TIDMNG. TIDM35DT TIDM71GP TIDM87QJ TIDM46QK
RNS Number : 3881W
National Grid PLC
18 November 2010
18 November 2010
National Grid plc
Half year report for the six months ended 30 September 2010 (unaudited)
HIGHLIGHTS
· Strong first half performance
· Pre-tax profit1 up 45%
· Earnings per share1 up 5% 4
· Operating cash flow2 of GBP1,933m, up 20%
· Capital investment3 of GBP1.7bn, up GBP122m
· 8% increase in the rebased interim dividend
· Regulatory progress in the US
· new rate agreements for Massachusetts gas companies
· rate filing nearing completion in New York
· Completed GBP3.2bn rights issue
· UK Transmission capex increased to GBP627m
· Net debt down GBP2.9bn from 31 March 2010
· Well positioned for 2010/11
FINANCIAL RESULTS FOR CONTINUING OPERATIONS
+----------------------------------------------+--------+---------+--------+
| | Six months ended 30 |
| | September |
+----------------------------------------------+---------------------------+
| (GBPm, at actual exchange rate) | 2010 | 2009 | % |
| | | | change |
+----------------------------------------------+--------+---------+--------+
| Business performance1 | | | |
+----------------------------------------------+--------+---------+--------+
| Operating profit | 1,509 | 1,149 | 31 |
+----------------------------------------------+--------+---------+--------+
| Pre-tax profit | 938 | 649 | 45 |
+----------------------------------------------+--------+---------+--------+
| Earnings | 656 | 554 | 18 |
+----------------------------------------------+--------+---------+--------+
| Earnings per share | 20.3p | 19.4p4 | 5 |
+----------------------------------------------+--------+---------+--------+
| | | | |
+----------------------------------------------+--------+---------+--------+
| Statutory results | | | |
+----------------------------------------------+--------+---------+--------+
| Operating profit | 1,581 | 1,404 | 13 |
+----------------------------------------------+--------+---------+--------+
| Pre-tax profit | 971 | 944 | 3 |
+----------------------------------------------+--------+---------+--------+
| Earnings | 760 | 696 | 9 |
+----------------------------------------------+--------+---------+--------+
| Earnings per share | 23.5p | 24.4p4 | (4) |
+----------------------------------------------+--------+---------+--------+
| | | | |
+----------------------------------------------+--------+---------+--------+
| Dividend per share | 12.90p | 11.94p5 | 8 |
+----------------------------------------------+--------+---------+--------+
Steve Holliday, Chief Executive, said:
"I am pleased with our operating and financial performance in the first half of
the year. Operating profits were up 31% on last year. This is driven by strong
performance in all our businesses and the continued growth of our asset base.
This period's profit growth is additionally driven by timing impacts, as we had
a significant under-recovery of revenues in the first half of last year. In
line with our policy, we are increasing the rebased interim dividend by 8%. We
are making steady progress in the US with our process of filing for required
improvements in our various rate plans and we await the outcome in New York.
We have increased our capital programme, investing where we are confident we can
earn attractive returns. We welcome the announcement of the new RIIO regulatory
regime in the UK with the focus on investment and innovation. We are already
benefitting from the current incentive schemes and expect to see more of these
under RIIO. We are confident that our strategy will continue to deliver
essential changes in our energy landscape while creating significant value for
shareholders and wider stakeholders".
____________________________
1 For definition of business performance results see footnote on page 5.
2 Operating cash flow from continuing operations before exceptional items,
remeasurements, stranded cost recoveries and taxation.
3 Capital investment including investment in joint ventures.
4 Prior year EPS and weighted average number of shares adjusted to reflect scrip
dividends and rights issue bonus element, refer to note 6 on page 26.
5 Prior year interim dividend of 13.65p rebased to reflect rights issue bonus
element, refer to note 8 on page 27.
CHIEF EXECUTIVE'S REVIEW
National Grid has made a good start to what is expected to be a strong financial
year.
We are delivering continued high standards of safety across all of our
businesses, with a 16% reduction in our 12 month rolling average employee injury
frequency rate compared to September 2009. We have also delivered improvements
in customer satisfaction in our UK and US distribution businesses.
We have made real progress on our priorities for 2010/11: delivering our
increasing investment programme in a disciplined manner; progressing with our US
regulatory filings; and continuing to drive efficiency across the business.
Our GBP3.2bn rights issue, completed in June, provides funding for the projected
increase in investment in our UK Transmission business over the next five years.
We have started to invest increased amounts in our UK Transmission business
compared to last year. We are on target to complete our Isle of Grain Phase III
investment and the BritNed link in this financial year.
From 2 November, we have new rate agreements in our Massachusetts gas businesses
and expect the result of the upstate New York electric filing in January 2011.
As a result of the gas rate case decision in Massachusetts, we now have full or
partial decoupling across 67% of our US regulated business along with new
capital and bad debt trackers. These elements are important in enabling our
businesses to consistently deliver the returns we wish to achieve.
The regulatory regime in the UK governs the remuneration of around GBP14bn of
our expected total investment of GBP22bn to 2015. The proposals for the
development of this regulatory regime were published in July and we are
encouraged by many elements of these proposals.
We continue to drive efficiencies through the business, achieving increased
procurement savings and making further progress towards our targeted KeySpan
merger synergy savings.
On 4 October we announced that Steve Lucas is retiring from National Grid after
10 years as Finance Director of National Grid and formerly Lattice Group plc.
The Board is grateful to Steve for his significant contribution during his years
with the Company and is also delighted to welcome Andrew Bonfield as Finance
Director from 1 November.
October marked the 75th anniversary of the UK's high voltage electricity grid
which forms the basis for the National Grid that we know today. We are
celebrating this notable milestone and we are proud that National Grid today
retains the spirit of innovation and excellence of those early pioneers.
Investment and Funding
In the first half of the year we have invested GBP1.7bn of which GBP1.1bn was in
the UK. We continue to increase investment in our UK regulated businesses. We
anticipate an increased spend across a number of new projects in the UK in the
second half of the year and we remain on track for a significant increase in our
capital investment programme for the full year: principally in our regulated UK
Electricity Transmission business. We ensure, before any investment is
undertaken, that we are clear how and when it will be remunerated.
Net debt has decreased by GBP2.9bn from 31 March 2010 to GBP19.2bn reflecting
the receipt of GBP3.2bn from our rights issue in June.
Our net finance costs for this period have increased by GBP70m to GBP574m. This
reflects the impact of UK inflation on our index linked debt, compared to
deflation in the same period last year, partly offset by a reduction in net
pension interest. In order to manage our cash resources efficiently we have
utilised around GBP900m of cash in buying back our debt securities and repaying
bank loans early. We are taking advantage of the opportunity to buy back debt
in order to optimise near term financing costs whilst retaining the balance
sheet capacity to fund the increasing capital investment programme in the medium
term.
We are committed to financing our business in a manner consistent with
maintaining an efficient balance sheet and optimising our cost of capital. Our
UK operating companies have low single A credit ratings and we expect our key
credit metric for the current year to be comfortably above the minimum level
required for these. Since March, Moody's Investor Services, Fitch Ratings and
Standard & Poor's have all reaffirmed our credit ratings with stable outlook.
Regulation Update
We are in a time of significant changes to the UK energy supply, generation and
demand landscape. This presents many new challenges to the energy industry. On
26 July, Ofgem announced their proposals for the evolution of the UK regulatory
framework. These proposals are designed to regulate the network companies that
will be helping to meet these new challenges and undertaking the required step
up in regulated network investment. Future price controls will be for eight
years and will encourage the regulated companies to determine and then deliver
the outputs that customers and the industry need. This new "RIIO" (Revenue =
Incentives + Innovation + Outputs) framework will apply to our UK regulated
businesses from April 2013. We are encouraged by the proposals and believe that
the RIIO framework can offer the opportunity for us to earn attractive returns
on our investments by delivering the outputs that customers want in an
innovative and efficient manner.
We expect to see further consultation on the application of the RIIO framework
to the upcoming transmission and gas distribution price controls (RIIO-T1 and
RIIO-GD1) in December with a conclusion by Ofgem on the strategy for those
reviews in March 2011. The initial proposals on the first RIIO price controls
are expected in July 2012.
We are committed to achieving acceptable returns from our US businesses.
Working towards this goal, we continue to make progress on our rate case
filings. On 2 November we received a satisfactory decision from the
Massachusetts Department of Public Utilities (MADPU) in relation to our filings
for new rates in our Massachusetts Gas businesses. We were awarded an increase
in revenues of $58m, based on a 9.75% return on equity and a 50% common equity
ratio. Importantly, a number of mechanisms including decoupling, true ups of
pension costs and the commodity element of bad debts and a capital investment
tracker were also approved. In addition, late yesterday the recommendation of
the administrative law judges in the Niagara Mohawk electric rate case was
published and we are currently reviewing this document. All parties now have
the opportunity to file exception briefs in December and we expect the New York
Public Service Commission (NYPSC) to make its decision on rates for next year in
January 2011.
During this year's rate filings, questions over the allocation of our US service
company costs have been raised. We have engaged The Liberty Consulting Group
(Liberty) to undertake a comprehensive and independent review of related
financial records, processes and policies. Three of the four state commissions,
the Rhode Island Public Utilities Commission, the NYPSC and the MADPU, have
announced that they will undertake their own reviews of service company costs as
well. We will make the findings of the Liberty review available to all of our
regulators when we receive the results which we expect by the end of the
financial year.
On 20 May 2010 the Governor of Rhode Island signed into law a bill which
requires regulated utilities to decouple revenues from energy usage and to
expand efficiency programmes. This legislation will also enable us to collect,
starting from April 2011, the costs of infrastructure capital investment
programmes for our electric distribution business, annual vegetation management
and inspection and maintenance (I&M) expenses. In addition, the legislation
allows for the recovery and annual collection of an expanded capital investment
programme effective from April 2011 for our Gas Distribution business. We filed
for decoupling on 18 October and plan to file proposals for the annual
reconciliation mechanisms by the end of the year.
As reported at our full year results for 2009/10, we continue to evaluate
options to allow us to exit both our gas and electricity distribution businesses
in New Hampshire, which together represent less than 2% of our US rate base.
Efficiency Programmes
We remain on track to deliver our targeted KeySpan merger synergy savings of
$200m a year and as at 30 September 2010 we had achieved a run rate of $182m.
In June we consolidated our US transmission and both US gas and electric
distribution control centres into the newly renovated Northborough, MA
facility. We continue to drive procurement costs down through a combination of
leveraging National Grid's scale, unit price reductions and decreasing the
number of suppliers. Compared to the same period last year, our controllable
costs (excluding bad debts, pension and other post employment benefit costs)
were 1% lower. Our global procurement initiative has delivered over GBP40m of
savings, mainly capital, in the 6 months to September 2010.
DIVIDEND
The Board has approved an 8% increase in the interim dividend to 12.90p per
ordinary share ($1.0239 per American Depositary Share) in line with our policy
of targetting 8% growth until March 2012. This interim dividend has been
calculated using a rebased figure for the 2009/10 interim dividend of 11.94p
(actual 13.65p). This is derived by applying a ratio of 1.1427 to the interim
dividend for 2009/10 reflecting the bonus element of the rights issue. The
interim dividend is to be paid on 19 January 2011 to shareholders on the
register as at 3 December 2010. A scrip dividend alternative will again be
offered.
OUTLOOK
We expect to deliver both strong operational and financial performance this
year. In particular we expect a substantial improvement in our Gas Distribution
business, where timing related items negatively impacted our 2009/10
performance.
The very strong performance of our Electricity Distribution and Generation
business and our Transmission business in the first half of the year was
primarily driven by timing related items combined with benefit from hot weather.
Some timing impacts were expected for these businesses given the under-recovery
during the previous year. The hot weather has resulted in approximately GBP33m
of additional revenues in our non-decoupled electricity distribution businesses
which are not timing related.
Net debt at March 2011 is expected to be significantly lower than at March 2010
due to the rights issue, partly offset by the net cash outflow driven by the
increased investment programme. This, together with a reduction in pensions
interest and continued low interest rates, is expected to benefit the financing
charge. However, the recent pick up in inflation is expected largely to offset
this benefit due to the impact on RPI linked bonds, leaving the full year
financing charge marginally below last year's figure.
Capital expenditure for the current year, including investment in joint
ventures, is now expected to be around GBP3.7bn.
Overall we are well positioned to deliver another year of strong performance.
BASIS OF PRESENTATION
Unless otherwise stated, all financial commentaries are given on a business
performance basis6 at actual exchange rates. Business performance represents
the results for continuing operations before exceptional items, mark-to-market
remeasurementsof 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
Operating profit was GBP1,509m, up 31% on the prior period (up 31% on a constant
currency basis7). This was primarily driven by good performance and timing
related items across all of our businesses and particularly by hot weather
impacting our Electricity Distribution and Generation business.
Net finance costs were GBP574m, 14% higher than the prior period, reflecting RPI
inflation compared to deflation in the corresponding period last year impacting
the accretion on index linked bonds, partly offset by lower net pension charges
and lower net debt levels as a result of the rights issue. Profit before tax
was up 45% to GBP938m. The tax charge on profit was GBP279m, GBP186m higher
than the prior period, with the first half tax charge reflecting the
geographical and seasonal split of our earnings and the non-recurrence of some
discrete items. For the full year we expect our effective tax rate to be around
30%. Earnings were up GBP102m on the prior period at GBP656m. Earnings per
share increased 5% from 19.4p (restated) in the first half last year to 20.3p
despite the dilutive impact of the rights issue in June.
Exceptional items and remeasurements for continuing operations and stranded cost
recoveries increased statutory earnings by GBP104m after tax. A detailed
breakdown of exceptional items, remeasurements and stranded cost recoveries can
be found on page 23. After these items and non-controlling interests, statutory
earnings for continuing operations attributable to shareholders were GBP760m.
Statutory basic earnings per share from continuing operations were 23.5p
compared with 24.4p (restated) for the prior period.
Operating cash flows from continuing operations, before exceptional items,
remeasurements, stranded cost recoveries and taxation, were GBP1,933m, GBP326m
higher than the prior period.
Capital investment8 in our continuing businesses was GBP1.7bn, in line with our
plans for the year.
Net debt fell to GBP19.2bn at 30 September 2010 compared with GBP22.1bn at 31
March 2010, reflecting the receipt of GBP3.2bn of cash from the rights issue and
the impact of the weakening of the US dollar-pound exchange rate on our dollar
denominated debt partly offset by capital investment.
Further information about our principal risks and uncertainties for the next six
months of the financial year is provided in Note 14 on page 29.
___________________________________
6 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 historical 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
23. A reconciliation of business performance to statutory results is provided in
the consolidated income statement on page 22.
7 '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 six months ended 30 September 2010, which was $1.52 to GBP1.00. The
average rate for the six months ended 30 September 2009 was $1.55 to GBP1.00.
8 Capital investment including investment in joint ventures.
REVIEW OF TRANSMISSION OPERATIONS
+----------------------------------------------+--------+--------+--------+
| Summary results | Six months ended 30 |
| | September |
+----------------------------------------------+--------------------------+
| (GBPm) | 2010 | 2009 | % |
| | | | change |
+----------------------------------------------+--------+--------+--------+
| Revenue and other operating income | 1,904 | 1,826 | 4 |
+----------------------------------------------+--------+--------+--------+
| Operating costs | (954) | (978) | (2) |
+----------------------------------------------+--------+--------+--------+
| Depreciation and amortisation | (226) | (211) | 7 |
+----------------------------------------------+--------+--------+--------+
| Operating profit - actual exchange rate | 724 | 637 | 14 |
+----------------------------------------------+--------+--------+--------+
| Operating profit - constant currency | 724 | 639 | 13 |
+----------------------------------------------+--------+--------+--------+
+----------------------------------------------+--------+--------+--------+
| Operating profit by geographical segment | Six months ended 30 |
| | September |
+----------------------------------------------+--------------------------+
| (GBPm, at constant currency) | 2010 | 2009 | % |
| | | | change |
+----------------------------------------------+--------+--------+--------+
| UK | 645 | 549 | 17 |
+----------------------------------------------+--------+--------+--------+
| US | 79 | 90 | (12) |
+----------------------------------------------+--------+--------+--------+
| Operating profit | 724 | 639 | 13 |
+----------------------------------------------+--------+--------+--------+
+----------------------------------------------+--------+--------+--------+
| Capital investment | Six months ended 30 |
| | September |
+----------------------------------------------+--------------------------+
| (GBPm, at actual exchange rate) | 2010 | 2009 | % |
| | | | change |
+----------------------------------------------+--------+--------+--------+
| UK | 627 | 561 | 12 |
+----------------------------------------------+--------+--------+--------+
| US | 133 | 99 | 34 |
+----------------------------------------------+--------+--------+--------+
| Capital investment | 760 | 660 | 15 |
+----------------------------------------------+--------+--------+--------+
Transmission operating profit was up 13% to GBP724m at constant currency. Net
regulated income increased by GBP109m, largely driven by the partial recovery in
the UK of under-recovery from prior years ('K'), higher gas demand and a change
to our gas transmission billing profile. US timing items contributed an
additional GBP6m operating profit in the period. Depreciation and amortisation
charges increased by GBP14m following the step up in our capital investment
programme. Other net items reduced operating profit by GBP16m. The period on
period movement in exchange rates had a GBP2m positive impact on operating
profit.
Capital investment in Transmission was GBP760m, 15% higher than the same period
last year. On 18 October we awarded an 8-year tunnelling contract for our
London cables replacement project, worth approximately GBP200 million, to
Costain for the construction of two deep cable tunnels. Investment in our US
transmission networks includes investment on the New England East-West Solution
project, where we are allowed an enhanced Federal Energy Regulatory Commission
return on equity of 12.89%.
The capital investment programme is partly driven by the connection of new
sources of generation. In the first six months of the year in UK electricity
transmission, we have made new connection offers for generation totalling 13.2GW
and new connection offers were signed for 5.9GW of offshore and 700MW of onshore
wind generation. This increases total new connection offers that have been
signed between May 2009 and the half year end to 28.7GW. In our quarterly
connections update at the start of November we reported that we expected around
27GW of new generation to connect to our system by the end of 2015 and 42GW by
2020.
The one year 'rollover' process for the current transmission price controls
(TPCR4) has started and preparation for the next full UK Transmission Price
Control Review (formerly TPCR5, now RIIO-T1) is underway. We are now entering
into detailed consultations with our stakeholders to shape the business plan
that we will submit to Ofgem next year. We expect to receive Ofgem's strategy
document including further detail on financial issues in December.
REVIEW OF GAS DISTRIBUTION OPERATIONS
+----------------------------------------------+---------+---------+--------+
| Summary results | Six months ended 30 |
| | September |
+----------------------------------------------+----------------------------+
| (GBPm) | 2010 | 2009 | % |
| | | | change |
+----------------------------------------------+---------+---------+--------+
| Revenue and other operating income | 1,854 | 1,767 | 5 |
+----------------------------------------------+---------+---------+--------+
| Operating costs | (1,326) | (1,331) | - |
+----------------------------------------------+---------+---------+--------+
| Depreciation and amortisation | (204) | (183) | 11 |
+----------------------------------------------+---------+---------+--------+
| Operating profit - actual exchange rate | 324 | 253 | 28 |
+----------------------------------------------+---------+---------+--------+
| Operating profit - constant currency | 324 | 250 | 30 |
+----------------------------------------------+---------+---------+--------+
+----------------------------------------------+--------+--------+--------+
| Operating profit by geographical segment | Six months ended 30 |
| | September |
+----------------------------------------------+--------------------------+
| (GBPm, at constant currency) | 2010 | 2009 | % |
| | | | change |
+----------------------------------------------+--------+--------+--------+
| UK | 383 | 385 | (1) |
+----------------------------------------------+--------+--------+--------+
| US | (59) | (135) | 56 |
+----------------------------------------------+--------+--------+--------+
| Operating profit | 324 | 250 | 30 |
+----------------------------------------------+--------+--------+--------+
+----------------------------------------------+--------+--------+--------+
| Capital investment | Six months ended 30 |
| | September |
+----------------------------------------------+--------------------------+
| (GBPm, at actual exchange rate) | 2010 | 2009 | % |
| | | | change |
+----------------------------------------------+--------+--------+--------+
| UK capex | 82 | 104 | (21) |
+----------------------------------------------+--------+--------+--------+
| UK repex | 247 | 233 | 6 |
+----------------------------------------------+--------+--------+--------+
| US | 213 | 204 | 4 |
+----------------------------------------------+--------+--------+--------+
| Capital investment | 542 | 541 | - |
+----------------------------------------------+--------+--------+--------+
Gas Distribution operating profit increased by 30% at constant currency during
the period to GBP324m. Net regulated income was up GBP24m mainly driven by an
increase in US revenues following customer growth and rate changes provided in
our New York rate plans. In the US, where the vast majority of annual revenue
is collected in the second half of the year, a start to the reversal of last
year's underrecovery contributed to a number of US timing items which gave a
positive GBP59m variance year on year. Bad debts reduced by GBP18m and other
expense items were GBP27m higher, including a GBP19m increase in depreciation.
Compared to the same period last year our controllable operating costs
(excluding bad debts, pension and other post employment benefit costs) were 3%
lower. The period on period movement in exchange rates had a GBP3m negative
impact on operating profit.
In the UK our revenues are entirely decoupled from volumes.In the US, where our
revenues are partially decoupled from volumes, gas distribution volumes
increased by 0.8% on a weather-normalised basis driven by higher demand and
higher conversions from oil to gas, which contributed to the addition of 17,400
new customers. This had limited impact on the results for the half year as this
is the off-peak period for gas consumption.
During the period, together with our Gas Distribution alliance partnerships in
the UK, we have replaced around 1,000km of gas main, resulting in total
replacement expenditure (repex) of GBP247m. In the US, we have replaced around
200km of main and we are on track to deliver this year around 2,100km and 290km
in the UK and US respectively. Overall, our investment in network infrastructure
projects in the UK and US resulted in total capital expenditure (including
repex) of GBP542m this period.
UK Gas Distribution quarterly customer satisfaction scores improved on average
by 2% compared to the prior year.
We have a number of initiatives in place to drive further improvement in
customer satisfaction and efficiency. Amongst these is the first release of the
UK Gas Distribution Front Office which went live on 4 October 2010. This
programme has been in progress since January 2009 and will replace the key
systems and processes which support the Gas Distribution business in the UK.
Preparation for the UK Gas Distribution Price Control Review, now renamed
"RIIO-GD1", is underway. Customer consultations have begun and further detail
on the regulatory strategy for the review is expected in December, with initial
proposals in 2012. Together with the Transmission Price Control Review, these
are the first price controls for which the principles of the RIIO framework will
be implemented. We are fully engaged in working with Ofgem and our stakeholders
to make these a success, delivering the outputs that customers require and
allowing our business to earn attractive returns for delivering in innovative
ways.
In the US, our residential gas customer satisfaction scores have shown an
improvement, moving to the 2nd quartile in JD Power's 2010 study from the 3rd
quartile in their 2009 study.
As detailed in the Chief Executive's review, we continue to make regulatory
progress in the US with new rates in our Massachusetts Gas businesses and
filings in our Rhode Island Gas business.
On 12 April 2010 we filed for our Niagara Mohawk Gas business seeking an
increase in revenues of $13.9m. This filing included cost recovery for property
taxes, pensions and OPEBs, and site investigation and remediation. This
increase was approved and new rates became effective on 20 May 2010.
On 29 January 2010 we filed for $65m in additional annual revenues for the next
five years to recover deferred balances, primarily environmental site
investigation and remediation costs, associated with our New York City and Long
Island gas companies. The case is progressing and we are expecting a decision
with new rates early in 2011.
REVIEW OF ELECTRICITY DISTRIBUTION AND GENERATION OPERATIONS
+----------------------------------------------+---------+---------+--------+
| Summary results | Six months ended 30 |
| | September |
+----------------------------------------------+----------------------------+
| (GBPm) | 2010 | 2009 | % |
| | | | change |
+----------------------------------------------+---------+---------+--------+
| Revenue and other operating income* | 2,229 | 1,947 | 14 |
+----------------------------------------------+---------+---------+--------+
| Operating costs | (1,763) | (1,673) | 5 |
+----------------------------------------------+---------+---------+--------+
| Depreciation and amortisation | (106) | (105) | - |
+----------------------------------------------+---------+---------+--------+
| Operating profit - actual exchange rate | 360 | 169 | 113 |
+----------------------------------------------+---------+---------+--------+
| Operating profit - constant currency | 360 | 173 | 108 |
+----------------------------------------------+---------+---------+--------+
+----------------------------------------------+--------+--------+--------+
| Operating profit by principal activities | Six months ended 30 |
| | September |
+----------------------------------------------+--------------------------+
| (GBPm, at constant currency) | 2010 | 2009 | % |
| | | | change |
+----------------------------------------------+--------+--------+--------+
| Electricity distribution | 299 | 112 | 167 |
+----------------------------------------------+--------+--------+--------+
| Long Island transmission and distribution | 33 | 25 | 32 |
| services | | | |
+----------------------------------------------+--------+--------+--------+
| Long Island generation | 28 | 36 | (22) |
+----------------------------------------------+--------+--------+--------+
| Operating profit | 360 | 173 | 108 |
+----------------------------------------------+--------+--------+--------+
+----------------------------------------------+--------+--------+--------+
| Capital investment | Six months ended 30 |
| | September |
+----------------------------------------------+--------------------------+
| (GBPm, at actual exchange rate) | 2010 | 2009 | % |
| | | | change |
+----------------------------------------------+--------+--------+--------+
| Electricity distribution | 161 | 148 | 9 |
+----------------------------------------------+--------+--------+--------+
| Long Island generation | 14 | 18 | (22) |
+----------------------------------------------+--------+--------+--------+
| Capital investment | 175 | 166 | 5 |
+----------------------------------------------+--------+--------+--------+
* Excludes revenue from stranded cost recoveries.
During the period, operating profit from Electricity Distribution and Generation
increased by 108% to GBP360m on a constant currency basis. Net regulated income
was up by GBP66m, GBP33m of this driven by higher volumes, principally due to
hot weather during the summer. Total volumes in our business increased by 6.2%,
1.3% on a weather-normalised basis, on the same period last year.GBP22m of the
increase in net regulated income was due to increased revenues from the outcomes
of the Massachusetts and Rhode Island electric rate cases at the start of this
calendar year. Timing items were up GBP129m mainly representing a reversal of
GBP65m of under-recoveries in the first six months of last year and the recovery
of a GBP40m closing under-recovered balance at the end of 2009/10. Bad debt
expense reduced by GBP5m and other expenses increased by GBP13m, mainly due to
pensions and healthcare costs. The period on period movement in exchange rates
had a GBP4m positive benefit on operating profit.
All Electricity Distribution and Generation call handling service levels are
meeting regulatory targets with the exception of upstate New York, where we are
confident we will achieve the required level over the full year. Our customer
satisfaction studies continue to remain in compliance with regulatory
requirements. In the J.D Power and Associates 2010 Electric Utility and
Residential Customer Satisfaction study released on 14 July 2010, National Grid
showed an improvement, moving from the 4th quartile in 2009 to 3rd quartile this
year.
New York reliability is on track to meet regulatory targets for 2010.Our 2010
reliability for Massachusetts has been adversely affected by a single severe
wind storm in February. We have filed a request for the exclusion of this storm
from the service quality metrics.
On 29 June, National Grid opened a solar generating facility in Massachusetts
after installing over 4,600 solar panels on the roof of our New England
Distribution Centre in Whitinsville. The 1MW facility will provide enough
electricity to power nearly 200 homes and reduce carbon emissions by 590 tonnes
each year.
National Grid's participation with the Department of Energy (DoE) for the
advancement of smart grid technologies continues. National Grid and the DoE
share the cost of the programmes in National Grid's area approximately equally.
The total estimated programme cost is $31m, with signed contracts and projects
underway for $24m of this. In addition, National Grid is involved in the
development of smart grid pilots in Massachusetts and upstate New York.
In October we filed further briefs and reply briefs in the Niagara Mohawk
electric rate case with our filing on 25 October being for a revenue increase of
$361m. We believe that we have presented a strong case in the best interest of
all stakeholders, balancing the needs of consumers for reliable and affordable
energy supplies. Late yesterday the recommendation of the administrative law
judges was published and we are currently reviewing this document. All parties
now have the opportunity to file exception briefs in December and we expect the
NYPSC to make its decision on rates for next year in January 2011.On 18 June
2010 we agreed to a one month extension of the Niagara Mohawk electric filing
procedural schedule such that new rates will be effective from 1 February 2011.
Under the terms of this extension there is a "make whole" provision, subject to
Commission approval, that will restore the Company to the same financial
position as if new rates had come into effect on 1 January 2011.
Following the change in Rhode Island legislation on 20 May 2010 we were allowed
to implement rates commencing April 2011 for the Rhode Island electric business
that provide for the recovery of the annual capital investment allowance and
full funding of the operating expenses incurred to implement the vegetation
management and inspection and maintenance programmes. We filed for decoupling
on 18 October and plan to file proposals for the new rate elements by the end of
the year.
REVIEW OF NON-REGULATED AND OTHER ACTIVITIES
+----------------------------------------------+--------+--------+--------+
| Summary results | Six months ended 30 |
| | September |
+----------------------------------------------+--------------------------+
| (GBPm) | 2010 | 2009 | % |
| | | | change |
+----------------------------------------------+--------+--------+--------+
| Revenue and other operating income | 353 | 382 | (8) |
+----------------------------------------------+--------+--------+--------+
| Operating costs | (169) | (206) | (18) |
+----------------------------------------------+--------+--------+--------+
| Depreciation and amortisation | (83) | (86) | (3) |
+----------------------------------------------+--------+--------+--------+
| Operating profit | 101 | 90 | 12 |
+----------------------------------------------+--------+--------+--------+
+----------------------------------------------+--------+--------+--------+
| Operating profit by principal activities | Six months ended 30 |
| | September |
+----------------------------------------------+--------------------------+
| (GBPm, at actual exchange rate) | 2010 | 2009 | % |
| | | | change |
+----------------------------------------------+--------+--------+--------+
| Metering | 87 | 86 | 1 |
+----------------------------------------------+--------+--------+--------+
| Grain LNG | 28 | 20 | 40 |
+----------------------------------------------+--------+--------+--------+
| Property | 12 | 10 | 20 |
+----------------------------------------------+--------+--------+--------+
| Sub-total operating profit | 127 | 116 | 9 |
+----------------------------------------------+--------+--------+--------+
| Corporate and other activities | (26) | (26) | - |
+----------------------------------------------+--------+--------+--------+
| Operating profit | 101 | 90 | 12 |
+----------------------------------------------+--------+--------+--------+
+----------------------------------------------+--------+--------+--------+
| Capital investment* | Six months ended 30 |
| | September |
+----------------------------------------------+--------------------------+
| (GBPm, at actual exchange rate) | 2010 | 2009 | % |
| | | | change |
+----------------------------------------------+--------+--------+--------+
| Metering | 61 | 64 | (5) |
+----------------------------------------------+--------+--------+--------+
| Grain LNG | 33 | 60 | (45) |
+----------------------------------------------+--------+--------+--------+
| Property | 2 | 2 | - |
+----------------------------------------------+--------+--------+--------+
| Other | 36 | 13 | 177 |
+----------------------------------------------+--------+--------+--------+
| Capital investment | 132 | 139 | (5) |
+----------------------------------------------+--------+--------+--------+
* Excludes investment in joint ventures.
Operating profit from our non-regulated and other activities increased by 12% to
GBP101m. This was mainly driven by an increase in operating profit from our
Grain LNG business due to increased revenues in that business.
Metering operating profit was up GBP1m at GBP87m. During the period, capital
investment in this business was GBP61m. On 23 February the Court of Appeal
ruled on Ofgem's decision to fine us for a breach of the UK Competition Act 1998
and further reduced the fine to GBP15m but also upheld the original decision in
part. We have paid the fine and we have been denied leave to appeal to the
Supreme Court and this ends the legal process.
Both the new OnStream domestic gas smart meters and single phase electricity
smart meters have received the required industry approvals. Trials of our smart
meters started in October jointly with Scottish and Southern Electricity.
Our Grain LNG business delivered an operating profit of GBP28m, up 40%. During
the period capital investment in this business decreased by 45% to GBP33m
reflecting the completion of work on the construction of the Phase III capacity
expansion. Phase III is currently in the final stage of commissioning and the
first commissioning cargo arrived on 29 October. Phase III will add a further
LNG tank and a second unloading jetty, increasing the total annual capacity of
the terminal to around 15 million tonnes per annum, representing around 20% of
total UK gas demand. This investment is underpinned by long-term, take-or-pay
contracts.
In July we completed the sale of Fulcrum, our UK non-regulated utility
connections business, to Marwyn Capital.
In August, we completed the sale of National Grid Energy Services, the US
residential/light commercial heating, ventilation and air conditioning service
and installation business.
On 31 August we completed the sale of our interest in Honeoye Storage
Corporation, an independent gas storage facility in New York to Consolidated
Edison Development Inc.
We are exiting from our investment in Blue-NG, a joint venture investing in
renewable combined heat and power generation. This decision was taken in August
2010 following our assessment of the prospects of that company against our own
investment criteria and regulatory and planning restrictions. An exceptional
expense of GBP58m has been incurred in the half year in relation to this exit.
In addition to the capital expenditure in our Non-Regulated and Other
activities, we invested GBP72m in our joint ventures compared to GBP53m in the
same period last year. Investment in our BritNed joint venture was GBP41m,
compared to GBP43m in the same period last year, bringing our total investment
to GBP164m.
Investment in our Millennium Pipeline joint venture was GBP23m in the period
compared to GBP6m in the same period last year.
PROVISIONAL FINANCIAL TIMETABLE
+-----------------+-------------------------------------------------------+
| 1 December 2010 | Ordinary shares go ex-dividend |
+-----------------+-------------------------------------------------------+
| | |
+-----------------+-------------------------------------------------------+
| 3 December 2010 | Record date for 2010/11 interim dividend |
+-----------------+-------------------------------------------------------+
| | |
+-----------------+-------------------------------------------------------+
| 8 December 2010 | Scrip reference price announced |
+-----------------+-------------------------------------------------------+
| | |
+-----------------+-------------------------------------------------------+
| 17 December | Scrip election date for 2010/11 interim dividend |
| 2010 | |
+-----------------+-------------------------------------------------------+
| | |
+-----------------+-------------------------------------------------------+
| 19 January 2011 | 2010/11 interim dividend paid to qualifying ordinary |
| | shareholders |
+-----------------+-------------------------------------------------------+
| | |
+-----------------+-------------------------------------------------------+
| January 2011 | Interim management statement |
+-----------------+-------------------------------------------------------+
| | |
+-----------------+-------------------------------------------------------+
| 19 May 2011 | 2010/11 preliminary results |
+-----------------+-------------------------------------------------------+
| | |
+-----------------+-------------------------------------------------------+
| 1 June 2011 | Ordinary shares go ex-dividend |
+-----------------+-------------------------------------------------------+
| | |
+-----------------+-------------------------------------------------------+
| 3 June 2011 | Record date for 2010/11 final dividend |
+-----------------+-------------------------------------------------------+
| | |
+-----------------+-------------------------------------------------------+
| 8 June 2011 | Scrip reference price announced |
+-----------------+-------------------------------------------------------+
| | |
+-----------------+-------------------------------------------------------+
| Mid-June 2011 | Annual Report & Accounts published |
+-----------------+-------------------------------------------------------+
| | |
+-----------------+-------------------------------------------------------+
| 20 July 2011 | Scrip election date for 2010/11 final dividend |
+-----------------+-------------------------------------------------------+
| | |
+-----------------+-------------------------------------------------------+
| 25 July 2011 | Interim management statement and |
| | Annual General Meeting, ICC, Birmingham |
+-----------------+-------------------------------------------------------+
| | |
+-----------------+-------------------------------------------------------+
| 17 August 2011 | 2010/11 final dividend paid to qualifying ordinary |
| | shareholders |
+-----------------+-------------------------------------------------------+
CONTACTS
National Grid:
Investors
+------------------------+------------------------+------------------------+
| David Rees | +44 (0)20 7004 3170 | +44 (0)7901 511322(m) |
+------------------------+------------------------+------------------------+
| George Laskaris | +1 718 403 2526 | +1 917 375 0989(m) |
+------------------------+------------------------+------------------------+
| Andy Mead | +44 (0)20 7004 3166 | +44 (0)7752 890787(m) |
+------------------------+------------------------+------------------------+
| Michael Smart | +44 (0)20 7004 3214 | +44 (0)7767 298988(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 | +44 (0)20 7004 3149 | +44 (0)7774 827710(m) |
+------------------------+------------------------+------------------------+
| Debbie Taylor | +44 (0)20 7004 3148 | +44 (0)7787 568375(m) |
+------------------------+------------------------+------------------------+
| | | |
| Brunswick | | |
| Tom Burns | +44 (0)20 7404 5959 | |
| Rebecca Shelley | +44 (0)20 7404 5959 | |
+------------------------+------------------------+------------------------+
An analyst presentation will be held at the London Stock Exchange, 10
Paternoster Square, London EC4M 7LS at 9:15am (UK time) today
Live telephone coverage of the analyst presentation - conference code 8422266
+--------------+------------------------+---------------+------------------+
| UK dial in | +44 (0)207138 0844 | US dial in | +1 212 444 0896 |
| number | | number | |
+--------------+------------------------+---------------+------------------+
Telephone replay of the analyst presentation (available until 17 January 2011)
+--------------+------------------------+---------------+------------------+
| UK Dial in | +44 (0) 207 111 1244 | Account | 8422266# |
| number | +1 347 366 9565 | number | |
| US Dial in | | | |
| number | | | |
| | | | |
+--------------+------------------------+---------------+------------------+
A live web cast of the presentation will also be available at
www.nationalgrid.com
A short video of Steve Holliday talking about these results is available on
www.cantos.com
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
National Grid images can be found via the following link
http://www.flickr.com/photos/national_grid/sets/
CAUTIONARY STATEMENT
This half year report 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 US
Securities Act, and Section 21E of the US Securities Exchange Act of 1934. These
statements include information with respect to National Grid's financial
condition, 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
Grid's 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
Grid's ability to control or estimate precisely, 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; and unseasonable weather affecting energy demands. Other factors
that could cause actual results to differ materially from those described in
this document include fluctuations in exchange rates, interest rates, commodity
price indices and settlement of hedging arrangements; restrictions in National
Grid"s borrowing and debt arrangements; changes to credit ratings of National
Grid and its subsidiaries; adverse changes and volatility in the global credit
markets; National Grid"s ability to access capital markets and other sources of
credit in a timely manner and on acceptable terms; deflation or inflation; the
seasonality of National Grid"s businesses; the future funding requirements of
National Grid"s 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 Grid"s 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 Grid's subsidiaries.
In addition National Grid's 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 Grid's filings with and submissions to the US
Securities and Exchange Commission (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 results to differ materially from those contained in any
forward-looking statement.
These forward-looking statements speak only as at the date of this half year
report. Except as required by the FSA, the London Stock Exchange, the Part VI
Rules or applicable law, National Grid does not have any obligation to update or
revise publicly any forward-looking statement, whether as a result of new
information, further events or otherwise. Except as required by the FSA, the
London Stock Exchange, the Part VI Rules or applicable law, National Grid
expressly disclaims any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statement contained herein to
reflect any change in National Grid's expectations with regard thereto or any
change in events, conditions or circumstances on which any such statement is
based. In light of these risks, uncertainties and assumptions, the
forward-looking events discussed in this half year report might not occur.
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| CONSOLIDATED INCOME STATEMENT | | 2010 | | 2009 | | Year | |
| for the six months ended 30 September | | | | | | ended | |
| | | | | | | 31 | |
| | | | | | | March | |
| | | | | | | 2010 | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| |Notes | GBPm | | GBPm | | GBPm | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| | | | | | | | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| Revenue | 2a | 6,412 | | 6,044 | | 13,988 | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| Other operating income | | 24 | | 13 | | 19 | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| Operating costs | | (4,855) | | (4,653) | | (10,714) | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| | | | | | | | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| Operating profit | | | | | | | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| - Before exceptional items, | 2b | 1,509 | | 1,149 | | 3,121 | |
| remeasurements and stranded cost | | | | | | | |
| recoveries | | | | | | | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| - Exceptional items, remeasurements | 3 | 72 | | 255 | | 172 | |
| and stranded cost recoveries | | | | | | | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| Total operating profit | 2b | 1,581 | | 1,404 | | 3,293 | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| | | | | | | | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| Interest income and similar income | 4 | 651 | | 509 | | 1,005 | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| Interest expense and other finance | | | | | | | |
| costs | | | | | | | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| - Before exceptional items and | | (1,225) | | (1,013) | | (2,160) | |
| remeasurements | | | | | | | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| - Exceptional items and | 3 | (39) | | 40 | | 47 | |
| remeasurements | | | | | | | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| | 4 | (1,264) | | (973) | | (2,113) | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| | | | | | | | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| Share of post-tax results of joint | | 3 | | 4 | | 8 | |
| ventures and associates | | | | | | | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| | | | | | | | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| Profit before taxation | | | | | | | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| - Before exceptional items, | | 938 | | 649 | | 1,974 | |
| remeasurements and stranded cost | | | | | | | |
| recoveries | | | | | | | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| - Exceptional items, remeasurements | 3 | 33 | | 295 | | 219 | |
| and stranded cost recoveries | | | | | | | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| Total profit before taxation | | 971 | | 944 | | 2,193 | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| Taxation | | | | | | | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| - Before exceptional items, | 5 | (279) | | (93) | | (553) | |
| remeasurements and stranded cost | | | | | | | |
| recoveries | | | | | | | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| - Exceptional items, remeasurements | 3 | 71 | | (153) | | (251) | |
| and stranded cost recoveries | | | | | | | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| Total taxation | | (208) | | (246) | | (804) | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| | | | | | | | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| Profit after taxation | | | | | | | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| - Before exceptional items, | | 659 | | 556 | | 1,421 | |
| remeasurements and stranded cost | | | | | | | |
| recoveries | | | | | | | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| - Exceptional items, remeasurements | 3 | 104 | | 142 | | (32) | |
| and stranded cost recoveries | | | | | | | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| | | | | | | | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| Profit for the period | | 763 | | 698 | | 1,389 | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| | | | | | | | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| Attributable to: | | | | | | | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| - Equity shareholders of the parent | | 760 | | 696 | | 1,386 | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| - Non-controlling interests | | 3 | | 2 | | 3 | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| | | | | | | | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| | | | | | | | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| | | 763 | | 698 | | 1,389 | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| | | | | | | | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| Earnings per share* | | | | | | | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| - Basic | 6a | 23.5p | | 24.4p | | 48.6p | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| - Diluted | 6b | 23.3p | | 24.3p | | 48.4p | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| | | | | | | | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| Dividends per ordinary share: paid | 8 | 24.84p | | 23.00p | | 36.65p | |
| during the period | | | | | | | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| Dividends per ordinary share: for the | 8 | 12.90p | | 13.65p | | 38.49p | |
| period | | | | | | | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
| | | | | | | | |
+---------------------------------------+-------+---------+--+---------+--+----------+--+
* Comparative EPS data have been restated to reflect the impact of the bonus
element of the rights issue and as a result of the additional shares issued as
scrip dividends.
+---------------------------------------------+---------+--+---------+--+--------+--+
| CONSOLIDATED STATEMENT OF COMPREHENSIVE | 2010 | | 2009 | | Year | |
| INCOME | | | | | ended | |
| for the six months ended 30 September | | | | | 31 | |
| | | | | | March | |
| | | | | | 2010 | |
+---------------------------------------------+---------+--+---------+--+--------+--+
| | GBPm | | GBPm | | GBPm | |
+---------------------------------------------+---------+--+---------+--+--------+--+
| | | | | | | |
+---------------------------------------------+---------+--+---------+--+--------+--+
| Profit for the period | 763 | | 698 | | 1,389 | |
+---------------------------------------------+---------+--+---------+--+--------+--+
| | | | | | | |
+---------------------------------------------+---------+--+---------+--+--------+--+
| Other comprehensive income: | | | | | | |
+---------------------------------------------+---------+--+---------+--+--------+--+
| Exchange adjustments | (56) | | (79) | | 33 | |
+---------------------------------------------+---------+--+---------+--+--------+--+
| Actuarial net loss | (1,178) | | (1,424) | | (731) | |
+---------------------------------------------+---------+--+---------+--+--------+--+
| Deferred tax on actuarial net losses | 404 | | 455 | | 175 | |
+---------------------------------------------+---------+--+---------+--+--------+--+
| Net gains/(losses) in respect of cash flow | 9 | | (3) | | (45) | |
| hedges | | | | | | |
+---------------------------------------------+---------+--+---------+--+--------+--+
| Transferred to profit or loss on cash flow | (9) | | (5) | | 3 | |
| hedges | | | | | | |
+---------------------------------------------+---------+--+---------+--+--------+--+
| Deferred tax on cash flow hedges | (2) | | 1 | | 9 | |
+---------------------------------------------+---------+--+---------+--+--------+--+
| Net gains on available-for-sale investments | 6 | | 33 | | 54 | |
+---------------------------------------------+---------+--+---------+--+--------+--+
| Transferred to profit or loss on sale of | (2) | | - | | (6) | |
| available-for-sale investments | | | | | | |
+---------------------------------------------+---------+--+---------+--+--------+--+
| Deferred tax on available-for-sale | - | | (5) | | (5) | |
| investments | | | | | | |
+---------------------------------------------+---------+--+---------+--+--------+--+
| Share of post-tax other comprehensive | (4) | | - | | 5 | |
| (losses)/income of joint ventures and | | | | | | |
| associates | | | | | | |
+---------------------------------------------+---------+--+---------+--+--------+--+
| | | | | | | |
+---------------------------------------------+---------+--+---------+--+--------+--+
| Other comprehensive loss for the period | (832) | | (1,027) | | (508) | |
+---------------------------------------------+---------+--+---------+--+--------+--+
| | | | | | | |
+---------------------------------------------+---------+--+---------+--+--------+--+
| | | | | | | |
+---------------------------------------------+---------+--+---------+--+--------+--+
| Total comprehensive (loss)/income for the | (69) | | (329) | | 881 | |
| period | | | | | | |
+---------------------------------------------+---------+--+---------+--+--------+--+
| | | | | | | |
+---------------------------------------------+---------+--+---------+--+--------+--+
| Total comprehensive (loss)/income | | | | | | |
| attributable to: | | | | | | |
+---------------------------------------------+---------+--+---------+--+--------+--+
| - Equity shareholders of the parent | (72) | | (330) | | 879 | |
+---------------------------------------------+---------+--+---------+--+--------+--+
| - Non-controlling interests | 3 | | 1 | | 2 | |
+---------------------------------------------+---------+--+---------+--+--------+--+
| | | | | | | |
+---------------------------------------------+---------+--+---------+--+--------+--+
| | (69) | | (329) | | 881 | |
+---------------------------------------------+---------+--+---------+--+--------+--+
| | | | | | | |
+---------------------------------------------+---------+--+---------+--+--------+--+
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| CONSOLIDATED BALANCE SHEET | | 2010 | | 2009 | | At 31 | |
| at 30 September | | | | | | March | |
| | | | | | | 2010 | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| |Notes | GBPm | | GBPm | | GBPm | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| | | | | | | | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Non-current assets | | | | | | | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Goodwill | | 4,931 | | 4,843 | | 5,102 | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Other intangible assets | | 444 | | 355 | | 389 | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Property, plant and equipment | | 31,333 | | 29,197 | | 30,855 | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Deferred tax assets | | - | | 219 | | - | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Other non-current assets | | 137 | | 139 | | 162 | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Financial and other investments | | 506 | | 425 | | 486 | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Derivative financial assets | 10 | 1,903 | | 1,867 | | 1,494 | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| | | | | | | | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Total non-current assets | | 39,254 | | 37,045 | | 38,488 | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| | | | | | | | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Current assets | | | | | | | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Inventories and current intangible | | 579 | | 647 | | 407 | |
| assets | | | | | | | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Trade and other receivables | | 1,715 | | 1,702 | | 2,293 | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Financial and other investments | 10 | 2,931 | | 1,669 | | 1,397 | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Derivative financial assets | 10 | 459 | | 432 | | 248 | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Cash and cash equivalents | 10 | 419 | | 359 | | 720 | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| | | | | | | | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Total current assets | | 6,103 | | 4,809 | | 5,065 | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| | | | | | | | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Total assets | | 45,357 | | 41,854 | | 43,553 | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| | | | | | | | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Current liabilities | | | | | | | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Borrowings | 10 | (2,835) | | (2,626) | | (2,806) | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Derivative financial liabilities | 10 | (250) | | (183) | | (212) | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Trade and other payables | | (2,424) | | (2,302) | | (2,847) | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Current tax liabilities | | (427) | | (274) | | (391) | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Provisions | | (271) | | (263) | | (303) | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| | | | | | | | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Total current liabilities | | (6,207) | | (5,648) | | (6,559) | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| | | | | | | | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Non-current liabilities | | | | | | | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Borrowings | 10 | (21,010) | | (22,883) | | (22,318) | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Derivative financial liabilities | 10 | (863) | | (615) | | (662) | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Other non-current liabilities | | (1,995) | | (1,936) | | (1,974) | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Deferred tax liabilities | | (2,957) | | (2,514) | | (3,324) | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Pensions and other post-retirement | | (3,984) | | (3,652) | | (3,098) | |
| benefit obligations | | | | | | | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Provisions | | (1,435) | | (1,349) | | (1,407) | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| | | | | | | | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Total non-current liabilities | | (32,244) | | (32,949) | | (32,783) | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| | | | | | | | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Total liabilities | | (38,451) | | (38,597) | | (39,342) | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| | | | | | | | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Net assets | | 6,906 | | 3,257 | | 4,211 | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| | | | | | | | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Equity | | | | | | | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Called up share capital | | 414 | | 297 | | 298 | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Share premium account | | 1,363 | | 1,368 | | 1,366 | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Retained earnings | | 6,858 | | 6,467 | | 7,316 | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Other equity reserves | | (1,738) | | (4,887) | | (4,781) | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| | | | | | | | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Shareholders' equity | | 6,897 | | 3,245 | | 4,199 | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Non-controlling interests | | 9 | | 12 | | 12 | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| | | | | | | | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| Total equity | | 6,906 | | 3,257 | | 4,211 | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
| | | | | | | | |
+---------------------------------------+-------+----------+-+----------+--+----------+--+
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| CONSOLIDATED STATEMENT OF | Called-up | Share | Retained | Other | Total | Non-controlling | Total |
| CHANGES IN EQUITY | share | premium | earnings | equity | share-holders' | interests | equity |
| | capital | account | | reserves | equity | | |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| | | | | | | | |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| Changes in equity for the | | | | | | | |
| period: | | | | | | | |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| | | | | | | | |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| At 1 April 2010 | 298 | 1,366 | 7,316 | (4,781) | 4,199 | 12 | 4,211 |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| Total comprehensive | - | - | (14) | (58) | (72) | 3 | (69) |
| (loss)/income for the | | | | | | | |
| period | | | | | | | |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| Equity dividends | - | - | (613) | - | (613) | - | (613) |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| Rights issue | 113 | - | - | 3,101 | 3,214 | - | 3,214 |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| Scrip dividend related | 3 | (3) | 141 | - | 141 | - | 141 |
| share issue | | | | | | | |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| Other movements in | - | - | - | - | - | (6) | (6) |
| non-controlling interests | | | | | | | |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| Share-based payment | - | - | 11 | - | 11 | - | 11 |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| Issue of treasury shares | - | - | 16 | - | 16 | - | 16 |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| Tax on share-based payment | - | - | 1 | - | 1 | - | 1 |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| | | | | | | | |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| At 30 September 2010 | 414 | 1,363 | 6,858 | (1,738) | 6,897 | 9 | 6,906 |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| | | | | | | | |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| | | | | | | | |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| | | | | | | | |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| | Called-up | Share | Retained | Other | Total | Non-controlling | Total |
| | share | premium | earnings | equity | share-holders' | interests | equity |
| | capital | account | | reserves | equity | | |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| | | | | | | | |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| Changes in equity for the | | | | | | | |
| period: | | | | | | | |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| | | | | | | | |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| At 1 April 2009 | 294 | 1,371 | 7,135 | (4,830) | 3,970 | 14 | 3,984 |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| Total comprehensive | - | - | (273) | (57) | (330) | 1 | (329) |
| (loss)/income for the | | | | | | | |
| period | | | | | | | |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| Equity dividends | - | - | (557) | - | (557) | - | (557) |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| Scrip dividend related | 3 | (3) | 137 | - | 137 | - | 137 |
| share issue | | | | | | | |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| Other movements in | - | - | - | - | - | (3) | (3) |
| non-controlling interests | | | | | | | |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| Share-based payment | - | - | 10 | - | 10 | - | 10 |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| Issue of treasury shares | - | - | 13 | - | 13 | - | 13 |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| Tax on share-based payment | - | - | 2 | - | 2 | - | 2 |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| | | | | | | | |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| At 30 September 2009 | 297 | 1,368 | 6,467 | (4,887) | 3,245 | 12 | 3,257 |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| | | | | | | | |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| | | | | | | | |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| | | | | | | | |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| | Called-up | Share | Retained | Other | Total | Non-controlling | Total |
| | share | premium | earnings | equity | share-holders' | interests | equity |
| | capital | account | | reserves | equity | | |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| | | | | | | | |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| Changes in equity for the | | | | | | | |
| year: | | | | | | | |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| | | | | | | | |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| At 1 April 2009 | 294 | 1,371 | 7,135 | (4,830) | 3,970 | 14 | 3,984 |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| Total comprehensive income | - | - | 830 | 49 | 879 | 2 | 881 |
| for the year | | | | | | | |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| Equity dividends | - | - | (893) | - | (893) | - | (893) |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| Scrip dividend related | 4 | (5) | 205 | - | 204 | - | 204 |
| share issue | | | | | | | |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| Other movements in | - | - | - | - | - | (4) | (4) |
| non-controlling interests | | | | | | | |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| 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 |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
| | | | | | | | |
+-----------------------------+-----------+---------+----------+----------+----------------+-----------------+--------+
+---------------------------------------------+---------+--+---------+--+---------+--+
| CONSOLIDATED CASH FLOW STATEMENT | 2010 | | 2009 | | Year | |
| for the six months ended 30 September | | | | | ended | |
| | | | | | 31 | |
| | | | | | March | |
| | | | | | 2010 | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| | GBPm | | GBPm | | GBPm | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| | | | | | | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Cash flows from operating activities | | | | | | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Total operating profit | 1,581 | | 1,404 | | 3,293 | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Adjustments for: | | | | | | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Exceptional items, remeasurements and | (72) | | (255) | | (172) | |
| stranded cost recoveries | | | | | | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Depreciation and amortisation | 619 | | 585 | | 1,188 | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Share-based payment charge | 11 | | 10 | | 25 | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Changes in working capital | 46 | | 329 | | 431 | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Changes in provisions | (85) | | (57) | | (98) | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Changes in pensions and other | (167) | | (409) | | (521) | |
| post-retirement benefit obligations | | | | | | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Cash flows relating to exceptional items | (43) | | (72) | | (135) | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Cash flows relating to stranded cost | 166 | | 194 | | 361 | |
| recoveries | | | | | | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| | | | | | | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Cash generated from operations | 2,056 | | 1,729 | | 4,372 | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Tax paid | (116) | | (131) | | 144 | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| | | | | | | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Net cash inflow from operating activities | 1,940 | | 1,598 | | 4,516 | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| | | | | | | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Cash flows from investing activities | | | | | | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Acquisition of investments | (72) | | (53) | | (86) | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Disposal of subsidiaries | 21 | | - | | 6 | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Purchases of intangible assets | (77) | | (35) | | (104) | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Purchases of property, plant and equipment | (1,467) | | (1,426) | | (3,007) | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Disposals of property, plant and equipment | 10 | | 9 | | 15 | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Interest received | 12 | | 12 | | 21 | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Dividends received from joint ventures | 3 | | 17 | | 18 | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Net movements in financial investments | (1,541) | | 507 | | 805 | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| | | | | | | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Net cash flow used in investing activities | (3,111) | | (969) | | (2,332) | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| | | | | | | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Cash flows from financing activities | | | | | | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Proceeds of rights issue | 3,218 | | - | | - | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Proceeds from issue of treasury shares | 16 | | 13 | | 18 | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Net decrease in borrowings and related | (1,330) | | (112) | | (499) | |
| derivatives | | | | | | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Interest paid | (491) | | (480) | | (1,003) | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Exceptional finance costs on the redemption | (57) | | - | | (33) | |
| of debt | | | | | | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Dividends paid to shareholders | (472) | | (420) | | (688) | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Repurchase of share capital and purchase of | - | | - | | (7) | |
| treasury shares | | | | | | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| | | | | | | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Net cash flow from/ (used in) financing | 884 | | (999) | | (2,212) | |
| activities | | | | | | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| | | | | | | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Net decrease in cash and cash equivalents | (287) | | (370) | | (28) | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Exchange movements | (3) | | (7) | | (1) | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Net cash and cash equivalents at start of | 691 | | 720 | | 720 | |
| period | | | | | | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| | | | | | | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| Net cash and cash equivalents at end of | 401 | | 343 | | 691 | |
| period (i) | | | | | | |
+---------------------------------------------+---------+--+---------+--+---------+--+
| | | | | | | |
+---------------------------------------------+---------+--+---------+--+---------+--+
i) Net of bank overdrafts of GBP18m (30 September 2009: GBP16m; 31 March 2010:
GBP29m).
NOTES TO THE 2010/11 HALF YEAR FINANCIAL INFORMATION
1. Basis of preparation and new accounting standards, interpretations and
amendments
The half year financial information covers the six month period ended 30
September 2010 and has been prepared under International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board
(IASB), and IFRS as adopted by the European Union, in accordance with
International Accounting Standard 34 'Interim Financial Reporting' and the
Disclosure and Transparency Rules of the Financial Services Authority. The half
year financial information is unaudited but has been reviewed by the auditors
and their report is attached to this document.
The following standards, interpretations and amendments, issued by the IASB and
by the International Financial Reporting Interpretations Committee (IFRIC), are
effective for the year ending 31 March 2011. None of these had any impact on
consolidated results or assets and liabilities.
· IFRS 3 on business combinations
· IAS 27 on consolidated and separate financial statements
· Amendment to IAS 39 on eligible hedged items
· IFRS 1 on first-time adoption of IFRS
· IFRIC 17 on distributions of non-cash assets to owners
· Improvements to IFRS 2009
· Amendment to IFRS 2 on group cash-settled share-based payments
· Amendment to IFRS 1 on additional exemptions for first-time adopters of
IFRS
· Amendment to IAS 32 on the classification of rights issues
The half year financial information does not constitute statutory accounts as
defined in Section 434 of the Companies Act 2006. It should be read in
conjunction with the statutory accounts for the year ended 31 March 2010, which
were prepared in accordance with IFRS as issued by the IASB and as adopted by
the European Union, and have been filed with the Registrar of Companies. The
auditors' report on these statutory accounts was unqualified and did not contain
a statement under Section 498 of the Companies Act 2006.
The half year financial information has been prepared in accordance with the
accounting policies expected to be applicable for the year ending 31 March 2011
and consistent with those applied in the preparation of our accounts for the
year ended 31 March 2010, except for any impact of new standards,
interpretations and amendments noted above.
Date of approval
This announcement was approved by the Board of Directors on 17 November 2010.
2. Segmental analysis
The Board of Directors is National Grid's 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 |
| | Britain's gas distribution system. |
+-------------------------+----------------------------------------------+
| Gas Distribution US | Gas distribution in New York and New |
| | England. |
+-------------------------+----------------------------------------------+
| Electricity | Electricity distribution and generation in |
| Distribution and | New York and New England. |
| Generation US | |
+-------------------------+----------------------------------------------+
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.
The Gas Distribution US segment experiences significant seasonal fluctuations
owing to weather conditions and peak delivery volumes occurring in the second
half of the fiscal year. In the UK the pricing methodology for gas distribution
has a higher capacity delivery component and a lower volume component and so is
not subject to such significant seasonal fluctuations.
a) Revenue
+-------------------------------------------------+---------+---------+---------+
| Six months ended 30 September | 2010 | 2009 | Year |
| | | | ended |
| | | | 31 |
| | | | March |
| | | | 2010 |
+-------------------------------------------------+---------+---------+---------+
| | GBPm | GBPm | GBPm |
+-------------------------------------------------+---------+---------+---------+
| | | | |
+-------------------------------------------------+---------+---------+---------+
| Operating segments - continuing operations | | | |
+-------------------------------------------------+---------+---------+---------+
| Transmission UK | 1,679 | 1,609 | 3,460 |
+-------------------------------------------------+---------+---------+---------+
| Transmission US | 218 | 208 | 405 |
+-------------------------------------------------+---------+---------+---------+
| Gas Distribution UK | 770 | 768 | 1,517 |
+-------------------------------------------------+---------+---------+---------+
| Gas Distribution US | 1,080 | 999 | 3,708 |
+-------------------------------------------------+---------+---------+---------+
| Electricity Distribution and Generation US | 2,405 | 2,175 | 4,339 |
+-------------------------------------------------+---------+---------+---------+
| Other activities | 340 | 378 | 738 |
+-------------------------------------------------+---------+---------+---------+
| Sales between operating segments | (80) | (93) | (179) |
+-------------------------------------------------+---------+---------+---------+
| | | | |
+-------------------------------------------------+---------+---------+---------+
| Revenue | 6,412 | 6,044 | 13,988 |
+-------------------------------------------------+---------+---------+---------+
| | | | |
+-------------------------------------------------+---------+---------+---------+
| Total excluding stranded cost recoveries | 6,236 | 5,816 | 13,612 |
+-------------------------------------------------+---------+---------+---------+
| Stranded cost recoveries | 176 | 228 | 376 |
+-------------------------------------------------+---------+---------+---------+
| | | | |
+-------------------------------------------------+---------+---------+---------+
| Revenue | 6,412 | 6,044 | 13,988 |
+-------------------------------------------------+---------+---------+---------+
| | | | |
+-------------------------------------------------+---------+---------+---------+
| Geographical areas | | | |
+-------------------------------------------------+---------+---------+---------+
| UK | 2,710 | 2,695 | 5,524 |
+-------------------------------------------------+---------+---------+---------+
| US | 3,702 | 3,349 | 8,464 |
+-------------------------------------------------+---------+---------+---------+
| | | | |
+-------------------------------------------------+---------+---------+---------+
| Revenue | 6,412 | 6,044 | 13,988 |
+-------------------------------------------------+---------+---------+---------+
| | | | |
+-------------------------------------------------+---------+---------+---------+
2. Segmental analysis (continued)
b) Operating profit
+---------------------------+---------+---------+---------+-+---------+--------+---------+
| | Before exceptional | | After exceptional items, |
| | items, remeasurements | | remeasurements and |
| | and stranded cost | | stranded cost recoveries |
| | recoveries | | |
+---------------------------+-----------------------------+-+----------------------------+
| Six months ended 30 | 2010 | 2009 | Year | | 2010 | 2009 | Year |
| September | | | ended | | | | ended |
| | | | 31 | | | | 31 |
| | | | March | | | | March |
| | | | 2010 | | | | 2010 |
+---------------------------+---------+---------+---------+-+---------+--------+---------+
| | GBPm | GBPm | GBPm | | GBPm | GBPm | GBPm |
+---------------------------+---------+---------+---------+-+---------+--------+---------+
| Operating segments | | | | | | | |
+---------------------------+---------+---------+---------+-+---------+--------+---------+
| Transmission UK | 645 | 549 | 1,311 | | 592 | 544 | 1,252 |
+---------------------------+---------+---------+---------+-+---------+--------+---------+
| Transmission US | 79 | 88 | 153 | | 78 | 86 | 151 |
+---------------------------+---------+---------+---------+-+---------+--------+---------+
| Gas Distribution UK | 383 | 385 | 723 | | 389 | 378 | 682 |
+---------------------------+---------+---------+---------+-+---------+--------+---------+
| Gas Distribution US | (59) | (132) | 414 | | (51) | (47) | 448 |
+---------------------------+---------+---------+---------+-+---------+--------+---------+
| Electricity | 360 | 169 | 374 | | 512 | 356 | 701 |
| Distribution and | | | | | | | |
| Generation US | | | | | | | |
+---------------------------+---------+---------+---------+-+---------+--------+---------+
| Other activities | 101 | 90 | 146 | | 61 | 87 | 59 |
+---------------------------+---------+---------+---------+-+---------+--------+---------+
| | | | | | | | |
+---------------------------+---------+---------+---------+-+---------+--------+---------+
| | 1,509 | 1,149 | 3,121 | | 1,581 | 1,404 | 3,293 |
+---------------------------+---------+---------+---------+-+---------+--------+---------+
| Geographical areas | | | | | | | |
+---------------------------+---------+---------+---------+-+---------+--------+---------+
| UK | 1,127 | 1,022 | 2,180 | | 1,016 | 1,010 | 2,007 |
+---------------------------+---------+---------+---------+-+---------+--------+---------+
| US | 382 | 127 | 941 | | 565 | 394 | 1,286 |
+---------------------------+---------+---------+---------+-+---------+--------+---------+
| | | | | | | | |
+---------------------------+---------+---------+---------+-+---------+--------+---------+
| | 1,509 | 1,149 | 3,121 | | 1,581 | 1,404 | 3,293 |
+---------------------------+---------+---------+---------+-+---------+--------+---------+
| | | | | | | | |
+---------------------------+---------+---------+---------+-+---------+--------+---------+
| Reconciliation to profit | | | | | | | |
| before tax: | | | | | | | |
+---------------------------+---------+---------+---------+-+---------+--------+---------+
| Operating profit | 1,509 | 1,149 | 3,121 | | 1,581 | 1,404 | 3,293 |
+---------------------------+---------+---------+---------+-+---------+--------+---------+
| Interest income and | 651 | 509 | 1,005 | | 651 | 509 | 1,005 |
| similar income | | | | | | | |
+---------------------------+---------+---------+---------+-+---------+--------+---------+
| Interest expense and | (1,225) | (1,013) | (2,160) | | (1,264) | (973) | (2,113) |
| other finance costs | | | | | | | |
+---------------------------+---------+---------+---------+-+---------+--------+---------+
| Share of post-tax | 3 | 4 | 8 | | 3 | 4 | 8 |
| results of joint ventures | | | | | | | |
| and associates | | | | | | | |
+---------------------------+---------+---------+---------+-+---------+--------+---------+
| | | | | | | | |
+---------------------------+---------+---------+---------+-+---------+--------+---------+
| Profit before tax - | 938 | 649 | 1,974 | | 971 | 944 | 2,193 |
| continuing operations | | | | | | | |
+---------------------------+---------+---------+---------+-+---------+--------+---------+
| | | | | | | | |
+---------------------------+---------+---------+---------+-+---------+--------+---------+
3. Exceptional items, remeasurements and stranded cost recoveries
Exceptional items, remeasurements and stranded cost recoveries are items of
income and expenditure that, in the judgement 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, restructuring costs 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 historical generation related
costs in the US related to generation assets that we no longer own. Such costs
can be recovered from customers as permitted by regulatory agreements.
+----------------------------------------------------+--------+--------+--------+
| Six months ended 30 September | 2010 | 2009 | Year |
| | | | ended |
| | | | 31 |
| | | | March |
| | | | 2010 |
+----------------------------------------------------+--------+--------+--------+
| | GBPm | GBPm | GBPm |
+----------------------------------------------------+--------+--------+--------+
| | | | |
+----------------------------------------------------+--------+--------+--------+
| Exceptional items - restructuring credit/(costs) | 7 | (48) | (149) |
| (i) | | | |
+----------------------------------------------------+--------+--------+--------+
| Exceptional items - environmental related | (75) | (7) | (63) |
| provisions (ii) | | | |
+----------------------------------------------------+--------+--------+--------+
| Exceptional items - net gain on disposal of | 19 | - | 11 |
| subsidiaries and associate (iii) | | | |
+----------------------------------------------------+--------+--------+--------+
| Exceptional items - joint venture impairment and | (58) | - | - |
| exit costs (iv) | | | |
+----------------------------------------------------+--------+--------+--------+
| Exceptional items - other (v) | (3) | (3) | (67) |
+----------------------------------------------------+--------+--------+--------+
| Remeasurements - commodity contracts (vi) | 10 | 113 | 71 |
+----------------------------------------------------+--------+--------+--------+
| Stranded cost recoveries (vii) | 172 | 200 | 369 |
+----------------------------------------------------+--------+--------+--------+
| Total exceptional items, remeasurements and | 72 | 255 | 172 |
| stranded cost recoveries included within operating | | | |
| profit | | | |
+----------------------------------------------------+--------+--------+--------+
| | | | |
+----------------------------------------------------+--------+--------+--------+
| Exceptional items - debt redemption costs (viii) | (57) | - | (33) |
+----------------------------------------------------+--------+--------+--------+
| Remeasurements - commodity contracts (vi) | - | (1) | (1) |
+----------------------------------------------------+--------+--------+--------+
| Remeasurements - net gains on derivative financial | 18 | 41 | 81 |
| instruments (ix) | | | |
+----------------------------------------------------+--------+--------+--------+
| Total exceptional items and remeasurements | (39) | 40 | 47 |
| included within finance costs | | | |
+----------------------------------------------------+--------+--------+--------+
| | | | |
+----------------------------------------------------+--------+--------+--------+
| Total exceptional items, remeasurements and | 33 | 295 | 219 |
| stranded cost recoveries before taxation | | | |
+----------------------------------------------------+--------+--------+--------+
| | | | |
+----------------------------------------------------+--------+--------+--------+
| Exceptional tax item - deferred tax credit arising | 115 | - | - |
| on the reduction in the UK tax rate (xi) | | | |
+----------------------------------------------------+--------+--------+--------+
| Exceptional tax item - other (x) | - | - | (41) |
+----------------------------------------------------+--------+--------+--------+
| Tax on exceptional items - restructuring | (1) | 17 | 45 |
| credit/(costs) (i) | | | |
+----------------------------------------------------+--------+--------+--------+
| Tax on exceptional items - environmental related | 22 | 3 | 8 |
| provisions (ii) | | | |
+----------------------------------------------------+--------+--------+--------+
| Tax on exceptional items - net gain on disposal of | (10) | - | (2) |
| subsidiaries and associate (iii) | | | |
+----------------------------------------------------+--------+--------+--------+
| Tax on exceptional items - other (v) | 1 | 1 | 19 |
+----------------------------------------------------+--------+--------+--------+
| Tax on exceptional items - debt redemption costs | 16 | - | 2 |
| (viii) | | | |
+----------------------------------------------------+--------+--------+--------+
| Tax on remeasurements - commodity contracts (vi) | (4) | (45) | (28) |
+----------------------------------------------------+--------+--------+--------+
| Tax on remeasurements - derivative financial | 1 | (49) | (106) |
| instruments (ix) | | | |
+----------------------------------------------------+--------+--------+--------+
| Tax on stranded cost recoveries (vii) | (69) | (80) | (148) |
+----------------------------------------------------+--------+--------+--------+
| | | | |
+----------------------------------------------------+--------+--------+--------+
| Tax on exceptional items, remeasurements and | 71 | (153) | (251) |
| stranded cost recoveries | | | |
+----------------------------------------------------+--------+--------+--------+
| | | | |
+----------------------------------------------------+--------+--------+--------+
| Total exceptional items, remeasurements and | 104 | 142 | (32) |
| stranded cost recoveries | | | |
+----------------------------------------------------+--------+--------+--------+
| | | | |
+----------------------------------------------------+--------+--------+--------+
| | | | |
+----------------------------------------------------+--------+--------+--------+
| Total exceptional items after taxation | (24) | (37) | (270) |
+----------------------------------------------------+--------+--------+--------+
| Total commodity contract remeasurements after | 6 | 67 | 42 |
| taxation | | | |
+----------------------------------------------------+--------+--------+--------+
| Total derivative financial instrument | 19 | (8) | (25) |
| remeasurements after taxation | | | |
+----------------------------------------------------+--------+--------+--------+
| Total stranded cost recoveries after taxation | 103 | 120 | 221 |
+----------------------------------------------------+--------+--------+--------+
| | | | |
+----------------------------------------------------+--------+--------+--------+
| Total exceptional items, remeasurements and | 104 | 142 | (32) |
| stranded cost recoveries after taxation | | | |
+----------------------------------------------------+--------+--------+--------+
| | | | |
+----------------------------------------------------+--------+--------+--------+
3. Exceptional items, remeasurements and stranded cost recoveries (continued)
i) The restructuring credit includes charges related to the integration of
KeySpan of GBP6m (2009: GBP22m; year ended 31 March 2010: GBP30m),
transformation related initiatives of GBP19m (2009: GBP26m; year ended 31 March
2010: GBP56m), and costs associated with the outsourcing of elements of our UK
shared services organisation of GBP7m (2009: GBPnil; year ended 31 March 2010:
GBP22m) offset by a GBP39m release of restructuring provisions recognised in
prior years. For the year ended 31 March 2010 there was an additional charge
for the further restructuring of our liquefied natural gas (LNG) storage
facilities of GBP41m.
ii) Environmental charges include GBP6m (2009: GBP7m; year ended 31 March
2010: GBP21m) and GBP69m (2009: GBPnil; year ended 31 March 2010: GBP42m)
related to specific exposures in the US and UK respectively. Costs incurred
with respect to the US environmental provisions are substantially recoverable
from customers.
iii) During the period there was a gain of GBP16m on the sale of the wholly
owned US subsidiaries, National Grid Energy Services (New England) LLC and
KeySpan Energy Solutions LLC and a loss of GBP6m on the sale of the wholly owned
UK subsidiary Fulcrum Group Holdings Limited. In addition there was a gain of
GBP9m on the sale of our 52.14% investment in Honeoye Storage Corp. During the
year ended 31 March 2010, there was a gain of GBP5m on the sale of a 30.29%
investment in the associate Steuben Gas Storage Company and the release of
various unutilised provisions amounting to GBP6m originally recorded on the sale
of Advantica in 2008.
iv) The joint venture impairment and exit costs relate to our investment in
Blue NG, a joint venture investing in renewable combined heat and power
generation. A decision to exit this joint venture was taken in August 2010
following our assessment of the prospects of that company against our own
investment criteria. The charge of GBP58m comprises an impairment of the
carrying value of the investment together with a provision for committed funding
and associated exit costs.
v) Other costs relate to amortisation charges on acquisition-related
intangibles of GBP3m (2009: GBP3m; year ended 31 March 2010: GBP6m). In addition
for the year ended 31 March 2010, other exceptional items also included an
impairment charge of GBP11m in relation to acquisition-related intangibles; a
charge of GBP9m relating to US healthcare costs arising from recent legislative
changes; and GBP41m related to a fine of GBP15m levied upon us by the Gas and
Electricity Markets Authority (GEMA) together with associated costs, and
provisions against receivables and other balance sheet items.
vi) 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 changes in the market price of the underlying commodity and those impacting
finance costs as a result of the time value of money.
vii) 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 GBP176m
(2009: GBP228m; year ended 31 March 2010: GBP376m) and operating costs of GBP4m
(2009: GBP28m; year ended 31 March 2010: GBP7m).
viii) Debt redemption costs represent costs arising from our debt repurchase
programme, undertaken to efficiently manage our cash resources following the
rights issue. Debt redemption costs in the year ended 31 March 2010 represented
costs relating to the early redemption of a significant loan.
ix) 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 other comprehensive
income or which are offset by adjustments to the carrying value of debt. The
tax charge on remeasurements includes a GBPnil (2009: GBP45m; year end 31 March
2010: GBP78m) charge in respect of prior years.
x) The exceptional tax charge of GBP41m for the year ended 31 March 2010 arose
due to a change in US tax legislation under the Patient Protection and
Affordable Care Act.
xi) The exceptional tax credit arises from a reduction in the UK corporation
tax rate from 28% to 27% included in the Finance (No 2) Act 2010. This results
in a reduction in deferred tax liabilities.
4. Finance income and costs
+-------------------------------------------------+---------+---------+---------+
| Six months ended 30 September | 2010 | 2009 | Year |
| | | | ended |
| | | | 31 |
| | | | March |
| | | | 2010 |
+-------------------------------------------------+---------+---------+---------+
| | GBPm | GBPm | GBPm |
+-------------------------------------------------+---------+---------+---------+
| | | | |
+-------------------------------------------------+---------+---------+---------+
| Interest income on financial instruments | 13 | 12 | 24 |
+-------------------------------------------------+---------+---------+---------+
| Expected return on pension and other | 638 | 497 | 981 |
| post-retirement benefit plan assets | | | |
+-------------------------------------------------+---------+---------+---------+
| | | | |
+-------------------------------------------------+---------+---------+---------+
| Interest income and similar income | 651 | 509 | 1,005 |
+-------------------------------------------------+---------+---------+---------+
| | | | |
+-------------------------------------------------+---------+---------+---------+
| Interest expense on financial instruments | (604) | (421) | (996) |
+-------------------------------------------------+---------+---------+---------+
| Interest on pension and other post-retirement | (626) | (603) | (1,193) |
| benefit plan liabilities | | | |
+-------------------------------------------------+---------+---------+---------+
| Unwinding of discounts on provisions | (56) | (39) | (70) |
+-------------------------------------------------+---------+---------+---------+
| Less: interest capitalised | 61 | 50 | 99 |
+-------------------------------------------------+---------+---------+---------+
| | | | |
+-------------------------------------------------+---------+---------+---------+
| Interest expense and other finance costs before | (1,225) | (1,013) | (2,160) |
| exceptional items and remeasurements | | | |
+-------------------------------------------------+---------+---------+---------+
| | | | |
+-------------------------------------------------+---------+---------+---------+
| Exceptional debt redemption costs | (57) | - | (33) |
+-------------------------------------------------+---------+---------+---------+
| Net gains on derivative financial instruments | 18 | 40 | 80 |
| and commodity contracts included in | | | |
| remeasurements | | | |
+-------------------------------------------------+---------+---------+---------+
| | | | |
+-------------------------------------------------+---------+---------+---------+
| Exceptional items and remeasurements | (39) | 40 | 47 |
+-------------------------------------------------+---------+---------+---------+
| | | | |
+-------------------------------------------------+---------+---------+---------+
| Interest expense and other finance costs | (1,264) | (973) | (2,113) |
+-------------------------------------------------+---------+---------+---------+
| | | | |
+-------------------------------------------------+---------+---------+---------+
| Net finance costs | (613) | (464) | (1,108) |
+-------------------------------------------------+---------+---------+---------+
| | | | |
+-------------------------------------------------+---------+---------+---------+
| Comprising: | | | |
+-------------------------------------------------+---------+---------+---------+
| Interest income and similar income | 651 | 509 | 1,005 |
+-------------------------------------------------+---------+---------+---------+
| Interest expense and other finance costs: | | | |
+-------------------------------------------------+---------+---------+---------+
| Before exceptional items and remeasurements | (1,225) | (1,013) | (2,160) |
+-------------------------------------------------+---------+---------+---------+
| Exceptional items and remeasurements (note 3) | (39) | 40 | 47 |
+-------------------------------------------------+---------+---------+---------+
| After exceptional items and remeasurements | (1,264) | (973) | (2,113) |
+-------------------------------------------------+---------+---------+---------+
| | | | |
+-------------------------------------------------+---------+---------+---------+
| | (613) | (464) | (1,108) |
+-------------------------------------------------+---------+---------+---------+
| | | | |
+-------------------------------------------------+---------+---------+---------+
5. Taxation
The tax charge for the period, excluding tax on exceptional items,
remeasurements and stranded cost recoveries is GBP279m (six months ended 30
September 2009: GBP93m; year ended 31 March 2010: GBP553m). The effective tax
rate of 29.7% (six months ended 30 September 2009: 14.3%) for the period is
based on the best estimate of the weighted average annual income tax rate by
jurisdiction expected for the full year. The half year effective tax rates
reflect the varied seasonality of earnings in the US as well as other discrete
items. For the full year we expect the group effective tax rate to be in line
with the half year rate. The effective tax rate for the year ended 31 March 2010
was 28.0%.
6. Earnings per share
a) Basic earnings per share
+------------------------------+----------+----------+----------+-----------+----------+-----------+
| Six months ended 30 | | | | | Year | Year |
| September | | | | | ended | ended |
| | 2010 | 2010 | 2009 | 2009 | 31 | 31 |
| | | | | | March | March |
| | | | | | 2010 | 2010 |
+------------------------------+----------+----------+----------+-----------+----------+-----------+
| | | Earnings | | Earnings | | Earnings |
| | Earnings | per | Earnings | per | | per |
| | | share | | share | Earnings | share |
+------------------------------+----------+----------+----------+-----------+----------+-----------+
| | GBPm | pence | GBPm | pence* | GBPm | pence* |
+------------------------------+----------+----------+----------+-----------+----------+-----------+
| | | | | | | |
+------------------------------+----------+----------+----------+-----------+----------+-----------+
| Adjusted basic | 656 | 20.3 | 554 | 19.4 | 1,418 | 49.7 |
+------------------------------+----------+----------+----------+-----------+----------+-----------+
| Exceptional items after | (24) | (0.7) | (37) | (1.3) | (270) | (9.5) |
| taxation | | | | | | |
+------------------------------+----------+----------+----------+-----------+----------+-----------+
| Commodity contract | 6 | 0.2 | 67 | 2.4 | 42 | 1.5 |
| remeasurements after | | | | | | |
| taxation | | | | | | |
+------------------------------+----------+----------+----------+-----------+----------+-----------+
| Derivative remeasurements | 19 | 0.6 | (8) | (0.3) | (25) | (0.9) |
| after taxation | | | | | | |
+------------------------------+----------+----------+----------+-----------+----------+-----------+
| Stranded cost recoveries | 103 | 3.1 | 120 | 4.2 | 221 | 7.8 |
| after taxation | | | | | | |
+------------------------------+----------+----------+----------+-----------+----------+-----------+
| | | | | | | |
+------------------------------+----------+----------+----------+-----------+----------+-----------+
| Basic | 760 | 23.5 | 696 | 24.4 | 1,386 | 48.6 |
+------------------------------+----------+----------+----------+-----------+----------+-----------+
| | | | | | | |
+------------------------------+----------+----------+----------+-----------+----------+-----------+
| | | millions | | millions* | | millions* |
+------------------------------+----------+----------+----------+-----------+----------+-----------+
| | | | | | | |
+------------------------------+----------+----------+----------+-----------+----------+-----------+
| Weighted average number of | | 3,238 | | 2,850 | | 2,852 |
| shares - basic | | | | | | |
+------------------------------+----------+----------+----------+-----------+----------+-----------+
| | | | | | | |
+------------------------------+----------+----------+----------+-----------+----------+-----------+
b) Diluted earnings per share
+------------------------------+----------+----------+----------+-----------+----------+-----------+
| Six months ended 30 | | | | | Year | Year |
| September | | | | | ended | ended |
| | 2010 | 2010 | 2009 | 2009 | 31 | 31 |
| | | | | | March | March |
| | | | | | 2010 | 2010 |
+------------------------------+----------+----------+----------+-----------+----------+-----------+
| | | Earnings | | Earnings | | Earnings |
| | Earnings | per | Earnings | | | per |
| | | share | | per | Earnings | share |
| | | | | share | | |
+------------------------------+----------+----------+----------+-----------+----------+-----------+
| | GBPm | pence | GBPm | pence* | GBPm | pence* |
+------------------------------+----------+----------+----------+-----------+----------+-----------+
| | | | | | | |
+------------------------------+----------+----------+----------+-----------+----------+-----------+
| Adjusted diluted | 656 | 20.1 | 554 | 19.3 | 1,418 | 49.5 |
+------------------------------+----------+----------+----------+-----------+----------+-----------+
| Exceptional items after | (24) | (0.7) | (37) | (1.3) | (270) | (9.4) |
| taxation | | | | | | |
+------------------------------+----------+----------+----------+-----------+----------+-----------+
| Commodity contract | 6 | 0.2 | 67 | 2.4 | 42 | 1.5 |
| remeasurements after | | | | | | |
| taxation | | | | | | |
+------------------------------+----------+----------+----------+-----------+----------+-----------+
| Derivative remeasurements | 19 | 0.6 | (8) | (0.3) | (25) | (0.9) |
| after taxation | | | | | | |
+------------------------------+----------+----------+----------+-----------+----------+-----------+
| Stranded cost recoveries | 103 | 3.1 | 120 | 4.2 | 221 | 7.7 |
| after taxation | | | | | | |
+------------------------------+----------+----------+----------+-----------+----------+-----------+
| | | | | | | |
+------------------------------+----------+----------+----------+-----------+----------+-----------+
| Diluted | 760 | 23.3 | 696 | 24.3 | 1,386 | 48.4 |
+------------------------------+----------+----------+----------+-----------+----------+-----------+
| | | | | | | |
+------------------------------+----------+----------+----------+-----------+----------+-----------+
| | | millions | | millions* | | millions* |
+------------------------------+----------+----------+----------+-----------+----------+-----------+
| | | | | | | |
+------------------------------+----------+----------+----------+-----------+----------+-----------+
| Weighted average number of | | 3,257 | | 2,865 | | 2,865 |
| shares - diluted | | | | | | |
+------------------------------+----------+----------+----------+-----------+----------+-----------+
| | | | | | | |
+------------------------------+----------+----------+----------+-----------+----------+-----------+
* Comparative EPS data have been restated to reflect the impact of the bonus
element of the rights issue and as a result of the additional shares issued as
scrip dividends.
7. Rights issue
On 14 June 2010, the Company raised GBP3.2 billion (net of expenses of GBP105
million) through a rights issue of 990 million new ordinary shares at 335 pence
each on the basis of 2 new ordinary shares for every 5 existing ordinary shares.
The issue price represented a discount of 44% to the closing ex-div share price
on 19 May 2010, the announcement date of the rights issue. The structure of the
rights issue gave rise to a merger reserve, representing the net proceeds of the
rights issue less the nominal value of the new shares issued.
The discount element inherent in the rights issue is treated as a bonus issue of
353 million shares. Earnings per share data has been restated for all
comparative periods presented, by adjusting the weighted average number of
shares to include these bonus shares. For comparability, dividends per share are
also presented after taking account of the bonus element of the rights issue, in
note 8.
8. Dividends
The following table shows the dividends paid to equity shareholders. Dividend
per share data is presented on a historical basis:
+---------------------+-------+-------+---------+-------+-------+---------+-------+--------+---------+
| Six months ended 30 | 2010 | 2010 | 2010 | 2009 | 2009 | 2009 | Year | Year | Year |
| September | | | | | | | ended | ended | ended |
| | | | | | | | 31 | 31 | 31 |
| | | | | | | | March | March | March |
| | | | | | | | 2010 | 2010 | 2010 |
+---------------------+-------+-------+---------+-------+-------+---------+-------+--------+---------+
| | pence | Total | | pence | Total | Settled | pence | Total | Settled |
| | per | GBPm | Settled | per | GBPm | via | per | GBPm | via |
| | share | | via | share | | scrip | share | | scrip |
| | | | scrip | | | GBPm | | | GBPm |
| | | | GBPm | | | | | | |
+---------------------+-------+-------+---------+-------+-------+---------+-------+--------+---------+
| | | | | | | | | | |
+---------------------+-------+-------+---------+-------+-------+---------+-------+--------+---------+
| Ordinary dividends | | | | | | | | | |
+---------------------+-------+-------+---------+-------+-------+---------+-------+--------+---------+
| Final - year ended | 24.84 | 613 | 141 | - | - | - | - | - | - |
| 2010 | | | | | | | | | |
+---------------------+-------+-------+---------+-------+-------+---------+-------+--------+---------+
| Interim - year | - | - | - | - | - | - | 13.65 | 336 | 68 |
| ended 2010 | | | | | | | | | |
+---------------------+-------+-------+---------+-------+-------+---------+-------+--------+---------+
| Final - year ended | - | - | - | 23.00 | 557 | 137 | 23.00 | 557 | 137 |
| 2009 | | | | | | | | | |
+---------------------+-------+-------+---------+-------+-------+---------+-------+--------+---------+
| | | | | | | | | | |
+---------------------+-------+-------+---------+-------+-------+---------+-------+--------+---------+
| Actual | 24.84 | 613 | 141 | 23.00 | 557 | 137 | 36.65 | 893 | 205 |
+---------------------+-------+-------+---------+-------+-------+---------+-------+--------+---------+
| | | | | | | | | | |
+---------------------+-------+-------+---------+-------+-------+---------+-------+--------+---------+
The table below presents rebased dividends per share after taking account of the
impact of the rights issue:
+---------------------+----------+--------+-----------+----------+--------+-----------+----------+--------+-----------+
| Six months ended 30 | 2010 | 2010 | 2010 | 2009 | 2009 | 2009 | Year | Year | Year |
| September | | | | | | | ended | ended | ended |
| | | | | | | | 31 | 31 | 31 |
| | | | | | | | March | March | March |
| | | | | | | | 2010 | 2010 | 2010 |
+---------------------+----------+--------+-----------+----------+--------+-----------+----------+--------+-----------+
| | pence | Impact | pence | pence | Impact | pence | pence | Impact | pence |
| | per | of | per | per | of | per | per | of | per |
| | share | rights | share | share | rights | share | share | rights | share |
| | (actual) | issue | (rebased) | (actual) | issue | (rebased) | (actual) | issue | (rebased) |
+---------------------+----------+--------+-----------+----------+--------+-----------+----------+--------+-----------+
| | | | | | | | | | |
+---------------------+----------+--------+-----------+----------+--------+-----------+----------+--------+-----------+
| Ordinary dividends | | | | | | | | | |
| - restated | | | | | | | | | |
+---------------------+----------+--------+-----------+----------+--------+-----------+----------+--------+-----------+
| Final - year ended | 24.84 | (3.10) | 21.74 | - | - | - | - | - | - |
| 2010 | | | | | | | | | |
+---------------------+----------+--------+-----------+----------+--------+-----------+----------+--------+-----------+
| Interim - year | - | - | - | - | - | - | 13.65 | (1.71) | 11.94 |
| ended 2010 | | | | | | | | | |
+---------------------+----------+--------+-----------+----------+--------+-----------+----------+--------+-----------+
| Final - year ended | - | - | - | 23.00 | (2.87) | 20.13 | 23.00 | (2.87) | 20.13 |
| 2009 | | | | | | | | | |
+---------------------+----------+--------+-----------+----------+--------+-----------+----------+--------+-----------+
| | | | | | | | | | |
+---------------------+----------+--------+-----------+----------+--------+-----------+----------+--------+-----------+
| Restated | 24.84 | (3.10) | 21.74 | 23.00 | (2.87) | 20.13 | 36.65 | (4.58) | 32.07 |
+---------------------+----------+--------+-----------+----------+--------+-----------+----------+--------+-----------+
| | | | | | | | | | |
+---------------------+----------+--------+-----------+----------+--------+-----------+----------+--------+-----------+
The Directors are proposing an interim dividend of 12.90p per share that would
absorb approximately GBP451m of shareholders' equity to be paid in respect of
the year ending 31 March 2011. A scrip dividend will again be offered as an
alternative.
9. Reconciliation of net cash flow to movement in net debt
+-------------------------------------------------+----------+----------+----------+
| Six months ended 30 September | 2010 | 2009 | Year |
| | | | ended |
| | | | 31 |
| | | | March |
| | | | 2010 |
+-------------------------------------------------+----------+----------+----------+
| | GBPm | GBPm | GBPm |
+-------------------------------------------------+----------+----------+----------+
| | | | |
+-------------------------------------------------+----------+----------+----------+
| Net decrease in cash and cash equivalents | (287) | (370) | (28) |
+-------------------------------------------------+----------+----------+----------+
| Increase/ (decrease) in financial investments | 1,541 | (507) | (805) |
+-------------------------------------------------+----------+----------+----------+
| Net decrease in borrowings and related | 1,330 | 112 | 499 |
| derivatives (i) | | | |
+-------------------------------------------------+----------+----------+----------+
| Net interest paid on the components of net debt | 525 | 468 | 999 |
+-------------------------------------------------+----------+----------+----------+
| | | | |
+-------------------------------------------------+----------+----------+----------+
| Decrease/ (increase) in net debt resulting from | 3,109 | (297) | 665 |
| cash flows | | | |
+-------------------------------------------------+----------+----------+----------+
| Changes in fair value of financial assets and | 416 | 1,404 | 865 |
| liabilities and exchange movements | | | |
+-------------------------------------------------+----------+----------+----------+
| Net interest charge on the components of net | (632) | (414) | (996) |
| debt | | | |
+-------------------------------------------------+----------+----------+----------+
| | | | |
+-------------------------------------------------+----------+----------+----------+
| Movement in net debt (net of related derivative | 2,893 | 693 | 534 |
| financial instruments) in the period | | | |
+-------------------------------------------------+----------+----------+----------+
| Net debt (net of related derivative financial | (22,139) | (22,673) | (22,673) |
| instruments) at start of period | | | |
+-------------------------------------------------+----------+----------+----------+
| | | | |
+-------------------------------------------------+----------+----------+----------+
| Net debt (net of related derivative financial | (19,246) | (21,980) | (22,139) |
| instruments) at end of period | | | |
+-------------------------------------------------+----------+----------+----------+
| | | | |
+-------------------------------------------------+----------+----------+----------+
i) The decrease in borrowings and related derivatives for the six months ended
30 September 2010 comprises proceeds received from loans issued of GBP0.4bn less
payments to repay loans of GBP1.5bn and movement in short-term borrowings and
derivative settlements of GBP0.2bn.
10. Net debt
+-------------------------------------------------+----------+----------+----------+
| At 30 September | 2010 | 2009 | 31 |
| | | | March |
| | | | 2010 |
+-------------------------------------------------+----------+----------+----------+
| | GBPm | GBPm | GBPm |
+-------------------------------------------------+----------+----------+----------+
| | | | |
+-------------------------------------------------+----------+----------+----------+
| Cash and cash equivalents | 419 | 359 | 720 |
+-------------------------------------------------+----------+----------+----------+
| Bank overdrafts | (18) | (16) | (29) |
+-------------------------------------------------+----------+----------+----------+
| | | | |
+-------------------------------------------------+----------+----------+----------+
| Net cash and cash equivalents | 401 | 343 | 691 |
+-------------------------------------------------+----------+----------+----------+
| Financial investments | 2,931 | 1,669 | 1,397 |
+-------------------------------------------------+----------+----------+----------+
| Borrowings (excluding bank overdrafts) | (23,827) | (25,493) | (25,095) |
+-------------------------------------------------+----------+----------+----------+
| | | | |
+-------------------------------------------------+----------+----------+----------+
| | (20,495) | (23,481) | (23,007) |
+-------------------------------------------------+----------+----------+----------+
| | | | |
+-------------------------------------------------+----------+----------+----------+
| Net debt related derivative financial assets | 2,362 | 2,299 | 1,742 |
+-------------------------------------------------+----------+----------+----------+
| Net debt related derivative financial | (1,113) | (798) | (874) |
| liabilities | | | |
+-------------------------------------------------+----------+----------+----------+
| | | | |
+-------------------------------------------------+----------+----------+----------+
| Net debt (net of related derivative financial | (19,246) | (21,980) | (22,139) |
| instruments) | | | |
+-------------------------------------------------+----------+----------+----------+
| | | | |
| | | | |
| | | | |
+-------------------------------------------------+----------+----------+----------+
11. Commitments and contingencies
+--------------------------------------------------+---------+--------+----------+--------+----------+
| At 30 September | 2010 | 2009 | | 31 | |
| | | | | March | |
| | | | | 2010 | |
+--------------------------------------------------+---------+--------+----------+--------+----------+
| | GBPm | GBPm | | GBPm | |
+--------------------------------------------------+---------+--------+----------+--------+----------+
| | | | | | |
+--------------------------------------------------+---------+--------+----------+--------+----------+
| Future capital expenditure contracted for but | 1,472 | 1,698 | | 1,738 | |
| not provided | | | | | |
+--------------------------------------------------+---------+--------+----------+--------+----------+
| Commitments under non-cancellable operating | 822 | 956 | * | 926 | |
| leases | | | | | |
+--------------------------------------------------+---------+--------+----------+--------+----------+
| Energy purchase commitments (i) | 3,850 | 3,856 | * | 3,948 | * |
+--------------------------------------------------+---------+--------+----------+--------+----------+
| Guarantees | 1,115 | 1,196 | | 1,189 | |
+--------------------------------------------------+---------+--------+----------+--------+----------+
| | | | | | |
| | | | | | |
| | | | | | |
+--------------------------------------------------+---------+--------+----------+--------+----------+
*Comparatives have been restated to present items on a basis consistent with the
current period 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 30
September 2010 these amounted to GBP270m (2009: GBP196m; 31 March 2010:
GBP222m).
Save as disclosed below, there have been no significant changes in relation to
other commitments, contingencies and guarantees, nor in relation to litigation
and claims, from the position reported on page 152 of our Annual Report and
Accounts 2009/10.
In respect of the Gas and Electricity Markets Authority action against us under
the UK Competition Act 1998, we received notification on 28 July 2010 that our
application for leave to appeal to the Supreme Court had been refused.
On 16 July 2010, a second putative class action seeking compensatory damages of
not less than $118 million (trebled, plus interest, costs and attorneys' fees)
was commenced against KeySpan and Morgan Stanley in the United States District
Court for the Southern District of New York. All claims are based on core
allegations that the financial swap transaction between KeySpan and Morgan
Stanley dated 18 January 2006, caused customers of Consolidated Edison, Inc. to
overpay between May 2006 and February 2008. National Grid's management believes
that the complaint and its allegations are without merit.
12. Exchange rates
The consolidated results are affected by the exchange rates used to translate
the results of its US operations and US dollar transactions. The US dollar to
pound sterling exchange rates used were:
+---------------------------------------------------+--------+--------+--------+
| 30 September | 2010 | 2009 | Year |
| | | | ended |
| | | | 31 |
| | | | March |
| | | | 2010 |
+---------------------------------------------------+--------+--------+--------+
| | | | |
+---------------------------------------------------+--------+--------+--------+
| Closing rate applied at period end | 1.57 | 1.60 | 1.52 |
+---------------------------------------------------+--------+--------+--------+
| Average rate applied for the period | 1.52 | 1.55 | 1.58 |
+---------------------------------------------------+--------+--------+--------+
| | | | |
+---------------------------------------------------+--------+--------+--------+
13. Related party transactions
There were no significant changes in the nature and size of related party
transactions for the period to those disclosed in the financial statements for
the year ended 31 March 2010, other than as detailed below.
Following a decision in August 2010 to cease investing in Blue-NG Limited (a
joint venture) an impairment was made against the carrying value of the
investment, including loans made to the entity and related interest due from
Blue-NG. For further details see note 3.
14. Principal risks and uncertainties
The principal risks and uncertainties which could affect National Grid for the
remaining six months of the financial year are disclosed in the Annual Report
and Accounts 2009/10 ('Annual Report'). A list of the significant risks is
provided on pages 26 and 27 of the Annual Report, and the risks are then
disclosed in more detail on pages 93 to 95, and pages 157 to 164. Our overall
risk management process is designed to identify, manage, and mitigate our
business risks, including financial risks. Our assessment of the principal risks
and uncertainties and our risk management processes have not changed since the
year end.
Statement of Directors' Responsibilities
The half year financial information is the responsibility of, and has been
approved by, the Directors. The Directors are responsible for preparing the half
year report in accordance with the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
The Directors confirm that the financial information has been prepared in
accordance with IAS 34 as adopted by the European Union, and that the half year
report herein includes a fair review of the information required by DTR 4.2.7
and DTR 4.2.8.
The Directors of National Grid plc are as listed in the National Grid plc Annual
Report for the year ended 31 March 2010, with the exception of Andrew Bonfield,
who was appointed as an executive director on 1 November 2010.
By order of the Board
..........................
..........................
Steve Holliday Steve Lucas
17 November 2010 17 November 2010
Chief Executive Officer Finance Director
Independent review report to National Grid plc
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the half year financial information for the six months ended 30
September 2010, which comprises the consolidated income statement, statement of
comprehensive income, balance sheet, statement of changes in equity, cash flow
statement and related notes. We have read the other information contained in the
half year financial information and considered whether it contains any apparent
misstatements or material inconsistencies with the information in the condensed
set of financial statements.
Directors' responsibilities
The half year financial information is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the half
year financial information in accordance with the Disclosure and Transparency
Rules of the United Kingdom's Financial Services Authority.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with International Financial Reporting Standards (IFRS)
as adopted by the European Union. The condensed set of financial statements
included in this half year financial information has been prepared in accordance
with International Accounting Standard 34, 'Interim Financial Reporting', as
adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half year financial information based on our
review. This report, including the conclusion, has been prepared for and only
for the Company for the purpose of the Disclosure and Transparency Rules of the
Financial Services Authority and for no other purpose. We do not, in producing
this report, accept or assume responsibility for any other purpose or to any
other person to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity' issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half year financial
information for the six months ended 30 September 2010 is not prepared, in all
material respects, in accordance with International Accounting Standard 34 as
adopted by the European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
PricewaterhouseCoopers LLP
Chartered Accountants
London
17 November 2010
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FDLLFBFFBFBV
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