Annual Report & Accounts 2017/18

99 NI Water Annual Report and Accounts 2017/18 Statutory Accounts 1 Key accounting policies continued • but it is unlikely to allow investment in additional necessary quality improvements, which may need to be deferred to the PC21 period; • the reduction in expenditure in line with inflation is being passed on to consumers through RPI+K price cap regulation and the PC15 outputs are being delivered; and • PC15 Final Determination targets remain valid and should be used for planning and performance reporting for the rest of the PC15 period. As a result, adjusted outputs were not formally agreed with the Utility Regulator for 2017/18. NI Water continues to make the case for certainty of funding and a medium term financial settlement to enable price limits and service targets/outputs set in the PC15 Final Determination to prevail. If funding levels drop below the minimum required to deliver all of the defined PC15 outputs within the PC15 six year period, a similar process will be undertaken to agree changes to PC15 Final Determination targets. On the basis of the ongoing discussions, the Directors have formed a judgement at the time of approving the financial statements, that the Company will be able to reach an agreement with the Utility Regulator and hence to apply adequate resources to continue in operational existence for the foreseeable future. As such, these conditions do not cast a significant doubt on the Company’s ability to continue as a going concern. The Company has the following short term and long term cash and bank facilities: • a new capital loan arrangement to 31 March 2021 has been established to fund the capital expenditure for the business. This also includes the facility to drawdown loan notes to cover unforeseen events/emergency situations; • a £20m working capital facility to 31 March 2021 which provides access to cash facilities for short term needs and for unforeseen events/emergency situations; • the Subsidy Agreement with Dfl permits the early drawdown of subsidy in year if the cash is required; and • access to transactional banking services under the new Northern Ireland Civil Service arrangements was established from 1 April 2016. Further information is included in Note G2 (liquidity risk). (d)Functional and presentation currency The consolidated financial statements are presented in pound sterling (GBP), which is the Company’s functional currency. All financial information presented in GBP has been rounded to the nearest thousand. (e) Changes in accounting policies There were no additional standards, amendments and interpretations that had a material impact on the Group’s financial statements during the year. (f) Critical accounting estimates and judgements The preparation of the consolidated financial statements, in conformity with IFRSs, requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year are included in the following Notes: • Note C4 – trade and other receivables; • Note E2 – measurement of defined benefit pension obligations; • Notes D3 and D4 – provisions and contingencies; • Note G1(r) and Note B4 – measurement of fair values; and • Note F1 – deferred taxation. Significant accounting policies are included at Note G1.