Northern Ireland Energy Holdings (NIEH) is the owner of three key parts of the energy infrastructure: the Moyle electricity inter-connector with Scotland, the natural gas pipeline from Scotland, and the natural gas transmission pipelines in the Belfast area, more recently purchased from Phoenix Natural Gas.

Because of the nature of the ownership (through a company without share capital) and the long-term contracts and licences, the company was able to borrow funds at modest interest rates. The assets were acquired in 2003, 2005 and 2008 from the owners (NIE and Phoenix) at acceptable capital values to the former |owners.

The largest expenditure item each year is the cost of interest and capital repayments. In the year to March 2009, these costs were £23.7m.

This largely explains why the operating profit of £16.4m converts to a pre-tax loss of £4.5m.

The non-executive directors are elected by the members and, in a rotation policy, in the last two years, some of the key personnel in creating the company have |resigned. Alasdair Locke, the original chairman, David Montgomery, Alan McClure and Damian McAteer have left the board. Peter Warry has joined the board and been appointed chairman. The non-executives each earn an annual fee of £41,000.

The company is in the unusual position of showing a negative value of its equity at the end on the financial years in 2008 (£1.1m) and 2009 (£5.2m).

This is explained in the annual report as a consequence of |the apparent loss on derivative financing.

There is a mismatch in accounting for interest rate swaps as well as an impact of significant non-cash costs arising from indexation of outstanding bond liabilities which are recovered, under the licences, when the cash is needed to meet repayments.