to the long-term nature of many of the financial instruments and the

uncertainty over future market rates.

The sensitivity figures are calculated based on a downward parallel shift across the interest rate curve

of 0.5% and upward parallel shifts of 0.5% and 1%, a range in outcomes that management deem

reasonably possible within the next financial year.

At 31 March 2025, the only floating rate debt facility was the revolving credit facility, which was nil

drawn (2024: same), so there was no related interest charge in the income statement. The impact on

the cash flows of the derivatives is excluded from this analysis, as there would be an equal and

opposite effect on the fair value movement, resulting a net £nil impact in the income statement.

The following table shows the amount by which the fair value of items recorded on the statement of

financial position at fair value would be adjusted for a given interest rate movement. As fair value

movements are taken to the income statement, there would be a corresponding adjustment to

finance costs; figures in brackets represent a reduction to profit.

	2025	2025	2025	2024	2024	2024
	-0.5%	+0.5%	+1%	-0.5%	+0.5%	+1%
Group and Company	£m	£m	£m	£m	£m	£m
Fair values:
Inter-company derivative asset	19.9	(18.7)	(36.4)	23.4	(21.8)	(43.6)
Inter-company derivative liability	(19.9)	18.7	36.4	(23.4)	21.8	43.6
Inflation-linked swaps	(34.7)	32.2	61.9	(44.7)	34.3	68.5
Interest rate swaps	4.2	(4.1)	(8.0)	6.4	(3.2)	(6.4)
Total finance costs impact	(30.5)	28.1	53.9	(38.3)	31.1	62.1

Inflation risk

The Group’s inflation-linked borrowings (see Note 19) and inflation-linked derivatives (see Note 20)

are exposed to a risk of change in cash flows due to changes in inflation rates. The Group’s index-

linked derivatives are exposed to a risk of change in their fair value due to changes in inflation rates.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

133

Notes to the Financial Statements (continued)

22. Financial risk management (continued)

Sensitivity analysis on inflation

Although the following analysis provides an indication of the Group’s exposure to inflation risk, such

analysis is limited due to the long-term nature of many of the financial instruments and the

uncertainty over future market rates.

The sensitivity figures are calculated based on a downward parallel shift across the inflation curve of

0.5% and upward parallel shifts of 0.5% and 1%, a range in outcomes that management deem

reasonably possible within the next financial year.

The following table shows the amount by which the finance costs in the income statement would have

differed if inflation rates over the course of the year had differed from the actual rates; figures in

brackets represent a reduction to profit. The change in indexation would have a corresponding impact

on the carrying value of the inflation-linked debt in the statement of financial position. The impact on

the cash flows of the derivatives is excluded from this analysis, as there would be an equal and

opposite effect on the fair value movement, resulting a net £nil impact in the income statement.

	2025	2025	2025	2024	2024	2024
	-0.5%	+0.5%	+1%	-0.5%	+0.5%	+1%
Group and Company	£m	£m	£m	£m	£m	£m
Interest:
Inflation-linked borrowings	-	-	-	-	-	(0.1)
Indexation:
Inflation-linked borrowings	1.4	(1.4)	(2.7)	1.4	(1.4)	(2.7)
Total finance costs impact	1.4	(1.4)	(2.7)	1.4	(1.4)	(2.8)

The following table shows the amount by which the fair value of items recorded in the statement of

financial position at fair value would be adjusted for a given inflation rate movement. As fair value

movements are taken to the income statement, there would be a corresponding adjustment to

finance costs; figures in brackets represent a reduction to profit.

	2025	2025	2025	2024	2024	2024
	-0.5%	+0.5%	+1%	-0.5%	+0.5%	+1%
Group and Company	£m	£m	£m	£m	£m	£m
Fair values:
Inter-company derivative asset	(29.0)	30.5	62.7	(33.2)	35.0	69.9
Inter-company derivative liability	29.0	(30.5)	(62.7)	33.2	(35.0)	(69.9)
Inflation-linked swaps	49.3	(52.9)	(109.8)	54.4	(65.1)	(130.1)
Total finance costs impact	49.3	(52.9)	(109.8)	54.4	(65.1)	(130.1)

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

134

Notes to the Financial Statements (continued)

22. Financial risk management (continued)

Credit risk

The Group is exposed to credit risk, which is the risk that financial loss arises from the failure of a

customer or counterparty to meet its obligations under a contract as they fall due. Credit risk arises

principally from cash and cash equivalents, money market deposits, derivative assets, and trade and

other receivables.

The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each

class of financial assets, as shown in the table in Note 21.

The Group is potentially exposed to significant credit risk in relation to cash and cash equivalents,

money market deposits and derivative assets. For these counterparties, minimum credit ratings are

specified, and individual exposure limits are in place to reduce the concentration of risk and exposure

to any one counterparty. Management does not anticipate any of these counterparties will fail to

meet its obligations. At 31 March 2025, none (2024: none) of the Group’s treasury balances were

either past due or impaired, and no terms had been re-negotiated with any counterparty.

The table below shows an analysis of the ratings of the counterparties with which the Group holds

cash and cash equivalents (excluding the impact of unpresented items), money market deposits and

derivative assets.

	2025	2025	2024	2024
Group and Company	£m	%	£m	%
AAA	91.2	51.5	90.3	41.1
A+	43.8	24.8	49.6	22.6
A	42.0	23.7	79.6	36.3
	177.0	100.0	219.5	100.0

For more information on the credit risk and expected credit losses in relation to trade and other

receivables, see Note 16.

Liquidity risk

Liquidity risk is the risk that the Group will have insufficient funds to meet its financial obligations as

they fall due. The Group manages the maturity profile of its assets, liabilities and commitments so

that cash flows are appropriately balanced and all funding obligations are able to be met when due.

This is achieved through maintaining a prudent level of liquid assets and arranging funding facilities

well in advance of need. The Group uses derivatives to economically hedge certain cash flows (see

Note 20).

The Board is responsible for monitoring the maturity of liquidity and deposit funding balances and

taking any action as appropriate. A long-term view of liquidity is provided by Group financial models

which project cash flows out 33 years ahead, to the end of the Regulatory Period ending 31 March

2058. A medium-term view is provided by the Group business plan covering the period ending 31

March 2028, which is updated and approved annually by the Board. The Board has approved a

liquidity framework within which the business operates, including the maintenance of a minimum of

12 months liquidity.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

135

Notes to the Financial Statements (continued)

22. Financial risk management (continued)

The Group had access to the following liquid assets and undrawn borrowing facilities at 31 March:

	2025	2024
Group and Company	£m	£m
Cash and cash equivalents (Note 17)	132.1	189.8
Committed undrawn borrowing facilities (Note 19)	250.0	50.0
	382.1	239.8

The Group considers the timing of scheduled payments to avoid risks associated with the

concentration of large cash flows within particular time periods.

The table below shows the maturity profile of the contractual cash flows due under the Group’s

financial liabilities, on an undiscounted basis, estimated using prevailing interest and inflation rates at

the reporting date. Derivative cash flows include those on both derivative assets and derivative

liabilities and have been shown net; all other cash flows are shown gross.

				<1 year	1 – 2	2 – 3	3 – 4	>4 years	Total
					years	years	years
Group and Company				£m	£m	£m	£m	£m	£m
At 31 March 2025:
Trade payables				(18.8)	-	-	-	-	(18.8)
Refundable customer deposits				(2.7)	-	-	-	-	(2.7)
Leases				(2.0)	(1.3)	(0.7)	(0.4)	(1.4)	(5.8)
Amounts	owed	to	parent	(4.6)	(4.6)	(116.9)	-	-	(126.1)
undertaking
Amounts owed to group companies				(25.0)	(25.0)	(25.0)	(25.0)	(816.7)	(916.7)
Bonds				(493.0)	(3.0)	(3.0)	(3.0)	(257.4)	(759.4)
Borrowings and overdrafts				(9.5)	(9.5)	(9.5)	(9.5)	(33.0)	(71.0)
Derivatives				(6.1)	(10.2)	(35.1)	(10.2)	(392.2)	(453.8)
Total contractual cash flows				(561.7)	(53.6)	(190.2)	(48.1)	(1,500.7)	(2,354.3)
At 31 March 2024:
Trade payables				(18.4)	-	-	-	-	(18.4)
Refundable customer deposits				(2.9)	-	-	-	-	(2.9)
Leases				(1.8)	(1.3)	(0.5)	(0.6)	(0.7)	(4.9)
Amounts	owed	to	parent	(4.5)	(4.5)	(4.5)	(115.5)	-	(129.0)
undertaking
Amounts owed to group companies				(25.0)	(25.0)	(25.0)	(25.0)	(841.7)	(941.7)
Bonds				(42.9)	(492.9)	(2.9)	(2.9)	(251.8)	(793.4)
Borrowings and overdrafts				(9.2)	(9.2)	(9.2)	(9.2)	(41.0)	(77.8)
Derivatives				(5.6)	(5.6)	(8.9)	(32.1)	(350.5)	(402.7)
Total contractual cash flows				(110.3)	(538.5)	(51.0)	(185.3)	(1,485.7)	(2,370.8)

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

136

Notes to the Financial Statements (continued)

23. Retirement benefit schemes

Group and Company

Nature of Scheme

The Group’s retirement benefit arrangement is the Electricity North West Group of the Electricity

Supply Pension Scheme (“ESPS” or “the Scheme”) and forms part of the ESPS. The Scheme contains

both a defined benefit section and a defined contribution section. The defined benefit section of the

Scheme closed to new entrants on 1 September 2006, with new employees of the Group subsequently

provided with access to the defined contribution section.

The defined benefit section is a UK funded final salary arrangement providing pensions and lump sums

to members and dependants. The defined benefit section is a separate fund that is legally separated

from the entity. The Trustee board of the Scheme is composed of representatives from both the

employer and members of the Scheme. Under the Pensions Act 2004 at least one third of the Trustee

Board must be member nominated and the Trustee Board has made the necessary arrangements to

fulfil this obligation. The Trustee Board of the Scheme is required by law to act in the interest of the

Scheme and all relevant stakeholders of the Scheme, i.e., active employees, retirees and employers.

The Trustee Board is responsible for the operation, funding and investment strategy of the Scheme.

During the year the Group made contributions of £9.8m (2024: £10.0m) to the defined benefit section

of the Scheme. This includes £nil (2024: £nil) of deficit contribution. The Group estimates that

contributions for the year ending 31 March 2026 will amount to around £9.8m. The total defined

benefit pension expense for the year was £6.8m (2024: £6.8m). No Executive directors were part of

the defined benefit scheme.

As at 31 March 2025 contributions of £1.0m (2024: £1.0m) relating to the current year had not been

paid over to the defined benefit Scheme.

Defined benefit assets are measured at fair value while liabilities are measured at present value. The

difference between the two amounts is recognised as a surplus or obligation in the Statement of

Financial Position.

UK legislation requires the Trustee Board to carry out valuations at least every three years and to

target full funding against a basis that prudently reflects the Scheme’s risk exposure. The most recent

triennial funding valuation of the scheme was carried out as at 31 March 2022 and identified a shortfall

of £19.4m against the Trustee Board’s statutory funding objective. A subsequent triennial valuation

as at 31 March 2025 is currently underway; however, the process remains at an early stage, and

preliminary results are not anticipated until the second half of 2025. In addition to the timing of the

two valuations, the contributions made in the period and the return on assets, the main difference is

due to the different assumptions used by the IAS 19 Employee Benefits (revised 2011) and the funding

valuation. In the event of underfunding, the Group must agree a deficit recovery plan with the Trustee

Board within statutory deadlines. As part of the 2023 actuarial valuation, the Group agreed to

eliminate the shortfall by paying additional annual contributions in the period to 31 March 2024; no

further additional contributions are required after 31 March 2024 until at least the next triennial

valuation. The next valuation, as at 31 March 2025, is currently underway and remains at an early

stage.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

137

Notes to the Financial Statements (continued)

23. Retirement benefit schemes (continued)

Funding the liabilities

The current and prior year defined benefit obligation has been calculated based on the results of the

31 March 2022 triennial funding valuation. The results of the 2022 funding valuation have been

projected forward by an independent actuary to take account of the requirements of revised IAS 19

in order to assess the position as at 31 March 2025 for the purpose of these financial statements. The

present value of the defined benefit obligation, the related current service cost and the past service

cost were measured using the projected unit credit method. A pension surplus under IAS 19 of £56.1m

is included in the statement of financial position at 31 March 2025 (2024: surplus of £39.0m).

The duration of the Scheme based on the results of the 31 March 2022 triennial funding valuation is

approximately 16 years (2024: 16 years). As at the current reporting date the Scheme actuary

estimates that the duration based on the 31 March 2022 triennial has since fallen to approximately

12 years (2024: 13 years) this has been used in the calculations as at 31 March 2025.

Investment risks

The Scheme has an investment strategy to aim to match pensioner and other liabilities with lower risk

cash flow investments and to invest liabilities in respect of active members into return seeking assets.

As active members retire, then a switch of investments would be carried out.

The Company recognises that the interests of customers, who ultimately fund pension costs, should

be given full recognition in determining the investment strategy. The Company works in collaboration

with the Scheme Trustee to ensure these interests are considered alongside those of the members of

the Scheme.

Other risks

In addition to investment risk, the Scheme exposes the Group to other risks, such as longevity risk,

inflation risk and interest rate risk. As the Scheme’s obligation is to provide lifetime pension benefits

to members upon retirement, increases in life expectancy will result in an increase in the Scheme’s

liabilities. Other assumptions used to value the defined benefit obligation are also uncertain.

These risks are managed through de-risking and hedging strategies and are measured and reported to

the Scheme’s Trustee. In particular, in October 2019 the Scheme completed a pensioner buy-in with

Scottish Widows for around 80% of the Scheme’s then pensioner liabilities. This buy-in asset now

represents 45.0% of the total Scheme assets as at 31 March 2025 (2024: 47.1%). This had the effect

of removing longevity and investment risks in respect of the liabilities for this part of the membership.

Winding up

Although currently there are no plans to do so, the Scheme could be wound up in which case the

benefits would have to be bought out with an insurance company. The cost of buying-out benefits

would be significantly more than the defined benefit obligation calculated in accordance with IAS 19.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

138

Notes to the Financial Statements (continued)

23. Retirement benefit schemes (continued)

Defined Contribution arrangements

All assets within the defined contribution section of the Scheme are held independently from the

Group.

The total cost charged to the income statement in relation to the defined contribution section for the

year ended 31 March 2025 was £11.2m (2024: £9.9m) and represents contributions payable to the

Scheme at rates specified in the rules of the Scheme. At 31 March 2025 contributions of £0.2m (2024:

£nil) due in respect of the current year had not been paid over to the defined contribution scheme.

Defined Benefits employee benefits

The reconciliation of the opening and closing statement of financial position is as follows:

	2025	2024
Group and Company	£m	£m
At 1 April	39.0	42.6
Expense recognised in the income statement	(6.8)	(6.8)
Contributions paid	9.8	10.0
Total re-measurement included in other comprehensive income	14.1	(6.8)
At 31 March	56.1	39.0

The balance recognised in the statement of financial position is as follows:

	2025	2024
Group and Company	£m	£m
Present value of defined benefit obligations	(769.1)	(855.0)
Fair value of plan assets	825.2	894.0
Net surplus arising from defined benefit obligation	56.1	39.0

Movements in the fair value of the defined benefit obligations are as follows:

	2025	2024
Group and Company	£m	£m
At 1 April	855.0	873.7
Current service cost	7.5	7.9
Interest expense	39.7	40.2
Member contributions	1.3	1.3
Re-measurement:
Effect of changes in demographic assumptions	(2.2)	(14.3)
Effect of changes in financial assumptions	(76.5)	(7.0)
Effect of experience adjustments	1.3	9.1
Benefits paid	(57.0)	(55.9)
At 31 March	769.1	855.0

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

139

Notes to the Financial Statements (continued)

23. Retirement benefit schemes (continued)

Movements in the fair value of the Pension Scheme assets were as follows:

	2025	2024
Group and Company	£m	£m
At 1 April	894.0	916.3
Interest income	41.8	42.4
Return on plan assets (net of interest income)	(63.3)	(19.0)
Employer contributions	9.8	10.0
Member contributions	1.3	1.3
Benefits paid	(57.0)	(55.9)
Administration expenses	(1.4)	(1.1)
At 31 March	825.2	894.0

The amount recognised in other comprehensive income is as follows:

	2025	2024
Group and Company	£m	£m
Return on scheme assets excluding interest income	(63.3)	(19.0)
Actuarial gain arising from changes in demographic assumptions	2.2	14.3
Actuarial gain arising from changes in financial assumptions	76.5	7.0
Experience loss on liabilities	(1.3)	(9.1)
Total gain/(loss) recognised in other comprehensive income	14.1	(6.8)

The net pension expense before taxation recognised in the income statement, before capitalisation,

in respect of the Scheme is summarised as follows:

	2025	2024
Group and Company	£m	£m
Current service cost	(7.5)	(7.9)
Interest income on plan assets	41.8	42.4
Interest expense on Scheme obligations	(39.7)	(40.2)
Administration expenses	(1.4)	(1.1)
Net pension expense before taxation	(6.8)	(6.8)

The above amounts are recognised in arriving at operating profit except for the interest on Scheme

assets and interest on Scheme obligations which have been recognised within finance expense (Note

9).

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

140

Notes to the Financial Statements (continued)

23. Retirement benefit schemes (continued)

The main financial assumptions used by the actuary (in determining the surplus) were as follows:

	2025	2024
Group and Company	%	%
Discount rate	5.60	4.80
Pensionable salary increases	4.15*	3.05
Pension increases (RPI)	3.10	3.15
Price inflation (RPI)	3.35	3.40
Price inflation (CPI)	2.95	2.95

*CPIH +1.1% (4.15%) in 2025, 2026. CPIH (3.05%) from 2027 onwards.

The mortality rates utilised in the valuation are based on the standard actuarial tables S3PA_M (SAPS3

combined amounts MIDDLE) (2024: S3PA_M) tables with a scaling of 109% for male pensioners (2024:

109%), 107% for female pensioners (2024: 107%), 109% for male non-pensioners/future pensioners

(2024: 109%) and 107% for female non-pensioners/future pensioners (2024: 107%). These scaling

factors allow for differences in expected mortality between the Scheme population and the

population used in the standard tables. A long-term improvement rate of 1.25% p.a. is assumed within

the underlying CMI 2023 model (2024: 1.25% CMI 2022 model).

The current life expectancies underlying the value of the accrued liabilities for the Scheme are:

	2025	2024
Group and Company	Years	Years
Male member - current age 45	25.8	25.8
Male member - current age 60	24.6	24.7
Female member - current age 45	29.0	28.9
Female member - current age 60	27.8	27.8

The following table presents a sensitivity analysis for each significant actuarial assumption, showing

how the defined benefit obligation would have been affected by changes in the relevant actuarial

assumption that were reasonably possible at the Statement of Financial Position date. The

calculations alter the relevant assumption by the amount specified, whilst assuming that all other

variables remained the same. The sensitivity analysis is for illustrative purposes and it is of note that

while the sensitivities below are based on isolated movements, in reality some assumptions are

interlinked and a movement in one may result in movements in others (e.g., inflation-based

assumptions).

	2025	2024
Group and Company	£m	£m
Increase in Defined Benefit Obligation:
Discount rate: decrease by 25 basis points	23.4	27.1
Price inflation: increase by 25 basis points	17.5	16.4
Life expectancy: increase longevity by 1 year	23.9	34.2

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

141

Notes to the Financial Statements (continued)

23. Retirement benefit schemes (continued)

As at 31 March 2025, the fair value of the Scheme’s assets and liabilities recognised in the Statement

of Financial Position were as follows:

Scheme

assets

Quoted

Unquoted

Total

Value

Scheme

assets

Quoted

Unquoted

Total

Value

	2025	2025	2025	2025	2024	2024	2024	2024
Group and Company	%	£m	£m	£m	%	£m	£m	£m
At 31 March
Cash	1.8	15.2	-	15.2	2.1	18.6	-	18.6
Debt instruments	31.2	162.2	95.1	257.3	30.3	195.6	75.1	270.7
Real estate	6.7	-	55.5	55.5	11.0	-	97.9	97.9
Distressed debt	0.3	-	2.1	2.1	0.5	-	4.4	4.4
Infrastructure equity	10.1	-	83.7	83.7	9.0	-	80.8	80.8
Asset backed securities	4.9	-	40.4	40.4	-	-	-	-
Pensioner buy-in	45.0	-	371.0	371.0	47.1	-	421.6	421.6
Fair value of assets	100.0	177.4	647.8	825.2	100.0	214.2	679.8	894.0
Present value of liabilities				(769.1)				(855.0)
Net retirement benefit
surplus				56.1				39.0

The fair value of the assets set out above are as per the quoted market prices in active markets.

Virgin Media vs NTL Pension Trust II Limited

In June 2023, in the case of Virgin Media Limited vs NTL Pension Trustee II Limited, the Trustee raised

a case to challenge whether an amendment to the pension scheme rules was invalid due to a lack of

actuarial confirmation required by law for contracted-out defined benefit schemes (under Section 37

of the Pensions Scheme Act 1993). The High Court ruled in favour of the Trustee on this matter. This

ruling was appealed at the Court of Appeal on 25 July 2024 however, the appeal was dismissed.

Therefore, as the law currently stands, a plan amendment to a contracted-out scheme carried out

between April 1997 and April 2016 without appropriate actuarial confirmation could be deemed void.

Since the outcome of the Court of Appeal judgement was announced, the Group sought legal advice

to ascertain the extent to which any historic amendments were certified by the scheme actuary (if

appropriate). The outcome of the legal review is that there is no reason to believe that the ruling in

the case will have any financial impact for the Company. However, the legal position is untested, and

it continues to evolve, so it is impossible to rule out the risk of challenge.

The legal advice was shared with the legal advisor to the Trustee of the ENW Group Pension Scheme.

Whilst the legal advisers to the Trustee have not forensically examined the analysis carried out, they

did not have any reason to disagree with the conclusion or believe that there is a fresh or freestanding

obligation on the trustees to look into this issue further as a matter of course.

Based on the current legal advice the Group has concluded that the ruling in the case will have no

material impact for the Company and the Group.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

142

Notes to the Financial Statements (continued)

24. Customer Contributions

Customer contributions are amounts received from a customer in respect of the provision of a new

connection to the network. Customer contributions are amortised through the Income Statement

over the expected lifetime of the relevant asset.

	2025	2024
Group and Company	£m	£m
At 1 April	801.3	765.1
Additions during the year	37.5	57.1
Amortised through revenue (Note 4 & 34)	(21.8)	(20.9)
At 31 March	817.0	801.3
Split:
Amounts due in less than one year	67.1	81.0
Amounts due after more than one year	749.9	720.3
At 31 March	817.0	801.3

Refundable customer contributions are those customer contributions which may be partly refundable,

dependent on contractual obligations.

	2025	2024
Group and Company	£m	£m
Refundable customer contributions	87.0	95.6
Non-refundable customer contributions	730.0	705.7
At 31 March	817.0	801.3

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

143

Notes to the Financial Statements (continued)

25. Deferred tax

The following are the major deferred tax liabilities and assets recognised by the Group and Company,

and the movements thereon, during the current and prior year.

Group and Company	Accelerated	Retirement	Other	Total
	tax	benefit
	depreciation	obligations
	£m	£m	£m	£m
At 1 April 2023	295.1	10.3	(68.1)	237.3
Charged to profit or loss (Note 10)	16.5	0.8	9.3	26.6
Deferred tax on re-measurement of defined benefit pension scheme	-	(1.7)	-	(1.7)
At 31 March 2024	311.6	9.4	(58.8)	262.2
Charged to profit or loss (Note 10)	28.7	1.1	13.4	43.2
Deferred tax on re-measurement of defined benefit pension scheme	-	3.5	-	3.5
At 31 March 2025	340.3	14.0	(45.4)	308.9

Other timing differences relate primarily to derivative instruments, but also includes general

provision, pension contributions not paid, rollover relief, IFRS9 and IFRS16 transitional adjustments.

Deferred tax is calculated at 25% (2024: 25%), being the rate at which it is expected to reverse.

There are no unrecognised deferred tax assets or liabilities for either the Group or Company in either

the current or prior year.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

144

Notes to the Financial Statements (continued)

26. Provisions

	2025	2024
Group and Company	£m	£m
At 1 April	0.7	1.0
Additions in the year	3.3	-
Utilisation of provision	(0.4)	(0.3)
At 31 March	3.6	0.7

At 31 March 2025, £2.5m (2024: £0.5m) of the balance is due in less than one year, £1.1m (2024:

£0.2m) is due after one year.

Additions in the year includes a provision relating to obligations arising from ongoing property-related

matters involving company infrastructure. The amount reflects management’s best estimate of

expected settlement costs based on current information. £2.5m (2024: £nil) of the balance is due in

less than one year, £0.8m (£2024: £nil) is due after one year.

The remainder of the provision relates to onerous lease provisions and is all due after one year.

27. Share capital

	2025	2024
Group and Company	£	£
Authorised:
569,999,996 ordinary shares of 50 pence each (2024: 569,999,996)	284,999,998	284,999,998
4 ‘A’ ordinary shares of 50 pence each (2024: 4)	2	2
Special rights redeemable preference shares of £1 (2024: 1)	1	1
At 31 March	285,000,001	285,000,001
Allotted, called up and fully paid:
476,821,341 ordinary shares of 50 pence each (2024: 476,821,341)	238,410,671	238,410,671
4 ‘A’ ordinary shares of 50 pence each (2024: 4)	2	2
At 31 March	238,410,673	238,410,673

The ‘A’ ordinary shares and the ordinary shares rank pari passu in all respects, save that dividends may

be declared on one class of shares without being declared on the other.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

145

Notes to the Financial Statements (continued)

28. Shareholders’ Equity

Called up share

capital

Share premium

account

Revaluation

reserve

Capital

redemption

reserve

Retained

earnings

Total

equity

	£m	£m	£m	£m	£m	£m
Group:
At 1 April 2024	238.4	4.4	70.0	8.6	757.0	1,078.4
Profit for the year	-	-	-	-	186.5	186.5
Other comprehensive income for the year	-	-	-	-	10.6	10.6
Transfer from revaluation reserve	-	-	(2.0)	-	2.0	-
	-	-	(2.0)	-	199.1	197.1
Transactions with owners recorded directly
in equity:
Dividends (Note 30)	-	-	-	-	(45.4)	(45.4)
At 31 March 2025	238.4	4.4	68.0	8.6	910.7	1,230.1
Company:
At 1 April 2024	238.4	4.4	70.0	8.6	756.7	1,078.1
Profit for the year	-	-	-	-	186.5	186.5
Other comprehensive income for the year	-	-	-	-	10.6	10.6
Transfer from revaluation reserve	-	-	(2.0)	-	2.0	-
	-	-	(2.0)	-	199.1	197.1
Transactions with owners recorded directly
in equity:
Dividends (Note 30)	-	-	-	-	(45.4)	(45.4)
At 31 March 2025	238.4	4.4	68.0	8.6	910.4	1,229.8

In 1997 the Company undertook a revaluation of certain assets, following North West Water’s

acquisition of Norweb. This resulted in the creation of a revaluation reserve of £234.9m. The

additional depreciation created as a result of the revaluation is transferred from the revaluation

reserve to retained earnings on an annual basis.

The capital redemption reserve is a non-distributable reserve specifically for the purchase of own

shares.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

146

Notes to the Financial Statements (continued)

29. Capital structure

Details of the authorised and allotted share capital, together with details of the movements in the

Company’s issued share capital during the year are shown in Note 27. The Company has Ordinary

shares, which carry no right to fixed income. Each share carries the right to one vote at general

meetings of the Company. The Company also has ‘A’ ordinary shares which rank pari passu in all

respects, save that dividends may be declared on one class of shares without being declared on the

other.

There exists an unissued special rights redeemable preference share which does not carry any voting

rights and can only be held by one of His Majesty’s Secretaries of State, another Minister of the Crown,

the Solicitor for the affairs of His Majesty’s Treasury or any other person acting on behalf of the Crown.

This share is a legacy from the privatisation of the Company and was issued on 19 November 1990

and redeemed on 31 March 1995.

There are no specific restrictions on the size of a holding or on the transfer of shares which are both

governed by the general provisions of the Articles of Association (“the Articles”) and prevailing

legislation. The directors are not aware of any agreements between holders of the Company’s shares

that may result in restrictions in the transfer of securities or on voting rights.

With regard to the appointment and replacement of directors, the Company is governed by its the

Articles, the Companies Act 2006 and related legislation. The Articles themselves may be amended

by special resolution of the shareholders. The powers of directors are described in the Articles, copies

of which are available on request, and in the Corporate Governance Report on pages 51 to 66.

Capital risk management

The capital structure of the Group consists of net debt, comprised of borrowings net of cash, and

equity, comprised of share capital and reserves.

The Group is subject to externally imposed capital requirements, by both Ofgem and financial lenders

and investors. These capital requirements include gearing levels, being the ratio of net debt to the

regulatory asset value (RAV). The forecast gearing position is closely monitored by the Board against

the external capital requirements (see page 38).

The RAV (2020/21 prices) is taken from the most recent Price Control Financial Model (PCFM)

published by Ofgem on its website and is calculated in accordance with the RIIO-ED2 methodology (1

April 2024 to 31 March 2028). For the year ended 31 March 2025, the RAV is £2,873.9m (2024:

£2,684.6m) and has been indexed using the CPIH for March 2025.

The Group manages its capital to ensure that entities in the Group will be able to continue as going

concerns while maximising the return to shareholders through the optimisation of the debt and equity

balance (see the dividend policy page 39), with regard to the externally imposed capital requirements.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

147

Notes to the Financial Statements (continued)

30. Dividends

Amounts recognised as distributions to equity holders in the year comprise:

	2025	2024
Group and Company	£m	£m
Final dividend for the year ended 31 March 2023 of 3.90 pence per
share (paid June 2023)	-	18.6
Interim dividend for the year ended 31 March 2024 of 2.47 pence
per share (paid February 2024)	-	11.8
Final dividend for the year ended 31 March 2024 of 9.52 pence per
share (paid June 2024)	45.4	-
Dividends	45.4	30.4

No interim or final dividends for the year ended 31 March 2025 have been proposed at the date of

signing of this report.

31. Parent, ultimate parent and controlling party

The immediate parent undertaking is North West Electricity Networks plc (“NWEN plc”), a company

incorporated and registered in the United Kingdom. The registered address of the immediate parent

undertaking is Borron Street, Stockport, Cheshire, SK1 2JD.

The smallest group in which the current and prior year results of the Company are consolidated is that

headed by NWEN plc; those consolidated financial statements can be obtained from the above

address.

The largest group in which the full current and prior year results of the Company are consolidated is

that headed by North West Electricity Networks (Jersey) Limited (“NWEN (Jersey)”), a company

incorporated and registered in Jersey; those consolidated financial statements can be obtained from

the registered address of NWEN (Jersey), which is 44 Esplanade, St Helier, Jersey, Channel Islands, JE4

9WG.

At 31 March 2024, the ultimate parent undertaking and ultimate controlling party was NWEN (Jersey).

On 22 October 2024, Scottish Power Energy Networks Holdings Limited (“Scottish Power”), part of the

group headed by Iberdrola, S.A., acquired 88% of the shares of NWEN (Jersey), with the remaining

12% of the shares retained by KDM Power Limited.

The transaction was subject to review by the Competition and Markets Authority (“CMA”) pursuant

to the regulations applicable to mergers of energy network companies in the United Kingdom; the

CMA imposed an Initial Enforcement Order (“IEO”) preventing any integration until CMA approval was

granted. CMA approval was granted, and the IEO lifted, on 20 March 2025.

In the period from 22 October 2024 to 20 March 2025, despite Scottish Power’s 88% equity ownership

of NWEN (Jersey), Scottish Power did not control NWEN (Jersey), nor therefore the Company, due to

the restrictions in the IEO. Scottish Power gained control of NWEN (Jersey) on 20 March 2025, when

the CMA approval was granted and the IEO lifted.

At 31 March 2025, the directors regard Iberdrola, S.A., a company incorporated and registered in

Spain, as the ultimate parent undertaking and the ultimate controlling party. The largest group that

will consolidate the results of the Company from 20 March is that headed by Iberdrola, S.A. The

registered address of Iberdrola is Torre Iberdrola, Plaza Euskadi 5, 48009, Bilbao, Spain.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

148

Notes to the Financial Statements (continued)

32. Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been

eliminated on consolidation and are not disclosed in this note. During the year the following

transactions with related parties were entered into:

	Group	Company	Group	Company
	2025	2025	2024	2024
	£m	£m	£m	£m
Recharges to:
Electricity North West (Construction and Maintenance)	1.9	1.9	2.3	2.3
Limited
Electricity North West Services Limited	1.6	1.6	1.3	1.3
Electricity North West Property Limited	0.1	0.1	0.1	0.1
Recharges from:
Electricity North West (Construction and Maintenance)	(1.5)	(1.5)	(1.2)	(1.2)
Limited
Electricity North West Services Limited	(9.6)	(9.6)	(8.1)	(8.1)
Interest on group borrowings:
North West Electricity Networks plc	(4.5)	(4.5)	(4.2)	(4.2)
ENW Finance plc	(25.5)	(25.5)	(25.4)	(25.4)
Interest on group borrowings (Note 9)	(30.0)	(30.0)	(29.6)	(29.6)
Reimbursement of inter-company loan impairment on loan from ENW Finance plc (Note 9)	(0.2)	(0.2)	(0.4)	(0.4)
Fair value movement on inter-company derivative	24.9	24.9	95.2	95.2
asset with ENW Finance plc (Note 9)
Fair value movement on inter-company derivative	(24.9)	(24.9)	(95.2)	(95.2)
liability with ENW Finance plc (Note 9)
Dividends paid to North West Electricity Networks plc	(45.4)	(45.4)	(30.4)	(30.4)
(Note 30)
Directors’ remuneration (Note 7)	(5.5)	(5.5)	(3.0)	(3.0)

For disclosure relating to executive directors’ remuneration see Note 7. The Company’s key

management personnel comprise of its executive directors.

As disclosed in Note 31, on the 22 October 2024 88% of the NWEN (Jersey) group was acquired by

Iberdrola, S.A. On the same date the CMA imposed an IEO which prevented the Iberdrola group from

controlling the companies in the NWEN (Jersey) group. The IEO was lifted on the 20

March 2025 from

which point Iberdrola obtained control. During the year ended 31 March 2025 the transactions

between ENWL and the companies in the Iberdrola group were in relation to sales and purchases,

conducted on a business-as-usual and arm’s length basis. For the period from 20 March to 31 March

2025 the sales amounted to £0.9m and the purchases to £0.1m. For the period from 22 October 2024

to 31 March 2025 the sales amounted to £12.3m and the purchases to £1.1m. During the year ended

31 March 2025, recharges made to companies in the Iberdrola group consisted of £0.3m, of which

£0.2m was outstanding at year-end.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

149

Notes to the Financial Statements (continued)

32. Related party transactions (continued)

Amounts outstanding with related parties are as follows:

					Group	Company	Group	Company
					2025	2025	2024	2024
					£m	£m	£m	£m
Amounts owed by group companies:
North West Electricity Networks plc					3.7	3.7	3.6	3.6
Electricity	North	West	(Construction	and	1.6	1.6	1.0	1.0
Maintenance) Limited
Electricity North West Services Limited					0.7	0.7	0.4	0.4
Electricity North West Property Limited					0.1	0.1	0.1	0.1
North West Electricity Networks (Finance) Limited					0.1	0.1	0.1	0.1
North West Electricity Networks (Jersey) Limited					0.2	0.2	0.2	0.2
North West Electricity Networks (Holdings) Limited					0.4	0.4	0.3	0.3
North West Electricity Networks (UK) Limited					0.6	0.6	0.1	0.1
Total owed by group companies (Note 16)					7.4	7.4	5.8	5.8
Amounts owed to subsidiaries:
Electricity North West Number 1 Company Limited					-	(15.5)	-	(15.5)
Interest payable to group companies:
North West Electricity Networks plc					(1.3)	(1.3)	(1.3)	(1.3)
ENW Finance plc					(10.4)	(10.4)	(10.7)	(10.7)
Other amounts payable to group companies:
Electricity North West Services Limited					(0.9)	(0.9)	(0.9)	(0.9)
North West Electricity Networks (Holdings) Limited					(0.2)	(0.2)	(0.2)	(0.2)
North West Electricity Networks (Jersey) Limited					(0.1)	(0.1)	(0.1)	(0.1)
North West Electricity Networks plc					(0.2)	(0.2)	(0.1)	(0.1)
Electricity	North	West	(Construction	and	(0.3)	(0.3)	(0.2)	(0.2)
Maintenance) Limited
Total owed to group companies (Note 18)					(13.4)	(13.4)	(13.5)	(13.5)
Borrowings payable to:
North West Electricity Networks plc (Note 19) 1					(111.1)	(111.1)	(109.8)	(109.8)
ENW Finance plc (Note 19) 2					(722.3)	(722.3)	(721.9)	(721.9)
Group tax relief owed by / (owed to):
North West Electricity Networks plc					(17.1)	(17.1)	(13.8)	(13.8)
North West Electricity Networks (Holdings) Ltd					-	-	(0.6)	(0.6)
North West Electricity Networks (UK) Ltd					0.4	0.4	(0.4)	(0.4)
Derivative asset with ENW Finance plc (Note 20)					192.2	192.2	217.1	217.1
Derivative liability with ENW Finance plc (Note 20)					(192.2)	(192.2)	(217.1)	(217.1)

This loan accrues weighted average interest at 4.11% (2024: 4.10%) and is repayable in March 2028.

This balance relates to two loans; £299.1m (2024: £299.0m) accrues interest at 1.415% and matures

in 2030, and £423.2m (2024: £422.9m) accrues interest at 4.893% and matures in 2032.

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

150

Notes to the Financial Statements (continued)

33. Contractual commitments

The following commitments have been contracted for but have not been recognised as liabilities in

the financial statements:

	2025	2024
Group and Company	£m	£m
Acquisition of software (Note 13)	9.6	2.1
Acquisition of property, plant and equipment (Note 11)	75.8	39.3
Contractual commitments	85.4	41.4

34. Cash flow information

Cash generated from operations

	2025	2024
Group and Company	£m	£m
Operating profit	280.8	229.1
Adjustments for:
Depreciation of property, plant and equipment (Note 5 & 11)	142.8	132.5
Amortisation of intangible asset (Note 5 & 13)	14.2	14.2
Amortisation of customer contributions (Note 4 & 24)	(21.8)	(20.9)
Profit on disposal of property, plant and equipment (Note 5)	(0.5)	(0.2)
Cash contributions in excess of pension charge to operating profit	(4.7)	(4.6)
Operating cash flows before movements in working capital	410.8	350.1
Changes in working capital:
Increase in inventories	(7.5)	(26.9)
Decrease/(increase) in trade and other receivables	2.9	(4.2)
Increase/(decrease) in trade and other payables	6.0	(7.7)
Cash generated from operations	412.2	311.3

Net debt reconciliation

This section sets out an analysis of net debt and the movements in net debt.

	2025	2024
Group and Company	£m	£m
Cash and cash equivalents (Note 17)	132.1	189.8
Borrowings (Note 19)	(1,565.8)	(1,570.0)
Net debt	(1,433.7)	(1,380.2)

Electricity North West Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2025

151

Notes to the Financial Statements (continued)

34. Cash flow information (continued)

Change in liabilities arising from financing activities

This section sets out an analysis of the movements in the Group’s liabilities for which cash flows have

been, or will be, classified as financing activities in the statement of cash flows.

Borrowings

Cash and cash

equivalents

Money market

deposits

over

three

months

Total

Group and Company	£m	£m	£m	£m
Net debt at 1 April 2023	(1,763.1)	173.8	305.7	(1,283.6)
Financing cash flows	221.4	16.0	(305.7)	(68.3)
Indexation (Note 9)	(31.0)	-	-	(31.0)
New leases (Note 19)	(2.6)	-	-	(2.6)
Transaction costs on new borrowings (Note 19)	0.1	-	-	0.1
Amortisation of transaction costs, discounts and premiums (Note 19)	5.2	-	-	5.2
Net debt at 31 March 2024	(1,570.0)	189.8	-	(1,380.2)
Financing cash flows	9.9	(57.7)	-	(47.8)
Indexation (Note 9)	(9.6)	-	-	(9.6)
New leases (Note 19)	(2.7)	-	-	(2.7)
Transaction costs on new borrowings (Note 19)	1.3	-	-	1.3
Amortisation of transaction costs, discounts and premiums (Note 19)	5.3	-	-	5.3
Net debt at 31 March 2025	(1,565.8)	132.1	-	(1,433.7)

Where applicable, interest on borrowings is included in operating activities in the statement of cash

flows and accruals within current liabilities in the statement of financial position and is, therefore,

excluded from this analysis.

35. Post balance sheet events

On 16 June 2025 Scottish Power UK plc provided North West Electricity Networks (Jersey) Limited

(“NWEN (Jersey)”) with a letter of support detailing the financial support it has committed to the group

headed by NWEN (Jersey). An amount of £500.0m is available and can be utilised by NWEN (Jersey)

and any of its subsidiaries, including the Company. This commitment will remain in place until the

earlier of the NWEN (Jersey) group securing alternative financing, or 12 months from the date of

approval of these financial statements, and will incur a charge of 20 basis points per annum whilst in

place.