e6vk
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
Date: 20 May 2010
Commission File Number: 001-14958
NATIONAL GRID plc
(Registrants Name)
1-3 Strand
London
WC2N 5EH, England
(Registrants Address)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form
20-F or Form 40-F.
Form 20-F þ Form 40-F o
Indicate by check mark whether the registrant by furnishing the information contained in this Form
is also thereby furnishing the information to the Commission pursuant to Rule 12g3- 2(b) under the
Securities Exchange Act of 1934.
Yes o
No þ
If Yes is marked, indicate below the file number assigned to the registrant in connection with
Rule 12g3-2(b):
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorised.
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NATIONAL GRID plc
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By: |
/s/ David C. Forward
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David C Forward |
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Assistant Secretary |
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Date: 20 May 2010
ANNEX
1 - SUMMARY
FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
Report of Foreign Issuer
Pursuant
to Rule 13a 16 or 15d 16 of
The Securities Exchange Act of 1934
Announcement sent to the London Stock Exchange on 20 May 2010
National Grid plc
1-3 Strand, London, WC2N 5EH,
United Kingdom
Announcement:
National
Grid plc Results for the year ended 31 March 2010
20 May 2010
National Grid plc
Results for the year ended 31 March 2010
HIGHLIGHTS
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Earnings per share up 14%1 |
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8% increase recommended in full year dividend; policy reaffirmed to 2012 |
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Good progress with US rate case filings |
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Capital investment of £3.3bn; in line with plans |
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Capital investment plan of £22bn targeted over the next five years |
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Fully underwritten rights issue announced to raise £3.2bn after expenses |
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Full details are set out in a separate announcement released today |
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Positive outlook for 2010/11 with current trading in line with our expectations |
FINANCIAL RESULTS FOR CONTINUING OPERATIONS
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(£m, at actual exchange rate) |
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Year ended 31 March |
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2010 |
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2009 |
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% change |
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Business
performance1 |
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Operating profit |
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3,121 |
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2,915 |
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7 |
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Pre-tax profit |
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1,974 |
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1,770 |
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12 |
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Earnings |
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1,418 |
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1,250 |
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13 |
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Earnings per share |
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57.4p |
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50.2p |
2 |
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14 |
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Statutory results |
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Operating profit |
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3,293 |
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2,623 |
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26 |
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Pre-tax profit |
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2,193 |
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1,394 |
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57 |
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Earnings |
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1,386 |
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919 |
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51 |
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Earnings per share |
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56.1p |
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36.9p |
2 |
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52 |
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Dividend per share |
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38.49p |
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35.64p |
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8 |
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Steve Holliday, Chief Executive, said:
We have delivered another year of strong operational and financial performance. Our pre-tax
profit increased by 12%, earnings per share increased by 14% and we are recommending an 8%
increase in our full year dividend. I am particularly pleased with our reliability performance in
the UK and US. We are delivering improvements in customer satisfaction in all of our businesses.
We continue to make progress in our priority areas: ensuring appropriate regulatory arrangements,
delivering investments and making further efficiencies. Im delighted to report that the run rate
of synergy savings from KeySpan has now exceeded $150m.
These excellent results clearly demonstrate that National Grids strategy continues to deliver.
Our performance in the first weeks of 2010/11 is encouraging and we are confident that this will be
another year of growth. We believe that the rights issue announced today will give us the scope
and appropriate financial flexibility to deliver the Groups strategy.
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1
Business performance results are the primary
financial performance measure used by National Grid, being the results for
continuing operations before exceptional items, remeasurements and stranded
cost recoveries. Remeasurements comprise gains or losses recorded in the
income statement arising from changes in the fair value of commodity contracts
and of derivative financial instruments to the extent that hedge accounting is
not achieved or is not fully effective. Stranded cost recoveries are costs
associated with historic generation investment and related contractual
commitments that were not recovered through the sale of those investments.
Further details are provided in Note 3 on page 25. A reconciliation of
Business performance to Statutory results is provided in the consolidated
income statement on page 17. |
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2
In accordance with IAS 33, comparative period
amounts have been restated as a result of shares issued via scrip dividends. |
1
National Grid
2009/10 Full Year Results
CHIEF EXECUTIVES REVIEW
Last year I reaffirmed that our priorities for 2009/10 were to focus on regulation both in the
US and UK, deliver disciplined investment and continue to deliver cost savings and drive for
efficiency.
Regulatory filings in the US
We have continued to make good progress in the US, receiving decisions on rate case filings for
upstate New York Gas (NMPC), New Hampshire Gas (Energy North), Massachusetts Electric and Rhode
Island Electric (Narragansett) during 2009/10. On 20 May 2009 the new rates agreed with the New
York Public Service Commission (NYPSC) for the NMPC gas distribution business came into effect.
These provided for a 13.7% increase in revenues, an allowed return on equity of 10.20% and
importantly introduced new mechanisms to decouple revenues from volumes transported as well as
true-ups for pensions and the impact of commodity price changes on bad debts. New rates for
Massachusetts Electric came into effect on 1 January 2010 providing for a 6.9% increase in revenues
and an allowed return on equity of 10.35%. Again, this outcome included appropriate frameworks for
volume decoupling and true-ups for pensions and bad debts.
In addition, this year we have benefited from a full years performance in our Long Island
generation business reflecting the rates agreed with the Federal Energy Regulatory Commission
(FERC) in January 2010, which retrospectively came into effect from 1 February 2009. These have
delivered an 18.1% increase in revenues and an allowed return on equity of 10.75%.
We were, however, disappointed with the decisions from the Rhode Island Public Utilities Commission
on the rate case filing for Narragansett Electric and the New Hampshire Public Utilities Commission
on the rate case filing for Energy North. We have considered our position in both cases and for
Narragansett Electric have already submitted a filing to the Rhode Island Supreme court requesting
that the court hear our appeal of the Commissions decision. We will, in parallel, be filing a new
rate case this year. We have decided that both our gas and electricity distribution rate plans in
New Hampshire, which together represent less than 2% of our US rate base, do not enable us to meet
long term customer needs and earn acceptable returns Therefore, we have decided to evaluate
options to allow us to exit both these businesses.
In the last quarter of 2009/10 we also completed the rate case filings for upstate New York
Electric (NMPC) for $369m a year, as adjusted, of additional transmission and distribution revenue
with effect from January 2011. We expect a decision in December 2010. In April 2010, we submitted
a rate case filing for our Massachusetts Gas companies requesting additional revenue of $106m a
year effective November 2010. A decision is expected in October 2010.
We remain confident that our continued programme of regulatory development will deliver
appropriate, forward looking rate cases for all of our US business.
Regulatory developments in the UK
In the UK we have continued constructive dialogue with Ofgem in relation to their review of the UK
regulatory regime (the RPI-X@20 review). We expect discussions to continue into the early summer
of 2010 with Ofgem submitting final recommendations to their board later in the summer prior to a
final consultation with industry in the autumn of this year. In parallel, we have also supported
Ofgem with its Project Discovery, examining the adequacy of current energy market arrangements to
meet the challenges of achieving climate change targets and ensuring both security of supply and
affordability for customers.
In July 2009 we established the team within the Transmission business in the UK to manage our
submissions to the Transmission Price Control Reviews. The current price controls end on 31 March
2012. Ofgem have however announced that there will be a one year roll-over of the existing price
2
National Grid
2009/10 Full Year Results
controls to 31 March 2013, although they have only recently consulted on the scope of this
roll-over. We anticipate a full review of capital expenditure in this roll-over year (2012/13)
and a less detailed review of operating costs, cost of capital and pension costs. Recently, we
have also established the team that will lead our response to the UK Gas Distribution Price Control
Review which runs to 31 March 2013. We expect the full Transmission and Distribution Price
Controls to run concurrently.
Disciplined investment programme
In 2009/10, we delivered a £3.3bn capital expenditure programme, supported by our current rate
plans and long term contracts. This is in line with our planned target of £3.4bn. This has
increased our UK and US asset bases by 8% and 3% respectively. In 2010/11 we plan to invest around
£3.9bn, including joint ventures, supported by our current rate plans and long term contracts. We
forecast that over the next five years capital expenditure will increase significantly totalling
approximately £22bn in aggregate.
Over the year, our net debt has fallen to £22.1bn from an opening position of £22.7bn. This is
reflective of the strong operating cashflow of the group and the weakening of the US dollar against
sterling.
The effective interest rate on treasury managed debt for our businesses in 2009/10 was 4.6%.
Driving efficiency via the global operating model
We continue to embed our global operating model into our business. Through this we are
standardising processes across the business in order to improve efficiency and productivity.
We have made solid progress against our targets in 2009/10. The integration of KeySpan is
progressing well. As at 31 March 2010 the run rate of synergy savings was $159m and we remain on
track to deliver the forecast $200m savings by August 2011.
In addition, we have made annualised procurement savings amounting to more than £160m, much of
which is related to the purchase of new fixed assets for our substantial capital investment
programme. These savings have been achieved through both leveraging our global procurement ability
and working closely with supply chains to achieve significant reductions in delivery times.
Although we will continue to see cost pressures associated with our growing asset base, we continue
to drive productivity throughout all our businesses. Real controllable costs (excluding bad debts)
reduced by 2% this year and as expected our efficiency metric4 has improved to 7.6%.
Security of supply and climate change
We remain focused on playing a leading role in addressing the longer term issues of security of
supply and climate change facing the energy industry.
In the US we have received approval to build initially 5MW of regulated distributed solar energy
generation in Massachusetts. This investment will earn the same return as that awarded in the
distribution rate case, 10.35%. During the year we were also awarded $2.1m by the US Department of
Energy to develop smart grid work force training. This matches a similar amount from the upstate
New York electricity rate case. Finally, both New York and Massachusetts state regulators approved
our enlarged energy efficiency programmes. These will help us to attain our climate change
objectives as agreed by the relevant states and provide us the opportunity to earn enhanced
incentives.
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3 A description of this metric can be found on page 14 |
3
National Grid
2009/10 Full Year Results
In the UK we continue to work closely with Ofgem in response to the reports from the Electricity
Networks Strategy Group. This includes actively progressing preliminary work on the infrastructure
investment required to facilitate early connection of new renewable generation assets, for which we
have now agreed funding of over £200m to 2012 for both design and construction activities. In
parallel, we are making steady progress on the development of new regulatory frameworks to enable
rapid and efficient connection of new renewable generation. On both sides of the Atlantic we are
working with developers on renewable gas demonstration plans.
DIVIDEND
We intend to maintain our policy of 8% per annum growth until 31 March 2012 after adjusting
the dividend to take account of the bonus element of the rights issue. Beyond 2012, we intend to
pursue a policy that targets real growth in dividends reflecting the growth prospects of the
business. In line with this policy, the Board has recommended a final dividend of 24.84p per
ordinary share ($1.7737 per American Depository share (ADS)), bringing the full-year dividend to
38.49p per ordinary share ($2.9217 per ADS). The final dividend is to be paid on 18 August 2010 to
shareholders on the register as at 4 June 2010.
An option for a scrip dividend was approved at the Annual General Meeting in July 2009. The take
up of this option was 25% for the 2008/09 final dividend and 20% for the 2009/10 interim dividend.
We plan to offer a similar option for the 2009/10 final dividend.
OUTLOOK
We expect to see continued growth in 2010/11 across all our businesses. Our UK regulated
revenues are subject to RPI-X indexation at the start of each financial year. For the purpose of
setting revenue for 2010/11 the average RPI-X element of the rate increases was 0.2%. In addition
both the UK and US businesses are expected to recover timing related items.
We expect our financing costs in 2010/11 to continue to benefit from current low interest rates,
although the pick up in inflation will impact index linked debt. Our tax rate is expected to
return to previous higher levels. In 2010/11 we plan to invest around £3.9bn including joint
ventures, supported by our current rate plans and long term contracts.
We believe that the rights issue announced today will give us the scope and appropriate financial
flexibility to deliver the Groups strategy. In particular, we believe it will allow the Group to
fund a significant increase in capital investment, whilst maintaining single A credit ratings for
its UK operating companies.
4
National Grid
2009/10 Full Year Results
BASIS OF PRESENTATION
Unless otherwise stated, all financial commentaries are given on a business performance basis,
at actual exchange rates. Business performance represents the results for continuing operations
before exceptional items, mark-to-market remeasurements of commodity contracts and financial
instruments that are held for economic hedging purposes but did not achieve hedge accounting, and
US stranded cost recoveries. Commentary provided in respect of results after exceptional items,
mark-to-market remeasurements and US stranded cost recoveries is described as statutory.
REVIEW OF RESULTS AND FINANCIAL POSITION
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Operating profit |
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Year ended 31 March |
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(£m) |
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2010 |
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2009 |
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% change |
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Revenue and other operating income |
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14,007 |
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15,687 |
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(11) |
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Operating costs |
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(9,698) |
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(11,650) |
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17 |
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Depreciation and amortisation |
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(1,188) |
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(1,122) |
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(6) |
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Operating profit actual exchange rate |
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3,121 |
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2,915 |
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7 |
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Operating profit constant currency |
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3,121 |
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2,888 |
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8 |
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Operating profit was £3,121m, up 7% on the prior year (up 8% on a constant currency
basis4). This was primarily driven by strong results in our Transmission and
Electricity Distribution and Generation businesses.
Net finance costs were £1,155m, flat on the prior year. Profit before tax was up 12% to £1,974m.
The tax charge on profit was £553m, £36m higher than the prior year, resulting in an effective tax
rate for the year of 28% (down from 29.2% in 2008/09).
Earnings were £1,418m, up 13% on the prior year. Earnings per share increased 14% from 50.2p
(adjusted for the scrip dividend) last year to 57.4p.
Exceptional items, remeasurements and stranded cost recoveries for continuing operations decreased
earnings by £32m after tax. Exceptional items include restructuring and environmental costs. A
detailed breakdown of exceptional items, remeasurements and stranded cost recoveries can be found
on page 25.
Operating cash flows from continuing operations, before exceptional items, remeasurements, stranded
cost recoveries and taxation, were £810m higher than the prior year at £4,146m.
Organic investment in our continuing businesses was £3.3bn, flat on the previous year.
Our net debt reduced to £22.1bn at 31 March 2010 compared with £22.7bn at 31 March 2009. This
mainly reflected the weakening of the US dollar over the year.
Our
average return on equity5 was 11.3% over the three year period ending 31 March 2010,
compared with 10.8% over the three year period ending 31 March 2009. In 2009/10 the annual return
was 15%, up on the prior year, largely reflecting UK inflation. Interest cover5 at 31
March 2010 was 3.9x, up from 3.1x at 31 March 2009, mainly reflecting strong business cash flows
and a lower interest charge.
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4
Constant currency basis refers to the
reporting of the actual results against the prior period results which, in
respect of any US$ currency denominated activity, have been translated using
the average US$ exchange rate for the year ended 31 March 2010, which was $1.58
to £1.00. The average rate for the year ended 31 March 2009 was $1.54 to
£1.00. |
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5
A description of these metrics can be found on
page 14. |
5
National Grid
2009/10 Full Year Results
REVIEW OF TRANSMISSION OPERATIONS
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Summary results |
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Year ended 31 March |
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(£m) |
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2010 |
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2009 |
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% change |
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Revenue and other operating income |
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3,880 |
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3,937 |
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(1) |
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Operating costs |
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(1,984) |
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(2,227) |
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11 |
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Depreciation and amortisation |
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(432) |
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(409) |
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(6) |
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Operating profit actual exchange rate |
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1,464 |
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1,301 |
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13 |
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Operating profit constant currency |
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1,464 |
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1,297 |
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13 |
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Operating profit by geographical segment |
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Year ended 31 March |
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(£m, at constant currency) |
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2010 |
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2009 |
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% change |
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UK |
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1,311 |
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1,126 |
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16 |
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US |
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153 |
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171 |
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(11) |
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Operating profit |
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1,464 |
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1,297 |
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13 |
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Capital investment |
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Year ended 31 March |
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(£m, at actual exchange rate) |
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2010 |
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2009 |
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% change |
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UK |
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1,254 |
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1,259 |
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US |
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240 |
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182 |
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32 |
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Capital investment |
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1,494 |
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1,441 |
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4 |
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Rate base* |
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2009/10 |
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2008/09 |
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% change |
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UK regulatory asset value (£m) |
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12,033 |
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11,001 |
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9 |
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US rate base ($m) |
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1,117 |
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1,032 |
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8 |
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Returns |
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2009/10 |
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2008/09 |
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UK operational return (real) |
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Electricity transmission |
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6.6% |
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4.7% |
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Gas transmission |
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7.6% |
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6.9% |
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US regulatory return on equity** (nominal) |
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New England *** |
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11.8% |
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11.8% |
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* Details of returns and rate base for all rate plans can be found at
www.nationalgrid.com. National Grids estimate of US rate base: regulatory filings or
an alternative US GAAP invested capital measure where either recent rate base filings are not
available or where the actual filed rate base currently excludes certain regulatory asset balances. |
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**
Weighted average return on equity based on regulatory asset value. |
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***
In New York, our electricity, transmission and distribution activities (including our stranded
cost recoveries) make a combined regulatory filing each calendar year. The combined New York rate
base and returns are reported in our Electricity Distribution and Generation line of business. |
6
National Grid
2009/10 Full Year Results
Transmission delivered a very strong performance during the year. Operating profit increased
by £163m. This was primarily driven by allowed increases in net regulated income of £142m. The
largest component of this was UK net regulated income which increased by £133m, largely as a result
of above-inflation revenue increases under the price control allowance. An under-recovery of
income of £80m in the UK and £4m in the US will be carried forward to 2010/11. In addition UK
incentive scheme performance increased operating profit by £35m and a reduction in controllable
costs increased operating profit by £23m. Other items reduced operating profit by £33m. This was
mainly the result of the French Interconnector returning to more normal levels as expected.
Movement in the dollar exchange rate had a £4m year-on-year negative effect on operating profit.
Capital investment in Transmission was £1,494m. This mainly related to UK electricity transmission
investment, which included the Thames Estuary reinforcement, our London cable tunnels project and
transmission investment in renewable generation (TIRG). Investment in our US transmission networks
included reliability spend in New York and investment in the New England East-West Solution (NEEWS)
project, where we earn an enhanced Federal Energy Regulatory Commission (FERC) return on equity of
12.89%. These investments resulted in increases in our Transmission UK regulatory asset value and
US rate base by 9% and 8% respectively, as compared to the prior year. In 2009/10 we have
sanctioned a number of large UK projects including the connection of renewables and nuclear
generation.
We measure the financial performance of our UK regulated business using an operational return
metric. In our electricity and gas transmission businesses we achieved operational returns of 6.6%
and 7.6% respectively, outperforming our regulatory assumptions for the year. The main
contributing factor was strong incentive performance, particularly in managing system balancing
costs and maintaining high levels of network reliability.
In the US we measure our financial performance against the allowed regulatory return on equity, the
basis used by our regulators in the US for setting rates. In New England we achieved a weighted
average 11.8% return on equity, in line with the prior year. Our New York electricity transmission
and distribution businesses currently operate under a single rate plan; this rate base and return
are reported in our Electricity Distribution and Generation line of business.
7
National Grid
2009/10 Full Year Results
REVIEW OF GAS DISTRIBUTION OPERATIONS
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Summary results |
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Year ended 31 March |
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(£m) |
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2010 |
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2009 |
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% change |
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Revenue and other operating income |
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5,226 |
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6,254 |
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(16) |
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Operating costs |
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(3,715) |
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(4,621) |
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20 |
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Depreciation and amortisation |
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(374) |
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(349) |
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(7) |
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Operating profit actual exchange rate |
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1,137 |
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1,284 |
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(11) |
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Operating profit constant currency |
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1,137 |
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1,268 |
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(10) |
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Operating profit by geographical segment |
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Year ended 31 March |
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(£m, at constant currency) |
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2010 |
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2009 |
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% change |
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UK |
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723 |
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672 |
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8 |
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US |
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414 |
|
|
|
596 |
|
|
|
(31) |
|
Operating profit |
|
|
1,137 |
|
|
|
1,268 |
|
|
|
(10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital investment |
|
Year ended 31 March |
|
|
|
|
(£m, at actual exchange rate) |
|
2010 |
|
|
2009 |
|
|
% change |
|
|
UK capex |
|
|
205 |
|
|
|
173 |
|
|
|
18 |
|
UK repex |
|
|
465 |
|
|
|
425 |
|
|
|
9 |
|
US |
|
|
409 |
|
|
|
421 |
|
|
|
(3) |
|
Capital investment |
|
|
1,079 |
|
|
|
1,019 |
|
|
|
6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rate base* |
|
|
|
|
|
|
|
|
|
|
|
2009/10 |
|
|
2008/09 |
|
|
% change |
|
|
UK regulatory asset value (£m) |
|
|
|
|
|
|
|
|
|
|
|
|
Gas Distribution |
|
|
7,001 |
|
|
|
6,550 |
|
|
|
7 |
|
US rate base ($m) |
|
|
|
|
|
|
|
|
|
|
|
|
New York |
|
|
5,352 |
|
|
|
5,156 |
|
|
|
4 |
|
New England** |
|
|
2,066 |
|
|
|
2,016 |
|
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Returns |
|
|
|
|
|
|
|
|
|
|
|
2009/10 |
|
|
2008/09 |
|
|
|
|
|
|
|
|
|
UK operational return (real) |
|
|
|
|
|
|
|
|
|
|
|
|
Gas Distribution |
|
|
6.3% |
|
|
|
5.8% |
|
|
|
|
|
US regulatory return on equity (nominal)*** |
|
|
|
|
|
|
|
|
|
|
|
|
New York |
|
|
9.4% |
|
|
|
10.2% |
|
|
|
|
|
New England** |
|
|
3.6% |
|
|
|
7.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
* Details of returns and rate base for all rate plans can be found at
www.nationalgrid.com. National Grids estimate of US rate base: regulatory filings or an
alternative US GAAP invested capital measure where either recent rate base filings are not
available or where the actual filed rate base currently excludes certain regulatory asset balances. |
|
** 2008/09 rate base restated to exclude $937m of goodwill |
|
*** Weighted average return on equity based on regulatory asset value |
8
National Grid
2009/10 Full Year Results
Gas Distribution operating profit decreased by 11% during the year to £1,137m, primarily
driven by timing related items in the US. UK net regulated income increased by £65m, largely as a
result of above-inflation revenue increases under the price control allowance. US net regulated
income decreased by £177m, largely as a result of timing and a one off Long Island property tax
recovery item. Revenue increases in our rate plans increased operating profit by £32m and timing
items reduced operating profit by £115m. In addition the economic impact on volumes reduced
operating profit by £38m. Other items reduced operating profit by £19m. The year-on-year movement
in exchange rates decreased operating profit by £16m. The UK and US regulated businesses will
carry forward an under recovery of £20m and £55m of income respectively to 2010/11.
Despite a severe winter, our UK Gas Distribution operations met all but one of their customer
service targets. Our US Gas Distribution operations met or exceeded all their regulatory targets
for system performance and customer satisfaction.
During the period, together with our gas distribution alliance partners, we have replaced over
2,000km of gas mains in the UK, resulting in total replacement expenditure (repex) of £465m, up 9%
on last year. In the US, in addition to investment in replacing ageing network infrastructure, we
added around 44,000 new gas customers during 2009/10. Overall, our investment in network
infrastructure projects in the UK and US resulted in total capital expenditure (including repex) of
£1,079m.
We measure the financial performance of our UK regulated business using an operational return
metric. We achieved a 6.3% operational return, significantly outperforming regulatory assumptions.
This was mainly as a result of outperformance on operating expenditure and incentives.
In New York, we achieved a weighted average 9.4% regulatory return on equity. This is largely as a
result of outperformance of base allowed returns in our downstate New York gas businesses where we
achieved 10.5% in Long Island and 11.2% in New York. This was slightly offset by the Niagara
Mohawk gas business return which does not include a full year of the new rate plan. Our New
England businesses are not currently earning their allowed returns, achieving a weighted average
3.6% regulatory return on equity. We have recently filed a new rate case for Massachusetts and our
Narragansett business return has been impacted by an increase in bad debts.
We continue to make good regulatory progress in the US. On 14 May 2009 our Niagara Mohawk gas rate
case, recommended by the New York Public Service Commission (NYPSC) staff, was approved in full
with a base allowed return of 10.2% and provided for a $39m increase in revenues. The revenue
increase came into effect on 20 May 2009. The rate case settlement included a year two update. In
compliance with the agreement, we filed for a $14m revenue increase. We have received conditional
approval and new rates will be effective 20 May 2010. On 29 May 2009 the New Hampshire gas rate
case (covering around 1% of our US rate base) was approved. We were disappointed with the allowed
return on equity of 9.54%, which is out of line with other regulatory decisions. We have decided
that both our gas and electricity distribution rate plans in New Hampshire, which together
represent less than 2% of our US rate base, do not enable us to meet long term customer needs and
earn acceptable returns. Therefore, we have decided to evaluate options to allow us to exit both
these businesses. On 16 April 2010 we filed the Massachusetts rate cases. This included a filing
for Colonial Gas and a combined filing for Boston and Essex Gas. We are proposing an 11.3% return
on equity, a revenue increase of $106m and revenue decoupling, capital investment, bad debt and
pension and healthcare trackers. On 29 January 2010 we made a compliance filing seeking recovery
of site investigation and remediation costs for our New York downstate gas companies. If approved,
these companies will begin recovering approximately $65m per year beginning January 2011.
9
National Grid
2009/10 Full Year Results
REVIEW OF ELECTRICITY DISTRIBUTION AND GENERATION OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary results |
|
Year ended 31 March |
|
|
|
|
(£m) |
|
2010 |
|
|
2009 |
|
|
% change |
|
|
Revenue and other operating income* |
|
|
3,963 |
|
|
|
4,537 |
|
|
|
(13) |
|
Operating costs |
|
|
(3,380) |
|
|
|
(4,054) |
|
|
|
17 |
|
Depreciation and amortisation |
|
|
(209) |
|
|
|
(218) |
|
|
|
4 |
|
Operating profit actual exchange rate |
|
|
374 |
|
|
|
265 |
|
|
|
41 |
|
Operating profit constant currency |
|
|
374 |
|
|
|
258 |
|
|
|
45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit by principal activities |
|
Year ended 31 March |
|
|
|
|
(£m, at constant currency) |
|
2010 |
|
|
2009 |
|
|
% change |
|
|
Electricity distribution |
|
|
263 |
|
|
|
205 |
|
|
|
28 |
|
Long Island transmission and distribution services |
|
|
41 |
|
|
|
23 |
|
|
|
78 |
|
Long Island generation |
|
|
70 |
|
|
|
30 |
|
|
|
133 |
|
Operating profit |
|
|
374 |
|
|
|
258 |
|
|
|
45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital investment |
|
Year ended 31 March |
|
|
|
|
(£m, at actual exchange rate) |
|
2010 |
|
|
2009 |
|
|
% change |
|
|
Electricity distribution |
|
|
338 |
|
|
|
317 |
|
|
|
7 |
|
Long Island generation |
|
|
34 |
|
|
|
38 |
|
|
|
(11) |
|
Capital investment |
|
|
372 |
|
|
|
355 |
|
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rate base** |
|
|
|
|
|
|
|
|
|
|
|
2009/10 |
|
|
2008/09 |
|
|
% change |
|
|
US rate base ($m) |
|
|
|
|
|
|
|
|
|
|
|
|
New York |
|
|
4,227 |
|
|
|
4,124 |
|
|
|
2 |
|
New England |
|
|
2,162 |
|
|
|
2,190 |
|
|
|
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Returns |
|
|
|
|
|
|
|
|
|
|
|
2009/10 |
|
|
2008/09 |
|
|
|
|
|
US regulatory return on equity (nominal)*** |
|
|
|
|
|
|
|
|
|
|
|
|
New York |
|
|
5.9% |
|
|
|
6.7% |
|
|
|
|
|
New England |
|
|
2.6% |
|
|
|
5.9% |
|
|
|
|
|
|
|
|
|
* Excludes revenue from stranded cost recoveries. |
|
** Details of returns and rate base for all rate plans can be found at www.nationalgrid.com.
National Grids estimate of US rate base: regulatory filings or an alternative US GAAP invested
capital measure where either recent rate base filings are not available or where the actual filed
rate base currently excludes certain regulatory asset balances. |
|
*** Weighted average return on equity based on regulatory asset value. |
10
National Grid
2009/10 Full Year Results
Electricity Distribution and Generation delivered a strong performance during the year.
Operating profit increased by 41% to £374m, primarily driven by rate increases in our Long Island
Generation business and the absence of severe storms. Regulated net income increased operating
profit by £35m, including rate increases in our generation business that increased operating profit
by £42m. An under-recovery of income of £40m will be carried forward to 2010/11. In addition the
absence of the severe ice storms which hit our service territory in December 2008 increased
operating profit by £80m relative to the prior year. Other items increased operating profit by
£1m. The weakening of the dollar had a £7m year-on-year negative impact on operating profit.
Our US Electricity Distribution operations met or exceeded all their regulatory targets for system
performance and customer satisfaction.
Capital expenditure was up 5% on the prior year at £372m. The investment was principally driven by
higher spend on line reliability enhancement programmes and substation asset condition
improvements.
We measure our US financial performance against the allowed regulatory returns on equity, the basis
used by our regulators in the US for setting rates. In New England we achieved a weighted average
2.6%. This includes Massachusetts and Rhode Island Electric. In both businesses the new rate
plans which have been agreed are not included in the returns. In New York we achieved a weighted
average of 5.9%. This includes our upstate New York electricity business where we recently filed a
new rate plan.
We continue to make good progress in our electric rate cases. The Massachusetts electric rate plan
was approved on 30 November 2009 with a base allowed return on equity of 10.35% and a $42m rate
increase effective 1 January 2010. In addition we have agreement to recover $24m over four years
from 2011 in relation to past storm costs. The plan also includes volume decoupling, annual
trackers for capital investment and pension and healthcare costs and improved allowance for bad
debt. On 5 January 2010 the Federal Energy Regulatory Commission (FERC) approved the agreement
with the Long Island Power Authority, which included a $65.7m rate increase effective 1 February
2009 and a 10.75% return on equity. In addition the agreement includes annual trackers for pension
and healthcare costs as well as capital expenditure. On 9 February 2010 and confirmed in a later
order, the Rhode Island rate plan was approved, providing an allowed return on equity of 9.8% and a
$23m increase in revenue effective 1 January 2010. Although we received an improved allowance for
bad debt, we did not receive approval of volume decoupling or annual trackers for capital
investment and pension and other post-employment benefits costs. We are disappointed with the
outcome and, on 20 April 2010, we filed a petition with the Rhode Island Supreme Court requesting
that it review the legality and reasonableness of the regulators decision.
On 29 January 2010 (as amended on 3 May 2010) we filed a three-year electric rate plan for Niagara
Mohawk for an increase in annual transmission and distribution revenue of $369m, effective 1
January 2011. We have also requested volume decoupling and a tracker for capital investment in
addition to an 11.1% return on equity.
11
National Grid
2009/10 Full Year Results
REVIEW OF NON-REGULATED AND OTHER ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary results |
|
Year ended 31 March |
|
|
|
|
(£m) |
|
2010 |
|
|
2009 |
|
|
% change |
|
|
Revenue and other operating income |
|
|
741 |
|
|
|
750 |
|
|
|
(1) |
|
Operating costs |
|
|
(422) |
|
|
|
(539) |
|
|
|
22 |
|
Depreciation and amortisation |
|
|
(173) |
|
|
|
(146) |
|
|
|
(18) |
|
Operating profit |
|
|
146 |
|
|
|
65 |
|
|
|
125 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit by principal activities |
|
Year ended 31 March |
|
|
|
|
(£m, at actual exchange rate) |
|
2010 |
|
|
2009 |
|
|
% change |
|
|
Metering |
|
|
162 |
|
|
|
133 |
|
|
|
22 |
|
Grain LNG |
|
|
51 |
|
|
|
21 |
|
|
|
143 |
|
Property |
|
|
6 |
|
|
|
1 |
|
|
|
- |
|
Sub-total operating profit |
|
|
219 |
|
|
|
155 |
|
|
|
41 |
|
|
Corporate and other activities |
|
|
(73) |
|
|
|
(90) |
|
|
|
19 |
|
Operating profit |
|
|
146 |
|
|
|
65 |
|
|
|
125 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital investment |
|
Year ended 31 March |
|
|
|
|
(£m, at actual exchange rate) |
|
2010 |
|
|
2009 |
|
|
% change |
|
|
Metering |
|
|
121 |
|
|
|
137 |
|
|
|
(12) |
|
Grain LNG |
|
|
117 |
|
|
|
213 |
|
|
|
(45) |
|
Property |
|
|
15 |
|
|
|
9 |
|
|
|
67 |
|
Other |
|
|
54 |
|
|
|
68 |
|
|
|
(21) |
|
Capital investment |
|
|
307 |
|
|
|
427 |
|
|
|
(28) |
|
|
12
National Grid
2009/10 Full Year Results
Operating profit from our Non-regulated and other activities increased by 125% during the year to
£146m. This very strong performance mainly reflected an increase in operating profit in our
Metering and Grain LNG businesses. As reported last year, we have taken action to defer property
sales in order to preserve value in the current challenging market conditions. This has resulted
in operating profit in our Property business remaining similar to last year at £6m.
Operating profit in our Metering business increased by £29m. This was primarily driven by
inflationary price increases and lower controllable costs. In February 2008, the Gas and
Electricity Markets Authority (GEMA) issued a decision to fine us £41.6m for a breach of the UK
Competition Act 1998. The fine was reduced on appeal to the Competition Appeal Tribunal and on 23
February 2010 further reduced to £15m by the Court of Appeal. On 22 March we sought leave to appeal
the Court of Appeals judgement to the Supreme Court.
Our OnStream business has launched an innovative smart metering package which incorporates an
electricity smart meter and a standalone gas smart meter. We will be carrying out a series of
small field trials this summer with two energy suppliers before a larger scale rollout.
Our Grain LNG business delivered an operating profit of £51m, an increase of £30m on the prior
year, as a result of Phase II being operational for the whole year. Capital expenditure reduced to
£117m as a result of the completion of Phase II. Phase III construction commenced in July 2008 and
is planned to be completed in the winter of 2010. This will add a further LNG tank and a second
unloading jetty, increasing the total annual capacity of the terminal to around 15m tonnes,
representing around 20% of total UK gas demand. These investments are underpinned by long-term,
take-or-pay contracts, which deliver an index-linked revenue stream.
JOINT VENTURES
BritNed, a 50/50 joint venture with TenneT (the Dutch electricity transmission owner), is on
target for completion of the 260 km electricity link between the UK and the Netherlands by December
2010 and commercial operation in April 2011. Construction of the converter sites at Maasvlakte and
the Isle of Grain is now complete. Land cable manufacture is now complete and the majority of the
marine cable has now been manufactured and tested.
We have made further progress towards generating sustainable power and heat at our pressure
reduction stations via Blue-NG, our joint venture with the renewable generation company, 2OC.
Construction contracts for the first two sites are in place and detailed design work is well
underway.
The Millennium pipeline in New York has completed its first full year of operations this year.
Expansion plans are being considered to provide a gas transmission service from the Marcellus Shale
production areas in Pennsylvania to the New York City markets.
13
National Grid
2009/10 Full Year Results
BOARD CHANGES
Robert Catell retired as Non-executive Director and Deputy Chairman of National Grid on 27
July 2009.
METRIC DEFINITIONS
The financial metrics we have reported today are designed to give greater transparency on
National Grids relative performance and our performance against regulatory contracts.
NATIONAL GRID RETURN ON EQUITY (nominal)
This metric captures the total operational and financial performance of the company.
Calculation: IFRS adjusted profit after tax divided by the equity base.
|
|
IFRS adjusted operating profit after tax is as reported on a business performance basis,
adjusted for: regulatory depreciation; capitalisation, mainly relating to gas distribution
mains replacement (repex) in the UK; pensions; indexation of our UK regulatory asset value;
and discontinued operations. |
|
|
Equity base is equal to the total UK regulatory asset value; plus total capital invested in
our US businesses; plus net assets for our Non-regulated and other businesses; minus net debt
as reported under IFRS. |
UK OPERATIONAL RETURN (real)
(Transmission UK; Gas Distribution UK)
This metric is comparable to the vanilla return used by Ofgem.
Calculation: (IFRS adjusted operating profit minus current tax), divided by regulatory asset value
|
|
IFRS adjusted operating profit is as reported on a business performance basis, adjusted
for: regulatory depreciation; capitalisation of gas distribution mains replacement (repex);
and pensions. |
|
|
Current tax is the tax charge as reported on a regulatory basis. |
US REGULATED RETURN ON EQUITY (nominal)
(Transmission US; Gas Distribution US; Electricity Distribution and Generation)
This is a US GAAP metric as calculated annually (financial year to 31 March for New England Power;
calendar year to 31 December in Massachusetts and New York) and reported to our regulators.
Calculation: Regulated net income divided by equity rate base.
|
|
Regulated net income is adjusted for earned savings in New York. |
|
|
Equity rate base is as reported to our regulators. For New England Power the rate base
applied is the common equity excluding goodwill. |
INTEREST COVER
This is an IFRS metric and reflects the calculation used by our credit rating agencies. It is used
as an indicator of balance sheet efficiency.
Calculation: Adjusted funds from operations divided by adjusted interest expense.
EFFICIENCY METRIC
Calculation: Adjusted regulated controllable costs divided by asset base.
|
|
Regulated controllable costs excluding bad debts. |
|
|
Asset base is the estimated mid year UK regulatory asset value and US rate base. |
Worked examples are available at www.nationalgrid.com.
14
National Grid
2009/10 Full Year Results
CONTACTS
National Grid:
|
|
|
|
|
Investors |
|
|
|
|
David Rees
|
|
+44 (0)20 7004 3170
|
|
+44 (0)7901 511322(m) |
Neil Pullen
|
|
+44 (0)20 7004 3143
|
|
+44 (0) 7770 703070(m) |
George Laskaris
|
|
+1 718 403 2526
|
|
+1 917 375 0989(m) |
Victoria Davies
|
|
+44 (0)20 7004 3171
|
|
+44 (0)7771 973447(m) |
Andy Mead
|
|
+44 (0)20 7004 3166
|
|
+44 (0)7752 890787(m) |
Iwan Hughes
|
|
+44 (0)20 7004 3169
|
|
+44 (0) 7900 405898(m) |
|
|
|
|
|
Media |
|
|
|
|
Clive Hawkins
|
|
+44 (0)20 7004 3147
|
|
+44 (0)7836 357173(m) |
Chris Mostyn
|
|
+1 781 907 1726
|
|
+1 347 702 3740(m) |
Gemma Stokes
|
|
+44 (0)1926 65 3555
|
|
+44 (0)7974 198333(m) |
Brunswick: Tom Burns
|
|
+44 (0)20 7396 5333
|
|
+44 (0)7974 982333(m) |
An analyst presentation will be held at the London Stock Exchange, 10 Paternoster Square, London
EC4M 7LS at 8:30am (UK time) today.
|
|
|
|
|
|
|
Live telephone
coverage of the analyst presentation - password National Grid |
UK dial in number
|
|
+44 (0) 207 806 1957
|
|
US dial in number
|
|
+1 212 444 0413 |
Confirmation Code
|
|
3684310 |
|
|
|
|
Telephone replay of the analyst presentation (available until 19 July 2010) |
Dial in number
|
|
+44 (0) 207 111 1244
|
|
US dial in number
|
|
+1 347 366 9565 |
Confirmation Code
|
|
3684310 |
|
|
|
|
A short video of Steve Holliday talking about these results is available on www.cantos.com. A live
web cast of the presentation will also be available at www.nationalgrid.com.
Photographs are available on www.newscast.co.uk.
You can view or download copies of our latest Annual Report or the Annual Review from our website
at www.nationalgrid.com/corporate/Investor+Relations/ or request a free printed copy by contacting
investor.relations@ngrid.com.
This announcement does not constitute, or form part of an offer to sell, or the solicitation of
an offer to subscribe for or buy, any securities. The securities referred to herein have not been
and will not be registered under the Securities Act or under any securities laws of any state or
other jurisdiction of the United States and may not be offered, sold, taken up, exercised, resold,
renounced, transferred or delivered, directly or indirectly, within the United States except
pursuant to an exemption from, or in a transaction not subject to, the registration requirements of
the Securities Act and in compliance with any applicable securities laws of any state or other
jurisdiction of the United States. There will be no public offer of such securities in the United
States.
15
National Grid
2009/10 Full Year Results
CAUTIONARY STATEMENT
This announcement contains certain statements that are neither reported financial results nor
other historical information. These statements are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. These statements include information with respect to National Grids
financial condition, its results of operations and businesses, strategy, plans and objectives.
Words such as anticipates, expects, intends, plans, believes, seeks, estimates,
targets, may, will, continue, project and similar expressions, as well as statements in
the future tense, identify forward-looking statements. These forward-looking statements are not
guarantees of National Grids future performance and are subject to assumptions, risks and
uncertainties that could cause actual future results to differ materially from those expressed in
or implied by such forward-looking statements. Many of these assumptions, risks and uncertainties
relate to factors that are beyond National Grids ability to control or estimate precisely, such as
such as changes in laws or regulations and decisions by governmental bodies or regulators; breaches
of, or changes in, environmental, climate change and health and safety laws or regulations; network
failure or interruption, the inability to carry out critical non-network operations and damage to
infrastructure; performance against regulatory targets and standards, including delivery of costs
and efficiency savings; customers and counterparties failing to perform their obligations to
National Grid; and unseasonable weather affecting energy demands. Other factors that could cause
actual results to differ materially from those described in this announcement include fluctuations
in exchange rates, interest rates, commodity price indices and settlement of hedging arrangements;
restrictions in National Grids borrowing and debt arrangements; changes to credit ratings of
National Grid and its subsidiaries; adverse changes and volatility in the global credit markets;
National Grids ability to access capital markets and other sources of credit in a timely manner
and other sources of credit on acceptable terms; deflation or inflation; the seasonality of
National Grids businesses; the future funding requirements of National Grids pension schemes and
other post-retirement benefit schemes, and the regulatory treatment of pension costs; the loss of
key personnel or the inability to attract, train or retain qualified personnel; new or revised
accounting standards, rules and interpretations, including changes of law and accounting standards
that may affect National Grids effective rate of tax; incorrect assumptions or conclusions
underpinning business development activity, and any unforeseen significant liabilities or other
unanticipated or unintended effects of such activities and the performance of National Grids
subsidiaries. In addition National Grids reputation may be harmed if consumers of energy suffer a
disruption to their supply. For a more detailed description of some of these assumptions, risks and
uncertainties, together with any other risk factors, please see National Grids filings with and
submissions to the US Securities and Exchange Commission (the SEC) (and in particular the Risk
Factors and Operating and Financial Review sections in its most recent Annual Report on Form 20-F).
The effects of these factors are difficult to predict. New factors emerge from time to time and
National Grid cannot assess the potential impact of any such factor on its activities or the extent
to which any factor, or combination of factors, may cause its results to differ materially from
those contained in any forward-looking statement. Except as may be required by law or regulation,
National Grid undertakes no obligation to update any of its forward-looking statements, which speak
only as of the date of this announcement. The content of any website references herein do not form
part of this announcement.
16
National Grid
2009/10 Full Year Results
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED INCOME STATEMENT |
|
|
|
|
|
|
|
|
|
|
for the years ended 31 March |
|
|
|
|
|
2010 |
|
|
2009 |
|
|
|
Notes |
|
|
£m |
|
|
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
2a |
|
|
|
13,988 |
|
|
|
15,624 |
|
Other operating income |
|
|
|
|
|
|
19 |
|
|
|
63 |
|
Operating costs |
|
|
|
|
|
|
(10,714) |
|
|
|
(13,064) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit |
|
|
|
|
|
|
|
|
|
|
|
|
- Before exceptional items, remeasurements and stranded cost recoveries |
|
|
2b |
|
|
|
3,121 |
|
|
|
2,915 |
|
- Exceptional items, remeasurements and stranded cost recoveries |
|
|
3 |
|
|
|
172 |
|
|
|
(292) |
|
Total operating profit |
|
|
2b |
|
|
|
3,293 |
|
|
|
2,623 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income and similar income |
|
|
4 |
|
|
|
1,005 |
|
|
|
1,315 |
|
Interest expense and other finance costs |
|
|
|
|
|
|
|
|
|
|
|
|
- Before exceptional items and remeasurements |
|
|
|
|
|
|
(2,160) |
|
|
|
(2,465) |
|
- Exceptional items and remeasurements |
|
|
3 |
|
|
|
47 |
|
|
|
(84) |
|
Total interest expense and other finance costs |
|
|
4 |
|
|
|
(2,113) |
|
|
|
(2,549) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share of post-tax results of joint ventures and associates |
|
|
|
|
|
|
8 |
|
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before taxation |
|
|
|
|
|
|
|
|
|
|
|
|
- Before exceptional items, remeasurements and stranded cost recoveries |
|
|
2b |
|
|
|
1,974 |
|
|
|
1,770 |
|
- Exceptional items, remeasurements and stranded cost recoveries |
|
|
3 |
|
|
|
219 |
|
|
|
(376) |
|
Total profit before taxation |
|
|
2b |
|
|
|
2,193 |
|
|
|
1,394 |
|
Taxation |
|
|
|
|
|
|
|
|
|
|
|
|
- Before exceptional items, remeasurements and stranded cost recoveries |
|
|
5 |
|
|
|
(553) |
|
|
|
(517) |
|
- Exceptional items, remeasurements and stranded cost recoveries |
|
|
3 |
|
|
|
(251) |
|
|
|
45 |
|
Total taxation |
|
|
|
|
|
|
(804) |
|
|
|
(472) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit from continuing operations after taxation |
|
|
|
|
|
|
|
|
|
|
|
|
- Before exceptional items, remeasurements and stranded cost recoveries |
|
|
|
|
|
|
1,421 |
|
|
|
1,253 |
|
- Exceptional items, remeasurements and stranded cost recoveries |
|
|
3 |
|
|
|
(32) |
|
|
|
(331) |
|
Profit for the year from continuing operations |
|
|
|
|
|
|
1,389 |
|
|
|
922 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year from discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
- Before exceptional items and remeasurements |
|
|
|
|
|
|
|
|
|
|
9 |
|
- Exceptional items and remeasurements |
|
|
|
|
|
|
|
|
|
|
16 |
|
|
|
|
|
|
|
|
|
|
|
|
25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year |
|
|
|
|
|
|
1,389 |
|
|
|
947 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
- Equity shareholders of the parent |
|
|
|
|
|
|
1,386 |
|
|
|
944 |
|
- Minority interests |
|
|
|
|
|
|
3 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,389 |
|
|
|
947 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share from continuing operations* |
|
|
|
|
|
|
|
|
|
|
|
|
- Basic |
|
|
6a |
|
|
|
56.1p |
|
|
|
36.9p |
|
- Diluted |
|
|
6b |
|
|
|
55.8p |
|
|
|
36.6p |
|
|
Earnings per share* |
|
|
|
|
|
|
|
|
|
|
|
|
- Basic |
|
|
6a |
|
|
|
56.1p |
|
|
|
37.9p |
|
- Diluted |
|
|
6b |
|
|
|
55.8p |
|
|
|
37.6p |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends per ordinary share: paid during the year |
|
|
7 |
|
|
|
36.65p |
|
|
|
33.94p |
|
Dividends per ordinary share: for the year |
|
|
|
|
|
|
38.49p |
|
|
|
35.64p |
|
|
|
|
|
|
|
|
* Comparative EPS data have been restated to reflect the impact of the additional shares issued
as scrip dividends
17
National Grid
2009/10 Full Year Results
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME |
|
|
|
|
|
|
for the years ended 31 March |
|
2010 |
|
|
2009 |
|
|
|
£m |
|
|
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year |
|
|
1,389 |
|
|
|
947 |
|
|
|
|
|
|
|
|
|
|
Other comprehensive income/(loss): |
|
|
|
|
|
|
|
|
Exchange adjustments |
|
|
33 |
|
|
|
464 |
|
Actuarial net losses |
|
|
(731) |
|
|
|
(2,018) |
|
Deferred tax on actuarial net losses |
|
|
175 |
|
|
|
678 |
|
Net losses taken to equity in respect of cash flow hedges |
|
|
(45) |
|
|
|
(1) |
|
Transferred to profit or loss on cash flow hedges |
|
|
3 |
|
|
|
(53) |
|
Deferred tax on cash flow hedges |
|
|
9 |
|
|
|
19 |
|
Net gains taken to equity on available-for-sale investments |
|
|
54 |
|
|
|
9 |
|
Transferred to profit or loss on sale of available-for-sale investments |
|
|
(6) |
|
|
|
(18) |
|
Deferred tax on available-for-sale investments |
|
|
(5) |
|
|
|
7 |
|
Share of post-tax other comprehensive income of joint ventures and associates |
|
|
5 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss for the year |
|
|
(508) |
|
|
|
(913) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the year |
|
|
881 |
|
|
|
34 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income attributable to: |
|
|
|
|
|
|
|
|
- Equity shareholders of the parent |
|
|
879 |
|
|
|
26 |
|
- Minority interests |
|
|
2 |
|
|
|
8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
881 |
|
|
|
34 |
|
|
|
|
18
National Grid
2009/10 Full Year Results
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED BALANCE SHEET |
|
|
|
|
|
|
|
|
|
|
at 31 March |
|
|
|
|
|
2010 |
|
|
2009 |
|
|
|
Notes |
|
|
£m |
|
|
£m |
|
|
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill |
|
|
|
|
|
|
5,102 |
|
|
|
5,391 |
|
Other intangible assets |
|
|
|
|
|
|
389 |
|
|
|
370 |
|
Property, plant and equipment |
|
|
|
|
|
|
30,855 |
|
|
|
29,545 |
|
Deferred tax assets |
|
|
|
|
|
|
- |
|
|
|
137 |
|
Pension asset |
|
|
|
|
|
|
- |
|
|
|
269 |
|
Other non-current assets |
|
|
|
|
|
|
162 |
|
|
|
106 |
|
Financial and other investments |
|
|
|
|
|
|
486 |
|
|
|
361 |
|
Derivative financial assets |
|
|
9 |
|
|
|
1,494 |
|
|
|
1,533 |
|
|
|
|
|
|
|
|
|
Total non-current assets |
|
|
|
|
|
|
38,488 |
|
|
|
37,712 |
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
Inventories and current intangible assets |
|
|
|
|
|
|
407 |
|
|
|
556 |
|
Trade and other receivables |
|
|
|
|
|
|
2,293 |
|
|
|
2,672 |
|
Financial and other investments |
|
|
9 |
|
|
|
1,397 |
|
|
|
2,197 |
|
Derivative financial assets |
|
|
9 |
|
|
|
248 |
|
|
|
593 |
|
Cash and cash equivalents |
|
|
9 |
|
|
|
720 |
|
|
|
737 |
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
|
|
|
|
5,065 |
|
|
|
6,755 |
|
|
|
|
|
|
|
|
|
Total assets |
|
|
2c |
|
|
|
43,553 |
|
|
|
44,467 |
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings |
|
|
9 |
|
|
|
(2,806) |
|
|
|
(3,253) |
|
Derivative financial liabilities |
|
|
9 |
|
|
|
(212) |
|
|
|
(307) |
|
Trade and other payables |
|
|
|
|
|
|
(2,847) |
|
|
|
(2,835) |
|
Current tax liabilities |
|
|
|
|
|
|
(391) |
|
|
|
(383) |
|
Provisions |
|
|
|
|
|
|
(303) |
|
|
|
(248) |
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
|
|
|
|
(6,559) |
|
|
|
(7,026) |
|
|
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings |
|
|
9 |
|
|
|
(22,318) |
|
|
|
(23,540) |
|
Derivative financial liabilities |
|
|
9 |
|
|
|
(662) |
|
|
|
(633) |
|
Other non-current liabilities |
|
|
|
|
|
|
(1,974) |
|
|
|
(2,092) |
|
Deferred tax liabilities |
|
|
|
|
|
|
(3,324) |
|
|
|
(2,661) |
|
Pensions and other post-retirement benefit obligations |
|
|
|
|
|
|
(3,098) |
|
|
|
(3,080) |
|
Provisions |
|
|
|
|
|
|
(1,407) |
|
|
|
(1,451) |
|
|
|
|
|
|
|
|
|
Total non-current liabilities |
|
|
|
|
|
|
(32,783) |
|
|
|
(33,457) |
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
|
|
|
|
(39,342) |
|
|
|
(40,483) |
|
|
|
|
|
|
|
|
|
Net assets |
|
|
|
|
|
|
4,211 |
|
|
|
3,984 |
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
Called up share capital |
|
|
|
|
|
|
298 |
|
|
|
294 |
|
Share premium account |
|
|
|
|
|
|
1,366 |
|
|
|
1,371 |
|
Retained earnings |
|
|
|
|
|
|
7,316 |
|
|
|
7,135 |
|
Other equity reserves |
|
|
|
|
|
|
(4,781) |
|
|
|
(4,830) |
|
|
|
|
|
|
|
|
|
Shareholders equity |
|
|
|
|
|
|
4,199 |
|
|
|
3,970 |
|
Minority interests |
|
|
|
|
|
|
12 |
|
|
|
14 |
|
|
|
|
|
|
|
|
|
Total equity |
|
|
|
|
|
|
4,211 |
|
|
|
3,984 |
|
|
|
|
|
|
|
|
19
National Grid
2009/10 Full Year Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the years ended 31 March |
|
Called-up |
|
|
Share |
|
|
|
|
|
|
Other |
|
|
share- |
|
|
|
|
|
|
|
|
share |
|
|
premium |
|
|
Retained |
|
|
equity |
|
|
holders |
|
|
Minority |
|
|
Total |
|
|
capital |
|
|
account |
|
|
earnings |
|
|
reserves |
|
|
equity |
|
|
interests |
|
|
equity |
|
|
|
£m |
|
|
£m |
|
|
£m |
|
|
£m |
|
|
£m |
|
|
£m |
|
|
£m |
|
|
|
|
At 1 April 2008 |
|
|
294 |
|
|
|
1,371 |
|
|
|
8,943 |
|
|
|
(5,252) |
|
|
|
5,356 |
|
|
|
18 |
|
|
|
5,374 |
|
Total comprehensive (loss)/income for the year |
|
|
- |
|
|
|
- |
|
|
|
(396) |
|
|
|
422 |
|
|
|
26 |
|
|
|
8 |
|
|
|
34 |
|
Equity dividends |
|
|
- |
|
|
|
- |
|
|
|
(838) |
|
|
|
- |
|
|
|
(838) |
|
|
|
- |
|
|
|
(838) |
|
Other movements in minority interests |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(12) |
|
|
|
(12) |
|
Share-based payment |
|
|
- |
|
|
|
- |
|
|
|
22 |
|
|
|
- |
|
|
|
22 |
|
|
|
- |
|
|
|
22 |
|
Issue of treasury shares |
|
|
- |
|
|
|
- |
|
|
|
8 |
|
|
|
- |
|
|
|
8 |
|
|
|
- |
|
|
|
8 |
|
Repurchase of share capital and purchase of
treasury shares |
|
|
- |
|
|
|
- |
|
|
|
(603) |
|
|
|
- |
|
|
|
(603) |
|
|
|
- |
|
|
|
(603) |
|
Tax on share-based payment |
|
|
- |
|
|
|
- |
|
|
|
(1) |
|
|
|
- |
|
|
|
(1) |
|
|
|
- |
|
|
|
(1) |
|
|
|
|
|
At 31 March 2009 |
|
|
294 |
|
|
|
1,371 |
|
|
|
7,135 |
|
|
|
(4,830) |
|
|
|
3,970 |
|
|
|
14 |
|
|
|
3,984 |
|
|
Total comprehensive income for the year |
|
|
- |
|
|
|
- |
|
|
|
830 |
|
|
|
49 |
|
|
|
879 |
|
|
|
2 |
|
|
|
881 |
|
Equity dividends |
|
|
- |
|
|
|
- |
|
|
|
(893) |
|
|
|
- |
|
|
|
(893) |
|
|
|
- |
|
|
|
(893) |
|
Scrip dividend related share issue |
|
|
4 |
|
|
|
(5) |
|
|
|
205 |
|
|
|
- |
|
|
|
204 |
|
|
|
- |
|
|
|
204 |
|
Other movements in minority interests |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(4) |
|
|
|
(4) |
|
Share-based payment |
|
|
- |
|
|
|
- |
|
|
|
25 |
|
|
|
- |
|
|
|
25 |
|
|
|
- |
|
|
|
25 |
|
Issue of treasury shares |
|
|
- |
|
|
|
- |
|
|
|
18 |
|
|
|
- |
|
|
|
18 |
|
|
|
- |
|
|
|
18 |
|
Purchase of treasury shares |
|
|
- |
|
|
|
- |
|
|
|
(7) |
|
|
|
- |
|
|
|
(7) |
|
|
|
- |
|
|
|
(7) |
|
Tax on share-based payment |
|
|
- |
|
|
|
- |
|
|
|
3 |
|
|
|
- |
|
|
|
3 |
|
|
|
- |
|
|
|
3 |
|
|
|
|
|
At 31 March 2010 |
|
|
298 |
|
|
|
1,366 |
|
|
|
7,316 |
|
|
|
(4,781) |
|
|
|
4,199 |
|
|
|
12 |
|
|
|
4,211 |
|
|
|
|
20
National Grid
2009/10 Full Year Results
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED
CASH FLOW STATEMENT |
|
|
|
|
|
|
|
|
|
|
for the years ended 31 March |
|
|
|
|
|
2010 |
|
|
2009 |
|
|
|
Notes |
|
|
£m |
|
|
£m |
|
|
|
|
|
|
|
|
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
Total operating profit |
|
|
2b |
|
|
|
3,293 |
|
|
|
2,623 |
|
Adjustments for: |
|
|
|
|
|
|
|
|
|
|
|
|
Exceptional items, remeasurements and stranded cost recoveries |
|
|
3 |
|
|
|
(172) |
|
|
|
292 |
|
Depreciation and amortisation |
|
|
|
|
|
|
1,188 |
|
|
|
1,122 |
|
Share-based payment charge |
|
|
|
|
|
|
25 |
|
|
|
22 |
|
Changes in working capital |
|
|
|
|
|
|
431 |
|
|
|
54 |
|
Changes in provisions |
|
|
|
|
|
|
(98) |
|
|
|
(99) |
|
Changes in pensions and other post-retirement benefit obligations |
|
|
|
|
|
|
(521) |
|
|
|
(678) |
|
Cash flows relating to exceptional items |
|
|
|
|
|
|
(135) |
|
|
|
(131) |
|
Cash flows relating to stranded cost recoveries |
|
|
|
|
|
|
361 |
|
|
|
359 |
|
|
|
|
|
|
|
|
|
Cash flows generated from continuing operations |
|
|
|
|
|
|
4,372 |
|
|
|
3,564 |
|
Cash flows relating to discontinued operations (excluding tax) |
|
|
|
|
|
|
- |
|
|
|
(8) |
|
|
|
|
|
|
|
|
|
Cash generated from operations |
|
|
|
|
|
|
4,372 |
|
|
|
3,556 |
|
Tax received/(paid) |
|
|
|
|
|
|
144 |
|
|
|
(143) |
|
|
|
|
|
|
|
|
|
Net cash inflow from operating activities |
|
|
|
|
|
|
4,516 |
|
|
|
3,413 |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of investments |
|
|
|
|
|
|
(86) |
|
|
|
(73) |
|
Sale of investments |
|
|
|
|
|
|
6 |
|
|
|
- |
|
Purchases of intangible assets |
|
|
|
|
|
|
(104) |
|
|
|
(78) |
|
Purchases of property, plant and equipment |
|
|
|
|
|
|
(3,007) |
|
|
|
(3,107) |
|
Disposals of property, plant and equipment |
|
|
|
|
|
|
15 |
|
|
|
27 |
|
Dividends received from joint ventures |
|
|
|
|
|
|
18 |
|
|
|
- |
|
Interest received |
|
|
|
|
|
|
21 |
|
|
|
85 |
|
Net movements in financial investments |
|
|
|
|
|
|
805 |
|
|
|
99 |
|
|
|
|
|
|
|
|
|
Cash flows used in continuing operations investing activities |
|
|
|
|
|
|
(2,332) |
|
|
|
(3,047) |
|
Cash flows relating to discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
- disposal proceeds (net of tax) (i) |
|
|
|
|
|
|
- |
|
|
|
1,053 |
|
- other investing activities |
|
|
|
|
|
|
- |
|
|
|
(4) |
|
|
|
|
|
|
|
|
|
Net cash flow used in investing activities |
|
|
|
|
|
|
(2,332) |
|
|
|
(1,998) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issue of treasury shares |
|
|
|
|
|
|
18 |
|
|
|
8 |
|
(Decrease)/increase in borrowings and related derivatives |
|
|
|
|
|
|
(499) |
|
|
|
1,641 |
|
Interest paid |
|
|
|
|
|
|
(1,003) |
|
|
|
(1,061) |
|
Exceptional finance costs on the redemption of debt |
|
|
|
|
|
|
(33) |
|
|
|
- |
|
Dividends paid to shareholders |
|
|
|
|
|
|
(688) |
|
|
|
(838) |
|
Repurchase of share capital and purchase of treasury shares |
|
|
|
|
|
|
(7) |
|
|
|
(627) |
|
|
|
|
|
|
|
|
|
Net cash flow used in financing activities |
|
|
|
|
|
|
(2,212) |
|
|
|
(877) |
|
|
|
|
|
|
|
|
|
Net (decrease)/increase in cash and cash equivalents |
|
|
8 |
|
|
|
(28) |
|
|
|
538 |
|
Exchange movements |
|
|
|
|
|
|
(1) |
|
|
|
18 |
|
Net cash and cash equivalents at start of year |
|
|
|
|
|
|
720 |
|
|
|
164 |
|
|
|
|
|
|
|
|
|
Net cash and cash equivalents at end of year (ii) |
|
|
|
|
|
|
691 |
|
|
|
720 |
|
|
|
|
|
|
|
|
i) |
|
2009 includes payment of tax arising on disposal of the Ravenswood generation station and
other businesses of £564m. |
|
ii) |
|
Net of bank overdrafts of £29m (2009: £17m). |
21
National Grid
2009/10 Full Year Results
NOTES TO THE PRELIMINARY ANNOUNCEMENT
1. Basis of preparation and new accounting standards, interpretations and amendments
The full year financial information contained in this announcement, which does not constitute
statutory accounts as defined in Section 434 of the Companies Act 2006, has been derived from the
statutory accounts for the year ended 31 March 2010, which will be filed with the Registrar of
Companies in due course. Statutory accounts for the year ended 31 March 2009 have been filed with
the Registrar of Companies. The auditors report on each of these statutory accounts was
unqualified and did not contain a statement under Section 498 of the Companies Act 2006 or Section
237 of the Companies Act 1985 respectively.
The full year financial information has been prepared in accordance with the accounting policies
applicable for the year ended 31 March 2010 and consistent with those applied in the preparation of
our accounts for the year ended 31 March 2009, except for the impact of new standards,
interpretations and amendments noted below.
During the year ended 31 March 2010, the Company adopted the following International Financial
Reporting Standards (IFRS), International Accounting Standards (IAS) or amendments, and
interpretations by the International Financial Reporting Interpretations Committee (IFRIC). The
impact of IFRIC 18 Transfers of assets from customers is to increase operating profit for the
year ended 31 March 2010 and reduce liabilities at 31 March 2010 by £22m. In accordance with the
transition provisions of IFRIC 18, comparative amounts have not been restated. None of the other
pronouncements had a material impact on the Companys consolidated results or assets and
liabilities.
|
|
|
IFRIC 18 on transfers of assets from customers |
|
|
|
|
IAS 1 revised on the presentation of financial statements |
|
|
|
|
Amendment to IFRS 7 on improving disclosures about financial instruments |
|
|
|
|
IFRS 8 on operating segments |
|
|
|
|
IAS 23 revised on borrowing costs |
|
|
|
|
IFRIC 13 on customer loyalty programmes |
|
|
|
|
Amendment to IFRS 2 on share-based payments |
|
|
|
|
Amendments to IAS 32 and IAS 1 on puttable financial instruments and obligations
arising on liquidation |
|
|
|
|
Amendments to IFRS 1 and IAS 27 on recognition of investments on first-time
adoption of IFRS and dividends out of pre-acquisition profits |
|
|
|
|
Improvements to IFRS 2008 |
|
|
|
|
IFRIC 15 on agreements for the construction of real estate |
|
|
|
|
IFRIC 16 on hedges of a net investment in a foreign operation |
|
|
|
|
Amendment to IAS 39 on the effective date for reclassification of financial
assets |
|
|
|
|
Amendments to IAS 39 and IFRIC 9 on embedded derivatives |
Date of approval
This announcement was approved by the Board of Directors on 19 May 2010.
22
National Grid
2009/10 Full Year Results
2. Segmental analysis
The Board of Directors is National Grids chief operating decision making body (as defined by IFRS
8). The segmental analysis is based on the information the Board of Directors uses internally for
the purposes of evaluating the performance of operating segments and determining resource
allocation between segments. The performance of operating segments is assessed principally on the
basis of operating profit before exceptional items, remeasurements and stranded cost recoveries.
The following table describes the main activities for each operating segment:
|
|
|
|
Transmission UK
|
|
High voltage electricity transmission networks, the gas transmission network
in Great Britain, UK liquefied natural gas (LNG) storage activities and the
French electricity interconnector. |
Transmission US
|
|
High voltage electricity transmission networks in New York and New England. |
Gas Distribution UK
|
|
Four of the eight regional networks of Great Britains gas distribution system. |
Gas Distribution US
|
|
Gas distribution in New York and New England. |
Electricity Distribution & Generation US
|
|
Electricity distribution in New York and New England and electricity
generation in New York. |
|
Other activities primarily relate to non-regulated businesses and other commercial operations not
included within the above segments, including: UK-based gas and electricity metering activities; UK
property management; a UK LNG import terminal; other LNG operations; US unregulated transmission
pipelines; US gas fields; together with corporate activities.
Sales between operating segments are priced having regard to the regulatory and legal requirements
to which the businesses are subject.
a) Revenue
|
|
|
|
|
|
|
|
|
Years ended 31 March |
|
2010 |
|
|
2009 |
|
|
|
£m |
|
|
£m |
|
|
|
|
Operating segments continuing operations |
|
|
|
|
|
|
|
|
Transmission UK |
|
|
3,460 |
|
|
|
3,487 |
|
Transmission US |
|
|
405 |
|
|
|
420 |
|
Gas Distribution UK |
|
|
1,517 |
|
|
|
1,466 |
|
Gas Distribution US |
|
|
3,708 |
|
|
|
4,786 |
|
Electricity Distribution & Generation US |
|
|
4,339 |
|
|
|
4,972 |
|
Other activities |
|
|
738 |
|
|
|
719 |
|
Sales between segments |
|
|
(179) |
|
|
|
(226) |
|
|
|
|
|
|
|
|
13,988 |
|
|
|
15,624 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total excluding stranded cost recoveries |
|
|
13,612 |
|
|
|
15,189 |
|
Stranded cost recoveries |
|
|
376 |
|
|
|
435 |
|
|
|
|
|
|
|
|
13,988 |
|
|
|
15,624 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Geographical areas |
|
|
|
|
|
|
|
|
UK |
|
|
5,524 |
|
|
|
5,334 |
|
US |
|
|
8,464 |
|
|
|
10,290 |
|
|
|
|
|
|
|
|
13,988 |
|
|
|
15,624 |
|
|
|
|
23
National Grid
2009/10 Full Year Results
2. Segmental analysis (continued)
A reconciliation of the operating segments measure of profit to total profit before taxation is
provided below. Further details of exceptional items, remeasurements and stranded cost recoveries
are provided in note 3.
b) Operating profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Before exceptional items, |
|
|
After exceptional items, |
|
|
|
remeasurements and stranded |
|
|
remeasurements and stranded |
|
|
|
cost recoveries |
|
cost recoveries |
Years ended 31 March |
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
|
£m |
|
|
£m |
|
|
£m |
|
|
£m |
|
|
|
|
Operating segments continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transmission UK |
|
|
1,311 |
|
|
|
1,126 |
|
|
|
1,252 |
|
|
|
1,063 |
|
Transmission US |
|
|
153 |
|
|
|
175 |
|
|
|
151 |
|
|
|
173 |
|
Gas Distribution UK |
|
|
723 |
|
|
|
672 |
|
|
|
682 |
|
|
|
629 |
|
Gas Distribution US |
|
|
414 |
|
|
|
612 |
|
|
|
448 |
|
|
|
226 |
|
Electricity Distribution & Generation US |
|
|
374 |
|
|
|
265 |
|
|
|
701 |
|
|
|
531 |
|
Other activities |
|
|
146 |
|
|
|
65 |
|
|
|
59 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
3,121 |
|
|
|
2,915 |
|
|
|
3,293 |
|
|
|
2,623 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Geographical areas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UK |
|
|
2,180 |
|
|
|
1,875 |
|
|
|
2,007 |
|
|
|
1,729 |
|
US |
|
|
941 |
|
|
|
1,040 |
|
|
|
1,286 |
|
|
|
894 |
|
|
|
|
|
|
|
|
|
|
3,121 |
|
|
|
2,915 |
|
|
|
3,293 |
|
|
|
2,623 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to profit before tax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit |
|
|
3,121 |
|
|
|
2,915 |
|
|
|
3,293 |
|
|
|
2,623 |
|
Interest income and similar income |
|
|
1,005 |
|
|
|
1,315 |
|
|
|
1,005 |
|
|
|
1,315 |
|
Interest expense and other finance costs |
|
|
(2,160) |
|
|
|
(2,465) |
|
|
|
(2,113) |
|
|
|
(2,549) |
|
Share of post-tax results of joint ventures and associates |
|
|
8 |
|
|
|
5 |
|
|
|
8 |
|
|
|
5 |
|
|
|
|
|
|
|
Profit before tax continuing operations |
|
|
1,974 |
|
|
|
1,770 |
|
|
|
2,193 |
|
|
|
1,394 |
|
|
|
|
|
|
c) Total assets
|
|
|
|
|
|
|
|
|
As at 31 March |
|
2010 |
|
|
2009 |
|
|
|
£m |
|
|
£m |
|
|
|
|
Operating segments |
|
|
|
|
|
|
|
|
Transmission UK |
|
|
11,085 |
|
|
|
10,451 |
|
Transmission US |
|
|
2,467 |
|
|
|
2,238 |
|
Gas Distribution UK |
|
|
6,592 |
|
|
|
6,158 |
|
Gas Distribution US |
|
|
9,454 |
|
|
|
10,112 |
|
Electricity Distribution & Generation US |
|
|
7,289 |
|
|
|
7,854 |
|
Other activities |
|
|
2,557 |
|
|
|
2,289 |
|
|
|
|
|
|
|
|
39,444 |
|
|
|
39,102 |
|
Joint ventures |
|
|
250 |
|
|
|
168 |
|
Unallocated |
|
|
3,859 |
|
|
|
5,197 |
|
|
|
|
|
Total assets |
|
|
43,553 |
|
|
|
44,467 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Geographical areas |
|
|
|
|
|
|
|
|
UK |
|
|
19,720 |
|
|
|
18,527 |
|
US |
|
|
19,974 |
|
|
|
20,743 |
|
Unallocated |
|
|
3,859 |
|
|
|
5,197 |
|
|
|
|
|
|
|
|
43,553 |
|
|
|
44,467 |
|
|
|
|
The analysis of total assets includes all attributable goodwill and excludes inter segment
balances. Unallocated total assets comprise cash and cash equivalents, taxation, current financial
investments and total derivative financial assets.
24
National Grid
2009/10 Full Year Results
3. Exceptional items, remeasurements and stranded cost recoveries
Exceptional items, remeasurements and stranded cost recoveries are items of income and expenditure
that, in the judgment of management, should be disclosed separately on the basis that they are
material, either by their nature or their size, to an understanding of our financial performance
and significantly distort the comparability of financial performance between periods. Items of
income or expense that are considered by management for designation as exceptional items include
such items as significant restructurings, write-downs or impairments of non-current assets,
significant changes in environmental or decommissioning provisions, integration of acquired
businesses and gains or losses on disposals of businesses or investments.
Remeasurements comprise gains or losses recorded in the income statement arising from changes in
the fair value of commodity contracts and of derivative financial instruments to the extent that
hedge accounting is not achieved or is not effective.
Stranded cost recoveries represent the recovery of historic generation related costs in the US
related to generation assets that are no longer owned. Such costs can be recovered from customers
as permitted by regulatory agreements.
|
|
|
|
|
|
|
|
|
Years ended 31 March |
|
2010 |
|
|
2009 |
|
|
|
£m |
|
|
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
Exceptional items restructuring costs (i) |
|
|
(149) |
|
|
|
(192) |
|
Exceptional items environmental related provisions (ii) |
|
|
(63) |
|
|
|
(78) |
|
Exceptional items gain on disposal of subsidiary and associate (iii) |
|
|
11 |
|
|
|
- |
|
Exceptional items other (iv) |
|
|
(67) |
|
|
|
(5) |
|
Remeasurements commodity contracts (v) |
|
|
71 |
|
|
|
(443) |
|
Stranded cost recoveries (vi) |
|
|
369 |
|
|
|
426 |
|
Total exceptional items, remeasurements and stranded cost recoveries included
within operating profit |
|
|
172 |
|
|
|
(292) |
|
|
|
|
|
|
|
|
|
|
Exceptional items debt redemption costs (vii) |
|
|
(33) |
|
|
|
- |
|
Remeasurements commodity contracts (v) |
|
|
(1) |
|
|
|
(2) |
|
Remeasurements net gains/(losses) on derivative financial instruments (viii) |
|
|
81 |
|
|
|
(82) |
|
Total exceptional items and remeasurements included within finance costs |
|
|
47 |
|
|
|
(84) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total exceptional items, remeasurements and stranded cost recoveries before taxation |
|
|
219 |
|
|
|
(376) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Exceptional tax item deferred tax charge arising from change in UK industrial
building allowance regime (ix) |
|
|
- |
|
|
|
(49) |
|
Exceptional tax item other (x) |
|
|
(41) |
|
|
|
- |
|
Tax on exceptional items restructuring costs (i) |
|
|
45 |
|
|
|
59 |
|
Tax on exceptional items environmental related provisions (ii) |
|
|
8 |
|
|
|
16 |
|
Tax on exceptional items gain on disposal of subsidiary and associate (iii) |
|
|
(2) |
|
|
|
- |
|
Tax on exceptional items other (iv) |
|
|
19 |
|
|
|
2 |
|
Tax on exceptional items debt redemption costs (vii) |
|
|
2 |
|
|
|
- |
|
Tax on remeasurements commodity contracts (v) |
|
|
(28) |
|
|
|
179 |
|
Tax on remeasurements derivative financial instruments (viii) |
|
|
(106) |
|
|
|
8 |
|
Tax on stranded cost recoveries (vi) |
|
|
(148) |
|
|
|
(170) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax on exceptional items, remeasurements and stranded cost recoveries |
|
|
(251) |
|
|
|
45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total exceptional items, remeasurements and stranded cost recoveries |
|
|
(32) |
|
|
|
(331) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total exceptional items after taxation |
|
|
(270) |
|
|
|
(247) |
|
Total commodity contract remeasurements after taxation |
|
|
42 |
|
|
|
(266) |
|
Total derivative financial instrument remeasurements after taxation |
|
|
(25) |
|
|
|
(74) |
|
Total stranded cost recoveries after taxation |
|
|
221 |
|
|
|
256 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total exceptional items, remeasurements and stranded cost recoveries after taxation |
|
|
(32) |
|
|
|
(331) |
|
|
|
|
25
National Grid
2009/10 Full Year Results
3. Exceptional items, remeasurements and stranded cost recoveries (continued)
|
|
|
i) |
|
Restructuring costs include costs related to the integration of KeySpan of £30m (2009:
£53m), the further restructuring of our liquefied natural gas (LNG) storage facilities of £41m
(2009: £50m), transformation related initiatives of £56m (2009: £68m) and costs associated
with the outsourcing of elements of our UK shared services organisation of £22m. Charges in
the comparative years also included planned cost reduction programmes in our UK businesses
(2009: £21m). |
|
ii) |
|
Environmental charges include £21m related to specific exposures in
the US together with £42m arising from changes in landfill tax
legislation in the UK. For the year ended 31 March 2010, the UK
charge was £42m (2009: £37m) and the US charge £21m (2009: £41m).
Costs incurred with respect to US environmental provisions are
substantially recoverable from customers. |
|
iii) |
|
During the year there was a gain of £5m on the sale of a 30.29%
investment in the associate Steuben Gas Storage Company. In addition
there was the release of various unutilised provisions amounting to
£6m originally recorded on the sale of Advantica in 2008. |
|
iv) |
|
Other costs for the year ended 31 March 2010 include: an impairment
charge of £11m and an amortisation charge of £6m (2009: £5m) in
relation to acquisition-related intangibles; a charge of £9m relating
to US healthcare costs arising from recent legislative changes; and
£41m related to a fine of £15m together with associated costs, and
provisions against receivables and other balance sheet items. For
further details on the fine levied upon us by the Gas and Electricity
Markets Authority (GEMA) refer to note 10. |
|
v) |
|
Remeasurements commodity contracts represent mark-to-market movements on certain physical
and financial commodity contract obligations in the US. These contracts primarily relate to
the forward purchase of energy for supply to customers, or to the economic hedging thereof,
that are required to be measured at fair value and that do not qualify for hedge accounting.
Under the existing rate plans in the US, commodity costs are recoverable from customers
although the timing of recovery may differ from the pattern of costs incurred. These movements
are comprised of those impacting operating profit which are based on the change in the
commodity contract liability and those impacting finance costs as a result of the time value
of money. |
|
vi) |
|
Stranded cost recoveries include the recovery of some of our historical investments in generating plants that were
divested as part of the restructuring and wholesale power deregulation process in New England and New York during the
1990s. Stranded cost recoveries on a pre-tax basis consist of revenue of £376m (2009: £435m) and operating costs of £7m
(2009: £9m). |
|
vii) |
|
Debt redemption costs in the year represent one-off costs relating to the early redemption of a significant loan. |
|
viii) |
|
Remeasurements net gains/(losses) on derivative financial instruments comprise gains/(losses) arising on derivative
financial instruments reported in the income statement. These exclude gains and losses for which hedge accounting has
been effective, which have been recognised directly in equity or which are offset by adjustments to the carrying value of
debt. The tax charge in the year ended 31 March 2010 includes a £78m (2009: £1m) charge in respect of prior years. |
|
ix) |
|
The exceptional tax charge of £49m in the year ended 31 March 2009 arose from a change in the UK industrial building
allowance regime arising in the 2008 Finance Act. This resulted in an increase in deferred tax liabilities. |
|
x) |
|
The exceptional tax charge of £41m arises due to a change in US tax legislation under the
Patient Protection and Affordable Care Act. |
4. Finance income and costs
|
|
|
|
|
|
|
|
|
Years ended 31 March |
|
2010 |
|
|
2009 |
|
|
|
£m |
|
|
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected return on pension and other post-retirement benefit plan assets |
|
|
981 |
|
|
|
1,236 |
|
Interest income on financial instruments |
|
|
24 |
|
|
|
79 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income and similar income |
|
|
1,005 |
|
|
|
1,315 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on pension and other post-retirement benefit plan obligations |
|
|
(1,193) |
|
|
|
(1,250) |
|
Interest expense on financial instruments |
|
|
(996) |
|
|
|
(1,280) |
|
Unwinding of discounts on provisions |
|
|
(70) |
|
|
|
(68) |
|
Less: interest capitalised |
|
|
99 |
|
|
|
133 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense and other finance costs before exceptional items and remeasurements |
|
|
(2,160) |
|
|
|
(2,465) |
|
|
|
|
|
|
|
|
|
|
Exceptional debt redemption costs |
|
|
(33) |
|
|
|
- |
|
Net gains/(losses) on derivative financial instruments and commodity contracts |
|
|
80 |
|
|
|
(84) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Exceptional items and remeasurements |
|
|
47 |
|
|
|
(84) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense and other finance costs |
|
|
(2,113) |
|
|
|
(2,549) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net finance costs |
|
|
(1,108) |
|
|
|
(1,234) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprising: |
|
|
|
|
|
|
|
|
Interest income and similar income |
|
|
1,005 |
|
|
|
1,315 |
|
Interest expense and other finance costs: |
|
|
|
|
|
|
|
|
Before exceptional items and remeasurements |
|
|
(2,160) |
|
|
|
(2,465) |
|
Exceptional items and remeasurements (note 3) |
|
|
47 |
|
|
|
(84) |
|
|
|
|
After exceptional items and remeasurements |
|
|
(2,113) |
|
|
|
(2,549) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,108) |
|
|
|
(1,234) |
|
|
|
|
26
National Grid
2009/10 Full Year Results
5. Taxation
|
|
|
|
|
|
|
|
|
Years ended 31 March |
|
2010 |
|
|
2009 |
|
|
|
£m |
|
|
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxation before exceptional items, remeasurements and stranded cost recoveries |
|
|
553 |
|
|
|
517 |
|
Exceptional tax items (note 3) |
|
|
41 |
|
|
|
49 |
|
Taxation on other exceptional items, remeasurements and stranded cost recoveries |
|
|
210 |
|
|
|
(94) |
|
Taxation on total exceptional items, remeasurements and stranded cost recoveries (note 3) |
|
|
251 |
|
|
|
(45) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total tax charge |
|
|
804 |
|
|
|
472 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxation as a percentage of profit before taxation: |
|
|
% |
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Before exceptional items, remeasurements and stranded cost recoveries |
|
|
28.0 |
|
|
|
29.2 |
|
After exceptional items, remeasurements and stranded cost recoveries |
|
|
36.7 |
|
|
|
33.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
The tax charge for the year can be analysed as follows: |
|
|
£m |
|
|
|
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
United Kingdom |
|
|
|
|
|
|
|
|
Corporation tax at 28% (2009: 28%) |
|
|
197 |
|
|
|
37 |
|
Corporation tax adjustment in respect of prior years (i) |
|
|
(31) |
|
|
|
(54) |
|
Deferred tax |
|
|
259 |
|
|
|
339 |
|
Deferred tax adjustment in respect of prior years (ii) |
|
|
(5) |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
420 |
|
|
|
322 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Overseas |
|
|
|
|
|
|
|
|
Corporate tax |
|
|
74 |
|
|
|
105 |
|
Corporate tax adjustment in respect of prior years |
|
|
(364) |
|
|
|
38 |
|
Deferred tax |
|
|
279 |
|
|
|
37 |
|
Deferred tax adjustment in respect of prior years |
|
|
395 |
|
|
|
(30) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
384 |
|
|
|
150 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total tax charge |
|
|
804 |
|
|
|
472 |
|
|
|
|
i) The UK corporation tax adjustment in respect of prior years includes a £76m charge (2009:
£2m credit) that relates to exceptional items, remeasurements and stranded cost recoveries.
ii) The UK deferred tax adjustment in respect of prior years includes a £1m charge (2009: £1m
charge) that relates to exceptional items, remeasurements and stranded cost recoveries.
27
National Grid
2009/10 Full Year Results
6. Earnings per share
a) Basic earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended 31 March |
|
|
|
|
|
Earnings |
|
|
|
|
|
|
Earnings |
|
|
|
Earnings |
|
|
per share |
|
|
Earnings |
|
|
per share |
|
|
|
2010 |
|
|
2010 |
|
|
2009 |
|
|
2009* |
|
|
|
£m |
|
|
pence |
|
|
£m |
|
|
pence |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted continuing operations |
|
|
1,418 |
|
|
|
57.4 |
|
|
|
1,250 |
|
|
|
50.2 |
|
Exceptional items after taxation |
|
|
(270) |
|
|
|
(10.9) |
|
|
|
(247) |
|
|
|
(9.9) |
|
Commodity contract remeasurements after taxation |
|
|
42 |
|
|
|
1.7 |
|
|
|
(266) |
|
|
|
(10.7) |
|
Derivative financial instrument remeasurements after taxation |
|
|
(25) |
|
|
|
(1.0) |
|
|
|
(74) |
|
|
|
(3.0) |
|
Stranded cost recoveries after taxation |
|
|
221 |
|
|
|
8.9 |
|
|
|
256 |
|
|
|
10.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
|
1,386 |
|
|
|
56.1 |
|
|
|
919 |
|
|
|
36.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted discontinued operations |
|
|
- |
|
|
|
- |
|
|
|
9 |
|
|
|
0.4 |
|
Gain on disposal of operations after taxation |
|
|
- |
|
|
|
- |
|
|
|
16 |
|
|
|
0.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations |
|
|
- |
|
|
|
- |
|
|
|
25 |
|
|
|
1.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
1,386 |
|
|
|
56.1 |
|
|
|
944 |
|
|
|
37.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
|
|
|
|
|
millions* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares basic* |
|
|
|
|
|
|
2,470 |
|
|
|
|
|
|
|
2,490 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
b) Diluted earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings |
|
|
|
|
|
|
Earnings |
|
Years ended 31 March |
|
Earnings |
|
|
per share |
|
|
Earnings |
|
|
per share |
|
|
|
2010 |
|
|
2010 |
|
|
2009 |
|
|
2009* |
|
|
|
£m |
|
|
pence |
|
|
£m |
|
|
pence |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted diluted continuing operations |
|
|
1,418 |
|
|
|
57.1 |
|
|
|
1,250 |
|
|
|
49.9 |
|
Exceptional items after taxation |
|
|
(270) |
|
|
|
(10.9) |
|
|
|
(247) |
|
|
|
(9.9) |
|
Commodity contract remeasurements after taxation |
|
|
42 |
|
|
|
1.7 |
|
|
|
(266) |
|
|
|
(10.6) |
|
Derivative financial instrument remeasurements after taxation |
|
|
(25) |
|
|
|
(1.0) |
|
|
|
(74) |
|
|
|
(3.0) |
|
Stranded cost recoveries after taxation |
|
|
221 |
|
|
|
8.9 |
|
|
|
256 |
|
|
|
10.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted continuing operations |
|
|
1,386 |
|
|
|
55.8 |
|
|
|
919 |
|
|
|
36.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted diluted discontinued operations |
|
|
- |
|
|
|
- |
|
|
|
9 |
|
|
|
0.4 |
|
Gain on disposal of operations after taxation |
|
|
- |
|
|
|
- |
|
|
|
16 |
|
|
|
0.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted discontinued operations |
|
|
- |
|
|
|
- |
|
|
|
25 |
|
|
|
1.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
1,386 |
|
|
|
55.8 |
|
|
|
944 |
|
|
|
37.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
|
|
|
|
|
millions* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares diluted* |
|
|
|
|
|
|
2,483 |
|
|
|
|
|
|
|
2,507 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Comparative EPS data have been restated to reflect the impact of the additional shares issued
as scrip dividends
28
National Grid
2009/10 Full Year Results
7. Dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended 31 March |
|
2010 |
|
|
2010 |
|
|
2010 |
|
|
2009 |
|
|
2009 |
|
|
|
pence |
|
|
|
|
|
|
settled |
|
|
pence |
|
|
|
|
|
|
(per ordinary |
|
|
Total |
|
|
via scrip |
|
|
(per ordinary |
|
|
Total |
|
|
|
share) |
|
|
£m |
|
|
£m |
|
|
share) |
|
|
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interim year ended 31 March 2010 |
|
|
13.65 |
|
|
|
336 |
|
|
|
68 |
|
|
|
- |
|
|
|
- |
|
Final year ended 31 March 2009 |
|
|
23.00 |
|
|
|
557 |
|
|
|
137 |
|
|
|
- |
|
|
|
- |
|
Interim year ended 31 March 2009 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
12.64 |
|
|
|
307 |
|
Final year ended 31 March 2008 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
21.30 |
|
|
|
531 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36.65 |
|
|
|
893 |
|
|
|
205 |
|
|
|
33.94 |
|
|
|
838 |
|
|
|
|
In addition, the Directors are proposing a final dividend for 2010 of 24.84p per share that will
absorb approximately £615m of shareholders equity (assuming all amounts are settled in cash). It
will be paid on 18 August 2010 to shareholders who are on the register of members at 4 June 2010. A
scrip dividend will be offered as an alternative.
8. Reconciliation of net cash flow to movement in net debt
|
|
|
|
|
|
|
|
|
Years ended 31 March |
|
2010 |
|
|
2009 |
|
|
|
£m |
|
|
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
(Decrease)/increase in cash and cash equivalents |
|
|
(28) |
|
|
|
538 |
|
Decrease in financial investments |
|
|
(805) |
|
|
|
(99) |
|
Decrease/(increase) in borrowings and related derivatives (i) |
|
|
499 |
|
|
|
(1,641) |
|
Net interest paid on the components of net debt |
|
|
999 |
|
|
|
956 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in net debt resulting from cash flows |
|
|
665 |
|
|
|
(246) |
|
Changes in fair value of financial assets and liabilities and exchange movements |
|
|
865 |
|
|
|
(3,625) |
|
Net interest charge on the components of net debt |
|
|
(996) |
|
|
|
(1,161) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Movement in net debt (net of related derivative financial instruments) in the year |
|
|
534 |
|
|
|
(5,032) |
|
Net debt (net of related derivative financial instruments) at start of year |
|
|
(22,673) |
|
|
|
(17,641) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net debt (net of related derivative financial instruments) at end of year |
|
|
(22,139) |
|
|
|
(22,673) |
|
|
|
|
i) The decrease/(increase) in borrowings and related derivatives for the year ended 31 March 2010
comprises proceeds from loans received of £1.9bn (2009: £4.9bn) less payments to repay loans of
£2.3bn (2009: £2.6bn) and movement in short-term borrowings and derivative settlements of £0.1bn
(2009: £0.7bn).
9. Net debt
|
|
|
|
|
|
|
|
|
At 31 March |
|
2010 |
|
|
2009 |
|
|
|
£m |
|
|
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
720 |
|
|
|
737 |
|
Bank overdrafts |
|
|
(29) |
|
|
|
(17) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash and cash equivalents |
|
|
691 |
|
|
|
720 |
|
Financial investments |
|
|
1,397 |
|
|
|
2,197 |
|
Borrowings (excluding bank overdrafts) |
|
|
(25,095) |
|
|
|
(26,776) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(23,007) |
|
|
|
(23,859) |
|
|
|
|
|
|
|
|
|
|
Net debt related derivative financial assets |
|
|
1,742 |
|
|
|
2,126 |
|
Net debt related derivative financial liabilities |
|
|
(874) |
|
|
|
(940) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net debt (net of related derivative financial instruments) |
|
|
(22,139) |
|
|
|
(22,673) |
|
|
|
|
29
National Grid
2009/10 Full Year Results
10. Commitments and contingencies
|
|
|
|
|
|
|
|
|
At 31 March |
|
2010 |
|
|
2009* |
|
|
|
£m |
|
|
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
Future capital expenditure contracted for but not provided |
|
|
1,738 |
|
|
|
1,626 |
|
Commitments under non-cancellable operating leases |
|
|
926 |
|
|
|
1,085 |
|
Energy purchase commitments (i) |
|
|
3,535 |
|
|
|
3,645 |
|
Guarantees (ii) |
|
|
1,189 |
|
|
|
1,202 |
|
Other commitments and contingencies (iii) |
|
|
930 |
|
|
|
644 |
|
|
|
|
* Comparatives have been restated to present items on a basis consistent with the current year
classification
i) |
|
Commodity contracts that do not meet the normal purchase, sale or usage criteria and hence
are accounted for as derivative contracts are recorded at fair value and incorporated in other
non-current assets, trade and other receivables, trade and other payables and other
non-current liabilities. At 31 March 2010 these amounted to £222m (2009: £310m). |
ii) |
|
Details of the guarantees entered into by the Company or its subsidiary undertakings at 31
March 2010 are shown below: |
|
a) |
|
a guarantee in respect of Ravenswood Unit 40 financing amounting to approximately
£377m. This expires in 2040; |
|
|
b) |
|
a letter of support of obligations under a shareholders agreement relating to the
interconnector project between Britain and the Netherlands amounting to approximately
£254m. This expires on commissioning expected early 2011; |
|
|
c) |
|
guarantees of certain obligations in respect of the UK Grain LNG Import Terminal
amounting to approximately £164m. These run for varying lengths of time, expiring between
now and 2028; |
|
|
d) |
|
a guarantee amounting to approximately £120m of half of the obligations of the
interconnector project between Britain and the Netherlands. This expires on commissioning
expected early 2011; |
|
|
e) |
|
guarantees of the liabilities of a metering subsidiary under meter operating contracts
amounting to £53m. These are ongoing; |
|
|
f) |
|
an uncapped guarantee, for which the maximum liability is estimated at £40m, to The
Crown Estates in support of the transfer of the interconnector between France and England
to National Grid Interconnectors Limited as part of the Licence to Assign Lease. This is
ongoing; |
|
|
g) |
|
letters of credit in support of gas balancing obligations amounting to £26m, lasting
for less than one year; |
|
|
h) |
|
guarantees of £14m relating to certain property obligations. The bulk of these expire
by December 2025; |
|
|
i) |
|
collateral of £15m to secure syndicate insurance obligations which are evergreen; |
|
|
j) |
|
guarantees in respect of a former associate amounting to £14m, the bulk of which
relates to its obligations to supply telecommunications services. These are open-ended; |
|
|
k) |
|
guarantees of the liabilities of our subsidiary, National Grid Carbon Limited, under
contracts in connection with work on a carbon capture and storage demonstration project
amounting to £20m. These expire on completion of the project expected in 2011; and |
|
|
l) |
|
other guarantees amounting to £92m arising in the normal course of business and entered
into on normal commercial terms. These guarantees run for varying lengths of time. |
iii) |
|
Includes commitments largely relating to gas purchasing and property remediation of £921m
(2009: £615m). |
We reported in previous Annual Reports and Accounts a decision by the Gas and Electricity
Markets Authority (GEMA) to fine National Grid £41.6 million for a breach of the UK Competition Act
1998 in respect of term contracts with gas suppliers entered into by our UK metering services
business in 2004. This decision was overturned in part and the fine reduced to £30m by the
Competition Appeal Tribunal in April 2009 and the fine was further reduced to £15m by the Court of
Appeal in a reserved judgement (not otherwise affecting the Competition Appeal Tribunals
judgement) issued in February 2010. On 22 March 2010, National Grid applied for leave to appeal
the Court of Appeals judgement to the Supreme Court.
As at 31 March 2010, we have provided for the fine together with associated costs and have provided
against certain trade receivables and other balance sheet items. Without prejudice to our position
in relation to appealing the Court of Appeals judgement, the £15m fine was paid to GEMA on 1 April
2010.
In October 2008, we informed Ofgem that mains replacement activity carried out by the UK Gas
Distribution business may have been misreported. Ofgems investigation continues, so that at
present it is too early to determine the likely outcome of the investigation and any potential
consequences arising from it.
As previously reported, in May 2007, KeySpan received a civil investigative demand from the
Antitrust Division of the US Department of Justice (the DOJ) and a further one in April 2008,
requesting the production of documents and information relating to its investigation of competitive
issues in the New York City electricity capacity market prior to the Companys acquisition of
KeySpan. In February 2010, the DOJ filed a proposed final judgement in the US District Court for
the Southern District of New York. Under the terms of the proposed settlement, the DOJ and KeySpan
agreed that KeySpan will pay US$12m in full and final resolution of the DOJs civil investigative
demands. This agreement contains no admissions of liability by KeySpan and remains subject to
court approval, which is currently anticipated later in 2010.
On 18 March 2010, a putative class action was commenced against KeySpan and Morgan Stanley in the
Supreme Court for the State of New York in Bronx County. The complaint alleges that a financial
swap transaction between KeySpan and Morgan Stanley in January 2006 caused customers of
Consolidated Edison, Inc. to overpay for electricity between May 2006 and February 2008. The
complaint seeks compensatory damages of US$160m, as well as punitive damages plus legal costs.
National Grids management believes that the complaint and its allegations are without merit.
30
National Grid
2009/10 Full Year Results
11. Exchange rates
The consolidated results are affected by the exchange rates used to translate the results of our US
operations and US dollar transactions. The US dollar to pound sterling exchange rates used were:
|
|
|
|
|
|
|
|
|
As at 31 March |
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Closing rate applied at year end |
|
|
1.52 |
|
|
|
1.44 |
|
Average rate applied for the year |
|
|
1.58 |
|
|
|
1.54 |
|
|
|
|
12. Related party transactions
The following information is provided in accordance with IAS 24 Related Party Disclosures, as
being material transactions with related parties during the year. These transactions are with
joint ventures and a pension plan and were in the normal course of business and are summarised
below:
|
|
|
|
|
|
|
|
|
Years ended 31 March |
|
2010 |
|
|
2009 |
|
|
|
£m |
|
|
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales: Services supplied to a pension plan and joint ventures |
|
|
5 |
|
|
|
4 |
|
Purchases: Services received from joint ventures |
|
|
73 |
|
|
|
44 |
|
Interest income: Interest received on loans with joint ventures |
|
|
1 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Receivable from a pension plan and joint ventures |
|
|
1 |
|
|
|
- |
|
Payable to joint ventures |
|
|
6 |
|
|
|
6 |
|
|
|
|
|
|
|
|
|
|
Dividends received from joint ventures |
|
|
18 |
|
|
|
- |
|
|
|
|
Amounts receivable from and payable to related parties are due on normal commercial terms.
At 31 March 2010, there was a loan receivable from Blue-NG Limited (a joint venture) of £23m (2009:
£nil) of which £4m is non interest-bearing and the remainder bears interest at 14% per annum.
31