EirGrid plc Annual Report 2011

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EirGrid plc Annual Report & Accounts 2011 26. Related Party Transactions Group The Group has voluntarily early adopted the provisions of IAS 24 (2009) Related Parties, with effect from 1 October 2009, as the Directors believe adoption will provide users with reliable and more relevant information regarding related party transactions. IAS 24 (2009) is a revision to IAS 24, which requires disclosure of transactions and outstanding balances with related parties, to draw attention to the possibility that its financial position and profit or loss may have been affected by the existence of related parties. EirGrid plc is an Irish commercial semi-state organisation, and as such is a related party of the Government of Ireland. Bernie Gray, Dermot Byrne and Niamh Cahill hold one share each in the share capital of the Company on behalf of the Minister for Public Expenditure and Reform, one ordinary share of the Company is held by the Minister for Communications, Energy and Natural Resources and the remainder of the issued share capital is held by the Minister for Public Expenditure and Reform, or on his behalf. Board members had no beneficial interest in the Group at any time during the year. In common with many other entities, the Group deals in the normal course of business with other Government sponsored bodies such as ESB. An Infrastructure Agreement is in place between the Group and ESB under the auspices of the Commission for Energy Regulation (CER), in relation to the roles of owner and operator of the transmission system. The charges to the Consolidated and Company Income Statements under this Agreement were as follows: Year to Year to 30 Sep 2011 30 Sep 2010 € ’000 € ’000 Transmission asset owner charge 157,341 144,614 At 30 September 2011 a total of €30.8m (2010: €26.8m) was payable to ESB under this Agreement. The movement in this balance was as follows: 30 Sep 2011 30 Sep 2010 € ’0oo €’000 Opening balance 26,757 29,154 Charges during the year 157,341 144,614 Payments made during the year (153,333) (147,011) Closing balance 30,765 26,757 This outstanding balance is unsecured and payable in cash and cash equivalents. 112
EirGrid plc Annual Report & Accounts 2011 26. Related Party Transactions (continued) The remuneration of key management (those people having the authority and responsibility for planning, directing and controlling the activities of the Group) during the year was as follows: Year to Year to 30 Sep 2011 30 Sep 2010 € ’000 € ’000 Short-term benefits 1,433 1,768 Post-employment benefits 172 258 Total 1,605 2,026 Company At 30 September 2011 €109.1m (2010: €79.8m) was due to the Company from its subsidiaries. During the year, the Company advanced €10.0m to EirGrid Interconnector Limited via an intercompany loan and on-lent €79.8m of debt. The Company has made total advances of €21.0m to EirGrid Interconnector Limited, and on-lent total debt of €164.3m. Management estimate that on-lent interest free debt will be repaid on a schedule matching the terms of the on-lent debt. The terms of interest free intercompany debt are such that the intercompany debt portion may only be repaid once commercial funding has been repaid. The Company has recognised an investment of €98.4m in EirGrid Interconnector Limited, representing the present value estimate of the commercial rate of interest foregone by the Company over the life of these loans (note 11). Management’s assumptions regarding the repayment profile of interest free intercompany loans arising from on-lent debt have changed. Management now estimate that on-lent interest free debt will be repaid on a schedule matching the terms of the on-lent debt. Previously, it was estimated that the first intercompany debt lent would be the first repaid. This has resulted in an increase in the value of the Company’s investment in EirGrid Interconnector Limited of €18.7m. Over the life of these loans notional interest will be charged to EirGrid Interconnector Limited such that by the repayment date the balances reflect the initial amounts lent. During the year, €3.2m was recharged under this arrangement. If management’s estimates regarding repayment of intercompany loans had not changed, €4.1m would have been recharged under the arrangement. All borrowings by subsidiaries are guaranteed by EirGrid plc through a cross-guarantee structure. The Company has issued letters of support for its EirGrid UK Holdings Limited and EirGrid Interconnector Limited subsidiaries. The Company has entered into a contract with another Group subsidiary, EirGrid Interconnector Limited, to licence the East-West Interconnector asset once construction is completed. 27. Post Balance Sheet Events There have been no significant events affecting the Group or Company since the year end. 28. Approval of Financial Statements The Board approved the Financial Statements on 21 December 2011. 113
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Transmission System 400kV, 275kV, 2
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EirGrid plc Annual Report 2011

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