Exhibit 15.1
    NATIONAL
    GRID PLC
  TABLE OF
    CONTENTS
  PageFORM 20-FItem 3.

Key InformationRisk factors

93Financial Calendars and Dividends

190Item 4.

Information on the CompanyOperating and Financial Review

14-83Organisation and Structure

15Note 1  Segmental analysis

125-127Note 7  Discontinued operations

136Note 12  Property, plant and equipment

140Note 36  Subsidiary, undertakings joint ventures
    and associates

171Definitions and glossary of terms

186-188Key Milestones

191Item 5.

Operating and Financial Review and ProspectsOperating and Financial Review

14-83Directors Report

96Adoption of new accounting standards

118-119Item 6.

Directors, Senior Management and EmployeesBoard of Directors

12-13Directors Remuneration Report

98-108Note 4  Pensions and other post-retirement
    benefits

131-132Note 30  Actuarial information on pensions and
    other post-retirement benefits

153-155Corporate Governance

84-95Employees

97Note 2  Operating Costs: (b) Number of
    employees

128Note 25  Share capital

148-149Item 7.

Major Shareholders and Related Party TransactionsNote 29  Related party transactions

153Item 8.

Financial InformationAccounting policies

82-83Adoption of new accounting standards

118-119Consolidated balance sheet

122Consolidated income statement

120Consolidated statement of comprehensive income

121Consolidated statement of changes in equity

123Consolidated cash flow statement

124Notes to the consolidated financial statements 
    analysis of items in the primary statements

125-150Notes to the financial statements  supplementary
    information

151-178Legal and related matters

21Total shareholder return (chart)

28Item 11.

Quantitative and Qualitative Disclosures about Market RiskFinancial position and financial management

74-81Commodity contracts

78-79Note 31  Supplementary information on the
    derivative financials instruments

156Note 32  Financial risk

157-162Note 33  Commodity risk

162-163




---



##### 



PageItem 16G

Corporate GovernanceCorporate governance practices: differences from New York Stock
    Exchange (NYSE) listing standards

91Item 18.

Financial StatementsAccounting policies

112-117Adoption of new accounting standards

118-119Consolidated balance sheet

122Consolidated income statement

120Consolidated statement of comprehensive income

121Consolidated statement of changes in equity

123Consolidated cash flow statement

124Notes to the consolidated financial statements 
    analysis of items in the primary statements

125-150Notes to the financial statements  supplementary
    information

151-178




---



##### 



EXTRACT
    FORM OF THE ANNUAL REPORT AND ACCOUNTS 2009/2010
  PageBusiness OverviewBoard of Directors


12Operating and Financial ReviewPrincipal operations


14Organisation and structure


15External markets


16Regulatory environment


18Energy policy, regulatory and other developments


20External relationships


22Vision, strategy and objectives


24Business drivers, risks and opportunities


26Key performance indicators


28Performance against our objectives


30Financial performance


38Transmission


46Gas Distribution


54Electricity Distribution & Generation


62Non-regulated businesses and other


70Financial position and financial management


74Accounting policies


82Corporate GovernanceCorporate Governance


84Directors ReportsDirectors report


96Directors remuneration report


98Financial StatementsContents of financial statements


109Accounting policies


112Adoption of new accounting standards


118Consolidated income statement


120Consolidated statement of comprehensive income


121Consolidated balance sheet


122Consolidated statement of changes in equity


123Consolidated cash flow statement


124Notes to the consolidated financial statements 
    analysis of items in the primary statements


125Notes to the consolidated financial statements 
    supplementary information


151Company accounting policies


179Company balance sheet


181Notes to the Company financial statements


182Shareholder InformationDefinitions and glossary of terms


186Summary of consolidated financial information


189Shareholder information


190




---



##### 



Business
Overview
 
 
 Board of Directors
  
 Sir John Parker, Chairman
   Steve Holliday, Chief Executive
 Executive Committee (chairman), Finance Committee
  Steve Lucas, Finance Director
 Executive Committee, Finance Committee
  Nick Winser, Executive Director
 Executive Committee
  Mark Fairbairn, Executive Director
 Executive Committee
 
   12     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



Tom King, Executive Director
   Ken Harvey, Non-executive Director 
and Senior Independent Director
 
  Linda Adamany, Non-executive Director
   Philip Aiken, Non-executive Director
   John Allan, Non-executive Director
 Stephen Pettit, Non-executive Director
 
  Maria Richter, Non-executive Director
 
  George Rose, Non-executive Director
 
  Helen Mahy, Company Secretary & General Counsel
 
   Annual Report and Accounts 2009/10 National Grid plc     13




---



##### 



Operating and Financial
Review
 
 
 
 Operating and Financial Review
  About National Grid14
    

Principal
operations15
    

Organisation
and structureOperational environment16
    
    External market18
    
    Regulatory environment20
    
    Energy policy, regulatory and other developments22
    
    External relationshipsDelivering performance24
    

Vision, strategy and objectives26
    
    Business drivers, risks and opportunities
 28
    
    Key performanceindicators (KPIs)30
    
    Performance againstour objectives38
    
    Financial performance46
    
    Transmission54
    
    Gas Distribution62
    
    Electricity Distribution & Generation70
    
    Non-regulated businesses and otherFinancial information74
    
    Financial position and financial management82
    
    Accounting policies
   
 
 Principal operations
 Transmission
 UK
 The transmission of electricity and gas in the UK as owner and operator of the high voltage
electricity transmission network in England and Wales, the gas national transmission system in
Great Britain, electricity interconnector with France and storage facilities for LNG. The
operation, but not ownership, of the electricity transmission networks in Scotland.
 US
 The transmission of electricity in the northeastern US as owner and operator of high voltage
electricity transmission networks in upstate New York, Massachusetts, New Hampshire, Rhode Island
and Vermont.
   Gas Distribution
 UK
 The distribution of gas as owner and operator of four of Great Britains eight gas distribution
networks.
 US
 The distribution of gas in the northeastern US as owner and operator of gas distribution networks
in upstate New York, New York City, Long Island, Massachusetts, New Hampshire and Rhode Island.
   Electricity Distribution & Generation
 US
 The distribution and generation of electricity in the northeastern US as owner of electricity
distribution networks in upstate New York, Massachusetts, New Hampshire and Rhode Island, as
operator and manager of the
 electricity transmission and distribution network on Long Island on behalf of the Long Island Power
Authority and as a generator of electricity on Long Island.
   Non-regulated businesses and
other
 Other services related to our main operations, principally in the UK. Includes metering services,
property management, electricity interconnectors and liquefied natural gas (LNG) importation.
 
   14     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



Organisation and structure
  
 Board of DirectorsExecutive CommitteeChief Executive: Steve HollidayFinance and shared services: Steve LucasTransmission:
    
    Gas Distribution:Nick Winser
    
    Mark
FairbairnElectricity Distribution& Generation:
    
    Non-regulated
businesses*and other (includingTom King
    
    corporate functions
andinformation services)
 
 *
    
    Responsibility for our non-regulated businesses is allocated to the Executive Directors based on
the nature of each business  (IMAGE)
    
    More information on the roles of the Board and its
Committees can be found in the Corporate Governance section on pages 87 to 91
   Business analysis 2009/10
 Geographical analysis 2009/10
  
  (IMAGE)
    
    More information on these adjustments is available on pages 38 and 39and in Accounting policies on page 116
     (IMAGE)
    
    More information on the history of National Grid is available in the Shareholder information section on page 191
 
   Annual Report and Accounts 2009/10 National Grid plc     15




---



##### 



Operating and Financial
Review
 
 External market
  Network
    
    Owner (and parent where relevant)Electricity distribution networks in Great Britain (non National Grid)West MidlandsEast Midlands
    
    Central Networks (E.ON)North West
    
    Electricity North WestNorth EastYorkshire
    
    CE Electric UK (Berkshire Hathaway)South WalesSouth West England
    
    Western Power DistributionLondonSouth East England
    
    EDF Energy Networks (Electricité deEast of England
    
    France)Central and Southern ScotlandCheshire, Merseyside andNorth Wales
    
    Scottish Power (Iberdrola)Northern ScotlandCentral Southern England
    
    Scottish and Southern EnergyElectricity transmission networks in Scotland (non National Grid)Northern Scotland
    
    Scottish and Southern EnergySouthern Scotland
    
    Scottish Power (Iberdrola)Gas distribution networks in Great Britain (non National Grid)North of England
    
    Northern Gas NetworksScotland
    
    Scotland Gas Networks (Scotia Gas)South and South East England
    
    Southern Gas Networks (Scotia Gas)Wales and West of England
    
    Wales & West Utilities
 Energy delivery in the northeastern US
       Other markets in which we operate
 
   16     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



Market structure and ownership
  Energy market developments
 Figure 1  Energy transportation in the UK
 
 Figure 2  Electricity transportation in the US
 
 Figure 3  Gas transportation in the US
 
   Annual Report and Accounts 2009/10 National Grid plc     17




---



##### 



Operating and Financial
Review
 
 
 Regulatory environment
  UK
 In the UK, energy networks are regulated by the Office of Gas and Electricity Markets (Ofgem).
Ofgem operates under the direction and governance of the Gas and Electricity Markets Authority and
has established price control mechanisms that restrict the amount of revenue that can be earned by
regulated businesses.
 
  US
 In the US, public utilities are regulated by the Federal Energy Regulatory Commission (FERC)
 and by
utility commissions in each of the states, including the New York Public Service Commission, the
Massachusetts Department of Public Utilities, the Rhode Island Public Utilities Commission and the
New Hampshire Public Utilities Commission. These US regulators set service standards, approve an
allowed cost base, determine cost recovery and allowable levels of return and approve mergers and
acquisitions of public utilities. The FERC also regulates public utility holding companies,
including the US businesses of National Grid.
 
 
   18     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



Annual Report and Accounts 2009/10 National Grid plc     19




---



##### 



Operating and Financial
Review
 
 
 Energy policy, regulatory and other developments
  2
 UK and European regulatory developments
 
   20     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



UK price controls
  US rate plans
 Other developments
    
  European policy
 In July 2009, the European Commissions third legislative package of energy proposals was
passed.
Among other things, this legislative package creates formal transmission system operator bodies for
both gas and electricity. These bodies are charged with developing technical and commercial rules
for cross border trading and producing 10 year network development plans. Through Board
representation and working level resources,
National Grid has established key roles in both organisations. Going forward, we see these
organisations and the wider package of legislation as leading to greater cooperation and
coordination with our neighbours in northwest Europe.
 
   Annual Report and Accounts 2009/10 National Grid plc     21




---



##### 



Operating
and Financial Review
 
 
 External relationships
 Responsibility
  day-to-day
      Investors
 Our aim is to ensure the value of our business is fully reflected in our share
price. We aim to
make National Grid attractive to investors so we can finance our operations as effectively as
possible.
 Customers
 We aim to treat customers with respect, to communicate clearly with them, and
to make their
interactions with us as straightforward as possible. We aim at all times to provide a safe,
reliable and efficient service to our customers.
 
   
 22     National Grid plc Annual Report and Accounts 2009/10




---



##### 



Regulators
 
 Our regulators, both in the UK and the US, are concerned with ensuring we can
and do provide a
safe, reliable and efficient service to our customers. Our ability to deliver that service, and to
deliver returns to our investors, depends on our relationships with those regulators.
 
   Suppliers
 We aim to work in partnership with our suppliers, developing constructive
relationships and working
together effectively. Our objective is to develop contractual arrangements with our suppliers that
align their interests with our own, as far as possible, and share financial risks appropriately.
 Communities
 We want to be welcomed and seen as a valued partner in the communities we
serve. We will prioritise
our community investment in areas where we have a business interest as well as knowledge and
expertise to share.
 
     
 Investment recovery programme
 Our US investment recovery and recycling programme helps us reduce waste and save money by
reusing,
selling or recycling assets. From electrical and gas equipment to office material and scrap, in
2009/10 we processed over 11,000 tonnes of material. As well as environmental and financial
benefits, the programme brings social advantages. Working in partnership with Monarch Industry and
Seven Hills Foundation, it provides adults with physical and mental disabilities the opportunity to
experience the work environment by performing a variety of tasks.
 
   
 Annual Report and Accounts 2009/10 National
Grid plc     23




---



##### 



Operating
and Financial Review
 
 
 Vision, strategy and objectives
 VisionOur vision is the long-term aspiration for
National Grid  what we want to be in
the future.
    
    We, at National Grid, will be the foremost international electricity and gas company, delivering
unparalleled safety, reliability and efficiency, vital to the wellbeing of our customers and
communities.We are committed to being an innovative leader in energy management and to safeguarding our
global
environment for future generations.StrategyOur strategy is a medium-term step in the
journey to achieve the vision  what we
will be doing over the next few years. It
is also the overarching principle that
provides commercial context to
each of the objectives.
    
  We will build on our core UK and US, electricity and gas, regulated business base and financial
discipline to deliver sustainable growth and superior financial performance.
 Company objectivesThe objectives are the building blocks of
the strategy and are fundamental to our
business  what we are doing now.
    
      Driving
improvements in our safety,
customer and operational performance



  Delivering strong, sustainable regulatory
and long-term contracts with good returns



  Modernising and extending our
transmission and distribution networks



  Expanding
our capabilities and
identifying new financeable
opportunities to grow
    
      Becoming
more efficient through
transforming our operating model
and increasingly aligning our
processes  Building
trust, transparency and
an inclusive and engaged workforce  Developing our talent, leadership
skills and capabilities  Positively shaping the energy and
climate change agenda with our external
stakeholders in both regionsLine of sightLine of sight links the vision,
strategy and Company objectives
to all our employees individual
objectives  how what each of
us does contributes to the success
of the Company.
    24     National Grid plc Annual Report and Accounts 2009/10




---



##### 



Delivering the future through our strategy
 
 
    UK strategy
Investment led organic growth
    
    Transmission UK
    
    à  Delivering a step change in asset replacement of our transmission
infrastructure
à  Delivering major new infrastructure investment to facilitate low carbon
targets in the UKGas Distribution UK
    
    à  Improving operating efficiency, safety and customer satisfaction
through Gas Distribution front office 
(see page 58)à  Successfully defending our position through the next price control
reviewUS strategy
Resetting the baseline and 
focus on growth from core
    
    Transmission US
    
    à  Delivering on regulatory agreed ageing asset renewal programmes
securing improved safety and reliability in our networksGas Distribution US
    
    à  Delivering rate plans and closing performance gaps
à  Delivering growth through new connections and mains
replacement/reinforcementà  Improving customer satisfactionElectricity
Distribution
& Generation
    
    à  Delivering rate plans and closing performance gap
à  Delivering new processes and cost efficiencies that benefit customers and
enhance alignment across the US businessà  Positioning ourselves as a utility of the future
 Values
    
    ResponsibilityThis year, we are emphasising the link
between the line of sight and our values.
It is important that we judge our
achievements not just on what is delivered
but also on how it is done. Our core values
are: respect others and value their diversity;
take ownership for driving performance;
demonstrate integrity and openness in all
relationships, and work as one team, one National
Grid.
    
    Our vision, strategy and Company objectives are underpinned by our commitment to corporate
responsibility. We will operate to the highest standards of corporate governance and conduct our
business in an ethical and sustainable manner.
 
  
 Annual Report and Accounts 2009/10 National
Grid plc     25




---



##### 



Operating
and Financial Review
 
 
 Business drivers, risks and opportunities
  
 
   
 26     National Grid plc Annual Report and Accounts 2009/10




---



##### 



Annual Report and Accounts 2009/10 National
Grid plc     27




---



##### 



Operating
and Financial Review
 
 
 Key performance indicators (KPIs)
 Company strategy and objectives
    
    Financial KPIs
    
    DefinitionsSustainable growth and superior financial
performance
    
    Adjusted earnings per share
    
    Adjusted earnings* divided by the weighted
average number of sharesTotal shareholder return
    
    Growth in share price assuming dividends
are reinvestedDelivering strong, sustainable
regulatory and long-term contracts
with good returns
    
    Group return on equity
    
    Adjusted earnings* with certain regulatory
based adjustments divided by equityBecoming more efficient through
transforming our operating model
and increasingly aligning our processes
    
    Regulated controllable operating costs
    
    Regulated controllable operating costs as a
proportion of regulated assets
  
 
     
 Total shareholder return (chart)
   *
    
    Adjusted earnings excludes exceptional items, remeasurements and stranded cost recoveries+
    
    2007/08 data includes continuing operations acquired with KeySpan for the period from 24 August
2007 to 31 March 2008 or as at 31 March 2008^
    
    2007/08 results include KeySpan operations on a pro forma financial performance basis assuming
the acquisition occurred on 1 April 2007†
    
    Comparative data has been restated for the impact of the scrip dividend issues‡
    
    Comparative data
has been restated to present information on a consistent basis with the current year
    
 28     National Grid plc Annual Report and Accounts 2009/10




---



##### 



Non-financial KPIs
 Company objectives
    
    Non-financial KPIs
    
    DefinitionsModernising and extending our transmission
and distribution networks
    
    Network reliability targets
    
    Various definitions appropriate to the
relevant line of businessDriving improvements in our safety,
customer and operational performance
    
    Customer satisfaction
    
    Our position in customer satisfaction
surveysEmployee lost time injury frequency rate
    
    Number of employee lost time injuries per
100,000 hours worked on a 12 month basisBuilding trust, transparency and an inclusive
and engaged workforce
    
    Employee engagement index
    
    Employee engagement index calculated using
responses to our annual employee surveyPositively shaping the energy and climate
change agenda with our stakeholders in
both regions
    
    Greenhouse gas emissions
    
    Percentage reduction in greenhouse gas
emissions against our 1990 baseline
  Network reliability targets
 Performance
    
    
    Measure
    
    
    Target05/06
    
    
    06/07
    
    
    07/08
    
    
    08/09
    
    
    09/10
    
    
    
    
    
    
    09/10Electricity transmission  UK
    
    
    99.9999
    
    
    
    99.9999
    
    
    
    99.9999
    
    
    
    99.9999
    
    
    
    99.9999
    
    
    
    %
    
    
    
    99.9999Gas transmission  UK
    
    
    100
    
    
    
    100
    
    
    
    100
    
    
    
    100
    
    
    
    100
    
    
    
    %
    
    
    
    100Gas distribution  UK
    
    
    99.999
    
    
    
    99.999
    
    
    
    99.999
    
    
    
    99.9999
    
    
    
    99.999
    
    
    
    %
    
    
    
    99.999Electricity transmission  US
    
    
    348
    
    
    
    259
    
    
    
    437
    
    
    
    266
    
    
    
    147
    
    
    MWh losses
    
    
    
    <253Electricity distribution  US
    
    
    141
    
    
    
    121
    
    
    
    110
    
    
    
    114
    
    
    
    114
    
    
    Mins of outage
    
    
    
    <122
  Customer satisfaction
 Performance
    
    Measure
    
    Target08/09
    
    09/10Gas Distribution  UK
    
    4th quartile
    
    Not yet available
    
    Quartile ranking
    
    To improveGas Distribution  US: Residential
    
    4th quartile
    
    3rd quartile
    
    Quartile ranking
    
    To improveGas Distribution  US: Commercial
    
    3rd quartile
    
    2nd quartile
    
    Quartile ranking
    
    To improveElectricity Distribution & Generation: Residential
    
    4th quartile
    
    4th quartile
    
    Quartile ranking
    
    To improveElectricity Distribution & Generation: Commercial
    
    4th quartile
    
    3rd quartile
    
    Quartile ranking
    
    To improve
 
 ~
    
    2007/08 restated due to improved baseline data relating to KeySpan. Previously published figure excluding KeySpan was 30%#
    
    Our greenhouse gas emissions for 2009/10 are not fully verified at the date of this Report. Fully verified data will be published on our website in
July 2010
 
  
 Annual Report and Accounts 2009/10 National
Grid plc     29




---



##### 



Operating
and Financial Review
 
 
 Performance against our objectives
 Changes to key performance indicators
 Performance measures and strategy
  We will build on our core UK and US electricity and gas regulated business base...
   ...and financial discipline...
   ...to deliver sustainable growth...
   ...and superior financial performance.
 
   30     National Grid plc Annual Report and Accounts 2009/10




---



##### 



Driving improvements in our safety, customer and operational performance
 
 We aim for operational excellence by performing to the highest standards of
safety and reliability,
and by improving customer service.
 
 Safety
   Employee safety
    Contractor safety
  Public safety
  Process safety
 Figure 1  Contractor lost time injuriesNumber
    
    Target: Zero
 
  
 Figure 2  Injuries to members of the publicNumber
    
    Target: Zero
 
   
 Figure 3  Employee sickness absence rate%
    
    Target: Zero
 
   
 Annual Report and Accounts 2009/10 National
Grid plc     31




---



##### 



Operating and Financial Review
 Performance against our objectives continued
 Employee health
        Reliability
 Customer service
 
   32     National Grid plc Annual Report and Accounts 2009/10




---



##### 



Delivering strong, sustainable regulatory and long-term contracts with good returns
 
 We will work with our regulators and governments to develop the changes that are required to
address climate change and security of supply in a way that is affordable for consumers and ensures
timely delivery while also ensuring adequate returns for our investors.
 Modernising and extending our transmission and distribution networks
 
 We aim to invest the amount required to maintain a safe and reliable system, and to accommodate new
patterns of supply and demand. Capital investment is one of the principal drivers to future growth.
 
     Expanding our capabilities and identifying new financeable opportunities to grow
 
 We are committed to the growth of National Grid through organic capital expenditure and, where
suitable opportunities are available, by the acquisition of new businesses.
 
   Annual Report and Accounts 2009/10 National Grid plc     33




---



##### 



Operating and Financial Review
 Performance against our objectives continued
  Becoming more efficient through transforming our operating model and increasingly aligning our
processes
 
 We aim to work as one company, operating to common core principles, standards and policies to
deliver our vision.
 
      Procurement
 Business process outsourcing
  Information services
     Transmission and distribution alignment
  Building trust, transparency and an inclusive and engaged workforce
 
 To better recruit, retain and develop talented people, we endeavour to engage our employees and to
achieve a more inclusive workplace and diverse workforce, reflecting the composition of the
communities in which we operate. Our goal is to be seen as an employer of choice across all
communities.
 
   34     National Grid plc Annual Report and Accounts 2009/10




---



##### 



Employee engagement
     Inclusion and diversity
 97%
    
    68%Employee survey response rate
    
    Employee engagement index22.7%
    
    13.5%Proportion of female employees
    
    Proportion of ethnic minority employees
 Figure 4  Inclusion and diversity  female employees
 
  Figure 5  Inclusion and diversity  ethnic minority employees
 
   Annual Report and Accounts 2009/10 National Grid plc     35




---



##### 



Operating and Financial Review
 Performance against our objectives continued
  Developing our talent, leadership skills and capabilities
 
 A key success factor in delivering our business objectives is having highly competent leaders at
every level within the organisation driving high performance and engaging employees. This is the
foundation of our talent development strategy, which focuses on the key transition points
individuals make during their careers.
 
     Positively shaping the energy and climate 
change agenda
 
 We aim to take the lead on the energy and climate change issues facing society. We will not simply
react to the initiatives of other relevant bodies. Instead, we will be proactive in leading the
agenda to make sure we help safeguard the environment.
 Climate change
 
   36     National Grid plc Annual Report and Accounts 2009/10




---



##### 



Protecting the environment
 3%
    
    8.8mtonnesTargeted annual energy reduction by
US customers over the next 10 yearsEstimated Scope 1 and 2 greenhouse gas emissions45%
    
    80%by 2020
    
    by 2050Greenhouse gas emissions reduction target
    
    Greenhouse gas emissions reduction target
 Figure 6  Significant environmental incidents
    
    Target: Zero
  
   Figure 7  Significant environmental incidents
 
   Annual Report and Accounts 2009/10 National Grid plc     37




---



##### 



Operating and Financial Review
 
 
 Financial performance
  Financial results
  Shareholder returns
 
 We aim to increase our dividend each year so that shareholders receive an appropriate level of
return on their investment in us. We also try to communicate with investors so that as much as
possible of the value we create is reflected in our share price.
 
  Dividends in respect of the financial year
  2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Dividends
    
    pence
    
    
    pence
    
    
    pence
    
    
    pence
    
    
    penceInterim
    
    
    13.65
    
    
    
    12.64
    
    
    
    11.70
    
    
    
    10.90
    
    
    
    10.20Final
    
    
    24.84
    
    
    
    23.00
    
    
    
    21.30
    
    
    
    17.80
    
    
    
    15.90Total
    
    
    38.49
    
    
    
    35.64
    
    
    
    33.00
    
    
    
    28.70
    
    
    
    26.10Dividends per ADS
    
    $
    
    
    $
    
    
    $
    
    
    $
    
    
    $Interim
    
    
    1.15
    
    
    
    0.95
    
    
    
    1.21
    
    
    
    1.03
    
    
    
    0.88Final
    
    
    1.77
    
    
    
    1.74
    
    
    
    2.05
    
    
    
    1.76
    
    
    
    1.51Total
    
    
    2.92
    
    
    
    2.69
    
    
    
    3.26
    
    
    
    2.79
    
    
    
    2.39
 Financial discipline
     Profit, cash flow and dividends
 
 If we achieve our objectives we should be able to deliver continued improvements in financial
performance, so that we deliver on our commitment to increase our dividend by 8% each year to
2011/12.
 
   Continuing and discontinued operations
  Measurement of financial performance and use of adjusted profit measures
 
   38     National Grid plc Annual Report and Accounts 2009/10




---



##### 



Exchange rates
    Profit for the year from continuing operations
   Earnings and earnings per share from continuing operations
 
   Annual Report and Accounts 2009/10 National Grid plc     39




---



##### 



Operating and Financial Review
 Financial performance continued
  Adjusted earnings
 Years ended 31 March2010
    
    
    2009
    
    
    2008Continuing operations
    
    £m
    
    
    £m
    
    
    £mAdjusted operating profit
    
    
    3,121
    
    
    
    2,915
    
    
    
    2,595Net finance costs excluding exceptional
items and remeasurements
    
    
    (1,155
    )
    
    
    (1,150
    )
    
    
    (770
    )Share of post-tax results of joint ventures
    
    
    8
    
    
    
    5
    
    
    
    4Adjusted profit before taxation
    
    
    1,974
    
    
    
    1,770
    
    
    
    1,829Taxation excluding tax on exceptional
items, remeasurements and stranded
cost recoveries
    
    
    (553
    )
    
    
    (517
    )
    
    
    (579
    )Adjusted profit from continuing operations
    
    
    1,421
    
    
    
    1,253
    
    
    
    1,250pence
    
    
    pence
    
    
    penceAdjusted earnings per share
from continuing operations
    
    
    57.4
    
    
    
    50.2
    
    
    
    47.2EarningsYears ended 31 March2010
    
    2009
    
    2008Continuing operations
    
    £m
    
    £m
    
    £mTotal operating profit
    
    
    3,293
    
    
    
    2,623
    
    
    
    2,964Net finance costs
    
    
    (1,108
    )
    
    
    (1,234
    )
    
    
    (786
    )Share of post-tax results of joint ventures
    
    
    8
    
    
    
    5
    
    
    
    4Profit before taxation
    
    
    2,193
    
    
    
    1,394
    
    
    
    2,182Taxation
    
    
    (804
    )
    
    
    (472
    )
    
    
    (607
    )Profit from continuing operations
    
    
    1,389
    
    
    
    922
    
    
    
    1,575pence
    
    
    pence
    
    
    penceEarnings per share fromcontinuing operations
    
    
    56.1
    
    
    
    36.9
    
    
    
    59.5
 Earnings per share from continuing operations
  Years ended 31 March2010
    
    
    2009
    
    
    2008Continuing operations
    
    £m
    
    
    £m
    
    
    £mAdjusted earnings per share
    
    
    57.4
    
    
    
    50.2
    
    
    
    47.2Exceptional items
    
    
    (10.9
    )
    
    
    (9.9
    )
    
    
    (0.1
    )Commodity contract remeasurements
    
    
    1.7
    
    
    
    (10.7
    )
    
    
    5.0Derivative financial instrument
remeasurements
    
    
    (1.0
    )
    
    
    (3.0
    )
    
    
    (1.3
    )Stranded cost recoveries
    
    
    8.9
    
    
    
    10.3
    
    
    
    8.7Earnings per share  continuing
operations
    
    
    56.1
    
    
    
    36.9
    
    
    
    59.5
 Adjusted profit measures
  a)
    
    Reconciliation of adjusted operating profit to total operating profit
 Years ended 31 March2010
    
    
    2009
    
    
    2008Continuing operations
    
    £m
    
    
    £m
    
    
    £mAdjusted operating profit
    
    
    3,121
    
    
    
    2,915
    
    
    
    2,595Exceptional items
    
    
    (268
    )
    
    
    (275
    )
    
    
    (242
    )Commodity contract remeasurements
    
    
    71
    
    
    
    (443
    )
    
    
    232Stranded cost recoveries
    
    
    369
    
    
    
    426
    
    
    
    379Total operating profit
    
    
    3,293
    
    
    
    2,623
    
    
    
    2,964
  b)
    
    Reconciliation of adjusted profit before taxation to profit before taxation
 Years ended 31 March2010
    
    
    2009
    
    
    2008Continuing operations
    
    £m
    
    
    £m
    
    
    £mAdjusted profit before taxation
    
    
    1,974
    
    
    
    1,770
    
    
    
    1,829Exceptional items
    
    
    (301
    )
    
    
    (275
    )
    
    
    (242
    )Commodity contract remeasurements
    
    
    70
    
    
    
    (445
    )
    
    
    223Derivative financial instrument
remeasurements
    
    
    81
    
    
    
    (82
    )
    
    
    (7
    )Stranded cost recoveries
    
    
    369
    
    
    
    426
    
    
    
    379Total profit before taxation
    
    
    2,193
    
    
    
    1,394
    
    
    
    2,182
  c)
    
    Reconciliation of adjusted earnings to earnings (profit for the year from continuing operations
attributable to equity shareholders of the parent company)
 Years ended 31 March2010
    
    
    2009
    
    
    2008Continuing operations
    
    £m
    
    
    £m
    
    
    £mAdjusted earnings
    
    
    1,418
    
    
    
    1,250
    
    
    
    1,247Exceptional items
    
    
    (270
    )
    
    
    (247
    )
    
    
    (2
    )Commodity contract remeasurements
    
    
    42
    
    
    
    (266
    )
    
    
    133Derivative financial instrument
remeasurements
    
    
    (25
    )
    
    
    (74
    )
    
    
    (35
    )Stranded cost recoveries
    
    
    221
    
    
    
    256
    
    
    
    229Earnings
    
    
    1,386
    
    
    
    919
    
    
    
    1,572
 
   40     National Grid plc Annual Report and Accounts 2009/10




---



##### 



Discontinued operations
     Profit and total earnings per share for the year
   Adjusted operating profit and operating profit
 £1,418m
    
    57.4pAdjusted earnings
    
    Adjusted earnings per share13%
    
    14%Increase in adjusted earnings
    
    Increase in adjusted earnings per share
 Figure 1  Adjusted earnings per share from continuing operations
 
  Figure 2  Earnings per share for continuing operations
 
  Figure 3  Adjusted operating profit from continuing operations
 
 Figure 4  Operating profit from continuing operations
 
   Annual Report and Accounts 2009/10 National Grid plc     41




---



##### 



Operating and Financial Review
 Financial performance continued
  Revenue by operating segment
 Years ended 31 March2010
    
    
    2009
    
    
    2008Continuing operations
    
    £m
    
    
    £m
    
    
    £mTransmission UK
    
    
    3,460
    
    
    
    3,487
    
    
    
    2,956Transmission US
    
    
    405
    
    
    
    420
    
    
    
    299Gas Distribution UK
    
    
    1,517
    
    
    
    1,466
    
    
    
    1,383Gas Distribution US
    
    
    3,708
    
    
    
    4,786
    
    
    
    2,845Electricity Distribution & Generation US
    
    
    4,339
    
    
    
    4,972
    
    
    
    3,508Other activities
    
    
    738
    
    
    
    719
    
    
    
    642Total segmental revenues
    
    
    14,167
    
    
    
    15,850
    
    
    
    11,633Less: sales between operating segments
    
    
    (179
    )
    
    
    (226
    )
    
    
    (210
    )Total
    
    
    13,988
    
    
    
    15,624
    
    
    
    11,423
 Segmental operating profit before exceptional items, remeasurements and stranded cost recoveries
 Years ended 31 March2010
    
    
    2009
    
    
    2008Continuing operations
    
    £m
    
    
    £m
    
    
    £mTransmission UK
    
    
    1,311
    
    
    
    1,126
    
    
    
    1,021Transmission US
    
    
    153
    
    
    
    175
    
    
    
    128Gas Distribution UK
    
    
    723
    
    
    
    672
    
    
    
    595Gas Distribution US
    
    
    414
    
    
    
    612
    
    
    
    392Electricity Distribution & Generation US
    
    
    374
    
    
    
    265
    
    
    
    330Other activities
    
    
    146
    
    
    
    65
    
    
    
    129Adjusted operating profit
    
    
    3,121
    
    
    
    2,915
    
    
    
    2,595
 Segmental operating profit
 Years ended 31 March2010
    
    
    2009
    
    
    2008Continuing operations
    
    £m
    
    
    £m
    
    
    £mTransmission UK
    
    
    1,252
    
    
    
    1,063
    
    
    
    1,013Transmission US
    
    
    151
    
    
    
    173
    
    
    
    122Gas Distribution UK
    
    
    682
    
    
    
    629
    
    
    
    574Gas Distribution US
    
    
    448
    
    
    
    226
    
    
    
    487Electricity Distribution & Generation US
    
    
    701
    
    
    
    531
    
    
    
    696Other activities
    
    
    59
    
    
    
    1
    
    
    
    72Operating profit
    
    
    3,293
    
    
    
    2,623
    
    
    
    2,964
 2009/10 compared with 2008/09
 Revenueand otheroperating
    
    
    Operating
    
    
    Operatingincome
    
    
    costs
    
    
    profitContinuing operations
    
    £m
    
    
    £m
    
    
    £m2008/09 results
    
    
    15,687
    
    
    
    (13,064
    )
    
    
    2,623Add back exceptional items and
remeasurements
    
    
    
    
    
    
    718
    
    
    
    718Deduct stranded cost recoveries
    
    
    (435
    )
    
    
    9
    
    
    
    (426
    )2008/09 adjusted results
    
    
    15,252
    
    
    
    (12,337
    )
    
    
    2,915Exchange movements
    
    
    (250
    )
    
    
    223
    
    
    
    (27
    )2008/09 constant currency results
    
    
    15,002
    
    
    
    (12,114
    )
    
    
    2,888Transmission UK
    
    
    (42
    )
    
    
    227
    
    
    
    185Transmission US
    
    
    (4
    )
    
    
    (14
    )
    
    
    (18
    )Gas Distribution UK
    
    
    50
    
    
    
    1
    
    
    
    51Gas Distribution US
    
    
    (957
    )
    
    
    775
    
    
    
    (182
    )Electricity Distribution & Generation US
    
    
    (459
    )
    
    
    575
    
    
    
    116Other activities
    
    
    (6
    )
    
    
    87
    
    
    
    81Sales between businesses
    
    
    47
    
    
    
    (47
    )
    
    
    2009/10 adjusted results
    
    
    13,631
    
    
    
    (10,510
    )
    
    
    3,121Exceptional items and remeasurements
    
    
    
    
    
    
    (197
    )
    
    
    (197
    )Stranded cost recoveries
    
    
    376
    
    
    
    (7
    )
    
    
    3692009/10 results
    
    
    14,007
    
    
    
    (10,714
    )
    
    
    3,293
    42     National Grid plc Annual Report and Accounts 2009/10




---



##### 



Revenueand otheroperating
    
    
    Operating
    
    
    Operatingincome
    
    
    costs
    
    
    profitContinuing operations
    
    £m
    
    
    £m
    
    
    £m2007/08 results
    
    
    11,498
    
    
    
    (8,534
    )
    
    
    2,964Add back exceptional items and
remeasurements
    
    
    
    
    
    
    10
    
    
    
    10Deduct stranded cost recoveries
    
    
    (382
    )
    
    
    3
    
    
    
    (379
    )2007/08 adjusted results
    
    
    11,116
    
    
    
    (8,521
    )
    
    
    2,595Exchange movements
    
    
    1,938
    
    
    
    (1,678
    )
    
    
    2602007/08 constant currency results
    
    
    13,054
    
    
    
    (10,199
    )
    
    
    2,855Transmission UK
    
    
    561
    
    
    
    (456
    )
    
    
    105Transmission US
    
    
    30
    
    
    
    (22
    )
    
    
    8Gas Distribution UK
    
    
    77
    
    
    
    
    
    
    
    77Gas Distribution US
    
    
    1,068
    
    
    
    (968
    )
    
    
    100Electricity Distribution & Generation US
    
    
    454
    
    
    
    (620
    )
    
    
    (166
    )Other activities
    
    
    24
    
    
    
    (88
    )
    
    
    (64
    )Sales between businesses
    
    
    (16
    )
    
    
    16
    
    
    
    2008/09 adjusted results
    
    
    15,252
    
    
    
    (12,337
    )
    
    
    2,915Exceptional items and remeasurements
    
    
    
    
    
    
    (718
    )
    
    
    (718
    )Stranded cost recoveries
    
    
    435
    
    
    
    (9
    )
    
    
    4262008/09 results
    
    
    15,687
    
    
    
    (13,064
    )
    
    
    2,623
 £3,121m
    
    £3,293mAdjusted operating profit
    
    Operating profit7%
    
    26%Increase in adjusted operating profit
    
    Increase in operating profit
 
   Annual Report and Accounts 2009/10 National Grid plc     43




---



##### 



Operating and Financial Review
 Financial performance continued
  
 Net finance costs
   Exceptional finance costs and remeasurements
    Taxation
   
 Cash flows
 Cash flows from operating activities
    44     National Grid plc Annual Report and Accounts 2009/10




---



##### 



Cash flows from investing activities
    Cash flows from financing activities
 £4,372m
    
    28.0%Cash generated from operations
    
    Effective tax rate before exceptional
items, remeasurements and stranded
cost recoveries23%
    
    £688mIncrease in cash flows 
from operations
    
    Dividends paid to shareholders 
in cash
 Figure 5  Operating cash flows
 
   Annual Report and Accounts 2009/10 National Grid plc     45




---



##### 



Operating and Financial Review
 
 
 Transmission
  Adjusted operating profit
    
    Capital investment£1,464m
    
    £1,494m2008/09: £1,301m
    
    2008/09: £1,441mEmployees
    
    UK energy transmitted3,953
    
    1,436TWh2008/09: 3,874
    
    2008/09: 1,454 TWh
 This year we have delivered nearly £1.5 billion worth of electricity and gas projects to upgrade
and reinforce ageing infrastructure and adapt our networks to cope with changing sources of energy.
 Our fundamental priorities remain safety, reliability and efficiency. We have also created an
enhanced line of sight from National Grids objectives to Transmissions objectives and annual
priorities.
 We are focused on the long-term security of supply and environmental challenges arising from the
transition to a low carbon economy.
 This section should be read in conjunction with the rest of this Operating and Financial Review
 Key Facts
 à
    
    Circuit length of over 27,800 kilometres of electricaloverhead lineà
    
    Over 850 kilometres of underground cableà
    
    286 TWh of electricity transmitted in the UKà
    
    Over 7,600 kilometres of gas pipelineà
    
    1,150 TWh of gas throughput
 About Transmission
  Principal operations
  Transmission UK
 Electricity
transmission owner
 We own the electricity transmission system in England and Wales. Our
electricity assets comprise a route length of over 7,200 kilometres of overhead line, mainly
consisting of double circuits, about 713 kilometres of underground cable and 338 substations at 242
sites.
 Electricity system operator
 We are the national electricity transmission system operator,
responsible for managing the operation of both the England and Wales transmission system that we
own and also the two high voltage electricity transmission networks in Scotland, which we do not
own. Day-to-day operation of the Great Britain electricity transmission system involves the
continuous real-time matching of demand and generation output, ensuring the stability and security
of the power system and the maintenance of satisfactory voltage and frequency. We are also
designated as system operator for the new offshore electricity transmission regime.
 Gas transmission owner
 We own the gas national transmission system in Great Britain. This comprises
approximately 7,600 kilometres of high pressure pipe and 23 compressor stations, connecting to 8
distribution networks and to third party independent systems for onward transportation of gas to
end consumers.
 Gas system operator
 We operate the gas national transmission system. Day-to-day operation includes
balancing supply and demand, maintaining satisfactory system pressures and ensuring gas quality
standards are met.
 French interconnector
 We own and operate the UK assets, and a portion of the
subsea cables, that comprise the electricity interconnector between England and France as part of a
joint arrangement with the French transmission operator.
 LNG storage
 We own and operate three liquefied natural gas (LNG) storage facilities in Great Britain following
the closure of Dynevor Arms during 2009.
    46     National Grid plc Annual Report and Accounts 2009/10




---



##### 



Transmission UK  electricity system
 
 Transmission UK  gas system
 338
  99.9999%
 
 £7.5bn
 
 23
  100%
 
 £4.5bn
 
   Annual Report and Accounts 2009/10 National Grid plc     47




---



##### 



Operating and Financial Review
 Transmission continued
   Transmission US
 Electricity transmission owner
 We own and operate an electricity transmission network of
approximately 13,800 kilometres spanning upstate New York, Massachusetts, Rhode Island, New
Hampshire and Vermont. Our US electricity transmission facilities operate at voltages ranging from
69 kV to 345 kV and comprise nearly 13,700 kilometres of overhead line, nearly 140 kilometres of
underground cable and 525 substations.
 We are the largest electricity transmission service provider in New England and New York by
reference to the length of these high voltage transmission lines.
 Canadian interconnector
 We own and operate a 224 kilometre direct current transmission line rated
at 450 kV that is a key section of an interconnector between New England and Canada.
 Regulation
 Transmission UK
     Transmission US  electricity networks
 525
  98.8%
  $1.1bn
  Zero
    48     National Grid plc Annual Report and Accounts 2009/10




---



##### 



6
 Transmission US
     External market, energy policy and regulatory and other developments
  Security of supply and climate change
 Other UK developments
    US regulatory developments
 
   Annual Report and Accounts 2009/10 National Grid plc     49




---



##### 



Operating and Financial Review
 Transmission continued
   Performance against our objectives
  Driving improvements in our safety, customer and operational performance
 Our objectives are to reduce employee lost time injuries to zero and to support generators and
distribution network customers, including our own networks operated by Gas Distribution in the UK
and Electricity Distribution & Generation in the US, in delivering energy efficiently and
effectively to consumers, in particular in connecting new sources of supply to our transmission
networks.
 Safety
   Customer service
  Delivering strong, sustainable regulatory and long-term contracts with good returns
 Our aim is to meet or exceed the base financial returns in our price controls in the UK and our
rate plans in the US.
 Modernising and extending our transmission and distribution networks
 We aim to meet or exceed network reliability and availability objectives. We are on track to
deliver our planned capital investment programme involving approximately £3.6 billion of capital
expenditure between 1 April 2010 and 31 March 2012.
   Reliability
     Years ended 31 MarchMeasure
    
    2010
    
    2009
    
    2008UK electricity transmission network
reliability  target 99.9999%
    
    
    99.9999
    %
    
    
    99.9999
    %
    
    
    99.9999
    %UK gas transmission network
reliability  target 100%
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %US electricity transmission network
reliability  target < 253 MWh
    
    147 MWh
    
    266 MWh
    
    437 MWhUK average annual availability for
electricity transmission network
    
    
    94.76
    %
    
    
    94.64
    %
    
    
    95.09
    %UK electricity system availability
at winter peak demand
    
    
    97.55
    %
    
    
    97.7
    %
    
    
    98.0
    %UK gas compressor fleet performance
 mean time between failures
    698 hrs
    
    405 hrs
    
    259 hrsUS annual network availability
    
    
    98.8
    %
    
    
    98.8
    %
    
    
    98.6
    %
    50     National Grid plc Annual Report and Accounts 2009/10




---



##### 



Capital investment
 UK investment
    US
investment
   Becoming more efficient through transforming our operating model and increasingly aligning our
processes
 Key areas of focus for our Transmission business in 2009/10 have been safety, securing funds for
anticipatory investment in the UK, better operational planning and establishing regional delivery
ventures in the US.
 Expanding our capabilities and identifying new financeable opportunities to grow
  (IMAGE)
 US regional delivery ventures The magnitude of transmission investment required in the US encouraged us to review our approach,
aiming to ensure we continue to deliver our investment programme safely and efficiently. In April
2009, we signed a 5 year regional delivery venture contract for projects in New England. This,
combined with a separate regional delivery venture in upstate New York, will contribute around $1.7
billion towards National Grids investment programme over the next 5 years.
 
   Annual Report and Accounts 2009/10 National Grid plc     51




---



##### 



Operating and Financial Review
 Transmission continued
 Financial performance
  Financial results  Transmission UK
  Years ended 31 March2010
    
    
    2009
    
    
    2008£m
    
    
    £m
    
    
    £mRevenue and other operating income
    
    
    3,475
    
    
    
    3,517
    
    
    
    2,956Operating costs excluding exceptional
items and remeasurements
    
    
    (2,164
    )
    
    
    (2,391
    )
    
    
    (1,935
    )Adjusted operating profit
    
    
    1,311
    
    
    
    1,126
    
    
    
    1,021Exceptional items
    
    
    (59
    )
    
    
    (63
    )
    
    
    (8
    )Operating profit
    
    
    1,252
    
    
    
    1,063
    
    
    
    1,013
 2009/10 compared with 2008/09
 Revenueand otheroperating
    
    
    Operating
    
    
    Operatingincome
    
    
    costs
    
    
    profit£m
    
    
    £m
    
    
    £m2008/09 results
    
    
    3,517
    
    
    
    (2,454
    )
    
    
    1,063Add back exceptional items
    
    
    
    
    
    
    63
    
    
    
    632008/09 adjusted results
    
    
    3,517
    
    
    
    (2,391
    )
    
    
    1,126Allowed revenues
    
    
    169
    
    
    
    
    
    
    
    169Timing on recoveries
    
    
    20
    
    
    
    
    
    
    
    20BSIS
    
    
    (197
    )
    
    
    227
    
    
    
    30French interconnector
    
    
    (26
    )
    
    
    
    
    
    
    (26
    )Depreciation
    
    
    
    
    
    
    (20
    )
    
    
    (20
    )Other
    
    
    (8
    )
    
    
    20
    
    
    
    122009/10 adjusted results
    
    
    3,475
    
    
    
    (2,164
    )
    
    
    1,311Exceptional items
    
    
    
    
    
    
    (59
    )
    
    
    (59
    )2009/10 results
    
    
    3,475
    
    
    
    (2,223
    )
    
    
    1,252
 2008/09 compared with 2007/08
 Revenueand otheroperating
    
    
    Operating
    
    
    Operatingincome
    
    
    costs
    
    
    profit£m
    
    
    £m
    
    
    £m2007/08 results
    
    
    2,956
    
    
    
    (1,943
    )
    
    
    1,013Add back exceptional items
    
    
    
    
    
    
    8
    
    
    
    82007/08 adjusted results
    
    
    2,956
    
    
    
    (1,935
    )
    
    
    1,021Allowed revenues
    
    
    232
    
    
    
    
    
    
    
    232Timing on recoveries
    
    
    (20
    )
    
    
    
    
    
    
    (20
    )BSIS
    
    
    318
    
    
    
    (330
    )
    
    
    (12
    )French interconnector
    
    
    43
    
    
    
    (4
    )
    
    
    39Depreciation
    
    
    
    
    
    
    3
    
    
    
    3Other
    
    
    (12
    )
    
    
    (125
    )
    
    
    (137
    )2008/09 adjusted results
    
    
    3,517
    
    
    
    (2,391
    )
    
    
    1,126Exceptional items
    
    
    
    
    
    
    (63
    )
    
    
    (63
    )2008/09 results
    
    
    3,517
    
    
    
    (2,454
    )
    
    
    1,063
    52     National Grid plc Annual Report and Accounts 2009/10




---



##### 



Financial results  Transmission US
  Years ended 31 March2010
    
    
    2009
    
    
    2008£m
    
    
    £m
    
    
    £mRevenue
    
    
    405
    
    
    
    420
    
    
    
    299Operating costs excluding
exceptional items
    
    
    (252
    )
    
    
    (245
    )
    
    
    (171
    )Adjusted operating profit
    
    
    153
    
    
    
    175
    
    
    
    128Exceptional items
    
    
    (2
    )
    
    
    (2
    )
    
    
    (6
    )Operating profit
    
    
    151
    
    
    
    173
    
    
    
    122
 2009/10 compared with 2008/09  The principal movements between 2008/09 and 2009/10 can be summarised as follows:
 Operating
    
    
    OperatingRevenue
    
    
    costs
    
    
    profit£m
    
    
    £m
    
    
    £m2008/09 results
    
    
    420
    
    
    
    (247
    )
    
    
    173Add back exceptional items
    
    
    
    
    
    
    2
    
    
    
    22008/09 adjusted results
    
    
    420
    
    
    
    (245
    )
    
    
    175Exchange movements
    
    
    (11
    )
    
    
    7
    
    
    
    (4
    )2008/09 constant currency results
    
    
    409
    
    
    
    (238
    )
    
    
    171Allowed revenues
    
    
    4
    
    
    
    
    
    
    
    4Timing on recoveries  revenues
    
    
    (13
    )
    
    
    
    
    
    
    (13
    )Timing on recoveries  pass-through costs
    
    
    5
    
    
    
    (7
    )
    
    
    (2
    )Other
    
    
    
    
    
    
    (7
    )
    
    
    (7
    )2009/10 adjusted results
    
    
    405
    
    
    
    (252
    )
    
    
    153Exceptional items
    
    
    
    
    
    
    (2
    )
    
    
    (2
    )2009/10 results
    
    
    405
    
    
    
    (254
    )
    
    
    151
 2008/09 compared with 2007/08 The principal movements between 2007/08 and 2008/09 can be summarised as follows:
 Operating
    
    
    OperatingRevenue
    
    
    costs
    
    
    profit£m
    
    
    £m
    
    
    £m2007/08 results
    
    
    299
    
    
    
    (177
    )
    
    
    122Add back exceptional items
    
    
    
    
    
    
    6
    
    
    
    62007/08 adjusted results
    
    
    299
    
    
    
    (171
    )
    
    
    128Exchange movements
    
    
    91
    
    
    
    (52
    )
    
    
    392007/08 constant currency results
    
    
    390
    
    
    
    (223
    )
    
    
    167Allowed revenues
    
    
    25
    
    
    
    
    
    
    
    25Timing on recoveries
    
    
    4
    
    
    
    
    
    
    
    4Other
    
    
    1
    
    
    
    (22
    )
    
    
    (21
    )2008/09 adjusted results
    
    
    420
    
    
    
    (245
    )
    
    
    175Exceptional items
    
    
    
    
    
    
    (2
    )
    
    
    (2
    )2008/09 results
    
    
    420
    
    
    
    (247
    )
    
    
    173
 
   Annual Report and Accounts 2009/10 National Grid plc     53




---



##### 



Operating and Financial Review
 
 
 Gas Distribution
  Adjusted operating profit
    
    Capital investment£1,137m
    
    £1,079m(2008/09: £1,284m)
    
    (2008/09: £1,019m)Employees
    
    Gas delivered9,828
    
    500 TWh(2008/09: 9,534)
    
    (2008/09: 522 TWh)
 We continue to share best practice between the UK and US to improve our efficiency and make our
operating practices more consistent.
 In aggregate across our networks we replaced in excess of
2,000 kilometres of metallic main in the UK and 362 kilometres in the US helping to improve the
safety and reliability of our networks.
 This section should be read in conjunction with the rest of this Operating and Financial Review
 
 Key Facts
 à
    
    Around 190,000 kilometres of gas pipelineà
    
    Delivery of 299 TWh of gas in the UK and 201 TWh in the USà
    
    Around 10.8 and 3.5 million consumers in the UK and US respectively
 About Gas Distribution
  Principal operations
 Gas Distribution UK
      Gas Distribution US
    54     National Grid plc Annual Report and Accounts 2009/10




---



##### 



Gas Distribution UK  operating area
 
 Gas Distribution US  operating area
 0.09
  £7.0bn
  10.8m
  132,000 km
  0.29
  $7.4bn
  3.5m
  58,000 km
 
   Annual Report and Accounts 2009/10 National Grid plc     55




---



##### 



Operating and Financial Review
 Gas Distribution continued
  Regulation
 Gas Distribution UK
       Gas Distribution US
 Equity

    
    Equity to
    
    
    SharingRate plan
    
    return
    

    debt ratio

        
    arrangementsNew York City
    
    
    9.8
    %
    
    
    45/55
    
    
    100% to 10.5%and Long Island
    
    
    
    
    
    
    
    
    
    50% to 12.5%35% to 13.5%nil above 13.5%Upstate New York
    
    
    10.2
    %
    
    
    44/56
    
    
    100% to 11.35%50% to 13.6%25% to 15.6%10% above 15.6%Boston, MA
    
    
    10.2
    %
    
    
    50/50
    
    
    100% to 14.2%75% above 14.2%Essex, MA
    
    
    11.2
    %
    
    
    55/45
    
    
    NoneColonial, MA
    
    
    11.2
    %
    
    
    46/54
    
    
    NoneRhode Island
    
    
    10.5
    %
    
    
    48/52
    
    
    50% to 11.5%25% above 11.5%New Hampshire
    
    
    9.54
    %
    
    
    50/50
    
    
    None
  External market, energy policy and regulatory and other developments
  New York
    56     National Grid plc Annual Report and Accounts 2009/10




---



##### 



Massachusetts
 
 New Hampshire
    Performance against our objectives
  Driving improvements in our safety, customer and 
operational performance
 
 Our objective is to reduce employee lost time injuries to zero, to meet customer service objectives
agreed with our regulator and to be within the first quartile of customer satisfaction in the
territories we operate in.
 
 Safety
 Customer service
     Delivering strong, sustainable regulatory and long-term contracts with good returns
 
 Our aim is to meet or exceed the base financial returns in our price controls in the UK and our
rate plans in the US.
 
   AllowedRate base(i)
    
    
    Return on equity(ii)
    
    returnRegulatory entity
    
    2009
    
    
    2008
    
    
    2009
    
    2008
    
    currentKEDNY
    
    $
    2,350m
    
    
    $
    2,294m
    
    
    
    11.2
    %
    
    
    11.9
    %
    
    
    9.8
    %KEDLI
    
    $
    1,899m
    
    
    $
    1,795m
    
    
    
    10.5
    %
    
    
    11.1
    %
    
    
    9.8
    %Mass. Gas
    
    $
    1,536m
    
    
    $1,488m
    (iii)
    
    
    2.9
    %
    
    
    8.3
    %
    
    
    10.6
    %Energy North
    
    $
    193m
    
    
    $
    191m
    
    
    
    3.8
    %
    
    
    4.4
    %
    
    
    9.5
    %Narragansett
    
    $
    337m
    
    
    $
    337m
    
    
    6.7%
    (iv)
    
    7.6
    %
    
    
    10.5
    %Niagara Mo. Gas
    
    $
    1,103m
    
    
    $
    1,067m
    
    
    
    3.8
    %
    
    
    4.8
    %
    
    
    10.2
    %
 (i)
    
    Estimate of rate base using filed regulatory returns at 31 December or an alternative US GAAP
based invested capital measure where recent rate base filings are either not available or where the
actual rate base currently excludes certain regulatory asset balances.(ii)
    
    Based on regulatory returns for the 12 months ended 31 December.(iii)
    
    2008 rate base has been restated to exclude $937 million of goodwill.(iv)
    
    Return is -0.7% before normalising for one time bad debt adjustments.
 
   Annual Report and Accounts 2009/10 National Grid plc     57




---



##### 



Operating and Financial Review
 Gas Distribution continued
  Modernising and extending our transmission and 
distribution networks
 
 Our objectives are to meet regulatory targets and to have zero loss of supply incidents. We are on
track to deliver capital investment by 2012 in line with our UK price control allowance and
supported by our US rate plans.
 
 Reliability
    Capital investment
  UK capital investment
 US capital investment
    Becoming more efficient through transforming our operating model and increasingly aligning our
processes
 
 Our objective is to utilise the benefits of common support services to drive improvements in our
operating and financial performance. In particular, we aim to adopt best practices across Gas
Distribution.
    58     National Grid plc Annual Report and Accounts 2009/10




---



##### 



Financial performance
  Financial results  Gas Distribution UK
  Years ended 31 March2010
    
    
    2009
    
    
    2008£m
    
    
    £m
    
    
    £mRevenue
    
    
    1,517
    
    
    
    1,466
    
    
    
    1,383Other operating income
    
    
    1
    
    
    
    2
    
    
    
    8Operating costs excluding
exceptional items
    
    
    (795
    )
    
    
    (796
    )
    
    
    (796
    )Adjusted operating profit
    
    
    723
    
    
    
    672
    
    
    
    595Exceptional items
    
    
    (41
    )
    
    
    (43
    )
    
    
    (21
    )Operating profit
    
    
    682
    
    
    
    629
    
    
    
    574
 2009/10 compared with 2008/09
 Revenueand otheroperating
    
    
    Operating
    
    
    Operatingincome
    
    
    costs
    
    
    profit£m
    
    
    £m
    
    
    £m2008/09 results
    
    
    1,468
    
    
    
    (839
    )
    
    
    629Add back exceptional items
    
    
    
    
    
    
    43
    
    
    
    432008/09 adjusted results
    
    
    1,468
    
    
    
    (796
    )
    
    
    672Allowed revenues
    
    
    85
    
    
    
    
    
    
    
    85Timing on recoveries
    
    
    (28
    )
    
    
    
    
    
    
    (28
    )Pass-through costs
    
    
    
    
    
    
    5
    
    
    
    5Non-formula
    
    
    (14
    )
    
    
    9
    
    
    
    (5
    )Other revenue and costs
    
    
    7
    
    
    
    (13
    )
    
    
    (6
    )2009/10 adjusted results
    
    
    1,518
    
    
    
    (795
    )
    
    
    723Exceptional items
    
    
    
    
    
    
    (41
    )
    
    
    (41
    )2009/10 results
    
    
    1,518
    
    
    
    (836
    )
    
    
    682
 Improving customer relations by reducing congestion
 Traffic congestion is a cost to the economy, with any solution for easing congestion improving the
experience of road users and delivering environmental benefits by reducing pollution from slow
moving vehicles. Traditional road plates to cover excavations are heavy, difficult to store and
require mechanical means to install on site. These difficulties have led to the practice of lane
closures and traffic control when working in highways. Following an investigation by Gas
Distribution, an alternative solution was identified that introduces a modular trench plating
system, providing quick and easy installation over excavations.
 (PICTURE)
 Emergency water ingress
 During winter 2009/10, over 6,000 properties were affected by a number of separate water ingress
incidents resulting in significant loss of supply. In particular, as Christmas 2009 approached, the
skills and commitment of our UK gas distribution team were put to the test by 2 major incidents
affecting over 4,000 properties in southeast England. In both cases a burst water pipe created a
hole in our low pressure main, resulting in water entering our network. Our engineers and support
team applied their skills and determination each day up to and during the Christmas period to
restore the gas supply.
 
   Annual Report and Accounts 2009/10 National Grid plc     59




---



##### 



Operating and Financial Review
 Gas Distribution continued
  2008/09 compared with 2007/08
 Revenueand otheroperating
    
    
    Operating
    
    
    Operatingincome
    
    
    costs
    
    
    profit£m
    
    
    £m
    
    
    £m2007/08 results
    
    
    1,391
    
    
    
    (817
    )
    
    
    574Add back exceptional items
    
    
    
    
    
    
    21
    
    
    
    212007/08 adjusted results
    
    
    1,391
    
    
    
    (796
    )
    
    
    595Allowed revenues
    
    
    90
    
    
    
    
    
    
    
    90Timing on recoveries
    
    
    (15
    )
    
    
    
    
    
    
    (15
    )Pass-through costs
    
    
    
    
    
    
    (9
    )
    
    
    (9
    )Non-formula
    
    
    9
    
    
    
    (12
    )
    
    
    (3
    )Other revenue and costs
    
    
    (7
    )
    
    
    21
    
    
    
    142008/09 adjusted results
    
    
    1,468
    
    
    
    (796
    )
    
    
    672Exceptional items
    
    
    
    
    
    
    (43
    )
    
    
    (43
    )2008/09 results
    
    
    1,468
    
    
    
    (839
    )
    
    
    629
 Financial results  Gas Distribution US
  Years ended 31 March2010
    
    
    2009
    
    
    2008£m
    
    
    £m
    
    
    £mRevenue
    
    
    3,708
    
    
    
    4,786
    
    
    
    2,845Operating costs excluding exceptional
items and remeasurements
    
    
    (3,294
    )
    
    
    (4,174
    )
    
    
    (2,453
    )Adjusted operating profit
    
    
    414
    
    
    
    612
    
    
    
    392Exceptional items and remeasurements
    
    
    34
    
    
    
    (386
    )
    
    
    95Operating profit
    
    
    448
    
    
    
    226
    
    
    
    487
 2009/10 compared with 2008/09
 Operating
    
    
    OperatingRevenue
    
    
    costs
    
    
    profit£m
    
    
    £m
    
    
    £m2008/09 results
    
    
    4,786
    
    
    
    (4,560
    )
    
    
    226Add back exceptional items
    
    
    
    
    
    
    52
    
    
    
    52Add back remeasurements
    
    
    
    
    
    
    334
    
    
    
    3342008/09 adjusted results
    
    
    4,786
    
    
    
    (4,174
    )
    
    
    612Exchange movements
    
    
    (121
    )
    
    
    105
    
    
    
    (16
    )2008/09 constant currency results
    
    
    4,665
    
    
    
    (4,069
    )
    
    
    596Pass-through costs
    
    
    (965
    )
    
    
    965
    
    
    
    Rate increases
    
    
    32
    
    
    
    
    
    
    
    32Economic impact on volumes
    
    
    (38
    )
    
    
    
    
    
    
    (38
    )Timing on recoveries
    
    
    56
    
    
    
    (171
    )
    
    
    (115
    )Merchant function charge
    
    
    (14
    )
    
    
    
    
    
    
    (14
    )Long Island property tax recoveries
    
    
    (39
    )
    
    
    
    
    
    
    (39
    )Bad debt expense
    
    
    
    
    
    
    5
    
    
    
    5Other revenues and costs
    
    
    11
    
    
    
    (24
    )
    
    
    (13
    )2009/10 adjusted results
    
    
    3,708
    
    
    
    (3,294
    )
    
    
    414Exceptional items
    
    
    
    
    
    
    (18
    )
    
    
    (18
    )Remeasurements
    
    
    
    
    
    
    52
    
    
    
    522009/10 results
    
    
    3,708
    
    
    
    (3,260
    )
    
    
    448
    60     National Grid plc Annual Report and Accounts 2009/10




---



##### 



2008/09 compared with 2007/08
  Operating
    
    
    OperatingRevenue
    
    
    costs
    
    
    profit£m
    
    
    £m
    
    
    £m2007/08 results
    
    
    2,845
    
    
    
    (2,358
    )
    
    
    487Add back exceptional items
    
    
    
    
    
    
    (95
    )
    
    
    (95
    )2007/08 adjusted results
    
    
    2,845
    
    
    
    (2,453
    )
    
    
    392Exchange movements
    
    
    873
    
    
    
    (753
    )
    
    
    1202007/08 constant currency results
    
    
    3,718
    
    
    
    (3,206
    )
    
    
    512KeySpan contribution
    
    
    902
    
    
    
    (896
    )
    
    
    6Pass-through costs
    
    
    69
    
    
    
    (69
    )
    
    
    Rate increases
    
    
    32
    
    
    
    
    
    
    
    32Weather and volumes
    
    
    22
    
    
    
    
    
    
    
    22Timing on recoveries
    
    
    (6
    )
    
    
    52
    
    
    
    46Merchant function charge
    
    
    38
    
    
    
    
    
    
    
    38Energy efficiency programme
    
    
    19
    
    
    
    (12
    )
    
    
    7Bad debt expense
    
    
    
    
    
    
    (29
    )
    
    
    (29
    )Other revenues and costs
    
    
    (8
    )
    
    
    (14
    )
    
    
    (22
    )2008/09 adjusted results
    
    
    4,786
    
    
    
    (4,174
    )
    
    
    612Exceptional items
    
    
    
    
    
    
    (52
    )
    
    
    (52
    )Remeasurements
    
    
    
    
    
    
    (334
    )
    
    
    (334
    )2008/09 results
    
    
    4,786
    
    
    
    (4,560
    )
    
    
    226
 Gas main replacement
 
   Annual Report and Accounts 2009/10 National Grid plc     61




---



##### 



Operating and Financial Review
 
 
 Electricity Distribution & Generation
 Adjusted operating profit
    
    Capital investment
 £374m
    
    £372m
 (2008/09: £265m)
    
    (2008/09: £355m)
 Employees
    
    Electricity delivered
 8,344
    
    62 TWh
 (2008/09: 8,251)
    
    (2008/09: 65 TWh)
 Our customers are at the heart of everything we do. We continue to invest in our distribution and
generation systems to create sustained improvements in our system reliability. We believe that
increased energy efficiency and the use of smart technologies is the best way to help our customers
control their energy costs and address the issue of climate change.
 In 2009, we met all our regulatory reliability targets and achieved internal targets moving us
towards top quartile reliability performance.
 Severe storms affected our service territories during the winter, causing service interruptions for
thousands of customers. Our emergency response plans were highly effective in restoring service
efficiently and safely.
 This section should be read in conjunction with the rest of this Operating and Financial Review
 
 Key Facts
 ®
    
    Over 116,800 kilometres of circuit®
    
    Approximately 3.4 million customers®
    
    666 substations®
    
    57 generation units at 13 locations across Long Island®
    
    LIPA network serving 1.1 million customers over 24,100 kilometres of circuit and 177 substations, delivering 22 TWh of electricity
 About Electricity Distribution & Generation
  Principal operations
 Electricity Distribution
     Generation
   Energy procurement
    62       National Grid plc Annual Report and Accounts 2009/10




---



##### 



Regulation
 Equity
    
    Equity to
    
    Efficiency gainsRate plan
    
    return
    
    debt ratio
    
    retainedUpstate New York
    
    
    10.6
    %
    
    48.5/51.5
    
    100% to 11.75%(Niagara Mohawk)
    
    
    
    
    
    
    
    50% to 14%25% to 16%10% above 16%Massachusetts
    
    
    10.35
    %
    
    49.99/50.01
    
    50% above 10.35%Rhode Island
    
    
    9.8
    %
    
    42.75/57.25
    
    50% from(Narragansett Electric)
    
    
    
    
    
    
    
    9.8% to 10.8%25% above 10.8%New Hampshire
    
    
    9.67
    %
    
    50/50
    
    50% above 11%
   Electricity Distribution & Generation  operating area
 41%
 
 
 $614m
 
   Annual Report and Accounts 2009/10 National Grid
plc       63




---



##### 



Operating and Financial Review
 Electricity Distribution & Generation continued
 External market, energy policy and regulatory and other developments
  Solar filing
  New York smart grid
   Massachusetts wind power
  Massachusetts smart grid
  LIPA power supply agreement (PSA) rate adjustment
 Upstate New York capital expenditure rate filing
   Upstate New York electricity rate plan
  Massachusetts and Rhode Island rate plans
   New Hampshire
    64       National Grid plc Annual Report and Accounts 2009/10




---



##### 



Niagara Mohawk management audit
  Performance against our objectives
  Driving improvements in our safety, customer and operational performance
 
 Our objectives are to reduce employee lost time injuries to zero, to meet customer service
objectives agreed with our regulators and to be within the upper quartile of customer satisfaction
in the territories in which we operate.
 
 Safety
  
    
    developing and implementing a comprehensive approach to enhancing safety by driving consistent
safety improvement initiatives across all areas, through the safety performance committee (SPC)
structure;
    
    building on the safe and unsafe acts (SUSA) programme to eliminate at risk behaviour while
reinforcing safe behaviour and identifying and implementing corrective measures identified by the
SPC through analysis of trends from SUSA visits;
    
    improving the quality of the job brief process by redesigning the process to improve risk
assessment and hazard identification, and implementing enhancements in the field;
    
    reducing road traffic accidents by undertaking targeted defensive driving training for high risk
employees in accordance with the current guidelines; and
    
    improving the quality of near miss reports and the process for actions and feedback to employees
by implementing a new
communication programme to promote quality reporting that may prevent injuries.
 Electric transportation
  National Grid is taking part in a comprehensive research and demonstration collaboration with Ford
Motor Company, Electric Power Research Institute and other electricity utilities to advance the
development of electric transportation infrastructure. We are using a pre production Ford Escape
plug in hybrid electric vehicle as a test bed to demonstrate the integration with smart grid
technology.
 
 We invested this year to make our generating stations greener
  We have recently completed upgrading the first of four units at our generating station in
Northport, Long Island. This involved installing advanced turbine components to improve efficiency
and reduce emissions. The efficiency improvements on this first unit will reduce annual fuel
consumption and carbon dioxide emissions by over 25,000 tonnes per year  equivalent to removing an
estimated 4,780 cars each doing 12,000 miles a year from the road in the US.
 
   Annual Report and Accounts 2009/10 National Grid
plc       65




---



##### 



Operating and Financial Review
 Electricity Distribution & Generation continued
 Customer service
     Delivering strong, sustainable regulatory and long-term contracts with good returns
 
 Our aim is to meet or exceed the base financial returns in our rate plans by delivering on
long-term contracts that provide value.
 
  AllowedRate base(i)
    
    
    Return on equity(ii)
    
    
    returnRegulatory entity
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    currentNiagara Mohawk
(Electric)
    
    
    $4,375m
    
    
    
    $4,609m
    
    
    
    5.1
    %
    
    
    6.7
    %
    
    
    10.6
    %Massachusetts
(Electric)
    
    
    $1,494m
    
    
    
    $1,495m
    
    
    
    4.7
    %
    
    
    7.0
    %
    
    
    10.35
    %Narragansett Electric
(Distribution only)
    
    
    $548m
    
    
    
    $564m
    
    
    
    (2.9
    )%
    
    
    2.3
    %
    
    
    9.8
    %Long Island Generation
    
    
    $503m
    
    
    
    $574m
    
    
    
    13.5
    %
    
    
    7.1
    %
    
    
    10.75
    %
 (i)
    
    Estimate of rate base using filed regulatory returns at 31 December or an alternative US GAAP
based invested capital measure where recent rate base filings
are either not available or where the actual rate base currently excludes certain regulatory asset
balances.(ii)
    
    Based on regulatory returns for the 12 months ended 31 December.
 Modernising and extending our transmission and distribution networks
 
 In addition to meeting reliability performance targets agreed with our regulators, our objectives
are to improve reliability and to deliver our capital investment programme.
 
 Reliability
    
 66        National Grid plc | Annual Report and Accounts 2009/10




---



##### 



Capital investment
 Becoming more efficient through transforming our operating model and increasingly aligning our
processes
 
 Our focus includes completing our remaining transformation initiatives, delivering the benefits of
our alignment, and driving continuous improvement and process excellence.
 
 Transforming operations
   Efficiency
   
    
    development of a US inventory management model;
    
    development and implementation of optimal fleet
sourcing strategies;
    
    development and implementation of an operations performance model;
    
    implementation of the advanced energy consumption initiative; and
    
    implementation of a cost conscious savings initiative.
  Customer organisation consolidation
 
   
 Annual
Report and Accounts 2009/10 | National Grid
plc       67




---



##### 



Operating and Financial Review
 Electricity Distribution & Generation continued
 Financial performance
  Financial results
  Years ended 31 March2010
    
    
    2009
    
    
    2008£m
    
    
    £m
    
    
    £mRevenue excluding stranded cost
recoveries
    
    
    3,963
    
    
    
    4,537
    
    
    
    3,126Operating costs excluding exceptional
items and remeasurements
    
    
    (3,589
    )
    
    
    (4,272
    )
    
    
    (2,796
    )Adjusted operating profit
    
    
    374
    
    
    
    265
    
    
    
    330Exceptional items
    
    
    (61
    )
    
    
    (51
    )
    
    
    (104
    )Remeasurements
    
    
    19
    
    
    
    (109
    )
    
    
    91Stranded cost recoveries
    
    
    369
    
    
    
    426
    
    
    
    379Operating profit
    
    
    701
    
    
    
    531
    
    
    
    696
 2009/10 compared with 2008/09
  Revenueand otheroperating
    
    
    Operating
    
    
    Operatingincome
    
    
    costs
    
    
    profit£m
    
    
    £m
    
    
    £m2008/09 results
    
    
    4,972
    
    
    
    (4,441
    )
    
    
    531Add back exceptional items
    
    
    
    
    
    
    51
    
    
    
    51Add back remeasurements
    
    
    
    
    
    
    109
    
    
    
    109Add back stranded cost recoveries
    
    
    (435
    )
    
    
    9
    
    
    
    (426
    )2008/09 adjusted results
    
    
    4,537
    
    
    
    (4,272
    )
    
    
    265Exchange movements
    
    
    (115
    )
    
    
    108
    
    
    
    (7
    )2008/09 adjusted results at constant
currency
    
    
    4,422
    
    
    
    (4,164
    )
    
    
    258Pass-through costs
    
    
    (440
    )
    
    
    411
    
    
    
    (29
    )Volume, price and weather
    
    
    (9
    )
    
    
    
    
    
    
    (9
    )LIPA capital recovery
    
    
    (29
    )
    
    
    29
    
    
    
    Generation
    
    
    32
    
    
    
    8
    
    
    
    40LIPA contribution
    
    
    (19
    )
    
    
    37
    
    
    
    18Storms
    
    
    
    
    
    
    80
    
    
    
    80Other direct costs
    
    
    
    
    
    
    (6
    )
    
    
    (6
    )Other
    
    
    6
    
    
    
    16
    
    
    
    222009/10 adjusted results
    
    
    3,963
    
    
    
    (3,589
    )
    
    
    374Exceptional items
    
    
    
    
    
    
    (61
    )
    
    
    (61
    )Remeasurements
    
    
    
    
    
    
    19
    
    
    
    19Stranded cost recoveries
    
    
    376
    
    
  
    (7
    )
    
    
    3692009/10 results
    
    
    4,339
    
    
    
    (3,638
    )
    
    
    701
 
    
 68         National
Grid plc | Annual Report and Accounts 2009/10




---



##### 



2008/09 compared with 2007/08
  Revenueand otheroperating
    
    
    Operating
    
    
    Operatingincome
    
    
    costs
    
    
    profit£m
    
    
    £m
    
    
    £m2007/08 results
    
    
    3,508
    
    
    
    (2,812
    )
    
    
    696Add back exceptional items
    
    
    
    
    
    
    104
    
    
    
    104Add back remeasurements
    
    
    
    
    
    
    (91
    )
    
    
    (91
    )Add back stranded cost recoveries
    
    
    (382
    )
    
    
    3
    
    
    
    (379
    )2007/08 adjusted results
    
    
    3,126
    
    
    
    (2,796
    )
    
    
    330Exchange movements
    
    
    957
    
    
    
    (856
    )
    
    
    1012007/08 adjusted results at constant
currency
    
    
    4,083
    
    
    
    (3,652
    )
    
    
    431Purchased electricity
    
    
    176
    
    
    
    (187
    )
    
    
    (11
    )Volume, price and weather
    
    
    6
    
    
    
    
    
    
    
    6LIPA capital recovery
    
    
    74
    
    
    
    (74
    )
    
    
    Generation
    
    
    124
    
    
    
    (114
    )
    
    
    10LIPA contribution
    
    
    77
    
    
    
    (65
    )
    
    
    12Bad debt expense
    
    
    
    
    
    
    (14
    )
    
    
    (14
    )Storms
    
    
    
    
    
    
    (74
    )
    
    
    (74
    )Other direct costs
    
    
    
    
    
    
    (53
    )
    
    
    (53
    )Depreciation and amortisation
    
    
    
    
    
    
    (10
    )
    
    
    (10
    )Other
    
    
    (3
    )
    
    
    (29
    )
    
    
    (32
    )2008/09 adjusted results
    
    
    4,537
    
    
    
    (4,272
    )
    
    
    265Exceptional items
    
    
    
    
    
    
    (51
    )
    
    
    (51
    )Remeasurements
    
    
    
    
    
    
    (109
    )
    
    
    (109
    )Stranded cost recoveries
    
    
    435
    
    
    
    (9
    )
    
    
    4262008/09 results
    
    
    4,972
    
    
    
    (4,441
    )
    
    
    531
 Solar developments
 In late 2009, the Massachusetts regulator approved National Grids proposal to install
approximately 5 MW of solar electricity generation  the biggest installation in the state. The
largest of these projects is being constructed in Greater Boston, next to National Grids
multicoloured LNG tank. This was formerly a manufactured gas plant site and, as a result, the
contaminated land has limited uses, making it an ideal site for a solar project. The site will
include 6,300 solar panels spread over 6 acres of land, providing up to 1.3 MW of power.
 
   
 Annual
Report and Accounts 2009/10 | National Grid plc        69




---



##### 



Operating and Financial Review
 
 
 Non-regulated businesses and other
 Adjusted operating profit
    
    Capital investment
 £146m
    
    £307m
 (2008/09: £65m)
    
    (2008/09: £427m)
 Employees
    
    LNG imported to the UKthrough Isle of Grain (tonnes)
 3,533*
    
    3.4m(2008/09: 3,597*)
    
    (2008/09: 1.2m)
 *
    
    Excluding shared services employees The majority of our non-regulated businesses and other activities either operate in markets related
to those of our principal businesses or provide support to our own
businesses.
 Construction of
phase III at our liquefied natural gas (LNG) importation terminal on the Isle of Grain continues on
track for completion in winter 2010/11. The site currently has annual import capacity of 9.8
million tonnes and by winter 2010/11, with the phase III expansion, it will have the capacity to
import 14.8 million tonnes per annum, around 20% of the UKs forecast gas demand.
 During the year, the OnStream portfolio of meters increased by approximately 627,000 assets,
comprising approximately 410,000 gas and 217,000 electricity meters.
 This section should be read in conjunction with the rest of this Operating and Financial Review.
 About our non-regulated businesses
  Principal operations
  Metering
 National Grid Metering and OnStream provide installation and maintenance services to energy
suppliers in the regulated and unregulated markets respectively. OnStream also provides meter
reading services. Our metering businesses provide services for an asset base of about 20 million
domestic, industrial and commercial meters.
 
 Grain LNG
 National Grid Grain LNG was the first new LNG importation terminal constructed in the UK for some
30 years, with construction divided into phases I and II (both fully operational) and III (under
construction).
 
 UK Property
 National Grid Property is responsible for managing our occupied properties in the UK, and for the
management, clean up and disposal of surplus sites, most of which are former gasworks.
 
 BritNed
 BritNed is a joint venture between National Grid and TenneT, the Dutch transmission system
operator, to build and operate a 1,000 MW, 260 km subsea electricity link between The Netherlands
and the UK.
 xoserve
 xoserve delivers transportation transactional services on behalf of all the major gas
network transportation companies in Great Britain, including National Grid. xoserve is jointly
owned by the five major gas distribution network companies and our UK Transmission business is the
majority shareholder.
 
 US non-regulated businesses
 Includes LNG storage, LNG road transportation, unregulated transmission
pipelines and West Virginia gas fields.
 
 Fulcrum
 Fulcrum operates across the UK mainland and offers multi-utility connections and environmental
services for all customer categories. As a gas transporter, Fulcrum designs, constructs, owns and
operates distribution systems.
 
 Blue-NG
 Blue-NG is a joint venture between National Grid and 2OC Ltd to construct and operate a new type of
highly efficient power station that makes use of the requirement to reduce pressure at pressure
stations, while generating renewable electricity and heat.
 
 Corporate activities and shared services function
 Corporate activities comprise central overheads,
insurance and expenditure incurred on business development.
    
 70         National
Grid plc | Annual Report and Accounts 2009/10




---



##### 



Business drivers
  Multi-year contractual arrangements
 OnStream has a long-term contract with British Gas for the
provision of gas and electricity meters (but see Current and future developments below), and a
range of contracts with other suppliers.
 Phase I of Grain LNG is underpinned by a long-term contract with BP/Sonatrach. Phase II, completed
in December 2008, is underpinned by long-term contracts signed with Centrica, Gaz de France Suez
and Sonatrach. Phase III, due to be commissioned in winter 2010/11, also has long-term contracts
for all the capacity with E.ON, Iberdrola and Centrica.
 Competition
 OnStream operates in the competitive market for the provision of new meters and its revenues are
therefore determined by how successful it is in obtaining business from customers.
 
 Capital investment
 OnStream are investing in technology such as smart metering capabilities to grow
our metering business. There is also significant investment in infrastructure projects such as
Grain LNG and BritNed.
 
 Efficiency
 Efficiency in delivering capital programmes and in operating our businesses and corporate
activities result in driving improved financial performance.
   External market and regulatory environment
   Current and future developments
  Metering competition investigation
  British Gas metering insourcing programme
 Performance against our objectives
  Driving improvements in our safety, customer and operational performance
 
 Our objectives include zero employee lost time injuries and to operate reliably. We also aim to
improve the quality of service to our customers.
 
   Expanding our capabilities and identifying new financeable opportunities to grow
 
 We are on track to deliver on our capital investment programme for non-regulated businesses and
other activities.
 
   
 Annual
Report and Accounts 2009/10 | National Grid plc        71




---



##### 



Operating and Financial Review
   Non-regulated businesses and other continued
  Financial performance
  Years ended 31 March2010
    
    
    2009
    
    
    2008£m
    
    
    £m
    
    
    £mRevenue
    
    
    738
    
    
    
    719
    
    
    
    642Operating income
    
    
    3
    
    
    
    31
    
    
    
    67Operating costs excludingexceptional items
    
    
    (595
    )
    
    
    (685
    )
    
    
    (580
    )Adjusted operating profit
    
    
    146
    
    
    
    65
    
    
    
    129Exceptional items
    
    
    (87
    )
    
    
    (64
    )
    
    
    (57
    )Operating profit
    
    
    59
    
    
    
    1
    
    
    
    72
 2009/10 compared with 2008/09
  Revenueand otheroperating
    
    
    Operating
    
    
    Operatingincome
    
    
    costs
    
    
    profit£m
    
    
    £m
    
    
    £m2008/09 results
    
    
    750
    
    
    
    (749
    )
    
    
    1Add back exceptional items
    
    
    
    
    
    
    64
    
    
    
    642008/09 adjusted results
    
    
    750
    
    
    
    (685
    )
    
    
    65Exchange movements
    
    
    (3
    )
    
    
    3
    
    
    
    2008/09 constant currency results
    
    
    747
    
    
    
    (682
    )
    
    
    65Metering
    
    
    3
    
    
    
    26
    
    
    
    29Property
    
    
    (31
    )
    
    
    36
    
    
    
    5Grain LNG
    
    
    63
    
    
    
    (33
    )
    
    
    30US non-regulated businesses
    
    
    (20
    )
    
    
    27
    
    
    
    7Other activities
    
    
    (21
    )
    
    
    31
    
    
    
    102009/10 adjusted results
    
    
    741
    
    
    
    (595
    )
    
    
    146Exceptional items
    
    
    
    
    
    
    (87
    )
    
    
    (87
    )2009/10 results
    
    
    741
    
    
    
    (682
    )
    
    
    59
 
   72      National Grid plc | Annual Report and Accounts 2009/10




---



##### 



2008/09 compared with 2007/08
  Revenueand otheroperating
    
    
    Operating
    
    
    Operatingincome
    
    
    costs
    
    
    profit£m
    
    
    £m
    
    
    £m2007/08 results
    
    
    709
    
    
    
    (637
    )
    
    
    72Add back exceptional items
    
    
    
    
    
    
    57
    
    
    
    572007/08 adjusted results
    
    
    709
    
    
    
    (580
    )
    
    
    129Exchange movements
    
    
    17
    
    
    
    (17
    )
    
    
    2007/08 constant currency results
    
    
    726
    
    
    
    (597
    )
    
    
    129Metering
    
    
    7
    
    
    
    22
    
    
    
    29Property
    
    
    (49
    )
    
    
    (43
    )
    
    
    (92
    )Grain LNG
    
    
    33
    
    
    
    (24
    )
    
    
    9US non-regulated businesses
    
    
    51
    
    
    
    (53
    )
    
    
    (2
    )Other activities
    
    
    (18
    )
    
    
    10
    
    
    
    (8
    )2008/09 adjusted results
    
    
    750
    
    
    
    (685
    )
    
    
    65Exceptional items
    
    
    
    
    
    
    (64
    )
    
    
    (64
    )2008/09 results
    
    
    750
    
    
    
    (749
    )
    
    
    1
 Grain LNG centre of excellence
 Following further recent expansion, Grain LNG is one of the worlds largest importation facilities
making a vital contribution to UK energy supply security. The commercial arrangements in place are
underpinned by long-term contracts with our customers, allowing them flexibility over how they use
their contracted capacity. This model has enabled the investment needed in the facility, allowing
the business to meet market and customer demands.
 A further above ground tank and regasification plant as well as a second jetty have been built and
will be operational by winter 2010/11. We are continuing to consult with the market to determine
the level of interest in further growth.
 Through Grain LNG, we have created a centre of excellence within LNG that will provide benefits for
National Grid, its customers and shareholders, and the wider UK energy industry.
 
  Annual Report and Accounts 2009/10 | National Grid plc      73




---



##### 



Operating and Financial Review
   
 
 
 Financial position and financial management
  Going concern
  Financial position
 Balance sheet
  NetAssets
    
    
    Liabilities
    
    
    assets£m
    
    
    £m
    
    
    £mProperty, plant and equipment and

non-current intangible assets
    
    
    31,244
    
    
    
    
    
    
    
    31,244Goodwill and non-current investments
    
    
    5,588
    
    
    
    
    
    
    
    5,588Current assets and liabilities
    
    
    2,700
    
    
    
    (3,541
    )
    
    
    (841
    )Other non-current assets and liabilities
    
    
    162
    
    
    
    (3,381
    )
    
    
    (3,219
    )Post-retirement obligations
    
    
    
    
    
    
    (3,098
    )
    
    
    (3,098
    )Deferred tax
    
    
    
    
    
    
    (3,324
    )
    
    
    (3,324
    )Total before net debt
    
    
    39,694
    
    
    
    (13,344
    )
    
    
    26,350Net debt
    
    
    3,859
    
    
    
    (25,998
    )
    
    
    (22,139
    )Total as at 31 March 2010
    
    
    43,553
    
    
    
    (39,342
    )
    
    
    4,211Total as at 31 March 2009
    
    
    44,467
    
    
    
    (40,483
    )
    
    
    3,984
  Net debt
    Capital structure
 2010
    
    
    2009RAV gearing
    
    %
    
    
    %Regulated transmission and distribution businesses
within National Grid Gas plc
    
    
    57
    
    
    
    60National Grid Electricity Transmission plc
    
    
    56
    
    
    
    58
  Rights issue
  Liquidity and treasury management
 Treasury policy
 
   74      National Grid plc | Annual Report and Accounts 2009/10




---



##### 



Current condition of the financial markets
  Cash flow and cash flow forecasting
 £43.6bn
    
    £4.2bnTotal assets
    
    Net assets£22.1bn
    
    3.9xNet debt
    
    Interest cover
 Figure 1 - Net debt at 31 March
  
 Figure 2  Maturity of net debt at 31 March 2010
  
 Figure 3  Maturity of borrowings at 31 March 2010
 
   Annual Report and Accounts 2009/10 | National Grid plc     75




---



##### 



Operating and Financial Review
   Financial position and financial management continued
  Funding and liquidity management
  Programme
    
    Amount
    
    StatusNational Grid plcUS commercial paper programme
    
    $3.0 billion
    
    UnutilisedUS SEC-registered debt shelf
    
    Unlimited
    
    $1.0 billionissuedEuro commercial paper programme
    
    $1.5 billion
    
    £94 million(equivalent
    )issuedNational Grid Electricity Transmission plcUS commercial paper programme
    
    $1.0 billion
    
    UnutilisedEuro commercial paper programme
    
    $1.0 billion
    
    30 millionissuedNational Grid plc and National Grid Electricity Transmission plcEuro medium-term note programme
    
    15.0 billion
    
    9.0 billionissuedNational Grid Gas plcUS commercial paper programme
    
    $2.5 billion
    
    UnutilisedEuro commercial paper programme
    
    $1.25 billion
    
    UnutilisedEuro medium-term note programme
    
    10.0 billion
    
    5.7 billionissuedNational Grid USAUS commercial paper programme
    
    $2.0 billion
    
    UnutilisedEuro medium-term note programme
    
    4.0 billion
    
    0.1 billionissued
 Facility
    
    AmountNational Grid plc and National Grid USAShort-term committed facilities
    
    $810 millionNational Grid plcLong-term committed facilities
    
    £830 millionLong-term committed facilities
    
    $280 millionNational Grid Gas plcLong-term committed facilities
    
    £700 millionNational Grid Electricity Transmission plcLong-term committed facilities
    
    £425 millionNational Grids US subsidiariesCommitted facilities
    
    $530 millionNational Grid plc and certain subsidiariesUncommitted borrowing facilities
    
    £528 million
   Facility
    
    Moodys
    
    
    S&P
    
    
    FitchNational Grid plc
    
    Baa1/P2
    
    
    BBB+/A2
    
    
    BBB+/F2National Grid Holdings One plc
    
    
    
    
    
    BBB+/A2
    
    
    
    National Grid Electricity
Transmission plc
    
    
    A3/P2
    
    
    
    A-/A2
    
    
    
    A/F2National Grid Gas plc
    
    
    A3/P2
    
    
    
    A-/A2
    
    
    
    A/F2National Grid Gas Holdings Ltd
    
    
    A3
    
    
    
    A-
    *
    
    
    ANational Grid USA
    
    
    A3/P2
    
    
    BBB+/A2
    
    
    
    Niagara Mohawk Power Corp.
    
    
    A3
    
    
    
    A-/A2
    
    
    
    Massachusetts Electric Co.
    
    
    A3/P2
    
    
    
    A-/A2
    
    
    
    New England Power Co.
    
    
    A3/P2
    
    
    
    A-/A2
    
    
    
    The Narragansett Electric Co.
    
    
    A3
    
    
    
    A-/A2
    
    
    
    KeySpan Corporation
    
    Baa1/P2
    
    
    
    A-/A2
    
    
    
    A-The Brooklyn Union Gas Company
    
    
    A3
    
    
    
    A
    
    
    
    A+KeySpan Gas East Corporation
    
    
    A3
    
    
    
    A
    
    
    
    ABoston Gas Company
    
    Baa1
    
    
    
    A-
    
    
    
    Colonial Gas Company
    
    
    A3
    
    
    
    A-
    *
    
    
    National Grid Generation LLC
    
    Baa1
    ^
    
    
    A-
    *
    
    
    
 *
    
    Corporate credit rating^
    
    Issuer rating
 
   76      National Grid plc | Annual Report and Accounts 2009/10




---



##### 



Use of derivative financial instruments
   Refinancing risk management
   Interest rate risk management
 A3/BBB+
    
    A3/A-/AMoodys/S&P senior unsecured
ratings for National Grid USA
    
    Moodys/S&P/Fitch senior unsecured
ratings for NGG plc and NGET plcBaa1
    
    BBB+Moodys senior unsecured

rating for National Grid plc
    
    S&P and Fitch senior unsecured
ratings for National Grid plc
 Figure 4  Interest rate profile pre-derivatives at 31 March 2010
  
 Figure 5  Interest rate profile post-derivatives at 31 March 2010
  
 Figure 6  Currency profile at 31 March 2010
 
   Annual Report and Accounts 2009/10 | National Grid plc      77




---



##### 



Operating and Financial Review
   Financial position and financial management continued
  Foreign exchange risk management
 Counterparty risk management
    Valuation and sensitivity analysis
    2009/10
    
    
    2008/09Other
    
    
    
    
    
    
    OtherIncome
    
    
    equity
    
    
    Income
    
    
    equitystatement
    
    
    reserves
    
    
    statement
    
    
    reserves£m
    
    
    £m
    
    
    £m
    
    
    £mUK retail price index ±0.50%
    
    
    17
    
    
    
    
    
    
    
    17
    
    
    
    UK interest rates ±0.50%
    
    
    51
    
    
    
    71
    
    
    
    67
    
    
    
    77US interest rates ±0.50%
    
    
    52
    
    
    
    14
    
    
    
    63
    
    
    
    13US dollar exchange rate ±10%
    
    
    68
    
    
    
    623
    
    
    
    55
    
    
    
    880
 
 Commodity contracts
 
   78      National Grid plc | Annual Report and Accounts 2009/10




---



##### 



Energy purchase contracts
 Commodity purchase contracts accounted for as derivative contracts
   Derivative financial instruments linked to 
commodity prices
      Sensitivity analysis
 
   Annual Report and Accounts 2009/10 | National Grid plc      79




---



##### 



Operating and Financial Review
   Financial position and financial management continued
  2009/10
    
    
    2008/09*Other
    
    
    
    
    
    
    OtherIncome
    
    
    equity
    
    
    Income
    
    
    equitystatement
    
    
    reserves
    
    
    statement
    
    
    reserves£m
    
    
    £m
    
    
    £m
    
    
    £m10% increase in

commodity prices
    
    
    71
    
    
    
    (1
    )
    
    
    33
    
    
    
    (1
    )10% decrease in

commodity prices
    
    
    (64
    )
    
    
    1
    
    
    
    (43
    )
    
    
    1
 *
    
    Prior year comparatives have been restated to be consistent on a post-tax basis
 Commitments and contingencies
  2010
    
    
    2009*£m
    
    
    £mFuture capital expenditure contracted

but not provided for
    
    
    1,738
    
    
    
    1,626Total operating lease commitments
    
    
    926
    
    
    
    1,085Power commitments
    
    
    3,535
    
    
    
    3,645Other commitments, contingencies

and guarantees
    
    
    2,119
    
    
    
    1,846
 *
    
    Comparatives have been restated to present items on a basis consistent with the current
year classification
   Contractual obligations at 31 March 2010
 Less than
    
    
    1-3
    
    
    3-5
    
    
    More than1 year
    
    
    years
    
    
    years
    
    
    5 years
    
    
    Total£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mFinancial liabilitiesBorrowings
    
    
    2,390
    
    
    
    3,422
    
    
    
    3,707
    
    
    
    15,220
    
    
    
    24,739Interest payments

on borrowings
    
    
    915
    
    
    
    1,719
    
    
    
    1,412
    
    
    
    8,417
    
    
    
    12,463Finance lease liabilities
    
    
    30
    
    
    
    73
    
    
    
    34
    
    
    
    135
    
    
    
    272Other non interest-
bearing liabilities
    
    
    2,287
    
    
    
    265
    
    
    
    
    
    
    
    
    
    
    
    2,552Derivatives payments
    
    
    859
    
    
    
    1,568
    
    
    
    575
    
    
    
    1,299
    
    
    
    4,301Derivatives receipts
    
    
    (1,027
    )
    
    
    (1,820
    )
    
    
    (1,022
    )
    
    
    (1,213
    )
    
    
    (5,082
    )Commodity contracts
    
    
    488
    
    
    
    203
    
    
    
    64
    
    
    
    37
    
    
    
    792Other contractual
obligationsCapital commitments
    
    
    1,376
    
    
    
    284
    
    
    
    67
    
    
    
    11
    
    
    
    1,738Operating leases
    
    
    91
    
    
    
    163
    
    
    
    172
    
    
    
    500
    
    
    
    926Energy commitments
    
    
    1,566
    
    
    
    1,064
    
    
    
    627
    
    
    
    278
    
    
    
    3,535Total at 31 March 2010
    
    
    8,975
    
    
    
    6,941
    
    
    
    5,636
    
    
    
    24,684
    
    
    
    46,236
 Off balance sheet arrangements
  Details of material litigation as at 31 March 2010
  Metering competition investigation
   Gas Distribution mains replacement investigation
 
   80      National Grid plc | Annual Report and Accounts 2009/10




---



##### 



KeySpan Department of Justice investigation
   KeySpan class action
  Related party transactions
   Retirement arrangements
     Net pension and other post-retirement obligations
 UK
    
    
    US
    
    
    TotalNet plan asset/(liability)
    
    £m
    
    
    £m
    
    
    £mAs at 1 April 2009
    
    
    (154
    )
    
    
    (2,657
    )
    
    
    (2,811
    )Exchange movements
    
    
    
    
    
    
    140
    
    
    
    140Current service cost
    
    
    (50
    )
    
    
    (88
    )
    
    
    (138
    )Expected return less interest
    
    
    (76
    )
    
    
    (136
    )
    
    
    (212
    )Curtailments, settlements and other
    
    
    (17
    )
    
    
    (38
    )
    
    
    (55
    )Actuarial gains/(losses) on plan assets
    
    
    2,420
    
    
    
    772
    
    
    
    3,192 on plan liabilities
    
    
    (3,038
    )
    
    
    (885
    )
    
    
    (3,923
    )Employer contributions
    
    
    269
    
    
    
    440
    
    
    
    709As at 31 March 2010
    
    
    (646
    )
    
    
    (2,452
    )
    
    
    (3,098
    )Plan assets
    
    
    14,883
    
    
    
    4,253
    
    
    
    19,136Plan liabilities
    
    
    (15,529
    )
    
    
    (6,705
    )
    
    
    (22,234
    )Net plan liability
    
    
    (646
    )
    
    
    (2,452
    )
    
    
    (3,098
    )
  Actuarial position
   Contributions
  
    
    National Grid UK Pension Scheme: the
Company made deficit contributions of £59 million during 2009/10 which ensured that the deficit
reported at the 2007 valuation was paid in full; and
    
    National Grid Electricity Supply Pension
Scheme: the Company made deficit contributions of £90 million during 2009/10 and anticipates no
further payments in the year to 31 March 2011, in line with the recovery plan.
   Plan assets
 
   Annual Report and Accounts 2009/10 | National Grid plc      81




---



##### 



Operating and Financial Review
 
 
 
 Accounting policies
  Basis of accounting
   Choices permitted under IFRS
  Presentation formats
 We use the nature of
expense method for our
income statement and total
our balance sheet to net
assets and total equity.
 In the income statement,
we present subtotals of
total operating profit,
profit before tax and
profit from continuing
operations, together
with additional
subtotals excluding
exceptional items,
remeasurements and
stranded cost
recoveries. Exceptional
items, remeasurements
and stranded cost
recoveries are presented
separately on the face
of the income statement.
 Customer contributions
 Contributions received
prior to 1 July 2009
towards capital
expenditure are recorded
as deferred income and
amortised in line with
the depreciation on the
associated asset.
  Financial instruments
 We normally opt to apply
hedge accounting in most
circumstances where this
is permitted. For net
investment hedges, we
have chosen to use the
spot rate method, rather
than the alternative
forward rate method.
  Timing of goodwill impairment reviews
 Goodwill impairment
reviews are carried out
annually in the final
quarter of the financial
year.
   Critical accounting policies
 Revenue
 Revenue includes an
assessment of energy and
accruals for
transportation services,
supplied to customers
between the date of the
last meter reading and the
year end. Changes to the
estimate of the energy or
transportation services
supplied during this
period would have an
impact on our reported
results.
 Unbilled revenues
at 31 March 2010 are
estimated at £415 million
in the US and £308 million
in the UK compared with
£522 million and £315
million respectively at 31
March 2009.
  Estimated economic lives of property, plant and equipment
 The reported amounts for
depreciation of property,
plant and equipment and
amortisation of
non-current intangible
assets can be materially
affected by the
judgements exercised in
determining their
estimated economic lives.
  Hedge accounting
 We use derivative
financial instruments to
hedge certain economic
exposures arising from
movements in exchange and
interest rates or other
factors that could affect
either the value of our
assets or liabilities or
our future cash flows.
Movements in the fair
values of derivative
financial instruments may
be accounted for using
hedge accounting where we
meet the relevant
eligibility, documentation
and effectiveness testing
requirements. If a hedge
does not meet the strict
criteria for hedge
accounting, or where there
is ineffectiveness or
partial ineffectiveness,
then the movements will be
recorded in the income
statement immediately
instead of being
recognised in other
comprehensive income or by
being offset by
adjustments to the
carrying value of debt.
 Exceptional items,
remeasurements and
stranded cost recoveries
 Exceptional items,
remeasurements and
stranded cost recoveries
are items of income and
expense 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
distort the comparability
of our financial
performance between
periods.
 Items of income or
expense that are
considered by management
for designation as
exceptional items include
such items as significant
restructurings,
write-downs or
impairments of
non-current assets,
significant changes in
environmental or
decommissioning
provisions, integration
of acquired businesses
and gains or losses on
disposals of businesses
or investments.
 Remeasurements comprise
gains or losses recorded
in the income statement
arising from changes in
the fair value of
commodity contracts and of
derivative financial
instruments. These fair
values increase or
decrease as a consequence
of changes in commodity
and financial indices and
prices over which we have
no control.
 Stranded cost
recoveries relate to the
recovery, through charges
to electricity customers
in upstate New York and in
New England, of costs
mainly incurred prior to
divestiture of generation
assets.
  Tax estimates
 Our tax charge is based
on the profit for the
year and tax rates in
effect. The determination
of appropriate provisions
for taxation requires us
to take into account
anticipated decisions of
tax authorities and
estimate our ability to
utilise tax benefits
through future earnings
and tax planning.
 
   82       National Grid plc Annual Report and Accounts 2009/10




---



##### 



Carrying value of
assets and potential for
impairments
 The carrying value of
assets recorded in the
consolidated balance sheet
could be materially
reduced if an impairment
were to be assessed as
being required. Impairment
reviews are carried out
either when a change in
circumstance is identified
that indicates an asset
might be impaired or, in
the case of goodwill,
annually. An impairment
review involves
calculating either or both
of the fair value or the
value in use of an asset
or group of assets and
comparing with the
carrying value in the
balance sheet.
 These calculations involve
the use of assumptions as
to the price that could be
obtained for, or the
future cash flows that
will be generated by, an
asset or group of assets,
together with an
appropriate discount rate
to apply to those cash
flows.
  Assets and liabilities
carried at fair value
 Certain assets and
liabilities, principally
financial investments,
derivative financial
instruments and certain
commodity contracts, are
carried in the balance
sheet at their fair value
rather than historical
cost.
 The fair value of
financial investments is
based on market prices, as
is that of derivative
financial instruments
where market prices exist.
Other derivative financial
instruments and those
commodity contracts
carried at fair value are
valued using financial
models, which include
judgements on, in
particular, future
movements in exchange and
interest rates as well as
equity and commodity
prices.
  Provisions
 Provisions are made for
liabilities, the timing
and amount of which is
uncertain. These include
provisions for the cost of
environmental
restoration and
remediation,
decommissioning of nuclear
facilities we no longer
own but to which we still
have a responsibility to
contribute, restructuring,
and employer and public
liability claims.
 Calculations of these
provisions are based on
estimated cash flows
relating to these costs,
discounted at an
appropriate rate where
significant. The amounts
and timing of cash flows
relating to these
liabilities are based on
management estimates
supported by external
consultants.
  Pensions and other
post-retirement
obligations
 Pensions and other
post-retirement benefit
obligations recorded in
the balance sheet are
calculated actuarially
using a number of
assumptions about the
future, including
inflation, salary
increases, length of
service and pension and
investment returns,
together with the use of a
discount rate to calculate
the present value of the
obligation.
 These assumptions can have
a significant impact on
both the pension
obligation recorded in the
balance sheet and on the
net charge recorded in the
income statement.
  Energy commitments
 Our energy commitments
relate to contractual
commitments to purchase
electricity or gas to
satisfy physical delivery
requirements to our
customers or for energy
that we use ourselves. In
managements judgement
these commitments meet the
normal purchase, sale or
usage exemption in IAS 39
and are not recognised in
the financial statements.
 If these commitments
were judged not to meet
the exemption under IAS
39 they would have to be
carried in the balance
sheet at fair value as
derivative instruments,
with movements in their
fair value
shown in the income
statement under
remeasurements.
 Revenue accruals
 A 10% change in our
estimate of unbilled
revenues at 31 March 2010
would result in an
increase or decrease in
our recorded net assets
and profit for the year
by approximately £47
million net of tax.
  Asset useful lives
 An increase in the
economic useful lives of
assets of one year on
average would reduce our
annual depreciation charge
on property, plant and
equipment by £39 million
(pre-tax) and our annual
amortisation charge on
intangible assets by £7
million (pre-tax).
  Hedge accounting
 If using our derivative
financial instruments,
hedge accounting had not
been achieved during the
year ended 31 March 2010
then the profit after tax
for the year would have
been £341 million higher
than that reported net of
tax, and net assets would
have been £299 million
lower.
 Assets carried at fair
value
 A 10% change in assets and
liabilities carried at
fair value would result in
an increase or decrease in
the carrying value of
derivative financial
instruments and commodity
contract liabilities of
£87 million and £22
million respectively.
  Provisions
 A 10% change in the
estimates of future cash
flows estimated in respect
of provisions for
liabilities would result
in an
increase or decrease in
our provisions of
approximately £171
million.
  Pensions and other
post-retirement
obligations
 Our pension and
post-retirement
obligations are sensitive
to the actuarial
assumptions used. A 0.1%
increase in the discount
rate, a 0.5% increase in
the rate of salary
increases or an increase
of one year in life
expectancy would result in
a change in the net
obligation of £317
million, £166 million and
£670 million and a change
in the annual pension cost
of £4 million, £8 million
and £5 million
respectively.
   Accounting developments
 Accounting standards, amendments to standards and interpretations adopted in 2009/10
  Accounting standards, amendments to standards and interpretations not yet adopted
 
   Annual Report and Accounts 2009/10 | National Grid plc       83




---



##### 



Directors Reports
 
 
 
 Corporate Governance
  Chairmans foreword
       Sir John Parker
 Governance framework
 
   84       National Grid plc Annual Report and Accounts 2009/10




---



##### 



Name
    
    Attendance*ChairmanSir John Parker
    
    10 of 10Chief ExecutiveSteve Holliday
    
    10 of 10Executive DirectorsMark Fairbairn
    
    10 of 10Tom King
    
    10 of 10Steve Lucas
    
    9 of 10Nick Winser
    
    10 of 10Non-executive DirectorsKen Harvey (Senior Independent Director)
    
    10 of 10Linda Adamany
    
    10 of 10Philip Aiken
    
    10 of 10John Allan
    
    9 of 10Stephen Pettit
    
    10 of 10Maria Richter
    
    10 of 10George Rose
    
    7 of 10Bob Catell (Deputy Chairman to 27 July 2009)
    
    3 of 3
 *
    
    Attendance is expressed as number of meetings
attended out of number possible or applicable for the
individual Director
   re-election
 Non-executive Director independence
  Roles of the Chairman, Chief Executive and
Senior Independent Director
 
   Annual Report and Accounts 2009/10 | National Grid plc       85




---



##### 



Directors Reports
 Corporate Governance continued
  Non-executive
 Director development
   
    
    informing them at each Board meeting of the latest training courses which may be of
interest;
    
    attendance at key site visits;
    
    informing them of legal and corporate governance updates and best practice; and
    
    management presentations.
  
    
    external coaching;
    
    attendance at external courses and business schools; and
    
    experience of other boardrooms through non-executive appointments.
 Performance evaluation
 
   
 86       National Grid plc Annual Report and Accounts 2009/10




---



##### 




    
    enhancement of the Non-executive Directors familiarity and interaction with each
line of business;
    
    development of a more standard presentation format for in depth line of business
reviews, in order to promote consistency and ease of comparison; and
    
    greater transparency of key performance indicator data provided to the Board.
  The
Board and its Committees
  
    
    corporate governance;
    
    strategy, financial policy and approval of the budget and business plan;
    
    Director/employee issues such as Director succession planning, with input and
recommendations from the Nominations Committee; and
    
    stock exchange and listing requirements such as dividend approval/recommendation
and approval of results announcements, interim management statements and the Annual Report and
Accounts.
  
    
    safety, health and the environment;
    
    the financial status of the Company;
    
    operational headlines from the Companys businesses together with a detailed
update from one of the lines of business on a rotating basis;
    
    updates on business development and strategy implementation;
 
    
    updates on external matters
affecting the Company;
    
    reports from the Board Committees;
and
    
    updates on the governance of the Company
and its businesses and any legal or new risk issues
that the Board should be aware of.
    Audit Committee
    Name
    
    Attendance*George Rose (chairman)
    
    6 of 6Linda Adamany
    
    6 of 6Philip Aiken
    
    5 of 6Maria Richter
    
    5 of 6
 *
    
    Attendance is expressed as number of meetings
attended out of number possible for the individual
Director
 
   Annual Report and Accounts 2009/10 | National Grid plc       87




---



##### 



Directors Reports
 Corporate Governance continued
  
    
    a review of the level and constitution of external audit and non-audit fees and the
independence and objectivity of the external auditors, including an evaluation of the external
audit process globally, incorporating a review of the expertise of the audit firm;
    
    monitoring and reviewing the effectiveness of internal (corporate) audit activities,
including discussions with the director of corporate audit without management present;
    
    reviewing the effectiveness of the Companys financial reporting, internal controls and
compliance with applicable legal requirements and monitoring risk and compliance management
procedures across the Company and reviewing specific risks (details of such risks can be found on
pages 93 to 95);
    
    receiving reports from the business separation compliance officer, as required under
National Grid Gas plcs gas transporter licences;
    
    reviewing the Companys results statements, interim management statements and Annual
Report and Accounts before publication and making appropriate recommendations to the Board
following review;
    
    reviewing accounting policies in light of international accounting developments;
    
    receiving reports where appropriate in accordance with its terms of reference on
business conduct issues, including any instances of alleged fraud and actions taken as a result of
investigations and a review of the whistleblowing policy; and
    
    receiving reports from the Companys cross functional steering group that has been
established to ensure appropriate awareness of and actions in relation to risks arising from the
current economic climate.
 Executive Committee
 
   88       National Grid plc Annual Report and Accounts 2009/10




---



##### 



Name
    
    Attendance*Steve Holliday (chairman)
    
    12 of 12Mark Fairbairn
    
    12 of 12Tom King
    
    11 of 12Steve Lucas
    
    12 of 12Nick Winser
    
    11 of 12David Lister
    
    8 of 9Helen Mahy
    
    12 of 12George Mayhew
    
    9 of 9Mike Westcott
    
    7 of 9Alison Wood
    
    8 of 9
 *
    
    Attendance is expressed as number of meetings attended out of number possible or applicable for
the individual
  
    
    the financial, operational, safety and environmental performance of the Company and its businesses;
    
    strategic business development and implementation;
    
    approving capital and operational expenditure under the
specific authorities delegated to it by the Board;
    
    global regulatory matters;
    
    business conduct, risk and compliance reports;
    
    adequacy and effectiveness of internal control and risk management;
    
    global inclusion and diversity matters;
    
    global outsourcing;
    
    global human resource matters; and
    
    global information systems strategic issues.
  Finance Committee
 Name
    
    Attendance*Maria Richter (chairman)
    
    4 of 4John Allan
    
    3 of 4Steve Holliday
    
    3 of 4Steve Lucas
    
    3 of 4Stephen Pettit
    
    4 of 4
 *
    
    Attendance is expressed as number of meetings attended out of number possible for the individual
Director
  
    
    long-term funding requirements;
    
    setting and reviewing treasury management guidelines and policy in light of market conditions;
    
    taxation issues for the Company;
    
    treasury performance updates; and
    
    pensions updates.
 The ability to raise finance is a key factor to the success of the Company, especially with the
volume of planned capital investment in both the UK and US and the recent global economic downturn.
While market conditions are likely to remain testing for some time, the knowledge and experience of
the treasury, taxation and pensions personnel at National Grid, many of whom present to the
Committee, provide the members with the confidence that National Grid is well positioned to meet
the financial challenges ahead. Maria Richter, Committee chairman
 Nominations Committee
   Name
    
    Attendance*Sir John Parker (chairman)
    
    6 of 6Ken Harvey
    
    6 of 6Maria Richter
    
    6 of 6George Rose
    
    5 of 6
 *
    
    Attendance is expressed as number of meetings attended out of number possible for the individual
Director
 
   
 Annual Report and Accounts 2009/10 | National Grid plc     89




---



##### 



Directors Reports
 Corporate Governance continued
  
    
    the size of the Board, its structure and composition;
    
    changes to the composition of Board Committees;
    
    the annual Board and Committee evaluation process;
    
    succession planning for Board members; and
    
    development and succession plans for senior management, as developed by the Chief Executive and
global human resources director.
 Remuneration Committee
    Name
    
    Attendance*John Allan (chairman)
    
    7 of 7Ken Harvey
    
    7 of 7Stephen Pettit
    
    7 of 7George Rose
    
    6 of 7
 *
    
    Attendance is expressed as number of meetings attended out of number possible for the individual
Director
  Risk & Responsibility Committee
 Name
    
    Attendance*Stephen Pettit (chairman)
    
    4 of 4Linda Adamany
    
    4 of 4Philip Aiken
    
    4 of 4Ken Harvey
    
    4 of 4Bob Catell (retired 27 July 2009)
    
    1 of 1
 *
    
    Attendance is expressed as number of meetings attended out of number possible or applicable for
the individual Director
   
    
    reviewed serious incident and near miss reports;
    
    considered the current and projected environmental impact of the Company, including climate
change;
    
    reviewed safety, health and environment audit plans and the outcome of such audits;
    
    reviewed progress in embedding a process safety culture;
    
    considered specific identified future risks and plans for minimising such risks;
    
    reviewed reports on business conduct issues; and
    
    considered reports and updates from external safety, health, environment and security advisors.
   All Committee members enjoy and appreciate the opportunity to meet with employees at all levels of
the organisation and to hear their views and opinions on matters such as safety, environment,
health and other important risks. This enhances significantly our understanding of the matters when
they are brought to our meetings in a more formal way. Most of the Non-executive Directors together
with the Chairman of the Board also took part in an inclusion and diversity workshop. We explored
what the Company means by inclusion and diversity and why both are so important to the Companys
success. We also considered what we as Non-executive Directors can do to support the Company on its
inclusion and diversity journey. We continually look to apply the knowledge gained at the workshop
in our Company meetings and site visits.   Stephen Pettit, Committee chairman
 
   
 90     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



Disclosure Committee
   Shareholders
 Corporate governance practices: differences from New York Stock Exchange (NYSE) listing standards
  
    
    different tests of independence for Board members are applied under the Code and Section 303A;
    
    there is no requirement for a separate corporate governance committee in the UK; all Directors on
the Board discuss and decide upon governance issues and the Nominations Committee makes
recommendations to the Board with regard to certain of the responsibilities of a corporate
governance committee;
    
    while the Company reports compliance with the Code in each Annual Report and Accounts, there is
no requirement to adopt and disclose separate corporate governance guidelines; and
    
    while the Audit Committee, having a membership of four independent Non-executive Directors,
exceeds the minimum membership requirements under Section 303A of three independent Non-executive
Directors, it should be noted that the quorum for a meeting of the Audit Committee, of two
independent Non-executive Directors, is less than the minimum membership requirements under Section
303A.
 Risk management and internal control
 
   
 Annual Report and Accounts 2009/10 | National Grid plc     91




---



##### 



Directors Reports
 Corporate Governance continued
  
    
    the receipt of a Letter of Assurance from the Chief Executive, which consolidates key matters of
interest raised through the year-end assurance process;
    
    assurance from its Committees as appropriate, with particular reference to the reports received
from the Audit Committee and Risk & Responsibility Committee on the reviews undertaken by them at
their respective meetings; and
    
    assurances in relation to the certifications required to be given under the Sarbanes-Oxley Act,
required as a result of the Companys NYSE listing.
 Internal control  information assurance
  Internal control over financial 
reporting  Sarbanes-Oxley
  Risk management
 Compliance management
    
 92     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



Risk factors
  Changes in law or regulation and decisions by governmental bodies or regulators could have a
material adverse effect on our results of operations.
  Breaches of, or changes in, environmental, climate change or health and safety laws or
regulations could expose us to increased costs, claims for financial compensation and adverse
regulatory consequences, as well as damaging our reputation.
 Network failure or interruption, the inability to carry out critical non network operations
and damage to infrastructure may have significant material adverse impacts on both our financial
position and reputation.
  Our results of operations depend on a number of factors relating to business performance
including performance against regulatory targets and the delivery of anticipated cost and
efficiency savings.
 
   
 Annual Report and Accounts 2009/10 | National Grid plc     93




---



##### 



Directors Reports
 Corporate Governance continued
  Our reputation may be harmed if consumers of energy suffer a disruption to their supply.
  Fluctuations in exchange rates (in particular in the dollar to sterling exchange rate),
interest rates and commodity price indices and settlement of hedging arrangements could have a
significant impact on our results of operations, indebtedness and cash flow.
   We are subject to restrictions with respect to our borrowing and debt arrangements, and our
funding costs and access to financing may be adversely affected by changes to credit ratings and by
prolonged periods of market volatility or illiquidity.
 Our results of operations could be affected by deflation or inflation.
  Business development activity, including acquisitions and disposals, may be based on
incorrect assumptions or conclusions; there may be unforeseen significant liabilities or there may
be other unanticipated or unintended effects.
  Future funding requirements of our pension schemes and other post-retirement benefits could
materially adversely affect our results of operations.
    
 94     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



New or revised accounting standards, rules and interpretations could have an adverse effect
on our reported financial results. Changes in law and accounting standards could increase our
effective rate of tax.
  Customers and counterparties to our transactions may fail to perform their obligations, which
could harm our results of operations.
  Our operating results may fluctuate on a seasonal and quarterly basis.
  The loss of key personnel or the inability to attract, train or retain qualified personnel
could affect our ability to implement our strategy and have a material adverse effect on our
business, financial condition, results of operations and prospects.
 National Grid plc is a holding company and therefore depends on the operational and financial
performance of its subsidiaries.
   Helen Mahy
 
   
 Annual Report and Accounts 2009/10 | National Grid plc     95




---



##### 



Directors Reports
 
 
 Directors Report
  Directors
  Code of Ethics
  Principal activities and business review
  Dividends
  Political donations and expenditure
  Charitable donations
 Financial instruments
  Contractual arrangements
  Post balance sheet events
 17 43
 Change of control provisions
    Future developments
  Research and development
  Share capital
 17 43
    
 96     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



1 3 1 3
 
 Employees
   www.nationalgrid.com.
 Policy and practice on payment of creditors
 Audit information
  Articles of Association
 www. nationalgrid.com.
 Material interests in shares
  % of voting rightsBlack Rock Inc
    
    
    4.99Legal and General Group plc
    
    
    4.35Crescent Holding GmbH
    
    
    4.34Capital Group Companies, Inc
    
    
    3.75FMR Corp
    
    
    3.06
  Annual General Meeting
   Helen Mahy
 
   
 Annual Report and Accounts 2009/10 | National Grid plc     97




---



##### 



Directors Reports
 
 
 Directors Remuneration Report
  John Allan
  Remuneration Committee
 Non-executive
 
    
    Towers Watson (formerly Towers Perrin), independent remuneration advisors (mid-November
2009 onwards). It also provides general remuneration and benefits advice to the Company.
Prior to that, Deloitte LLP, independent remuneration advisors (April 2009 until mid-November 2009),
who also provide taxation and financial advice to the Company;
    
    Alithos Limited, provision of Total Shareholder Return calculations for the Performance
Share Plan and Executive Share Option Plan;
    
    Linklaters LLP, advice relating to Directors service contracts as well as
providing other legal advice to the Company; and
    
    KPMG LLP, advice relating to pension taxation legislation.
 Remuneration policy
  
    
    total rewards should be set at levels that are competitive in the relevant market. For UK-based Executive
Directors, the primary focus is placed on companies ranked (in terms of market capitalisation)
11-40 in the FTSE 100. This peer group is therefore weighted towards companies
smaller than National Grid and positioning the package slightly below median
against this group is considered to be appropriate for a large, international
but predominately regulated business. For US-based Executive Directors, the
primary focus is placed on US utility companies;
    
    a significant proportion of the Executive Directors total reward should be performance based. Performance
based incentives will be earned through the achievement of demanding targets
for short-term business and individual performance as well as long-term shareholder
value creation, consistent with our Framework for Responsible Business which can
be found at: www.nationalgrid.com/corporate/About+Us/ CorporateGovernance/Other;
    
    for higher levels of performance, rewards should be substantial but not excessive;
    
    incentive plans, performance measures and targets should be stretching and aligned
as closely as possible with shareholders long-term interests; and
    
    remuneration structures should motivate employees to enhance the Companys performance without
encouraging them to take undue risks, whether financial or operational.
    
 98     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



Executive Directors remuneration
  
    
    salary;
    
    Annual Performance Plan including the Deferred Share Plan;
    
    long-term incentive, the Performance Share Plan;
    
    all-employee share plans;
    
    pension contributions; and
    
    non-cash benefits.
 Salary
  Annual Performance Plan including the Deferred Share Plan (DSP)
 Level of performance achieved in 2009/10as determined by the Remuneration CommitteeFinancial measures
    
    Company targets
    
    Divisional targetsAdjusted EPS
    
    stretchConsolidatedcash flow
    
    stretchReturn on equity
    
    stretchOperating profit
    
    
    
    varied performance
  (i), (ii), (iii)Line of business
returns targets
    
    
    
    varied performance
  (iv), (v), (vi)
 (i)
    
    Transmission at stretch.(ii)
    
    Gas Distribution between target and stretch.(iii)
    
    Electricity Distribution & Generation between target and stretch.(iv)
    
    Transmission at stretch (UK), at target (US).(v)
    
    Gas Distribution between target and stretch (UK), at threshold (US)(vi)
    
    Electricity Distribution & Generation between target and stretch (US only).
 
   
 Annual Report and Accounts 2009/10 | National Grid plc     99




---



##### 



Directors Reports
 Directors Remuneration Report continued
  Long-term incentive  Performance Share Plan (PSP)
 Vested 2006 PSP award
  Recruitment promise  Special Retention Award (SRA)
  Share ownership guidelines
  Share dilution through the operation of share-based incentive plans
  Executive Directors remuneration package
    
 100     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



Executive Directors remuneration package
  
  All-employee share plans
 
    
    Sharesave: Employees resident in the UK, including UK-based
Executive Directors, are eligible to participate in HM Revenue & Customs approved all-employee
Sharesave schemes. Under these schemes, participants may contribute between £5 and £250 in total
each month, for a fixed period of three years, five years or both. Contributions are taken from net
salary. At the end of the savings period, these contributions can be used to purchase ordinary
shares in National Grid at a discount capped at 20% of the market price set at the launch of each
scheme.
    
    Share Incentive Plan (SIP): Employees resident in the UK, including UK-based Executive Directors,
are eligible to participate in the SIP. Contributions up to £125 are deducted from participants
gross salary and used to purchase ordinary shares in National Grid each month. The shares are
placed in trust and if they are left in trust for at least five years, they can be removed free of
UK income tax and National Insurance Contributions.
    
    US Incentive Thrift Plans: Employees of National Grids US companies (including US-based
Executive Directors) are eligible to participate in the Thrift Plans, which are tax-advantaged
savings plans (commonly referred to as 401(k) plans). These are defined contribution pension plans
that give participants the opportunity to invest up to applicable Federal salary limits ie a
maximum of 50% of salary (pre-tax) limited to US$16,500 for those under the age of 50 and US$22,000
for those over 50 for calendar years 2009 and 2010; and/or up to 15% of salary (post-tax) up to
applicable limits (US$245,000 for calendar years 2009 and 2010). Generally, the Company matches
100% of the first 2% and 75% of the next 4% of salary contributed, resulting in a maximum matching
contribution of 5% of salary up to the Federal salary cap. For employees in legacy KeySpan plans,
the Company matches 50% of employees contributions up to a maximum Company contribution of 3%.
Employees may invest their own and Company contributions in National Grid shares or various mutual
fund options. Legacy KeySpan employees who invest in National Grid shares do so with a 10%
discount.
    
    Employee Stock Purchase Plan (ESPP): Employees of National
Grids US companies (including US-based Executive Directors) are eligible to participate in the
ESPP (commonly referred to as a 423b plan). Eligible employees have the opportunity to purchase
ADSs on a monthly basis at a 10% discounted price. Under the plan employees may contribute up to
20% of base pay each year up to a maximum annual contribution of US$20,000 to purchase ADSs in
National Grid. Any ADSs purchased through the ESPP may be sold at any time, however, there are tax
advantages for ADSs held for at least two years from the offer date.
 Pensions
    Non-cash benefits
  Flexible benefits plan
 
   
 Annual Report and Accounts 2009/10 | National Grid plc     101




---



##### 



Directors Reports
 Directors Remuneration Report continued
  Executive Directors service contracts, termination and mitigation
   Date of contract
    
    Notice periodExecutive DirectorsSteve Holliday
    
    1 April 2006
    
    12 monthsSteve Lucas
    
    13 June 2002
    
    12 monthsNick Winser
    
    28 April 2003
    
    12 monthsMark Fairbairn
    
    23 January 2007
    
    12 monthsTom King
    
    11 July 2007
    
    12 months
 External appointments and retention of fees
  Company

    
    Retained fees (£)Executive DirectorsSteve Holliday
    
    Marks and Spencer Group plc
    
    
    79,000Steve Lucas
    
    Compass Group PLC
    
    
    90,000Nick Winser
    
    Kier Group plc
    
    
    41,000
 Non-executive Directors remuneration
 Non-executive Directors letters of appointment
  Date of
    
    Date of nextappointment
    
    election (i)Non-executive DirectorsSir John Parker
    
    21 October 2002
    
    2010 AGMKen Harvey
    
    21 October 2002
    
    2010 AGMLinda Adamany
    
    1 November 2006
    
    2010 AGMPhilip Aiken
    
    15 May 2008
    
    2010 AGMJohn Allan
    
    1 May 2005
    
    2010 AGMStephen Pettit
    
    21 October 2002
    
    2010 AGMMaria Richter
    
    1 October 2003
    
    2010 AGMGeorge Rose
    
    21 October 2002
    
    2010 AGMBob Catell (ii)
    
    1 April 2009
    
    n/a
 (i)
    
    The Board has decided that all Directors will seek re-election annually.(ii)
    
    Bob Catell retired as a Non-executive Director on 27 July 2009.
 Performance graph
    
 National Grid plc
    
 102     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



Remuneration during the year ended 31 March 2010
  1. Directors emoluments
  Year ended31 MarchTable 1A
    
    
    
    
    
    Year ended 31 March 2010
    
    2009Annual
    
    
    Benefits
    
    
    BenefitsPerformance
    
    
    in kind (ii)
    
    
    in kind (ii)
    
    
    OtherSalary (i)
    
    
    Plan
    
    
    (cash)
    
    
    (non-cash)
    
    
    emoluments
    
    
    Total
    
    
    Total£000s
    
    
    £000s
    
    
    £000s
    
    
    £000s
    
    
    £000s
    
    
    £000s
    
    
    £000sExecutive DirectorsSteve Holliday
    
    
    925
    
    
    
    1,323
    
    
    
    12
    
    
    
    13
    
    
    
    
    
    
    
    2,273
    
    
    
    2,206Steve Lucas (iii)
    
    
    521
    
    
    
    730
    
    
    
    
    
    
    
    19
    
    
    
    
    
    
    
    1,270
    
    
    
    1,259Nick Winser
    
    
    462
    
    
    
    652
    
    
    
    
    
    
    
    15
    
    
    
    
    
    
    
    1,129
    
    
    
    1,096Mark Fairbairn (iii)
    
    
    461
    
    
    
    527
    
    
    
    
    
    
    
    14
    
    
    
    
    
    
    
    1,002
    
    
    
    1,089Tom King (iv)
    
    
    665
    
    
    
    898
    
    
    
    5
    
    
    
    14
    
    
    
    
    
    
    
    1,582
    
    
    
    1,396Total
    
    
    3,034
    
    
    
    4,130
    
    
    
    17
    
    
    
    75
    
    
    
    
    
    
    
    7,256
    
    
    
    7,046
 (i)
    
    The Executive Directors decided voluntarily to forego salary increases in 2009. It is
anticipated their salaries will next be reviewed in June 2010.(ii)
    
    Benefits in kind comprise benefits such as private medical insurance, life assurance, either a
fully expensed car or cash in lieu of a car and the use of a driver when required.(iii)
    
    These Executive Directors participate in the UK flexible benefits plan which operates by way of salary
sacrifice, therefore, their salaries are reduced by the benefits they have purchased. The value of
these benefits is included in the Benefits in kind (non-cash) figure. The values are: Steve Lucas
£3,688 and Mark Fairbairn £801.(iv)
    
    For US-based Executive Directors, the exchange rate averaged over the year 1 April 2009 to 31
March 2010 to convert US dollars to UK pounds sterling is $1.579:£1.
 Year ended31 MarchTable 1B
    
    Year ended 31 March 2010
    
    
    2009OtherFees
    
    
    emoluments
    
    
    Total
    
    
    Total£000s
    
    
    £000s
    
    
    £000s
    
    
    £000sNon-executive DirectorsSir John Parker (i)
    
    
    550
    
    
    
    65
    
    
    
    615
    
    
    
    604Ken Harvey
    
    
    80
    
    
    
    
    
    
    
    80
    
    
    
    83Linda Adamany
    
    
    78
    
    
    
    
    
    
    
    78
    
    
    
    75Philip Aiken
    
    
    68
    
    
    
    
    
    
    
    68
    
    
    
    59John Allan
    
    
    82
    
    
    
    
    
    
    
    82
    
    
    
    76Stephen Pettit
    
    
    82
    
    
    
    
    
    
    
    82
    
    
    
    84Maria Richter
    
    
    94
    
    
    
    
    
    
    
    94
    
    
    
    92George Rose
    
    
    81
    
    
    
    
    
    
    
    81
    
    
    
    84Bob Catell (ii)
    
    
    22
    
    
    
    
    
    
    
    22
    
    
    
    n/aTotal
    
    
    1,137
    
    
    
    65
    
    
    
    1,202
    
    
    
    1,157
 (i)
    
    Sir John Parkers other emoluments comprise a fully expensed car, private medical insurance and
life assurance.(ii)
    
    Bob Catell was a Non-executive Director for the period 1 April 2009 to 27 July 2009, after
having retired from the Board as an Executive Director on 31 March 2009.
 
   
 Annual Report and Accounts 2009/10 | National Grid plc     103




---



##### 



Directors Reports
 Directors Remuneration Report continued
  2. Directors pensions
  Transfer valueof increase inaccrued benefitAdditional
    
    
    in the yearAdditional
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    benefit earned in
    
    
    endedPersonal
    
    
    benefit earned
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Increase in
    
    
    the year ended
    
    
    31 March 2010contributions
    
    
    during year
    
    
    Accrued
    
    
    Transfer value of accrued
    
    
    transfer
    
    
    31 March 2010
    
    
    (excludingmade to the
    
    
    ended
    
    
    entitlement as at
    
    
    benefits as at 31 March (ii)
    
    
    value less
    
    
    (excluding
    
    
    inflationscheme during
    
    
    31 March 2010
    
    
    31 March 2010
    
    
    
    
    
    
    
    
    
    
    Directors
    
    
    inflation)
    
    
    & Directorsthe year (i)
    
    
    pension
    
    
    pension
    
    
    2010
    
    
    2009
    
    
    contributions
    
    
    pension
    
    
    contributions)Table 2
    
    £000s
    
    
    £000s
    
    
    £000s
    
    
    £000s
    
    
    £000s
    
    
    £000s
    
    
    £000s
    
    
    £000sSteve Holliday (iii)
    
    
    12
    
    
    
    33
    
    
    
    314
    
    
    
    5,995
    
    
    
    4,740
    
    
    
    1,243
    
    
    
    33
    
    
    
    610Steve Lucas
    
    
    21
    
    
    
    19
    
    
    
    269
    
    
    
    6,006
    
    
    
    4,877
    
    
    
    1,108
    
    
    
    19
    
    
    
    408Nick Winser (iv)
    
    
    19
    
    
    
    11
    
    
    
    196
    
    
    
    3,379
    
    
    
    2,802
    
    
    
    559
    
    
    
    11
    
    
    
    158Mark Fairbairn (v)
    
    
    19
    
    
    
    13
    
    
    
    199
    
    
    
    3,714
    
    
    
    3,084
    
    
    
    612
    
    
    
    13
    
    
    
    201Tom King (vi)
    
    
    
    
    
    
    50
    
    
    
    169
    
    
    
    832
    
    
    
    442
    
    
    
    390
    
    
    
    50
    
    
    
    246
 (i)
    
    The UK-based Executive Directors participate in FPS, a salary sacrifice arrangement, the
effects of which have not been taken into account when reporting their personal contributions
above.(ii)
    
    The transfer values shown at 31 March 2009 and 2010 represent the value of each Executive
Directors accrued benefits based on total service to the relevant date. Transfer values for the
UK-based Executive Directors have been calculated in line with transfer value bases agreed with the
UK Pension Scheme Trustees. The transfer values for the US-based Executive Director have been
calculated using discount rates based on high quality US corporate bonds and associated yields at
the relevant dates.(iii)
    
    In addition to the pension above, there is an accrued lump sum entitlement of £108,000 as at
31 March 2010. The increase to the accumulated lump sum including inflation was £1,000 and
excluding inflation was £1,000 in the year to 31 March 2010. The transfer value information above
includes the value of the lump sum.(iv)
    
    In addition to the pension above, there is an accrued lump sum entitlement of £260,000 as at
31 March 2010. The increase to the accumulated lump sum including inflation was £2,000 and
excluding inflation was £2,000 in the year to 31 March 2010. The transfer value information above
includes the value of the lump sum.(v)
    
    In addition to the pension above, there is an accrued lump sum entitlement of £280,000 as at 31
March 2010. The increase to the accumulated lump sum including inflation was £2,000 and excluding
inflation was £2,000 in the year to 31 March 2010. The transfer value information above includes
the value of the lump sum.(vi)
    
    The exchange rate as at 31 March 2010 was $1.51845:£1 and as at 31 March 2009 was $1.4368:£1.
In addition to the pension quoted above, through participation in the 401(k) plan in the US, the
Company made contributions worth £4,840 to a defined contribution arrangement.
    
 104     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



3. Directors interests in share options
  Options
    
    
    
    
    
    
    Optionsexercised or
    
    
    Market price
    
    
    granted
    
    
    Options held
    
    
    Exercise priceOptions held at
    
    
    lapsed during
    
    
    at exercise
    
    
    during
    
    
    at 31 March
    
    
    per share
    
    
    Normal exerciseTable 3
    
    1 April 2009
    
    
    the year
    
    
    (pence)
    
    
    the year
    
    
    2010
    
    
    (pence)
    
    
    periodSteve HollidayESOP
    
    
    67,497
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    67,497
    
    
    
    481.5
    
    
    June 2005 to June 2012Share Match
    
    
    10,350
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,350
    
    
    100 in total
    
    
    June 2005 to June 201214,083
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,083
    
    
    100 in total
    
    
    June 2006 to June 201318,713
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,713
    
    
    nil
    
    
    May 2007 to May 2014Sharesave
    
    
    3,432
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,432
    
    
    
    488
    
    
    Apr 2014 to Sep 2014Total
    
    
    114,075
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    114,075Steve LucasESOP
    
    
    54,404
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54,404
    
    
    
    434.25
    
    
    Dec 2005 to Dec 2012Sharesave
    
    
    1,693
    (i)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,693
    
    
    
    558
    
    
    Apr 2010 to Sep 2010
    
    
    
    
    
    
    
    
    
    
    
    2,990
    
    
    
    2,990
    
    
    
    520
    
    
    Apr 2015 to Sep 2015Total
    
    
    56,097
    
    
    
    
    
    
    
    
    
    
    
    2,990
    
    
    
    59,087Nick WinserESOP
    
    
    19,755
    
    
    
    19,755
    (ii)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    531.5
    
    
    June 2003 to June 2010Total
    
    
    19,755
    
    
    
    19,755
    
    
    
    
    
    
    
    
    
    
    
    Mark FairbairnESOP
    
    
    2,180
    
    
    
    2,180
    (iii)
    
    
    539.5
    
    
    
    
    
    
    
    
    
    
    
    435.75
    
    
    July 2002 to July 200933,489
    
    
    
    33,489
    (ii)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    531.5
    
    
    June 2003 to June 201031,152
    
    
    
    31,152
    (iii)
    
    
    539.5
    
    
    
    
    
    
    
    
    
    
    
    481.5
    
    
    June 2005 to June 2012Sharesave
    
    
    862
    (i)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    862
    
    
    
    383
    
    
    Apr 2010 to Sep 20101,760
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,760
    
    
    
    558
    
    
    Apr 2012 to Sep 2012512
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    512
    
    
    
    655
    
    
    Apr 2013 to Sep 2013Total
    
    
    69,955
    
    
    
    66,821
    
    
    
    
    
    
    
    
    
    
    
    3,134
 (i)
    
    On 1 April 2010 Steve Lucas and Mark Fairbairn exercised Sharesave options over 1,693 and 862
shares respectively. The market price at the date of exercise was 647.5p.(ii)
    
    The performance
condition was not satisfied for the ESOP award granted in 2000. As a result, the awards have lapsed
in full.(iii)
    
    Mark Fairbairn exercised simultaneously two ESOP awards over a total of 33,332 shares. The
market price at the date of exercise was 539.5p.
 
   
 Annual Report and Accounts 2009/10 | National Grid plc     105




---



##### 



Directors Reports
 Directors Remuneration Report continued
  3. Directors interests in share options continued
 Executive Share Option Plan (ESOP)
    Grants made in 2000
  4. Directors interests in the PSP, DSP and SRA
  Table 4
    
    
    
    
    
    PSP, DSPand SRA
    
    
    
    
    
    
    
    
    
    
    Releaseconditional
    
    
    Awards
    
    
    Awards
    
    
    of PSP
    
    
    
    
    
    
    Market price
    
    
    
    
    
    
    ConditionalType of
    
    awards at
    
    
    lapsed
    
    
    vested
    
    
    awards
    
    
    Awards granted
    
    
    at award
    
    
    
    
    
    
    awards ataward

    
    1 April 2009
    
    
    during year
    
    
    in year
    
    
    in year
    
    
    during year
    
    
    (pence except#)
    
    
    Date of award
    
    
    31 March 2010
    
    
    Release dateSteve HollidayPSP
    
    
    100,801
    
    
    
    
    
    
    
    
    
    
    
    100,801
    (i)
    
    
    
    
    
    
    527.03
    
    
    June 2005
    
    
    
    
    
    
    June 2009PSP
    
    
    126,788
    
    
    
    
    
    
    
    126,788
    
    
    126,788
    (ii)
    
    
    
    
    
    
    591.5382
    
    
    June 2006
    
    
    
    
    
    
    Mar 2010PSP
    
    
    139,217
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    740.75
    
    
    June 2007
    
    
    
    139,217
    
    
    June 2011PSP
    
    
    77,247
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    800.9919
    
    
    Nov 2007
    
    
    
    77,247
    
    
    Nov 2011PSP
    
    
    276,947
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    667.9967
    
    
    June 2008
    
    
    
    276,947
    
    
    June 2012PSP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    342,353
    
    
    
    540.3773
    
    
    June 2009
    
    
    
    342,353
    
    
    June 2013DSP
    
    
    36,389
    
    
    
    
    
    
    36,389
    (iii)
    
    
    
    
    
    
    
    
    
    
    583.96
    
    
    June 2006
    
    
    
    
    
    
    June 2009DSP
    
    
    42,435
    
    
    
    
    
    
    42,435
    (iv)
    
    
    
    
    
    
    
    
    
    
    726.87
    
    
    June 2007
    
    
    
    
    
    
    Mar 2010DSP
    
    
    85,307
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    697.48
    
    
    June 2008
    
    
    
    85,307
    
    
    June 2011DSP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    68,960
    (v)
    
    
    541.14
    
    
    June 2009
    
    
    
    68,960
    
    
    June 2012Total
    
    
    
    
    
    
    885,131
    
    
    
    
    
    
    
    205,612
    
    
    
    227,589
    
    
    
    411,313
    
    
    
    
    
    
    
    
    
    
    
    990,031Steve LucasPSP
    
    
    99,615
    
    
    
    
    
    
    
    
    
    
    
    99,615
    (i)
    
    
    
    
    
    
    527.03
    
    
    June 2005
    
    
    
    
    
    
    June 2009PSP
    
    
    101,430
    
    
    
    
    
    
    
    101,430
    
    
    101,430
    (ii)
    
    
    
    
    
    
    591.5382
    
    
    June 2006
    
    
    
    
    
    
    Mar 2010PSP
    
    
    84,930
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    740.75
    
    
    June 2007
    
    
    
    84,930
    
    
    June 2011PSP
    
    
    47,125
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    800.9919
    
    
    Nov 2007
    
    
    
    47,125
    
    
    Nov 2011PSP
    
    
    157,186
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    667.9967
    
    
    June 2008
    
    
    
    157,186
    
    
    June 2012PSP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    194,308
    
    
    
    540.3773
    
    
    June 2009
    
    
    
    194,308
    
    
    June 2013DSP
    
    
    34,882
    
    
    
    
    
    
    34,882
    (iii)
    
    
    
    
    
    
    
    
    
    
    583.96
    
    
    June 2006
    
    
    
    
    
    
    June 2009DSP
    
    
    29,276
    
    
    
    
    
    
    29,276
    (iv)
    
    
    
    
    
    
    
    
    
    
    726.87
    
    
    June 2007
    
    
    
    
    
    
    Mar 2010DSP
    
    
    47,263
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    697.48
    
    
    June 2008
    
    
    
    47,263
    
    
    June 2011DSP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,656
    (v)
    
    
    541.14
    
    
    June 2009
    
    
    
    38,656
    
    
    June 2012Total
    
    
    
    
    
    
    601,707
    
    
    
    
    
    
    
    165,588
    
    
    
    201,045
    
    
    
    232,964
    
    
    
    
    
    
    
    
    
    
    
    569,468
    
 106     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



4. Directors interests in the PSP, DSP and SRA continued
 Table 4
    
    
    
    
    
    PSP, DSPand SRA
    
    
    
    
    
    
    
    
    
    
    Releaseconditional
    
    
    Awards
    
    
    Awards
    
    
    of PSP
    
    
    
    
    
    
    Market price
    
    
    
    
    
    
    ConditionalType of
    
    awards at
    
    
    lapsed
    
    
    vested
    
    
    awards
    
    
    Awards granted
    
    
    at award
    
    
    
    
    
    
    awards ataward
    
    1 April 2009
    
    
    during year
    
    
    in year
    
    
    in year
    
    
    during year
    
    
    (pence except#)
    
    
    Date of award
    
    
    31 March 2010
    
    
    Release dateNick WinserPSP
    
    
    91,314
    
    
    
    
    
    
    
    
    
    
    
    91,314
    (i)
    
    
    
    
    
    
    527.03
    
    
    June 2005
    
    
    
    
    
    
    June 2009PSP
    
    
    88,751
    
    
    
    
    
    
    
    88,751
    
    
    88,751
    (ii)
    
    
    
    
    
    
    591.5382
    
    
    June 2006
    
    
    
    
    
    
    Mar 2010PSP
    
    
    75,008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    740.75
    
    
    June 2007
    
    
    
    75,008
    
    
    June 2011PSP
    
    
    41,620
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    800.9919
    
    
    Nov 2007
    
    
    
    41,620
    
    
    Nov 2011PSP
    
    
    138,413
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    667.9967
    
    
    June 2008
    
    
    
    138,413
    
    
    June 2012PSP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    171,102
    
    
    
    540.3773
    
    
    June 2009
    
    
    
    171,102
    
    
    June 2013DSP
    
    
    31,316
    
    
    
    
    
    
    31,316
    (iii)
    
    
    
    
    
    
    
    
    
    
    583.96
    
    
    June 2006
    
    
    
    
    
    
    June 2009DSP
    
    
    25,596
    
    
    
    
    
    
    25,596
    (iv)
    
    
    
    
    
    
    
    
    
    
    726.87
    
    
    June 2007
    
    
    
    
    
    
    Mar 2010DSP
    
    
    36,008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    697.48
    
    
    June 2008
    
    
    
    36,008
    
    
    June 2011DSP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,804
    (v)
    
    
    541.14
    
    
    June 2009
    
    
    
    33,804
    
    
    June 2012Total
    
    
    
    
    
    
    528,026
    
    
    
    
    
    
    
    145,663
    
    
    
    180,065
    
    
    
    204,906
    
    
    
    
    
    
    
    
    
    
    
    495,955Mark FairbairnPSP
    
    
    40,225
    
    
    
    
    
    
    
    
    
    
    
    40,225
    (i)
    
    
    
    
    
    
    527.03
    
    
    June 2005
    
    
    
    
    
    
    June 2009PSP
    
    
    40,572
    
    
    
    
    
    
    
    40,572
    
    
    40,572
    (ii)
    
    
    
    
    
    
    591.5382
    
    
    June 2006
    
    
    
    
    
    
    Mar 2010PSP
    
    
    67,499
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    740.75
    
    
    June 2007
    
    
    
    67,499
    
    
    June 2011PSP
    
    
    37,453
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    800.9919
    
    
    Nov 2007
    
    
    
    37,453
    
    
    Nov 2011PSP
    
    
    138,324
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    667.9967
    
    
    June 2008
    
    
    
    138,324
    
    
    June 2012PSP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    170,991
    
    
    
    540.3773
    
    
    June 2009
    
    
    
    170,991
    
    
    June 2013DSP
    
    
    10,800
    
    
    
    
    
    
    10,800
    (iii)
    
    
    
    
    
    
    
    
    
    
    583.96
    
    
    June 2006
    
    
    
    
    
    
    June 2009DSP
    
    
    13,867
    
    
    
    
    
    
    13,867
    (iv)
    
    
    
    
    
    
    
    
    
    
    726.87
    
    
    June 2007
    
    
    
    
    
    
    Mar 2010DSP
    
    
    40,646
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    697.48
    
    
    June 2008
    
    
    
    40,646
    
    
    June 2011DSP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,605
    (v)
    
    
    541.14
    
    
    June 2009
    
    
    
    32,605
    
    
    June 2012Total
    
    
    
    
    
    
    389,386
    
    
    
    
    
    
    
    65,239
    
    
    
    80,797
    
    
    
    203,596
    
    
    
    
    
    
    
    
    
    
    
    487,518Tom KingPSP
    
    ADSs 24,006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $83.3121
    #
    
    Nov 2007
    
    
    ADSs 24,006
    
    
    Nov 2011PSP
    
    ADSs 32,099
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $65.4211
    #
    
    June 2008
    
    
    ADSs 32,099
    
    
    June 2012PSP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ADSs 47,609
    (vi)
    
    
    $44.1091
    #
    
    June 2009
    
    
    ADSs 47,609
    
    
    June 2013SRA
    
    ADSs 23,658
    
    
    
    
    
    
    ADSs 11,829
    (vii)
    
    
    
    
    
    
    
    
    
    
    $84.5360
    #
    
    Nov 2007
    
    
    ADSs 11,829
    
    
    Nov 2008to Nov 2010DSP
    
    ADSs 4,843
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $68.1174
    #
    
    June 2008
    
    
    ADSs 4,843
    
    
    June 2011DSP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ADSs 12,080
    (vi)
    
    
    $44.8371
    #
    
    June 2009
    
    
    ADSs 12,080
    
    
    June 2012Total ADSs
    
    ADSs 84,606
    
    
    
    
    
    
    ADSs 11,829
    
    
    
    
    
    
    ADSs 59,689
    
    
    
    
    
    
    
    
    
    
    ADSs 132,466
 (i)
    
    The 2005 PSP award vested in full in June 2008 and then entered a retention period. The
shares under the award were released on the fourth anniversary of the date of grant (June 2009).(ii)
    
    The 2006 PSP award vested in full in June 2009 and then entered a retention period. The
Remuneration Committee approved an early release of the shares on 1 March 2010. Cash payments in
lieu of dividends accrued during the retention period were paid as follows: Steve Holliday £32,401
in August 2009 and £19,230 in February 2010; Steve Lucas £25,921 and £15,384; Nick Winser £22,681
and £13,461; and Mark Fairbairn £10,368 and £6,153 respectively.(iii)
    
    Following the three year deferral period, the 2006 DSP award was released in June 2009. Cash
payments in lieu of dividends accrued during the deferral period were paid as follows: Steve
Holliday £39,357, Steve Lucas £37,727, Nick Winser £33,870 and Mark Fairbairn £11,681.(iv)
    
    Following a near complete deferral period, the Remuneration Committee approved the early
release of the 2007 DSP award on 1 March 2010. Cash payments in lieu of dividends accrued during
the deferral period were paid as follows: Steve Holliday £38,800, Steve Lucas £26,768, Nick Winser
£23,403 and Mark Fairbairn £12,679.(v)
    
    Exceptionally, the 2009 DSP award for UK-based Executive
Directors was made over restricted shares. The award was subject to income tax and National
Insurance Contributions on grant and therefore shares shown reflect the net number of shares.(vi)
    
    Awards were made over ADSs and each ADS represents five ordinary shares.(vii)
    
    Tom King received a Special Retention Award as part of a contractual commitment made at the
time of his recruitment. The award vests in three equal tranches over three years, the second
vesting for which was November 2009 for 11,829 ADSs. The ADS price on vesting for the second
tranche was $54.62450.
 
   
 Annual Report and Accounts 2009/10 | National Grid plc     107




---



##### 



Directors Reports
 Directors Remuneration Report continued
  5. Directors beneficial interests
 17 43
 Ordinary shares at
    
    
    Ordinary shares at31 March 2010
    
    
    1 April 2009
    
    
    Options/awards over
    
    
    Options/awards overor, if earlier, on
    
    
    or, if later, on
    
    
    ordinary shares at
    
    
    ordinary shares atTable 5
    
    retirement (i)
    
    
    appointment
    
    
    31 March 2010
    
    
    1 April 2009Sir John Parker
    
    
    81,635
    
    
    
    81,337
    
    
    
    
    
    
    
    Steve Holliday (ii) (iii)
    
    
    221,472
    
    
    
    39,285
    
    
    
    1,104,106
    
    
    
    999,206Steve Lucas (ii) (iv) (v)
    
    
    167,503
    
    
    
    88,192
    
    
    
    628,555
    
    
    
    657,804Nick Winser (ii)
    
    
    223,138
    
    
    
    83,518
    
    
    
    495,955
    
    
    
    547,781Mark Fairbairn (ii) (iii) (iv)
    
    
    143,372
    
    
    
    48,305
    
    
    
    490,652
    
    
    
    459,341Tom King
    
    
    97,640
    
    
    
    59,145
    
    
    
    662,330
    
    
    
    423,030Ken Harvey
    
    
    3,740
    
    
    
    3,740
    
    
    
    
    
    
    
    Linda Adamany
    
    
    2,000
    
    
    
    2,000
    
    
    
    
    
    
    
    Philip Aiken
    
    
    3,500
    
    
    
    2,000
    
    
    
    
    
    
    
    John Allan
    
    
    7,000
    
    
    
    2,000
    
    
    
    
    
    
    
    Stephen Pettit
    
    
    2,632
    
    
    
    2,632
    
    
    
    
    
    
    
    Maria Richter
    
    
    10,255
    
    
    
    5,255
    
    
    
    
    
    
    
    George Rose
    
    
    4,852
    
    
    
    4,852
    
    
    
    
    
    
    
    Bob Catell (vi)
    
    
    72,415
    
    
    
    40,000
    
    
    
    
    
    
    
    
 (i)
    
    There has been no other change in the beneficial interests of the Directors in ordinary shares
between 1 April 2010 and 19 May 2010, except in respect of routine monthly purchases under the SIP
(see note (iii) below) and with respect to the exercise of Sharesave options (see note (iv) below).(ii)
    
    Each of the Executive Directors, with the exception of Tom King, was for Companies Act
purposes deemed to be a potential beneficiary under the National Grid plc 1996 Employee Benefit
Trust and the National Grid Employee Share Trust; Steve Holliday, Steve Lucas, Nick Winser and Mark
Fairbairn thereby have an interest in 238,740 and 544,944 ordinary shares in the aforementioned
trusts respectively, as at 31 March 2010 (with the latter holding 36,283 ADSs in addition).(iii)
    
    Beneficial interest includes shares purchased under the monthly operation of the SIP in the
year to 31 March 2010. In April and May 2010 a further 40 shares were purchased on behalf of Steve
Holliday and a further 80 shares were purchased on behalf of Mark Fairbairn thereby increasing
their beneficial interests.(iv)
    
    The beneficial interests for Steve Lucas and Mark Fairbairn increased on 1 April 2010 to
include Sharesave exercises over 1,693 shares and 862 shares respectively.(v)
    
    Steve Lucas was for Companies Act purposes deemed to be a potential beneficiary in 11,361
ordinary shares held by Lattice Group Trustees Limited as trustee of the Lattice Group Employee
Share Ownership Trust as at 31 March 2010.(vi)
    
    Bob Catell retired from the Board as a Non-executive Director on 27 July 2009.
 6. National Grid share price range
   Helen Mahy
    
 108     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



Contents of financial statements
    
 Directors statement and independent Auditors report110
    
    
    Statement of Directors responsibilities111
    
    
    Independent Auditors report to the Members of National Grid plcConsolidated financial statements under IFRSBasis of preparation112
    
    
    Accounting policies118
    
    

Adoption of new accounting standardsPrimary statements120
    
    
    Consolidated income statement121
    
    
    Consolidated statement of comprehensive income122
    
    
    Consolidated balance sheet123
    
    
    Consolidated statement of changes in equity124
    
    
    Consolidated cash flow statementNotes to the consolidated financial statements  analysis of items in the primary statements125
    
    
    Note 1    Segmental analysis127
    
    
    Note 2    Operating costs130
    
    
    Note 3    Exceptional items, remeasurements and stranded cost recoveries131
    
    
    Note 4    Pensions and other post-retirement benefits133
    
    
    Note 5    Finance income and costs134
    
    
    Note 6    Taxation136
    
    
    Note 7    Discontinued operations136
    
    
    Note 8    Dividends137
    
    
    Note 9    Earnings per share138
    
    
    Note 10  Goodwill139
    
    
    Note 11  Other intangible assets140
    
    
    Note 12  Property, plant and equipment141
    
    
    Note 13  Other non-current assets141
    
    
    Note 14  Financial and other investments141
    
    
    Note 15  Investments in joint ventures and associates142
    
    
    Note 16  Deferred tax assets and liabilities143
    
    
    Note 17  Derivative financial instruments144
    
    
    Note 18  Inventories and current intangible assets144
    
    
    Note 19  Trade and other receivables145
    
    
    Note 20  Cash and cash equivalents145
    
    
    Note 21  Borrowings146
    
    
    Note 22  Trade and other payables146
    
    
    Note 23  Other non-current liabilities147
    
    
    Note 24  Provisions148
    
    
    Note 25  Share capital149
    
    
    Note 26  Other equity reserves150
    
    
    Note 27  Consolidated cash flow statement
 Notes to the consolidated financial statements  supplementary information151
    
    
    Note 28  Commitments and contingencies153
    
    
    Note 29  Related party transactions153
    
    
    Note 30  Actuarial information on pensions and other post-retirement benefits156
    
    
    Note 31  Supplementary information on derivative financial instruments157
    
    
    Note 32  Financial risk162
    
    
    Note 33  Commodity risk165
    
    
    Note 34  Bonds and facilities167
    
    
    Note 35  Share options and reward plans171
    
    
    Note 36  Subsidiary undertakings, joint ventures and associates172
    
    
    Note 37  National Grid Gas plc and Niagara Mohawk Power Corporation additional disclosuresCompany financial statements under UK GAAPBasis of preparation179
    
    
    Company accounting policiesPrimary statement181
    
    
    Company balance sheetNotes to the Company financial statements182
    
    
    Note 1    Adoption of new accounting standards183
    
    
    Note 2    Fixed asset investments183
    
    
    Note 3    Debtors183
    
    
    Note 4    Creditors (amounts falling due within one year)184
    
    
    Note 5    Derivative financial instruments184
    
    
    Note 6    Current asset investments184
    
    
    Note 7    Borrowings185
    
    
    Note 8    Called up share capital185
    
    
    Note 9    Reserves185
    
    
    Note 10  Reconciliation of movements in shareholders funds185
    
    
    Note 11  Commitments and contingencies185
    
    
    Note 12  Directors and employees
 
  
 Annual Report and Accounts 2009/10 | National Grid plc     109




---



##### 



Financial Statements
 Intentionally
Omitted
 
 110     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



Intentionally
Omitted
 
 Annual Report and Accounts 2009/10 | National Grid plc     111




---



##### 



Financial Statements
 
 
 
 Accounting policies
 
      A. Basis of preparation of consolidated financial statements under IFRS
      
 B. Basis of consolidation
 C. Foreign currencies
    D. Goodwill
   
 112     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



E. Intangible assets other than goodwill
     Amortisation periods
    
    YearsSoftware
    
    
    3 to 5Acquisition-related intangibles
    
    
    10 to 25Other  licences and other intangibles
    
    
    3 to 5
  F. Property, plant and equipment
 Depreciation periods
    
    YearsFreehold and leasehold buildings
    
    up to 65Plant and machineryElectricity transmission plant
    
    
    15 to 60Electricity distribution plant
    
    
    15 to 60Electricity generation plant
    
    
    20 to 40Interconnector plant
    
    
    15 to 60Gas plant  mains, services and regulating equipment
    
    
    30 to 100Gas plant  storage
    
    
    40Gas plant  meters
    
    
    10 to 33Motor vehicles and office equipment
    
    up to 10
 G. Impairment of assets
     H. Taxation
 Current tax
  Deferred tax and investment tax credits
 
  
 Annual
Report and Accounts 2009/10 | National Grid plc     113




---



##### 



Financial Statements
 Accounting policies continued
 
 
     I. Discontinued operations, assets and businesses held for sale
 J. Inventories
  K. Decommissioning and environmental costs
 
  L. Revenue
     M. Segmental information
 
   
 114     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



N. Pensions and other post-retirement benefits
 
 
 
  O. Leases
    P. Financial instruments
 
 
   
 Annual
Report and Accounts 2009/10 | National
Grid plc     115




---



##### 



Financial Statements
 Accounting policies continued
 
 
     Q. Commodity contracts
  
  R. Hedge accounting
 S. Share-based payments
 
 T. Business performance and exceptional items, remeasurements and stranded cost recoveries
   
 116     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



U. Other operating income
  V. Emission allowances
   W. Cash and cash equivalents
 X. Other equity reserves
   Y. Dividends
  Z. Areas of judgement and key sources of estimation uncertainty
   
    
    The categorisation of certain items as exceptional items, remeasurements and stranded cost recoveries and the definition of adjusted earnings  notes 3 and 9.
    
    The exemptions adopted on transition to IFRS on 1 April 2004 including, in particular, those relating to business combinations.
    
    Classification of business activities as held for sale and discontinued operations  accounting policy I.
    
    Hedge accounting  accounting policy R.
    
    Energy purchase contracts  classification as being for normal purchase, sale or usage  accounting policy Q and note 28.
  
    
    Impairment of goodwill  accounting policy D and note 10.
    
    Review of residual lives, carrying values and impairment charges for other intangible assets and property, plant and equipment  accounting policies E, F and G.
    
    Estimation of liabilities for pensions and other post-retirement benefits  note 4.
    
    Valuation of financial instruments and derivatives  notes 17 and 31.
    
    Revenue recognition and assessment of unbilled revenue  accounting policy L.
    
    Recoverability of deferred tax assets  accounting policy H and note 16.
    
    Environmental and decommissioning provisions  note 24.
 
  
 Annual
Report and Accounts 2009/10 | National Grid plc     117




---



##### 



Financial Statements
   
 
 
 
 
 Adoption of new accounting standards
   New IFRS accounting standards and interpretations adopted in 2009/10
  IFRIC 18 on transfers of assets from customers
    
    Addresses arrangements whereby an entity receives items of property, plant and
equipment or cash which the entity must use to connect customers to a network or
provide access to a supply of goods or services, or both.IAS 1 revised on the presentation
of financial statements
    
    Requires changes to the presentation of financial statements and adopts revised titles for
the primary statements, although companies may continue to use the existing titles.Amendment to IFRS 7 on improving
disclosures about financial instruments
    
    Introduces a three-level hierarchy for fair value measurement disclosures and requires entities
to provide additional disclosures about the relative reliability of fair value measurements.
In addition, the amendment clarifies and enhances existing requirements for the disclosure
of liquidity risk. The additional information required by this amendment can be found in
note 32 and note 33.IFRS 8 on operating segments
    
    Sets out the requirements for the disclosure of information about an entitys operating
segments and about the entitys products and services, the geographical areas in which
it operates and its major customers.IAS 23 revised on borrowing costs
    
    Removes the option of immediately recognising as an expense borrowing costs that relate
to assets that take a substantial period of time to get ready for use or sale.IFRIC 13 on customer loyalty programmes
    
    Clarifies that the sale of goods or services together with customer award credits (for example,
loyalty points or the right to free products) is accounted for as a multiple-element transaction.
The consideration received from the customer is allocated between the components of the
arrangement based on their fair values, which will defer the recognition of some revenue.Amendment to IFRS 2 on share-based
payments
    
    Clarifies the definition of vesting conditions and the accounting treatment of cancellations.
Vesting conditions are defined as either service conditions or performance conditions.
Cancellations by employees are accounted for in the same way as cancellations by the Company.Amendments to IAS 32 and IAS 1 on puttable
financial instruments and obligations arising
on liquidation
    
    Addresses the classification as a liability or as equity of certain puttable financial
instruments and instruments, or components thereof, which impose upon an entity an
obligation to deliver a pro rata share of net assets on liquidation.Amendment to IFRS 1 First time Adoption of
International Financial Reporting Standards
and IAS 27 Consolidated and Separate
Financial Statements on the cost of an
Investment in a Subsidiary, Jointly Controlled
Entity or Associate
    
    Permits investments to be recognised on first time adoption of IFRS at cost or deemed cost
(fair value or previous GAAP carrying amount) and removes the requirement to recognise
dividends out of pre-acquisition profits as a reduction in the cost of the investment.Improvements to IFRS 2008
    
    Contains amendments to various existing standards.IFRIC 15 on agreements for the construction
of real estate
    
    Addresses the timing of revenue recognition for entities engaged in the construction of real
estate for their customers.IFRIC 16 on hedges of a net investment
in a foreign operation
    
    Clarifies that a hedged risk may be designated at any level in a group and hedging instruments
may be held by any company in a group (except the foreign entity being hedged), that net
investment hedge accounting may not be adopted in respect of a presentation currency
and, on disposal the amounts to be reclassified from equity to profit or loss are the cumulative
gain or loss on the hedging instrument and the cumulative translation difference on the
foreign operation disposed of.Amendment to IAS 39 Financial Instruments:
Recognition and measurement: Reclassification
of Financial Assets: Effective Date and Transition
    
    Clarifies the effective date of the reclassification of financial assets.Amendments to IAS 39 and IFRIC 9
on embedded derivatives
    
    Requires reassessment of whether an embedded derivative should be separated out if
a financial asset is reclassified out of the fair value through profit or loss category.
 
   
 118     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



New IFRS accounting standards and interpretations not yet adopted
  IFRS 3R on business combinations
    
    Makes a number of changes to the accounting for business combinations, including
requirements that all payments to purchase a business are to be recorded at fair value at
the acquisition date, with some contingent payments subsequently remeasured at fair value
through income; an option to calculate goodwill based on the parents share of net assets
only or to include goodwill related to the minority interest; and a requirement that all transaction
costs be expensed. IFRS 3R has been adopted by the Company with effect from 1 April 2010.IAS 27R on consolidated and individual
financial statements
    
    Requires the effects of all transactions with non-controlling interests to be recorded in equity
if there is no change in control. The revised standard also specifies the accounting when
control is lost. IAS 27R has been adopted by the Company with effect from 1 April 2010.Amendment to IAS 39 Financial Instruments:
Recognition and measurement on eligible
hedged items
    
    Prohibits designating inflation as a hedgeable component of an instrument, unless cash flows
relating to the separate inflation component are contractual and also prohibits the designation
of a purchased option in its entirety as the hedge of a one-sided risk in a forecast transaction.
The amendment to IAS 39 has been adopted by the Company with effect from 1 April 2010.Revised IFRS 1 on first time adoption
of IFRS
    
    Changes the structure, while retaining the substance, of the previously issued version of
IFRS 1. The revised version of IFRS 1 has been adopted by the Company with effect from
1 April 2010.IFRIC 17 on distribution of non-cash
assets to owners
    
    Requires such a distribution to be measured at the fair value of the asset and any difference
between the carrying amount of the asset and its fair value to be recognised in profit or loss.
IFRIC 17 has been adopted by the Company with effect from 1 April 2010.Improvements to IFRS 2009
    
    Contains amendments to various existing standards. The amendments have been adopted
by the Company with effect from 1 April 2010.Amendment to IFRS 2 on group cash-settled 
share-based payments
    
    Clarifies the scope and accounting for group cash-settled share-based payment transactions
in separate or individual financial statements when there is no obligation to settle the
share-based payment transaction. The amendment to IFRS 2 has been adopted by the
Company with effect from 1 April 2010.Amendment to IFRS 1 on first time adoption
of IFRS
    
    Provides additional exemptions for first time adopters. The amendment to IFRS 1 will be
adopted by the Company with effect from 1 April 2010, subject to endorsement by the
European Union.Amendment to IAS 32 on classification
of rights issues
    
    Defines as an equity instrument a financial instrument that gives the holder the right to acquire
a fixed number of the entitys equity instruments for a fixed amount of any currency, if the
financial instrument is offered pro rata to all existing owners of the same class of non-
derivative equity instruments. The amendment to IAS 32 has been adopted by the Company
with effect from 1 April 2010.Revised IAS 24 on related 
party disclosures
    
    Simplifies the definition of a related party and provides a partial exemption for government
related entities. The revised version of IAS 24 will be adopted by the Company with effect
from 1 April 2011, subject to endorsement by the European Union.IFRS 9 on financial instruments
    
    Requires that financial assets should be classified as at either amortised cost or fair value
on the basis of the entitys business model and contractual cash flows. IFRS 9 will be adopted
by the Company with effect from 1 April 2013, subject to endorsement by the European
Union.IFRIC 19 on extinguishing financial 
liabilities with equity instruments
    
    Clarifies that equity instruments issued to extinguish a financial liability should be measured
at fair value, unless fair value cannot reasonably be determined in which case the fair value
of the liabilities extinguished should be used. IFRIC 19 will be adopted by the Company
with effect from 1 April 2011, subject to endorsement by the European Union.Amendment to IFRIC 14 on prepayments
of a minimum funding requirement
    
    Permits an entity to treat early payments of contributions to cover a minimum funding
requirement as an asset. The amendment to IFRIC 14 will be adopted by the Company
with effect from 1 April 2011, subject to endorsement by the European Union.Amendment to IFRS 1 on comparative
IFRS 7 disclosures
    
    Provides limited disclosure exemptions in respect of financial instruments for first time
adopters of IFRS. The amendment to IFRS 1 will be adopted by the Company with effect
from 1 April 2011, subject to endorsement by the European Union.
 
  
 Annual
Report and Accounts 2009/10 | National Grid plc     119




---



##### 



Financial Statements
   Consolidated income statement
 
 2010
    
    
    2010
    
    
    2009
    
    
    2009
    
    
    2008
    
    
    2008Notes
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mRevenue
    
    
    1(a
    )
    
    
    
    
    
    
    13,988
    
    
    
    
    
    
    
    15,624
    
    
    
    
    
    
    
    11,423Other operating income
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    
    
    
    
    63
    
    
    
    
    
    
    
    75Operating costs
    
    
    2
    
    
    
    
    
    
    
    (10,714
    )
    
    
    
    
    
    
    (13,064
    )
    
    
    
    
    
    
    (8,534
    )Operating profitBefore exceptional items, remeasurements
and stranded cost recoveries
    
    
    1(b
    )
    
    
    3,121
    
    
    
    
    
    
    
    2,915
    
    
    
    
    
    
    
    2,595Exceptional items, remeasurements
 and
stranded cost recoveries
    
    
    3
    
    
    
    172
    
    
    
    
    
    
    
    (292
    )
    
    
    
    
    
    
    369Total operating profit
    
    
    1(b
    )
    
    
    
    
    
    
    3,293
    
    
    
    
    
    
    
    2,623
    
    
    
    
    
    
    
    2,964Interest income and similar income
    
    
    5
    
    
    
    
    
    
    
    1,005
    
    
    
    
    
    
    
    1,315
    
    
    
    
    
    
    
    1,275Interest expense and other finance costsBefore exceptional items and remeasurements
    
    
    5
    
    
    
    (2,160
    )
    
    
    
    
    
    
    (2,465
    )
    
    
    
    
    
    
    (2,045
    )Exceptional items and remeasurements
    
    
    3,5
    
    
    
    47
    
    
    
    
    
    
    
    (84
    )
    
    
    
    
    
    
    (16
    )Total interest expense and other finance costs
    
    
    5
    
    
    
    
    
    
    
    (2,113
    )
    
    
    
    
    
    
    (2,549
    )
    
    
    
    
    
    
    (2,061
    )Share of post-tax results of joint ventures and associates
    
    
    15
    
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    4Profit before taxationBefore exceptional items, remeasurements
and stranded cost recoveries
    
    
    1(b
    )
    
    
    1,974
    
    
    
    
    
    
    
    1,770
    
    
    
    
    
    
    
    1,829Exceptional items, remeasurements 
and
stranded cost recoveries
    
    
    3
    
    
    
    219
    
    
    
    
    
    
    
    (376
    )
    
    
    
    
    
    
    353Total profit before taxation
    
    
    1(b
    )
    
    
    
    
    
    
    2,193
    
    
    
    
    
    
    
    1,394
    
    
    
    
    
    
    
    2,182TaxationBefore exceptional items, remeasurements
and stranded cost recoveries
    
    
    6
    
    
    
    (553
    )
    
    
    
    
    
    
    (517
    )
    
    
    
    
    
    
    (579
    )Exceptional items, remeasurements 
and
stranded cost recoveries
    
    
    3,6
    
    
    
    (251
    )
    
    
    
    
    
    
    45
    
    
    
    
    
    
    
    (28
    )Total taxation
    
    
    6
    
    
    
    
    
    
    
    (804
    )
    
    
    
    
    
    
    (472
    )
    
    
    
    
    
    
    (607
    )Profit from continuing operations after taxationBefore exceptional items, remeasurements
and stranded cost recoveries
    
    
    
    
    
    
    1,421
    
    
    
    
    
    
    
    1,253
    
    
    
    
    
    
    
    1,250Exceptional items, remeasurements 
and
stranded cost recoveries
    
    
    3
    
    
    
    (32
    )
    
    
    
    
    
    
    (331
    )
    
    
    
    
    
    
    325Profit for the year from continuing operations
    
    
    
    
    
    
    
    
    
    
    1,389
    
    
    
    
    
    
    
    922
    
    
    
    
    
    
    
    1,575Profit for the year from discontinued operationsBefore exceptional items and remeasurements
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    
    
    
    
    28Exceptional items and remeasurements
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    1,590Profit for the year from discontinued operations
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25
    
    
    
    
    
    
    
    1,618Profit for the year
    
    
    
    
    
    
    
    
    
    
    1,389
    
    
    
    
    
    
    
    947
    
    
    
    
    
    
    
    3,193Attributable to:Equity shareholders of the parent
    
    
    
    
    
    
    
    
    
    
    1,386
    
    
    
    
    
    
    
    944
    
    
    
    
    
    
    
    3,190Minority interests
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    31,389
    
    
    
    
    
    
    
    947
    
    
    
    
    
    
    
    3,193Earnings per share from continuing operations*Basic
    
    
    9
    
    
    
    
    
    
    
    56.1p
    
    
    
    
    
    
    
    36.9p
    
    
    
    
    
    
    
    59.5pDiluted
    
    
    9
    
    
    
    
    
    
    
    55.8p
    
    
    
    
    
    
    
    36.6p
    
    
    
    
    
    
    
    59.1pEarnings per share*Basic
    
    
    9
    
    
    
    
    
    
    
    56.1p
    
    
    
    
    
    
    
    37.9p
    
    
    
    
    
    
    
    120.7pDiluted
    
    
    9
    
    
    
    
    
    
    
    55.8p
    
    
    
    
    
    
    
    37.6p
    
    
    
    
    
    
    
    120.0p
 
     
 120     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



Consolidated statement of comprehensive income
     
 2010
    
    
    2009
    
    
    2008Notes
    
    
    £m
    
    
    £m
    
    
    £mProfit for the year
    
    
    
    
    
    
    1,389
    
    
    
    947
    
    
    
    3,193Other comprehensive income/(loss):Exchange adjustments
    
    
    
    
    
    
    33
    
    
    
    464
    
    
    
    (25
    )Actuarial net (losses)/gains
    
    
    4
    
    
    
    (731
    )
    
    
    (2,018
    )
    
    
    432Deferred tax on actuarial net gains and losses
    
    
    6
    
    
    
    175
    
    
    
    678
    
    
    
    (98
    )Net losses taken to equity in respect of cash flow hedges
    
    
    
    
    
    
    (45
    )
    
    
    (1
    )
    
    
    (32
    )Transferred to profit or loss on cash flow hedges
    
    
    
    
    
    
    3
    
    
    
    (53
    )
    
    
    (7
    )Deferred tax on cash flow hedges
    
    
    6
    
    
    
    9
    
    
    
    19
    
    
    
    2Net gains taken to equity on available-for-sale investments
    
    
    
    
    
    
    54
    
    
    
    9
    
    
    
    6Transferred to profit or loss on sale of available-for-sale investments
    
    
    
    
    
    
    (6
    )
    
    
    (18
    )
    
    
    Deferred tax on available-for-sale investments
    
    
    6
    
    
    
    (5
    )
    
    
    7
    
    
    
    2Share of post-tax other comprehensive income of joint ventures and associates
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    Other comprehensive (loss)/income for the year
    
    
    
    
    
    
    (508
    )
    
    
    (913
    )
    
    
    280Total comprehensive income for the year
    
    
    
    
    
    
    881
    
    
    
    34
    
    
    
    3,473Total comprehensive income attributable to:Equity shareholders of the parent
    
    
    
    
    
    
    879
    
    
    
    26
    
    
    
    3,470Minority interests
    
    
    
    
    
    
    2
    
    
    
    8
    
    
    
    3881
    
    
    
    34
    
    
    
    3,473
 
  
 Annual
Report and Accounts 2009/10 | National
Grid plc     121




---



##### 



Financial Statements
   
 
 
 
 Consolidated balance sheet
    2010
    
    
    2009Notes
    
    
    £m
    
    
    £mNon-current assetsGoodwill
    
    
    10
    
    
    
    5,102
    
    
    
    5,391Other intangible assets
    
    
    11
    
    
    
    389
    
    
    
    370Property, plant and equipment
    
    
    12
    
    
    
    30,855
    
    
    
    29,545Deferred tax assets
    
    
    16
    
    
    
    
    
    
    
    137Pension asset
    
    
    4
    
    
    
    
    
    
    
    269Other non-current assets
    
    
    13
    
    
    
    162
    
    
    
    106Financial and other investments
    
    
    14,15
    
    
    
    486
    
    
    
    361Derivative financial assets
    
    
    17
    
    
    
    1,494
    
    
    
    1,533Total non-current assets
    
    
    
    
    
    
    38,488
    
    
    
    37,712Current assetsInventories and current intangible assets
    
    
    18
    
    
    
    407
    
    
    
    556Trade and other receivables
    
    
    19
    
    
    
    2,293
    
    
    
    2,672Financial and other investments
    
    
    14
    
    
    
    1,397
    
    
    
    2,197Derivative financial assets
    
    
    17
    
    
    
    248
    
    
    
    593Cash and cash equivalents
    
    
    20
    
    
    
    720
    
    
    
    737Total current assets
    
    
    
    
    
    
    5,065
    
    
    
    6,755Total assets
    
    
    1(d
    )
    
    
    43,553
    
    
    
    44,467Current liabilitiesBorrowings
    
    
    21
    
    
    
    (2,806
    )
    
    
    (3,253
    )Derivative financial liabilities
    
    
    17
    
    
    
    (212
    )
    
    
    (307
    )Trade and other payables
    
    
    22
    
    
    
    (2,847
    )
    
    
    (2,835
    )Current tax liabilities
    
    
    
    
    
    
    (391
    )
    
    
    (383
    )Provisions
    
    
    24
    
    
    
    (303
    )
    
    
    (248
    )Total current liabilities
    
    
    
    
    
    
    (6,559
    )
    
    
    (7,026
    )Non-current liabilitiesBorrowings
    
    
    21
    
    
    
    (22,318
    )
    
    
    (23,540
    )Derivative financial liabilities
    
    
    17
    
    
    
    (662
    )
    
    
    (633
    )Other non-current liabilities
    
    
    23
    
    
    
    (1,974
    )
    
    
    (2,092
    )Deferred tax liabilities
    
    
    16
    
    
    
    (3,324
    )
    
    
    (2,661
    )Pensions and other post-retirement benefit obligations
    
    
    4
    
    
    
    (3,098
    )
    
    
    (3,080
    )Provisions
    
    
    24
    
    
    
    (1,407
    )
    
    
    (1,451
    )Total non-current liabilities
    
    
    
    
    
    
    (32,783
    )
    
    
    (33,457
    )Total liabilities
    
    
    
    
    
    
    (39,342
    )
    
    
    (40,483
    )Net assets
    
    
    
    
    
    
    4,211
    
    
    
    3,984EquityCalled up share capital
    
    
    25
    
    
    
    298
    
    
    
    294Share premium account
    
    
    
    
    
    
    1,366
    
    
    
    1,371Retained earnings
    
    
    
    
    
    
    7,316
    
    
    
    7,135Other equity reserves
    
    
    26
    
    
    
    (4,781
    )
    
    
    (4,830
    )Shareholders equity
    
    
    
    
    
    
    4,199
    
    
    
    3,970Minority interests
    
    
    
    
    
    
    12
    
    
    
    14Total equity
    
    
    
    
    
    
    4,211
    
    
    
    3,984
  Sir John Parker  Steve Lucas
 
    
 122     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



Consolidated statement of changes in equity
    
 Called-up
    
    
    Share
    
    
    
    
    
    
    Other
    
    
    Totalshare
    
    
    premium
    
    
    Retained
    
    
    equity
    
    
    shareholders
    
    
    Minority
    
    
    Totalcapital
    
    
    account
    
    
    earnings
    
    
    reserves
    
    
    equity
    
    
    interests
    
    
    equity£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mAt 1 April 2007
    
    
    308
    
    
    
    1,332
    
    
    
    7,635
    
    
    
    (5,150
    )
    
    
    4,125
    
    
    
    11
    
    
    
    4,136Total comprehensive income/(loss) for the year
    
    
    
    
    
    
    
    
    
    
    3,524
    
    
    
    (54
    )
    
    
    3,470
    
    
    
    3
    
    
    
    3,473Equity dividends
    
    
    
    
    
    
    
    
    
    
    (780
    )
    
    
    
    
    
    
    (780
    )
    
    
    
    
    
    
    (780
    )Issue of ordinary share capital
    
    
    1
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    13B shares converted to ordinary shares
    
    
    
    
    
    
    27
    
    
    
    
    
    
    
    
    
    
    
    27
    
    
    
    
    
    
    
    27Other movements in minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    4Share-based payment
    
    
    
    
    
    
    
    
    
    
    18
    
    
    
    
    
    
    
    18
    
    
    
    
    
    
    
    18Transfer between reserves
    
    
    
    
    
    
    
    
    
    
    63
    
    
    
    (63
    )
    
    
    
    
    
    
    
    
    
    
    Issue of treasury shares
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    10Repurchase of share capital and purchase of treasury shares
    
    
    (15
    )
    
    
    
    
    
    
    (1,522
    )
    
    
    15
    
    
    
    (1,522
    )
    
    
    
    
    
    
    (1,522
    )Tax on share-based payment
    
    
    
    
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    (5
    )At 31 March 2008
    
    
    294
    
    
    
    1,371
    
    
    
    8,943
    
    
    
    (5,252
    )
    
    
    5,356
    
    
    
    18
    
    
    
    5,374Total comprehensive (loss)/income for the year
    
    
    
    
    
    
    
    
    
    
    (396
    )
    
    
    422
    
    
    
    26
    
    
    
    8
    
    
    
    34Equity dividends
    
    
    
    
    
    
    
    
    
    
    (838
    )
    
    
    
    
    
    
    (838
    )
    
    
    
    
    
    
    (838
    )Other movements in minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12
    )
    
    
    (12
    )Share-based payment
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    22Issue of treasury shares
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    8Repurchase of share capital and purchase of treasury shares
    
    
    
    
    
    
    
    
    
    
    (603
    )
    
    
    
    
    
    
    (603
    )
    
    
    
    
    
    
    (603
    )Tax on share-based payment
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )At 31 March 2009
    
    
    294
    
    
    
    1,371
    
    
    
    7,135
    
    
    
    (4,830
    )
    
    
    3,970
    
    
    
    14
    
    
    
    3,984Total comprehensive income for the year
    
    
    
    
    
    
    
    
    
    
    830
    
    
    
    49
    
    
    
    879
    
    
    
    2
    
    
    
    881Equity dividends
    
    
    
    
    
    
    
    
    
    
    (893
    )
    
    
    
    
    
    
    (893
    )
    
    
    
    
    
    
    (893
    )Scrip dividend related share issue
    
    
    4
    
    
    
    (5
    )
    
    
    205
    
    
    
    
    
    
    
    204
    
    
    
    
    
    
    
    204Other movements in minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4
    )
    
    
    (4
    )Share-based payment
    
    
    
    
    
    
    
    
    
    
    25
    
    
    
    
    
    
    
    25
    
    
    
    
    
    
    
    25Issue of treasury shares
    
    
    
    
    
    
    
    
    
    
    18
    
    
    
    
    
    
    
    18
    
    
    
    
    
    
    
    18Purchase of treasury shares
    
    
    
    
    
    
    
    
    
    
    (7
    )
    
    
    
    
    
    
    (7
    )
    
    
    
    
    
    
    (7
    )Tax on share-based payment
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    3At 31 March 2010
    
    
    298
    
    
    
    1,366
    
    
    
    7,316
    
    
    
    (4,781
    )
    
    
    4,199
    
    
    
    12
    
    
    
    4,211
 
  
 Annual
Report and Accounts 2009/10 | National Grid plc     123




---



##### 



Financial Statements
   
 
 
 
 Consolidated cash flow statement
    2010
    
    
    2009
    
    
    2008Notes
    
    
    £m
    
    
    £m
    
    
    £mCash flows from operating activitiesTotal operating profit
    
    
    1(b
    )
    
    
    3,293
    
    
    
    2,623
    
    
    
    2,964Adjustments for:Exceptional items, remeasurements and stranded cost recoveries
    
    
    3
    
    
    
    (172
    )
    
    
    292
    
    
    
    (369
    )Depreciation and amortisation
    
    
    
    
    
    
    1,188
    
    
    
    1,122
    
    
    
    994Share-based payment charge
    
    
    
    
    
    
    25
    
    
    
    22
    
    
    
    18Changes in working capital
    
    
    
    
    
    
    431
    
    
    
    54
    
    
    
    (150
    )Changes in provisions
    
    
    
    
    
    
    (98
    )
    
    
    (99
    )
    
    
    (5
    )Changes in pensions and other post-retirement benefit obligations
    
    
    
    
    
    
    (521
    )
    
    
    (678
    )
    
    
    (333
    )Cash flows relating to exceptional items
    
    
    
    
    
    
    (135
    )
    
    
    (131
    )
    
    
    (132
    )Cash flows relating to stranded cost recoveries
    
    
    
    
    
    
    361
    
    
    
    359
    
    
    
    278Cash flows generated from continuing operations
    
    
    
    
    
    
    4,372
    
    
    
    3,564
    
    
    
    3,265Cash flows relating to discontinued operations (excluding tax)
    
    
    27(a
    )
    
    
    
    
    
    
    (8
    )
    
    
    10Cash generated from operations
    
    
    
    
    
    
    4,372
    
    
    
    3,556
    
    
    
    3,275Tax received/(paid)
    
    
    
    
    
    
    144
    
    
    
    (143
    )
    
    
    (110
    )Net cash inflow from operating activities
    
    
    
    
    
    
    4,516
    
    
    
    3,413
    
    
    
    3,165Cash flows from investing activitiesAcquisition of subsidiaries, net of cash acquired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,502
    )Acquisition of other investments
    
    
    
    
    
    
    (86
    )
    
    
    (73
    )
    
    
    (26
    )Sale of investments in subsidiaries and other investments
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    55Purchases of intangible assets
    
    
    
    
    
    
    (104
    )
    
    
    (78
    )
    
    
    (45
    )Purchases of property, plant and equipment
    
    
    
    
    
    
    (3,007
    )
    
    
    (3,107
    )
    
    
    (2,832
    )Disposals of property, plant and equipment
    
    
    
    
    
    
    15
    
    
    
    27
    
    
    
    26Dividends from joint ventures
    
    
    
    
    
    
    18
    
    
    
    
    
    
    
    Interest received
    
    
    
    
    
    
    21
    
    
    
    85
    
    
    
    206Purchases of financial investments
    
    
    
    
    
    
    (2,832
    )
    
    
    (6,173
    )
    
    
    (8,788
    )Sales of financial investments
    
    
    
    
    
    
    3,637
    
    
    
    6,272
    
    
    
    8,833Cash flows used in continuing operations  investing activities
    
    
    
    
    
    
    (2,332
    )
    
    
    (3,047
    )
    
    
    (6,073
    )Cash flows relating to discontinued operations  investing activities (net of tax)
    
    
    27(b
    )
    
    
    
    
    
    
    1,049
    
    
    
    3,050Net cash flow used in investing activities
    
    
    
    
    
    
    (2,332
    )
    
    
    (1,998
    )
    
    
    (3,023
    )Cash flows from financing activitiesProceeds from issue of share capital and sale of treasury shares
    
    
    
    
    
    
    18
    
    
    
    8
    
    
    
    23Proceeds from loans received
    
    
    
    
    
    
    1,933
    
    
    
    4,892
    
    
    
    1,568Repayment of loans
    
    
    
    
    
    
    (2,257
    )
    
    
    (2,618
    )
    
    
    (650
    )Net movements in short-term borrowings and derivatives
    
    
    
    
    
    
    (175
    )
    
    
    (633
    )
    
    
    671Interest paid
    
    
    
    
    
    
    (1,003
    )
    
    
    (1,061
    )
    
    
    (900
    )Exceptional finance costs on the redemption of debt
    
    
    
    
    
    
    (33
    )
    
    
    
    
    
    
    Dividends paid to shareholders
    
    
    
    
    
    
    (688
    )
    
    
    (838
    )
    
    
    (780
    )Cash paid to shareholders under B share scheme
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (26
    )Repurchase of share capital and purchase of treasury shares
    
    
    
    
    
    
    (7
    )
    
    
    (627
    )
    
    
    (1,498
    )Net cash flow used in financing activities
    
    
    
    
    
    
    (2,212
    )
    
    
    (877
    )
    
    
    (1,592
    )Net (decrease)/increase in cash and cash equivalents
    
    
    27(c
    )
    
    
    (28
    )
    
    
    538
    
    
    
    (1,450
    )Exchange movements
    
    
    
    
    
    
    (1
    )
    
    
    18
    
    
    
    4Cash included within assets of businesses held for sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23Net cash and cash equivalents at start of year
    
    
    
    
    
    
    720
    
    
    
    164
    
    
    
    1,587Net cash and cash equivalents at end of year (i)
    
    
    20
    
    
    
    691
    
    
    
    720
    
    
    
    164
 
   
 124     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



Notes to the consolidated
financial statements 
analysis of items in the primary statements
    1. Segmental analysis
  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 Distribution & Generation US
    
    Electricity distribution in New York and New England and electricity generation in New York.
    (a) Revenue
 Sales
    
    
    Sales
    
    
    
    
    
    
    Sales
    
    
    Sales
    
    
    
    
    
    
    Sales
    
    
    SalesTotal
    
    
    between
    
    
    to third
    
    
    Total
    
    
    between
    
    
    to third
    
    
    Total
    
    
    between
    
    
    to thirdsales
    
    
    segments
    
    
    parties
    
    
    sales
    
    
    segments
    
    
    parties
    
    
    sales
    
    
    segments
    
    
    parties2010
    
    
    2010
    
    
    2010
    
    
    2009
    
    
    2009
    
    
    2009
    
    
    2008
    
    
    2008
    
    
    2008£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mOperating segments  continuing operationsTransmission UK
    
    
    3,460
    
    
    
    6
    
    
    
    3,454
    
    
    
    3,487
    
    
    
    2
    
    
    
    3,485
    
    
    
    2,956
    
    
    
    16
    
    
    
    2,940Transmission US
    
    
    405
    
    
    
    74
    
    
    
    331
    
    
    
    420
    
    
    
    83
    
    
    
    337
    
    
    
    299
    
    
    
    61
    
    
    
    238Gas Distribution UK
    
    
    1,517
    
    
    
    70
    
    
    
    1,447
    
    
    
    1,466
    
    
    
    79
    
    
    
    1,387
    
    
    
    1,383
    
    
    
    70
    
    
    
    1,313Gas Distribution US
    
    
    3,708
    
    
    
    5
    
    
    
    3,703
    
    
    
    4,786
    
    
    
    3
    
    
    
    4,783
    
    
    
    2,845
    
    
    
    2
    
    
    
    2,843Electricity Distribution & Generation US
    
    
    4,339
    
    
    
    1
    
    
    
    4,338
    
    
    
    4,972
    
    
    
    1
    
    
    
    4,971
    
    
    
    3,508
    
    
    
    2
    
    
    
    3,506Other activities
    
    
    738
    
    
    
    23
    
    
    
    715
    
    
    
    719
    
    
    
    58
    
    
    
    661
    
    
    
    642
    
    
    
    59
    
    
    
    58314,167
    
    
    
    179
    
    
    
    13,988
    
    
    
    15,850
    
    
    
    226
    
    
    
    15,624
    
    
    
    11,633
    
    
    
    210
    
    
    
    11,423Total excluding stranded cost recoveries
    
    
    
    
    
    
    
    
    
    
    13,612
    
    
    
    
    
    
    
    
    
    
    
    15,189
    
    
    
    
    
    
    
    
    
    
    
    11,041Stranded cost recoveries
    
    
    
    
    
    
    
    
    
    
    376
    
    
    
    
    
    
    
    
    
    
    
    435
    
    
    
    
    
    
    
    
    
    
    
    38213,988
    
    
    
    
    
    
    
    
    
    
    
    15,624
    
    
    
    
    
    
    
    
    
    
    
    11,423Geographical areasUK
    
    
    
    
    
    
    
    
    
    
    5,524
    
    
    
    
    
    
    
    
    
    
    
    5,334
    
    
    
    
    
    
    
    
    
    
    
    4,787US
    
    
    
    
    
    
    
    
    
    
    8,464
    
    
    
    
    
    
    
    
    
    
    
    10,290
    
    
    
    
    
    
    
    
    
    
    
    6,63613,988
    
    
    
    
    
    
    
    
    
    
    
    15,624
    
    
    
    
    
    
    
    
    
    
    
    11,423
 
  
 Annual
Report and Accounts 2009/10 | National Grid plc     125




---



##### 



Financial Statements
 Notes to the consolidated financial statements continued
 1. Segmental analysis continued
  (b) Operating profit
 Before exceptional items,
    
    
    After exceptional items,remeasurements and stranded
    
    
    remeasurements and strandedcost recoveries
    
    cost recoveries2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2008£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mOperating segments  continuing operationsTransmission UK
    
    
    1,311
    
    
    
    1,126
    
    
    
    1,021
    
    
    
    1,252
    
    
    
    1,063
    
    
    
    1,013Transmission US
    
    
    153
    
    
    
    175
    
    
    
    128
    
    
    
    151
    
    
    
    173
    
    
    
    122Gas Distribution UK
    
    
    723
    
    
    
    672
    
    
    
    595
    
    
    
    682
    
    
    
    629
    
    
    
    574Gas Distribution US
    
    
    414
    
    
    
    612
    
    
    
    392
    
    
    
    448
    
    
    
    226
    
    
    
    487Electricity Distribution & Generation US
    
    
    374
    
    
    
    265
    
    
    
    330
    
    
    
    701
    
    
    
    531
    
    
    
    696Other activities
    
    
    146
    
    
    
    65
    
    
    
    129
    
    
    
    59
    
    
    
    1
    
    
    
    723,121
    
    
    
    2,915
    
    
    
    2,595
    
    
    
    3,293
    
    
    
    2,623
    
    
    
    2,964Geographical areasUK
    
    
    2,180
    
    
    
    1,875
    
    
    
    1,752
    
    
    
    2,007
    
    
    
    1,729
    
    
    
    1,667US
    
    
    941
    
    
    
    1,040
    
    
    
    843
    
    
    
    1,286
    
    
    
    894
    
    
    
    1,2973,121
    
    
    
    2,915
    
    
    
    2,595
    
    
    
    3,293
    
    
    
    2,623
    
    
    
    2,964Reconciliation to profit before tax:Operating profit
    
    
    3,121
    
    
    
    2,915
    
    
    
    2,595
    
    
    
    3,293
    
    
    
    2,623
    
    
    
    2,964Interest income and similar income
    
    
    1,005
    
    
    
    1,315
    
    
    
    1,275
    
    
    
    1,005
    
    
    
    1,315
    
    
    
    1,275Interest expense and other finance costs
    
    
    (2,160
    )
    
    
    (2,465
    )
    
    
    (2,045
    )
    
    
    (2,113
    )
    
    
    (2,549
    )
    
    
    (2,061
    )Share of post-tax results of joint ventures and associates
    
    
    8
    
    
    
    5
    
    
    
    4
    
    
    
    8
    
    
    
    5
    
    
    
    4Profit before tax  continuing operations
    
    
    1,974
    
    
    
    1,770
    
    
    
    1,829
    
    
    
    2,193
    
    
    
    1,394
    
    
    
    2,182
  (c) Capital expenditure and depreciation
 Capital expenditure
    
    Depreciation and amortisation2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2008£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mOperating segments  continuing operationsTransmission UK
    
    
    1,254
    
    
    
    1,259
    
    
    
    1,600
    
    
    
    373
    
    
    
    353
    
    
    
    372Transmission US
    
    
    240
    
    
    
    182
    
    
    
    111
    
    
    
    59
    
    
    
    56
    
    
    
    40Gas Distribution UK
    
    
    670
    
    
    
    598
    
    
    
    514
    
    
    
    201
    
    
    
    177
    
    
    
    181Gas Distribution US
    
    
    409
    
    
    
    421
    
    
    
    188
    
    
    
    173
    
    
    
    172
    
    
    
    91Electricity Distribution & Generation US
    
    
    372
    
    
    
    355
    
    
    
    257
    
    
    
    215
    
    
    
    223
    
    
    
    146Other activities
    
    
    307
    
    
    
    427
    
    
    
    383
    
    
    
    173
    
    
    
    146
    
    
    
    1643,252
    
    
    
    3,242
    
    
    
    3,053
    
    
    
    1,194
    
    
    
    1,127
    
    
    
    994Discontinued operations
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    3,252
    
    
    
    3,242
    
    
    
    3,054
    
    
    
    1,194
    
    
    
    1,127
    
    
    
    994Geographical areasUK
    
    
    2,187
    
    
    
    2,270
    
    
    
    2,493
    
    
    
    733
    
    
    
    679
    
    
    
    709US
    
    
    1,065
    
    
    
    972
    
    
    
    560
    
    
    
    461
    
    
    
    448
    
    
    
    285Rest of the world
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    3,252
    
    
    
    3,242
    
    
    
    3,054
    
    
    
    1,194
    
    
    
    1,127
    
    
    
    994
    
 126     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



1. Segmental analysis continued
 (d) Total assets
 Total assets2010
    
    
    2009£m
    
    
    £mOperating segmentsTransmission UK
    
    
    11,085
    
    
    
    10,451Transmission US
    
    
    2,467
    
    
    
    2,238Gas Distribution UK
    
    
    6,592
    
    
    
    6,158Gas Distribution US
    
    
    9,454
    
    
    
    10,112Electricity Distribution & Generation US
    
    
    7,289
    
    
    
    7,854Other activities
    
    
    2,557
    
    
    
    2,28939,444
    
    
    
    39,102Joint ventures
    
    
    250
    
    
    
    168Unallocated
    
    
    3,859
    
    
    
    5,19743,553
    
    
    
    44,467Geographical areasUK
    
    
    19,720
    
    
    
    18,527US
    
    
    19,974
    
    
    
    20,743Unallocated
    
    
    3,859
    
    
    
    5,19743,553
    
    
    
    44,467
  
 2. Operating costs
 Before exceptional items,
    
    
    Exceptional items,remeasurements and stranded
    
    
    remeasurements and strandedcost recoveries
    
    cost recoveries
    
    Total2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2008£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mDepreciation of property, plant and
equipment
    
    
    1,131
    
    
    
    1,058
    
    
    
    940
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,131
    
    
    
    1,058
    
    
    
    940Amortisation of intangible assets
    
    
    57
    
    
    
    64
    
    
    
    50
    
    
    
    6
    
    
    
    5
    
    
    
    4
    
    
    
    63
    
    
    
    69
    
    
    
    54Payroll costs
    
    
    1,354
    
    
    
    1,415
    
    
    
    1,071
    
    
    
    48
    
    
    
    34
    
    
    
    108
    
    
    
    1,402
    
    
    
    1,449
    
    
    
    1,179Other operating charges:Purchases of electricity
    
    
    1,592
    
    
    
    2,199
    
    
    
    1,589
    
    
    
    (19
    )
    
    
    28
    
    
    
    (95
    )
    
    
    1,573
    
    
    
    2,227
    
    
    
    1,494Purchases of gas
    
    
    2,294
    
    
    
    3,228
    
    
    
    2,011
    
    
    
    (52
    )
    
    
    334
    
    
    
    (141
    )
    
    
    2,242
    
    
    
    3,562
    
    
    
    1,870Rates and property taxes
    
    
    907
    
    
    
    881
    
    
    
    608
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    907
    
    
    
    881
    
    
    
    608Electricity transmission services
scheme direct costs
    
    
    691
    
    
    
    904
    
    
    
    574
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    691
    
    
    
    904
    
    
    
    574Payments to Scottish electricity
transmission network owners
    
    
    260
    
    
    
    243
    
    
    
    226
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    260
    
    
    
    243
    
    
    
    226Other
    
    
    2,224
    
    
    
    2,345
    
    
    
    1,452
    
    
    
    221
    
    
    
    326
    
    
    
    137
    
    
    
    2,445
    
    
    
    2,671
    
    
    
    1,58910,510
    
    
    
    12,337
    
    
    
    8,521
    
    
    
    204
    
    
    
    727
    
    
    
    13
    
    
    
    10,714
    
    
    
    13,064
    
    
    
    8,534Operating costs include:Inventory consumed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    475
    
    
    
    788
    
    
    
    390Research expenditure
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    10
    
    
    
    13Operating lease rentalsPlant and machinery
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55
    
    
    
    48
    
    
    
    33Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32
    
    
    
    33
    
    
    
    30
 
  
 Annual
Report and Accounts 2009/10 | National Grid plc     127




---



##### 



Financial Statements
 Notes to the consolidated financial statements continued
 
 2. Operating costs continued
 (a) Payroll costs
 2010
    
    
    2009
    
    
    2008£m
    
    
    £m
    
    
    £mWages and salaries
    
    
    1,596
    
    
    
    1,615
    
    
    
    1,169Social security costs
    
    
    120
    
    
    
    118
    
    
    
    84Other pension costs
    
    
    161
    
    
    
    160
    
    
    
    218Share-based payments
    
    
    25
    
    
    
    22
    
    
    
    18Severance costs (excluding pension costs)
    
    
    16
    
    
    
    16
    
    
    
    141,918
    
    
    
    1,931
    
    
    
    1,503Less: payroll costs capitalised
    
    
    (516
    )
    
    
    (482
    )
    
    
    (324
    )1,402
    
    
    
    1,449
    
    
    
    1,179
  (b) Number of employees
 31 March
    
    
    Average
    
    
    31 March
    
    
    Average2010
    
    
    2010
    
    
    2009
    
    
    2009Number
    
    
    Number
    
    
    Number
    *
    
    Number
    *UK
    
    
    10,211
    
    
    
    10,269
    
    
    
    10,297
    
    
    
    10,296US
    
    
    17,895
    
    
    
    17,798
    
    
    
    17,694
    
    
    
    17,829Continuing operations
    
    
    28,106
    
    
    
    28,067
    
    
    
    27,991
    
    
    
    28,125Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8328,106
    
    
    
    28,067
    
    
    
    27,991
    
    
    
    28,208
 *
    Comparatives have been restated to present items on a basis consistent with the current year
classification
  (c) Key management compensation
 2010
    
    
    2009
    
    
    2008£m
    
    
    £m
    
    
    £mSalaries and short-term employee benefits
    
    
    10
    
    
    
    11
    
    
    
    9Post-employment benefits
    
    
    4
    
    
    
    3
    
    
    
    8Share-based payments
    
    
    5
    
    
    
    5
    
    
    
    319
    
    
    
    19
    
    
    
    20
  (d) Directors emoluments
    
 128     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



2. Operating costs continued
 (e) Auditors remuneration
 2010
    
    
    2009
    
    
    2008£m
    
    
    £m
    
    
    £mAudit services:Audit of parent company and consolidated financial statements
    
    
    1.1
    
    
    
    1.5
    
    
    
    1.4Other services:Audit of subsidiary financial statements pursuant to legislation
    
    
    5.4
    
    
    
    5.8
    
    
    
    5.1Other services supplied pursuant to legislation
    
    
    1.9
    
    
    
    2.4
    
    
    
    2.4Services relating to tax compliance
    
    
    0.6
    
    
    
    0.6
    
    
    
    0.7Services relating to tax advisory
    
    
    0.8
    
    
    
    0.3
    
    
    
    0.5Services relating to corporate finance transactions
    
    
    
    
    
    
    0.1
    
    
    
    0.7All other services
    
    
    1.2
    
    
    
    0.8
    
    
    
    0.411.0
    
    
    
    11.5
    
    
    
    11.2Total services pursuant to legislation
    
    
    8.4
    
    
    
    9.7
    
    
    
    8.9Total other services
    
    
    2.6
    
    
    
    1.8
    
    
    
    2.311.0
    
    
    
    11.5
    
    
    
    11.2
 
  
 Annual
Report and Accounts 2009/10 | National Grid plc     129




---



##### 



Financial Statements
 Notes to the consolidated financial statements continued
 
 3. Exceptional items, remeasurements and stranded cost recoveries
 2010
    
    
    2009
    
    
    2008£m
    
    
    £m
    
    
    £mExceptional items  restructuring costs (i)
    
    
    (149
    )
    
    
    (192
    )
    
    
    (133
    )Exceptional items  environmental related provisions (ii)
    
    
    (63
    )
    
    
    (78
    )
    
    
    (92
    )Exceptional items  gain on disposal of subsidiary and associate (iii)
    
    
    11
    
    
    
    
    
    
    
    6Exceptional items  other (iv)
    
    
    (67
    )
    
    
    (5
    )
    
    
    (23
    )Remeasurements  commodity contracts (v)
    
    
    71
    
    
    
    (443
    )
    
    
    232Stranded cost recoveries (vi)
    
    
    369
    
    
    
    426
    
    
    
    379Total exceptional items, remeasurements and stranded cost recoveries included within operating profit
    
    
    172
    
    
    
    (292
    )
    
    
    369Exceptional items  debt redemption costs (vii)
    
    
    (33
    )
    
    
    
    
    
    
    Remeasurements  commodity contracts (v)
    
    
    (1
    )
    
    
    (2
    )
    
    
    (9
    )Remeasurements  net gains/(losses) on derivative financial instruments (viii)
    
    
    81
    
    
    
    (82
    )
    
    
    (7
    )Total exceptional items and remeasurements included within finance costs
    
    
    47
    
    
    
    (84
    )
    
    
    (16
    )Total exceptional items, remeasurements and stranded cost recoveries before taxation
    
    
    219
    
    
    
    (376
    )
    
    
    353Exceptional tax item  deferred tax credit arising from the reduction in the UK tax rate (ix)
    
    
    
    
    
    
    
    
    
    
    170Exceptional tax item  deferred tax charge arising from change in UK industrial building allowance regime (x)
    
    
    
    
    
    
    (49
    )
    
    
    Exceptional tax item  other (xi)
    
    
    (41
    )
    
    
    
    
    
    
    Tax on exceptional items  restructuring costs (i)
    
    
    45
    
    
    
    59
    
    
    
    49Tax on exceptional items  environmental related provisions (ii)
    
    
    8
    
    
    
    16
    
    
    
    20Tax on exceptional items  gain on disposal of subsidiary and associate (iii)
    
    
    (2
    )
    
    
    
    
    
    
    (4
    )Tax on exceptional items  other (iv)
    
    
    19
    
    
    
    2
    
    
    
    5Tax on exceptional items  debt redemption costs (vii)
    
    
    2
    
    
    
    
    
    
    
    Tax on remeasurements  commodity contracts (v)
    
    
    (28
    )
    
    
    179
    
    
    
    (90
    )Tax on remeasurements  derivative financial instruments (viii)
    
    
    (106
    )
    
    
    8
    
    
    
    (28
    )Tax on stranded cost recoveries (vi)
    
    
    (148
    )
    
    
    (170
    )
    
    
    (150
    )Tax on exceptional items, remeasurements and stranded cost recoveries
    
    
    (251
    )
    
    
    45
    
    
    
    (28
    )Total exceptional items, remeasurements and stranded cost recoveries after taxation
    
    
    (32
    )
    
    
    (331
    )
    
    
    325Total exceptional items after taxation
    
    
    (270
    )
    
    
    (247
    )
    
    
    (2
    )Total commodity contract remeasurements after taxation
    
    
    42
    
    
    
    (266
    )
    
    
    133Total derivative financial instrument remeasurements after taxation
    
    
    (25
    )
    
    
    (74
    )
    
    
    (35
    )Total stranded cost recoveries after taxation
    
    
    221
    
    
    
    256
    
    
    
    229Total exceptional items, remeasurements and stranded cost recoveries after taxation
    
    
    (32
    )
    
    
    (331
    )
    
    
    325
 (i)
    
    Restructuring costs include costs related to the integration of KeySpan of £30m (2009:
£53m; 2008: £101m), the further restructuring of our liquefied natural gas (LNG) storage facilities
of £41m (2009: £50m; 2008: £nil), transformation related initiatives of £56m (2009: £68m; 2008:
£11m) and costs associated with the outsourcing of elements of our UK shared services organisation
of £22m. Charges in the comparative years also included planned cost reduction programmes in our UK
businesses (2009: £21m; 2008: £21m).(ii)
    
    Environmental charges include £21m related to specific exposures in the US together with £42m
arising from changes in landfill tax legislation in the UK. For the year ended 31 March 2010, the
UK charge was £42m (2009: £37m; 2008: £44m) and the US charge £21m (2009: £41m; 2008: £48m). Costs
incurred with respect to US environmental provisions are substantially recoverable from customers.(iii)
    
    During the year there was a gain of £5m on the sale of a 30.29% investment in the associate
Steuben Gas Storage Company. In addition there was the release of various unutilised provisions
amounting to £6m originally recorded on the sale of Advantica in 2008.(iv)
    
    Other costs for the year ended 31 March 2010 include: an impairment charge of £11m and an
amortisation charge of £6m (2009: £5m; 2008: £4m) in relation to acquisition-related intangibles; a
charge of £9m relating to US healthcare costs arising from recent legislative changes; and £41m
related to a fine of £15m together with associated costs and provisions against receivables and
other balance sheet items. For further details on the fine levied upon us by the Gas and
Electricity Markets Authority (GEMA) refer to note 28 (f).(v)
    
    Remeasurements  commodity contracts represent mark-to-market movements on certain physical and
financial commodity contract obligations in the US. These contracts primarily relate to the forward
purchase of energy for supply to customers, or to the economic hedging thereof, that are required
to be measured at fair value and that do not qualify for hedge accounting. Under the existing rate
plans in the US, commodity costs are recoverable from customers although the timing of recovery may
differ from the pattern of costs incurred. These movements are comprised of those impacting
operating profit which are based on the change in the commodity contract liability and those
impacting finance costs as a result of the time value of money.(vi)
    
    Stranded cost recoveries include the recovery of some of our historical investments in
generating plants that were divested as part of the restructuring and wholesale power deregulation
process in New England and New York during the 1990s. Stranded cost recoveries on a pre-tax basis
consist of revenue of £376m (2009: £435m; 2008: £382m) and operating costs of £7m (2009: £9m; 2008:
£3m).(vii)
    
    Debt redemption costs in the year represent one-off costs relating to the early redemption of
a significant loan.(viii)
    
    Remeasurements  net gains/(losses) on derivative financial instruments comprise
gains/(losses) arising on derivative financial instruments reported in the income statement. These
exclude gains and losses for which hedge accounting has been effective, which have been recognised
directly in equity or which are offset by adjustments to the carrying value of debt. The tax charge
in the year ended 31 March 2010 includes a £78m (2009: £1m; 2008: £11m) charge in respect of prior
years.(ix)
    
    The exceptional tax credit in the year ended 31 March 2008 of £170m arose from a reduction in
the UK corporation tax rate from 30% to 28% included in the 2007 Finance Act. This resulted in a
reduction in deferred tax liabilities.(x)
    
    The exceptional tax charge of £49m in the year ended 31 March 2009 arose from a change in the
UK industrial building allowance regime arising in the 2008 Finance Act. This resulted in an
increase in deferred tax liabilities.(xi)
    
    The exceptional tax charge of £41m arises due to a change in US tax legislation under the
Patient Protection and Affordable Care Act.
 
   
 130     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



4. Pensions and other post-retirement benefits
    Pensions
    
    US other post-retirement benefits2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2008£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mDefined contribution scheme costs
    
    
    7
    
    
    
    5
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    Defined benefit scheme costsCurrent service cost*
    
    
    112
    
    
    
    134
    
    
    
    125
    
    
    
    26
    
    
    
    32
    
    
    
    21Past service cost
    
    
    19
    
    
    
    
    
    
    
    5
    
    
    
    6
    
    
    
    7
    
    
    
    5Curtailment gain on redundancies
    
    
    (7
    )
    
    
    (4
    )
    
    
    (16
    )
    
    
    
    
    
    
    
    
    
    
    (4
    )Settlements on redundancies
    
    
    
    
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    Special termination benefits on redundancies
    
    
    26
    
    
    
    19
    
    
    
    80
    
    
    
    
    
    
    
    
    
    
    
    1Curtailment cost  augmentations
    
    
    4
    
    
    
    6
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    US healthcare reform cost
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    
    
    
    
    Total in payroll costs  continuing
    
    
    161
    
    
    
    160
    
    
    
    218
    
    
    
    41
    
    
    
    39
    
    
    
    23Curtailment gain on sale of subsidiary undertaking
    
    
    
    
    
    
    
    
    
    
    (12
    )
    
    
    
    
    
    
    
    
    
    
    Interest cost
    
    
    1,050
    
    
    
    1,106
    
    
    
    912
    
    
    
    143
    
    
    
    144
    
    
    
    89Expected return on plan assets
    
    
    (931
    )
    
    
    (1,163
    )
    
    
    (1,014
    )
    
    
    (50
    )
    
    
    (73
    )
    
    
    (50
    )Total in finance costs  continuing
    
    
    119
    
    
    
    (57
    )
    
    
    (102
    )
    
    
    93
    
    
    
    71
    
    
    
    39Current service cost
    
    
    
    
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    1Total in discontinued operations
    
    
    
    
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    1
 *
    As a result of flexible pension saving, a salary sacrifice arrangement introduced from
December 2009, the current service cost has increased by £2m with a corresponding decrease in wages
and salaries
  Pensions
    
    US other post-retirement benefits2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2008£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mActuarial net (loss)/gain during the year
    
    
    (572
    )
    
    
    (1,906
    )
    
    
    497
    
    
    
    (159
    )
    
    
    (112
    )
    
    
    (65
    )Exchange differences
    
    
    64
    
    
    
    (141
    )
    
    
    3
    
    
    
    76
    
    
    
    (408
    )
    
    
    3Total recognised for the year
    
    
    (508
    )
    
    
    (2,047
    )
    
    
    500
    
    
    
    (83
    )
    
    
    (520
    )
    
    
    (62
    )Cumulative actuarial (loss)/gain
    
    
    (1,156
    )
    
    
    (584
    )
    
    
    1,322
    
    
    
    (362
    )
    
    
    (203
    )
    
    
    (91
    )
 
  
 Annual
Report and Accounts 2009/10 | National
Grid plc     131




---



##### 



Financial Statements
 Notes to the consolidated financial statements continued
 4. Pensions and other post-retirement benefits continued
  Pensions
    
    US other post-retirement benefits2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2008£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mPresent value of funded obligations
    
    
    (19,372
    )
    
    
    (15,797
    )
    
    
    (16,233
    )
    
    
    (2,602
    )
    
    
    (2,299
    )
    
    
    (1,784
    )Fair value of plan assets
    
    
    18,186
    
    
    
    14,797
    
    
    
    16,536
    
    
    
    950
    
    
    
    722
    
    
    
    737(1,186
    )
    
    
    (1,000
    )
    
    
    303
    
    
    
    (1,652
    )
    
    
    (1,577
    )
    
    
    (1,047
    )Present value of unfunded obligations
    
    
    (226
    )
    
    
    (203
    )
    
    
    (158
    )
    
    
    
    
    
    
    
    
    
    
    Other post-employment liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (62
    )
    
    
    (74
    )
    
    
    (34
    )Unrecognised past service cost
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28
    
    
    
    43
    
    
    
    36Net (liability)/asset in the balance sheet
    
    
    (1,412
    )
    
    
    (1,203
    )
    
    
    145
    
    
    
    (1,686
    )
    
    
    (1,608
    )
    
    
    (1,045
    )Liabilities
    
    
    (1,412
    )
    
    
    (1,472
    )
    
    
    (701
    )
    
    
    (1,686
    )
    
    
    (1,608
    )
    
    
    (1,045
    )Assets
    
    
    
    
    
    
    269
    
    
    
    846
    
    
    
    
    
    
    
    
    
    
    
    Net (liability)/asset
    
    
    (1,412
    )
    
    
    (1,203
    )
    
    
    145
    
    
    
    (1,686
    )
    
    
    (1,608
    )
    
    
    (1,045
    )Changes in the present value of the defined benefit obligations
(including unfunded obligations)Opening defined benefit obligations
    
    
    (16,000
    )
    
    
    (16,391
    )
    
    
    (16,127
    )
    
    
    (2,299
    )
    
    
    (1,784
    )
    
    
    (1,126
    )Current service cost
    
    
    (112
    )
    
    
    (136
    )
    
    
    (127
    )
    
    
    (26
    )
    
    
    (32
    )
    
    
    (22
    )Interest cost
    
    
    (1,050
    )
    
    
    (1,106
    )
    
    
    (912
    )
    
    
    (143
    )
    
    
    (144
    )
    
    
    (89
    )Actuarial (losses)/gains
    
    
    (3,563
    )
    
    
    1,719
    
    
    
    1,335
    
    
    
    (360
    )
    
    
    215
    
    
    
    8Curtailment gain on redundancies
    
    
    7
    
    
    
    4
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    4Curtailment gain on sale of subsidiary undertaking
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    Net transfers and disposals
    
    
    (3
    )
    
    
    3
    
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    Special termination benefits
    
    
    (26
    )
    
    
    (19
    )
    
    
    (80
    )
    
    
    
    
    
    
    
    
    
    
    (1
    )Curtailment cost  augmentations
    
    
    (4
    )
    
    
    (6
    )
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    Acquisition of subsidiary undertakings
    
    
    
    
    
    
    
    
    
    
    (1,362
    )
    
    
    
    
    
    
    
    
    
    
    (639
    )Plan amendments
    
    
    (19
    )
    
    
    
    
    
    
    (5
    )
    
    
    9
    
    
    
    
    
    
    
    Plan amendments  US healthcare reform
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9
    )
    
    
    
    
    
    
    Medicare subsidy received
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10
    )
    
    
    
    
    
    
    Employee contributions
    
    
    (10
    )
    
    
    (13
    )
    
    
    (15
    )
    
    
    
    
    
    
    
    
    
    
    Benefits paid
    
    
    1,008
    
    
    
    1,003
    
    
    
    875
    
    
    
    132
    
    
    
    116
    
    
    
    78Exchange adjustments
    
    
    174
    
    
    
    (1,058
    )
    
    
    (6
    )
    
    
    104
    
    
    
    (670
    )
    
    
    3Closing defined benefit obligations
    
    
    (19,598
    )
    
    
    (16,000
    )
    
    
    (16,391
    )
    
    
    (2,602
    )
    
    
    (2,299
    )
    
    
    (1,784
    )Changes in the fair value of plan assetsOpening fair value of plan assets
    
    
    14,797
    
    
    
    16,536
    
    
    
    15,468
    
    
    
    722
    
    
    
    737
    
    
    
    531Expected return on plan assets
    
    
    931
    
    
    
    1,163
    
    
    
    1,014
    
    
    
    50
    
    
    
    73
    
    
    
    50Actuarial gains/(losses)
    
    
    2,991
    
    
    
    (3,625
    )
    
    
    (838
    )
    
    
    201
    
    
    
    (327
    )
    
    
    (73
    )Assets distributed on settlements and transfers
    
    
    
    
    
    
    
    
    
    
    (16
    )
    
    
    
    
    
    
    
    
    
    
    Transfers in/(out)
    
    
    3
    
    
    
    (3
    )
    
    
    (8
    )
    
    
    
    
    
    
    
    
    
    
    Employer contributions
    
    
    572
    
    
    
    799
    
    
    
    465
    
    
    
    137
    
    
    
    93
    
    
    
    46Employee contributions
    
    
    10
    
    
    
    13
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    Acquisition of subsidiary undertakings
    
    
    
    
    
    
    
    
    
    
    1,302
    
    
    
    
    
    
    
    
    
    
    
    259Benefits paid
    
    
    (1,008
    )
    
    
    (1,003
    )
    
    
    (875
    )
    
    
    (132
    )
    
    
    (116
    )
    
    
    (76
    )Exchange adjustments
    
    
    (110
    )
    
    
    917
    
    
    
    9
    
    
    
    (28
    )
    
    
    262
    
    
    
    Closing fair value of plan assets
    
    
    18,186
    
    
    
    14,797
    
    
    
    16,536
    
    
    
    950
    
    
    
    722
    
    
    
    737Actual return on plan assets
    
    
    3,922
    
    
    
    (2,462
    )
    
    
    176
    
    
    
    251
    
    
    
    (254
    )
    
    
    (23
    )Expected contributions to defined benefit plans in the following year
    
    
    353
    
    
    
    552
    
    
    
    581
    
    
    
    148
    
    
    
    123
    
    
    
    128
 
   
 132     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



5. Finance income and costs
 2010
    
    
    2009
    
    
    2008£m
    
    
    £m
    
    
    £mInterest income and similar incomeExpected return on pension and other post-retirement benefit plan assets
    
    
    981
    
    
    
    1,236
    
    
    
    1,064Interest income on financial instruments:Interest income from bank deposits and other financial assets
    
    
    18
    
    
    
    60
    
    
    
    209Interest receivable on finance leases
    
    
    
    
    
    
    1
    
    
    
    2Gains transferred from equity on disposal of available-for-sale investments
    
    
    6
    
    
    
    18
    
    
    
    Interest income and similar income
    
    
    1,005
    
    
    
    1,315
    
    
    
    1,275Interest expense and other finance costsInterest on pension and other post-retirement benefit plan obligations
    
    
    (1,193
    )
    
    
    (1,250
    )
    
    
    (1,001
    )Interest expense on financial liabilities held at amortised cost:Interest on bank loans and overdrafts
    
    
    (80
    )
    
    
    (136
    )
    
    
    (71
    )Interest on other borrowings
    
    
    (938
    )
    
    
    (1,135
    )
    
    
    (990
    )Interest on finance leases
    
    
    
    
    
    
    (14
    )
    
    
    (11
    )Interest on derivatives
    
    
    22
    
    
    
    5
    
    
    
    (46
    )Unwinding of discounts on provisions
    
    
    (70
    )
    
    
    (68
    )
    
    
    (45
    )Less: Interest capitalised (i)
    
    
    99
    
    
    
    133
    
    
    
    119Interest expense and other finance costs before exceptional items and remeasurements
    
    
    (2,160
    )
    
    
    (2,465
    )
    
    
    (2,045
    )Exceptional itemsExceptional debt redemption costs
    
    
    (33
    )
    
    
    
    
    
    
    RemeasurementsNet gains/(losses) on derivative financial instruments included in remeasurements (ii):Ineffectiveness on derivatives designated as fair value hedges (iii)
    
    
    67
    
    
    
    (34
    )
    
    
    1Ineffectiveness on derivatives designated as cash flow hedges
    
    
    (5
    )
    
    
    (18
    )
    
    
    13Ineffectiveness on derivatives designated as net investment hedges
    
    
    (19
    )
    
    
    (2
    )
    
    
    14On undesignated forward rate risk relating to derivatives designated as net investment hedges
    
    
    51
    
    
    
    112
    
    
    
    (53
    )On derivatives not designated as hedges or ineligible for hedge accounting
    
    
    (13
    )
    
    
    (140
    )
    
    
    18Financial element of remeasurements on commodity contracts
    
    
    (1
    )
    
    
    (2
    )
    
    
    (9
    )80
    
    
    
    (84
    )
    
    
    (16
    )Interest expense and other finance costs
    
    
    (2,113
    )
    
    
    (2,549
    )
    
    
    (2,061
    )Net finance costs
    
    
    (1,108
    )
    
    
    (1,234
    )
    
    
    (786
    )Comprising:Interest income and similar income
    
    
    1,005
    
    
    
    1,315
    
    
    
    1,275Interest expense and other finance costs:Before exceptional items and remeasurements
    
    
    (2,160
    )
    
    
    (2,465
    )
    
    
    (2,045
    )Exceptional items and remeasurements
    
    
    47
    
    
    
    (84
    )
    
    
    (16
    )After exceptional items and remeasurements
    
    
    (2,113
    )
    
    
    (2,549
    )
    
    
    (2,061
    )(1,108
    )
    
    
    (1,234
    )
    
    
    (786
    )
 (i)
    
    Interest on funding attributable to assets in the course of construction was capitalised
during the year at a rate of 2.8% (2009: 5.7%; 2008: 6.3%).(ii)
    
    Includes a net foreign exchange gain on financing activities of £334m (2009: £1,500m loss;
2008: £885m loss) offset by foreign exchange gains and losses on derivative financial instruments
measured at fair value.(iii)
    
    Includes a net loss on instruments designated as fair value hedges of £90m (2009: £382m gain;
2008: £87m gain) offset by a net gain of £157m (2009: £416m loss; 2008: £86m loss) arising from
fair value adjustments to the carrying value of debt.
 
  
 Annual
Report and Accounts 2009/10 | National Grid plc     133




---



##### 



Financial Statements
 Notes to the consolidated financial statements continued
 
 6. Taxation
 Taxation on items charged/(credited) to the income statement
 2010
    
    
    2009
    
    
    2008£m
    
    
    £m
    
    
    £mTaxation before exceptional items, remeasurements and stranded cost recoveries
    
    
    553
    
    
    
    517
    
    
    
    579Exceptional tax items (see note 3)
    
    
    41
    
    
    
    49
    
    
    
    (170
    )Taxation on other exceptional items, remeasurements and stranded cost recoveries
    
    
    210
    
    
    
    (94
    )
    
    
    198Taxation on total exceptional items, remeasurements and stranded cost recoveries (see note 3)
    
    
    251
    
    
    
    (45
    )
    
    
    28Total tax charge
    
    
    804
    
    
    
    472
    
    
    
    607
 Taxation as a percentage of profit before taxation
 2010
    
    
    2009
    
    
    2008%
    
    
    %
    
    
    %Before exceptional items, remeasurements and stranded cost recoveries
    
    
    28.0
    
    
    
    29.2
    
    
    
    31.7After exceptional items, remeasurements and stranded cost recoveries
    
    
    36.7
    
    
    
    33.9
    
    
    
    27.8
  2010
    
    
    2009
    
    
    2008£m
    
    
    £m
    
    
    £mUnited KingdomCorporation tax at 28% (2009: 28%; 2008: 30%)
    
    
    197
    
    
    
    37
    
    
    
    214Corporation tax adjustment in respect of prior years (i)
    
    
    (31
    )
    
    
    (54
    )
    
    
    (156
    )Deferred tax
    
    
    259
    
    
    
    339
    
    
    
    42Deferred tax adjustment in respect of prior years (ii)
    
    
    (5
    )
    
    
    
    
    
    
    67420
    
    
    
    322
    
    
    
    167OverseasCorporate tax
    
    
    74
    
    
    
    105
    
    
    
    209Corporate tax adjustment in respect of prior years
    
    
    (364
    )
    
    
    38
    
    
    
    31Deferred tax
    
    
    279
    
    
    
    37
    
    
    
    191Deferred tax adjustment in respect of prior years
    
    
    395
    
    
    
    (30
    )
    
    
    9384
    
    
    
    150
    
    
    
    440Total tax charge
    
    
    804
    
    
    
    472
    
    
    
    607
 (i)
    
    The UK corporation tax adjustment in respect of prior years includes a £76m charge (2009:
£2m credit; 2008: £9m charge) that relates to exceptional items, remeasurements and stranded cost
recoveries.(ii)
    
    The UK deferred tax adjustment in respect of prior years includes a £1m charge (2009: £1m
charge; 2008: £2m charge) that relates to exceptional items, remeasurements and stranded cost
recoveries.
 Taxation on items (credited)/charged to equity
 2010
    
    
    2009
    
    
    2008£m
    
    
    £m
    
    
    £mCorporation tax credit on share-based payments
    
    
    (3
    )
    
    
    (2
    )
    
    
    (7
    )Deferred tax charge on share of other comprehensive income of joint ventures and associates
    
    
    4
    
    
    
    
    
    
    
    Deferred tax charge/(credit) on available-for-sale investments
    
    
    5
    
    
    
    (7
    )
    
    
    (2
    )Deferred tax credit on revaluation of cash flow hedges
    
    
    (9
    )
    
    
    (19
    )
    
    
    (2
    )Deferred tax charge on share-based payments
    
    
    
    
    
    
    3
    
    
    
    12Deferred tax (credit)/charge on actuarial (losses)/gains (i)
    
    
    (175
    )
    
    
    (678
    )
    
    
    98(178
    )
    
    
    (703
    )
    
    
    99Total tax (credit)/charge recognised in the consolidated statement of comprehensive income
    
    
    (175
    )
    
    
    (704
    )
    
    
    94Total tax (credit)/charge relating to share-based payments recognised directly in equity
    
    
    (3
    )
    
    
    1
    
    
    
    5(178
    )
    
    
    (703
    )
    
    
    99
 (i)
    
    2010 includes a £42m charge relating to a change in US tax legislation under the Patient
Protection and Affordable Care Act.
    
 134     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



6. Taxation continued
  Before
    
    
    After
    
    
    Before
    
    
    After
    
    
    Before
    
    
    Afterexceptional
    
    
    exceptional
    
    
    exceptional
    
    
    exceptional
    
    
    exceptional
    
    
    exceptionalitems,
    
    
    items,
    
    
    items,
    
    
    items,
    
    
    items,
    
    
    items,remeasurements
    
    
    remeasurements
    
    
    remeasurements
    
    
    remeasurements
    
    
    remeasurements
    
    
    remeasurementsand stranded
    
    
    and stranded
    
    
    and stranded
    
    
    and stranded
    
    
    and stranded
    
    
    and strandedcost recoveries
    
    
    cost recoveries
    
    
    cost recoveries
    
    
    cost recoveries
    
    
    cost recoveries
    
    
    cost recoveries2010
    
    
    2010
    
    
    2009
    
    
    2009
    
    
    2008
    
    
    2008£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mProfit before taxationBefore exceptional items, remeasurements
and stranded cost recoveries
    
    
    1,974
    
    
    
    1,974
    
    
    
    1,770
    
    
    
    1,770
    
    
    
    1,829
    
    
    
    1,829Exceptional items, remeasurements 

and stranded cost recoveries
    
    
    
    
    
    
    219
    
    
    
    
    
    
    
    (376
    )
    
    
    
    
    
    
    353Profit before taxation from continuing
operations
    
    
    1,974
    
    
    
    2,193
    
    
    
    1,770
    
    
    
    1,394
    
    
    
    1,829
    
    
    
    2,182Profit from continuing operations multiplied
by rate of corporation tax in the UK of 28%
(2009: 28%; 2008: 30%)
    
    
    553
    
    
    
    614
    
    
    
    496
    
    
    
    390
    
    
    
    549
    
    
    
    655Effects of:Adjustments in respect of prior years
    
    
    (82
    )
    
    
    (5
    )
    
    
    (45
    )
    
    
    (46
    )
    
    
    (60
    )
    
    
    (49
    )Expenses not deductible for tax purposes
    
    
    62
    
    
    
    237
    
    
    
    76
    
    
    
    82
    
    
    
    102
    
    
    
    117Non-taxable income
    
    
    (6
    )
    
    
    (131
    )
    
    
    (35
    )
    
    
    (34
    )
    
    
    (75
    )
    
    
    (51
    )Adjustment in respect of foreign tax rates
    
    
    37
    
    
    
    77
    
    
    
    38
    
    
    
    32
    
    
    
    25
    
    
    
    67Impact of share-based payments
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    2
    
    
    
    2Remeasurement of deferred tax  change
in UK tax rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (170
    )Other
    
    
    (11
    )
    
    
    12
    
    
    
    (14
    )
    
    
    47
    
    
    
    36
    
    
    
    36Total taxation from continuing operations
    
    
    553
    
    
    
    804
    
    
    
    517
    
    
    
    472
    
    
    
    579
    
    
    
    607%
    
    
    %
    
    
    %
    
    
    %
    
    
    %
    
    
    %Effective income tax rate
    
    
    28.0
    
    
    
    36.7
    
    
    
    29.2
    
    
    
    33.9
    
    
    
    31.7
    
    
    
    27.8
 Factors that may affect future tax charges
 
  
 Annual
Report and Accounts 2009/10 | National Grid plc     135




---



##### 



Financial Statements
 Notes to the consolidated financial statements continued
 
 
 7. Discontinued operations
   Results of discontinued operations
 2010
    
    
    2009
    
    
    2008£m
    
    
    £m
    
    
    £mRevenue
    
    
    
    
    
    
    97
    
    
    
    201Operating costs
    
    
    
    
    
    
    (84
    )
    
    
    (166
    )Total operating profit from discontinued operations
    
    
    
    
    
    
    13
    
    
    
    35Remeasurement finance income (i)
    
    
    
    
    
    
    
    
    
    
    8Profit before tax from discontinued operations
    
    
    
    
    
    
    13
    
    
    
    43Taxation
    
    
    
    
    
    
    (4
    )
    
    
    (7
    )Profit after tax from discontinued operations
    
    
    
    
    
    
    9
    
    
    
    36Gain on disposal of Ravenswood
    
    
    
    
    
    
    27
    
    
    
    Gain on disposal of UK and US wireless operations
    
    
    
    
    
    
    
    
    
    
    1,506Gain on disposal of Basslink
    
    
    
    
    
    
    
    
    
    
    80Gain on disposal of discontinued operations before tax
    
    
    
    
    
    
    27
    
    
    
    1,586Taxation (ii)
    
    
    
    
    
    
    (11
    )
    
    
    (4
    )Gain on disposal of discontinued operations
    
    
    
    
    
    
    16
    
    
    
    1,582Total profit for the year from discontinued operationsBefore exceptional items, remeasurements and stranded cost recoveries
    
    
    
    
    
    
    9
    
    
    
    28Exceptional items, remeasurements and stranded cost recoveries
    
    
    
    
    
    
    16
    
    
    
    1,590
    
    
    
    25
    
    
    
    1,618
 (i)
    
    Remeasurement finance income comprised £8m of mark-to-market gains on financial
instruments.(ii)
    
    The tax charge for the year ended 31 March 2009 included a current tax charge of £564m offset
by a deferred tax credit of £564m.
 
 8. Dividends
 2010
    
    
    
    
    
    2010
    
    
    2009
    
    
    
    
    
    
    2008pence
    
    
    2010
    
    
    settled
    
    
    pence
    
    
    2009
    
    
    pence
    
    
    2008(per ordinary
    
    
    Total
    
    
    via scrip
    
    
    (per ordinary
    
    
    Total
    
    
    (per ordinary
    
    
    Totalshare)
    
    
    £m
    
    
    £m
    
    
    share)
    
    
    £m
    
    
    share)
    
    
    £mInterim dividend for the year ended 31 March 2010
    
    
    13.65
    
    
    
    336
    
    
    
    68
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Final dividend for the year ended 31 March 2009
    
    
    23.00
    
    
    
    557
    
    
    
    137
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interim dividend for the year ended 31 March 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12.64
    
    
    
    307
    
    
    
    
    
    
    
    Final dividend for the year ended 31 March 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21.30
    
    
    
    531
    
    
    
    
    
    
    
    Interim dividend for the year ended 31 March 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11.70
    
    
    
    300Final dividend for the year ended 31 March 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17.80
    
    
    
    48036.65
    
    
    
    893
    
    
    
    205
    
    
    
    33.94
    
    
    
    838
    
    
    
    29.50
    
    
    
    780
    
 136     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



9. Earnings per share
    (a) Basic earnings per share
 Earnings
    
    
    
    
    
    
    Earnings
    
    
    
    
    
    
    EarningsEarnings
    
    
    per share
    
    
    Earnings
    
    
    per share
    
    
    Earnings
    
    
    per share2010
    
    
    2010
    
    
    2009
    
    
    2009
    *
    
    2008
    
    
    2008
    *£m
    
    
    pence
    
    
    £m
    
    
    pence
    
    
    £m
    
    
    penceAdjusted earnings  continuing operations
    
    
    1,418
    
    
    
    57.4
    
    
    
    1,250
    
    
    
    50.2
    
    
    
    1,247
    
    
    
    47.2Exceptional items after taxation
    
    
    (270
    )
    
    
    (10.9
    )
    
    
    (247
    )
    
    
    (9.9
    )
    
    
    (2
    )
    
    
    (0.1
    )Commodity contract remeasurements after taxation
    
    
    42
    
    
    
    1.7
    
    
    
    (266
    )
    
    
    (10.7
    )
    
    
    133
    
    
    
    5.0Derivative financial instrument remeasurements after taxation
    
    
    (25
    )
    
    
    (1.0
    )
    
    
    (74
    )
    
    
    (3.0
    )
    
    
    (35
    )
    
    
    (1.3
    )Stranded cost recoveries after taxation
    
    
    221
    
    
    
    8.9
    
    
    
    256
    
    
    
    10.3
    
    
    
    229
    
    
    
    8.7Earnings  continuing operations
    
    
    1,386
    
    
    
    56.1
    
    
    
    919
    
    
    
    36.9
    
    
    
    1,572
    
    
    
    59.5Adjusted earnings  discontinued operations
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    0.4
    
    
    
    28
    
    
    
    1.1Gain on disposal of operations after taxation
    
    
    
    
    
    
    
    
    
    
    16
    
    
    
    0.6
    
    
    
    1,582
    
    
    
    59.8Other exceptional items and remeasurements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    0.3Earnings  discontinued operations
    
    
    
    
    
    
    
    
    
    
    25
    
    
    
    1.0
    
    
    
    1,618
    
    
    
    61.2Earnings
    
    
    1,386
    
    
    
    56.1
    
    
    
    944
    
    
    
    37.9
    
    
    
    3,190
    
    
    
    120.7
 2010
    
    
    
    
    
    2009
    *
    
    
    
    
    2008
    *millions
    
    
    
    
    
    millions
    
    
    
    
    
    millionsWeighted average number of shares  basic*
    
    
    
    
    
    
    2,470
    
    
    
    
    
    
    
    2,490
    
    
    
    
    
    
    
    2,644
 *
    Comparative EPS data have been restated to reflect the impact of the additional shares
issued as scrip dividends
 (b) Diluted earnings per share
 Earnings
    
    
    
    
    
    
    Earnings
    
    
    
    
    
    
    EarningsEarnings
    
    
    per share
    
    
    Earnings
    
    
    per share
    
    
    Earnings
    
    
    per share2010
    
    
    2010
    
    
    2009
    
    
    2009
    *
    
    2008
    
    
    2008
    *£m
    
    
    pence
    
    
    £m
    
    
    pence
    
    
    £m
    
    
    penceAdjusted diluted earnings  continuing operations
    
    
    1,418
    
    
    
    57.1
    
    
    
    1,250
    
    
    
    49.9
    
    
    
    1,247
    
    
    
    46.9Exceptional items after taxation
    
    
    (270
    )
    
    
    (10.9
    )
    
    
    (247
    )
    
    
    (9.9
    )
    
    
    (2
    )
    
    
    (0.1
    )Commodity contract remeasurements after taxation
    
    
    42
    
    
    
    1.7
    
    
    
    (266
    )
    
    
    (10.6
    )
    
    
    133
    
    
    
    5.0Derivative financial instrument remeasurements after taxation
    
    
    (25
    )
    
    
    (1.0
    )
    
    
    (74
    )
    
    
    (3.0
    )
    
    
    (35
    )
    
    
    (1.3
    )Stranded cost recoveries after taxation
    
    
    221
    
    
    
    8.9
    
    
    
    256
    
    
    
    10.2
    
    
    
    229
    
    
    
    8.6Diluted earnings  continuing operations
    
    
    1,386
    
    
    
    55.8
    
    
    
    919
    
    
    
    36.6
    
    
    
    1,572
    
    
    
    59.1Adjusted diluted earnings  discontinued operations
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    0.4
    
    
    
    28
    
    
    
    1.1Gain on disposal of operations after taxation
    
    
    
    
    
    
    
    
    
    
    16
    
    
    
    0.6
    
    
    
    1,582
    
    
    
    59.5Other exceptional items and remeasurements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    0.3Diluted earnings  discontinued operations
    
    
    
    
    
    
    
    
    
    
    25
    
    
    
    1.0
    
    
    
    1,618
    
    
    
    60.9Diluted earnings
    
    
    1,386
    
    
    
    55.8
    
    
    
    944
    
    
    
    37.6
    
    
    
    3,190
    
    
    
    120.0
 2010
    
    
    
    
    
    2009
    *
    
    
    
    
    2008
    *millions
    
    
    
    
    
    millions
    
    
    
    
    
    millionsWeighted average number of shares  diluted*
    
    
    
    
    
    
    2,483
    
    
    
    
    
    
    
    2,507
    
    
    
    
    
    
    
    2,659
 *
    Comparative EPS data have been restated to reflect the impact of the additional shares
issued as scrip dividends
 (c) Reconciliation of basic to diluted average number of shares
 2010
    
    
    
    
    
    2009
    
    
    
    
    
    2008millions
    
    
    
    
    
    millions
    
    
    
    
    
    millionsWeighted average number of ordinary shares  basic
    
    
    
    
    
    
    2,470
    
    
    
    
    
    
    
    2,490
    
    
    
    
    
    
    
    2,644Effect of dilutive potential ordinary shares  employee share plans
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    17
    
    
    
    
    
    
    
    15Weighted average number of ordinary shares  diluted
    
    
    
    
    
    
    2,483
    
    
    
    
    
    
    
    2,507
    
    
    
    
    
    
    
    2,659
 
   
 Annual
Report and Accounts 2009/10 | National Grid plc     137




---



##### 



Financial Statements
 Notes to the consolidated financial statements continued
 
 10. Goodwill
 £mCost at 1 April 2008
    
    
    3,904Exchange adjustments
    
    
    1,487Cost at 31 March 2009
    
    
    5,391Exchange adjustments
    
    
    (289
    )Cost at 31 March 2010
    
    
    5,102Net book value at 31 March 2010
    
    
    5,102Net book value at 31 March 2009
    
    
    5,391
    
 138     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



11. Other intangible assets
 Acquisition-Software
    
    
    related
    
    
    Other
    
    
    Total£m
    
    
    £m
    
    
    £m
    
    
    £mNon-currentCost at 1 April 2008
    
    
    373
    
    
    
    92
    
    
    
    27
    
    
    
    492Exchange adjustments
    
    
    32
    
    
    
    37
    
    
    
    1
    
    
    
    70Additions
    
    
    78
    
    
    
    
    
    
    
    
    
    
    
    78Reclassifications (i)
    
    
    50
    
    
    
    
    
    
    
    (12
    )
    
    
    38Disposals
    
    
    (8
    )
    
    
    
    
    
    
    
    
    
    
    (8
    )Cost at 31 March 2009
    
    
    525
    
    
    
    129
    
    
    
    16
    
    
    
    670Exchange adjustments
    
    
    (8
    )
    
    
    (7
    )
    
    
    
    
    
    
    (15
    )Additions
    
    
    103
    
    
    
    
    
    
    
    1
    
    
    
    104Reclassifications (i)
    
    
    5
    
    
    
    
    
    
    
    1
    
    
    
    6Disposals
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    (1
    )Cost at 31 March 2010
    
    
    624
    
    
    
    122
    
    
    
    18
    
    
    
    764Amortisation at 1 April 2008
    
    
    (214
    )
    
    
    (4
    )
    
    
    (3
    )
    
    
    (221
    )Exchange adjustments
    
    
    (12
    )
    
    
    (1
    )
    
    
    (1
    )
    
    
    (14
    )Amortisation charge for the year
    
    
    (59
    )
    
    
    (5
    )
    
    
    (5
    )
    
    
    (69
    )Reclassifications (i)
    
    
    (5
    )
    
    
    
    
    
    
    1
    
    
    
    (4
    )Disposals
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    8Amortisation at 31 March 2009
    
    
    (282
    )
    
    
    (10
    )
    
    
    (8
    )
    
    
    (300
    )Exchange adjustments
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    6Amortisation charge for the year
    
    
    (52
    )
    
    
    (6
    )
    
    
    (5
    )
    
    
    (63
    )Impairment charge for the year
    
    
    (7
    )
    
    
    (11
    )
    
    
    
    
    
    
    (18
    )Reclassifications (i)
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    (1
    )Disposals
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1Amortisation at 31 March 2010
    
    
    (334
    )
    
    
    (27
    )
    
    
    (14
    )
    
    
    (375
    )Net book value at 31 March 2010
    
    
    290
    
    
    
    95
    
    
    
    4
    
    
    
    389Net book value at 31 March 2009
    
    
    243
    
    
    
    119
    
    
    
    8
    
    
    
    370
 (i)
    
    Primarily represents reclassifications between property, plant and equipment, trade and
other receivables and between categories.
 
  
 Annual
Report and Accounts 2009/10 | National Grid plc     139




---



##### 



Financial Statements
 Notes to the consolidated financial statements continued
 
 
 12. Property, plant and equipment
 Assets
    
    
    MotorPlant
    
    
    in the
    
    
    vehiclesLand and
    
    
    and
    
    
    course of
    
    
    and officebuildings
    
    
    machinery
    
    
    construction
    
    
    equipment
    
    
    Total£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mCost at 1 April 2008
    
    
    1,152
    
    
    
    30,584
    
    
    
    2,626
    
    
    
    843
    
    
    
    35,205Exchange adjustments
    
    
    280
    
    
    
    3,903
    
    
    
    107
    
    
    
    2
    
    
    
    4,292Additions
    
    
    43
    
    
    
    2,026
    
    
    
    1,005
    
    
    
    90
    
    
    
    3,164Disposals
    
    
    (20
    )
    
    
    (204
    )
    
    
    (12
    )
    
    
    (31
    )
    
    
    (267
    )Reclassifications
    
    
    49
    
    
    
    1,207
    
    
    
    (1,241
    )
    
    
    (15
    )
    
    
    Cost at 31 March 2009
    
    
    1,504
    
    
    
    37,516
    
    
    
    2,485
    
    
    
    889
    
    
    
    42,394Exchange adjustments
    
    
    (54
    )
    
    
    (765
    )
    
    
    (19
    )
    
    
    (2
    )
    
    
    (840
    )Additions
    
    
    43
    
    
    
    893
    
    
    
    2,108
    
    
    
    104
    
    
    
    3,148Disposals
    
    
    (12
    )
    
    
    (288
    )
    
    
    (2
    )
    
    
    (48
    )
    
    
    (350
    )Reclassifications (i)
    
    
    91
    
    
    
    1,874
    
    
    
    (2,031
    )
    
    
    83
    
    
    
    17Cost at 31 March 2010
    
    
    1,572
    
    
    
    39,230
    
    
    
    2,541
    
    
    
    1,026
    
    
    
    44,369Depreciation at 1 April 2008
    
    
    (202
    )
    
    
    (10,179
    )
    
    
    
    
    
    
    (493
    )
    
    
    (10,874
    )Exchange adjustments
    
    
    (18
    )
    
    
    (1,050
    )
    
    
    
    
    
    
    (3
    )
    
    
    (1,071
    )Depreciation charge for the year (ii)
    
    
    (36
    )
    
    
    (958
    )
    
    
    
    
    
    
    (83
    )
    
    
    (1,077
    )Impairment charge for the year (iii)
    
    
    
    
    
    
    (29
    )
    
    
    
    
    
    
    
    
    
    
    (29
    )Disposals
    
    
    19
    
    
    
    157
    
    
    
    
    
    
    
    26
    
    
    
    202Reclassifications
    
    
    (5
    )
    
    
    (25
    )
    
    
    
    
    
    
    30
    
    
    
    Depreciation at 31 March 2009
    
    
    (242
    )
    
    
    (12,084
    )
    
    
    
    
    
    
    (523
    )
    
    
    (12,849
    )Exchange adjustments
    
    
    4
    
    
    
    206
    
    
    
    
    
    
    
    2
    
    
    
    212Depreciation charge for the year (ii)
    
    
    (30
    )
    
    
    (1,027
    )
    
    
    
    
    
    
    (91
    )
    
    
    (1,148
    )Impairment charge for the year (iii)
    
    
    (3
    )
    
    
    (23
    )
    
    
    (2
    )
    
    
    (1
    )
    
    
    (29
    )Disposals
    
    
    10
    
    
    
    261
    
    
    
    
    
    
    
    44
    
    
    
    315Reclassifications (i)
    
    
    (22
    )
    
    
    43
    
    
    
    
    
    
    
    (36
    )
    
    
    (15
    )Depreciation at 31 March 2010
    
    
    (283
    )
    
    
    (12,624
    )
    
    
    (2
    )
    
    
    (605
    )
    
    
    (13,514
    )Net book value at 31 March 2010
    
    
    1,289
    
    
    
    26,606
    
    
    
    2,539
    
    
    
    421
    
    
    
    30,855Net book value at 31 March 2009
    
    
    1,262
    
    
    
    25,432
    
    
    
    2,485
    
    
    
    366
    
    
    
    29,545
 (i)
    
    Primarily represents reclassifications between categories, other
intangible assets and trade and other receivables.(ii)
    
    Includes amounts in respect of capitalised depreciation of £17m (2009:
£19m).(iii)
    
    Relates to write-down of property, plant and equipment items in the liquefied natural gas
(LNG) storage facilities.
  2010
    
    
    2009£m
    
    
    £mFreehold
    
    
    1,208
    
    
    
    1,191Long leasehold (over 50 years)
    
    
    5
    
    
    
    5Short leasehold (under 50 years)
    
    
    76
    
    
    
    661,289
    
    
    
    1,262
    
 140     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



13. Other non-current assets
 2010
    
    
    2009£m
    
    
    £mPrepayments
    
    
    7
    
    
    
    6Other receivables
    
    
    71
    
    
    
    92Commodity contract assets
    
    
    84
    
    
    
    8162
    
    
    
    106
   
 14. Financial and other investments
 2010
    
    
    2009£m
    
    
    £mNon-currentAvailable-for-sale investments
    
    
    236
    
    
    
    193Investments in joint ventures and associates (note 15)
    
    
    250
    
    
    
    168486
    
    
    
    361CurrentAvailable-for-sale investments
    
    
    1,285
    
    
    
    2,038Loans and receivables
    
    
    112
    
    
    
    1591,397
    
    
    
    2,197Total financial and other investments
    
    
    1,883
    
    
    
    2,558Financial and other investments include the following:Investments in short-term money funds
    
    
    1,000
    
    
    
    1,758Managed investments in equity and bonds (i)
    
    
    385
    
    
    
    363Restricted cash balancesCollateral
    
    
    58
    
    
    
    159Other
    
    
    57
    
    
    
    Cash surrender value of life insurance policies
    
    
    126
    
    
    
    102Investment in joint ventures and associates (note 15)
    
    
    250
    
    
    
    168Other investments
    
    
    7
    
    
    
    81,883
    
    
    
    2,558
 (i)
    
    Includes £286m of current investments which are held by insurance captives and are
therefore restricted.
   
 15. Investments in joint ventures and associates
 2010
    
    
    2009£m
    
    
    £mShare of net assets at 1 April
    
    
    168
    
    
    
    71Exchange adjustments
    
    
    (7
    )
    
    
    19Additions
    
    
    86
    
    
    
    73Share of retained profit for the year
    
    
    8
    
    
    
    5Dividends received
    
    
    (18
    )
    
    
    Share of other comprehensive income
    
    
    9
    
    
    
    Other movements
    
    
    4
    
    
    
    Share of net assets at 31 March
    
    
    250
    
    
    
    168
 
  
 Annual
Report and Accounts 2009/10 | National
Grid plc     141




---



##### 



Financial Statements
 Notes to the consolidated financial statements continued
 
 16. Deferred tax assets and liabilities
  Deferred tax (assets)/liabilities
 Pensionsand otherAccelerated
    
    
    Share-
    
    
    post-
    
    
    
    
    
    
    Other nettax
    
    
    based
    
    
    retirement
    
    
    Financial
    
    
    temporarydepreciation
    
    
    payments
    
    
    benefits
    
    
    instruments
    
    
    differences
    
    
    Total£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mDeferred tax assets at 31 March 2008
    
    
    (2
    )
    
    
    (16
    )
    
    
    (875
    )
    
    
    (17
    )
    
    
    (382
    )
    
    
    (1,292
    )Deferred tax liabilities at 31 March 2008
    
    
    3,797
    
    
    
    
    
    
    
    249
    
    
    
    31
    
    
    
    474
    
    
    
    4,551At 1 April 2008
    
    
    3,795
    
    
    
    (16
    )
    
    
    (626
    )
    
    
    14
    
    
    
    92
    
    
    
    3,259Exchange adjustments
    
    
    471
    
    
    
    
    
    
    
    (303
    )
    
    
    3
    
    
    
    7
    
    
    
    178(Credited)/charged to income statement (i)
    
    
    (257
    )
    
    
    (1
    )
    
    
    219
    
    
    
    5
    
    
    
    (184
    )
    
    
    (218
    )Charged/(credited) to equity
    
    
    
    
    
    
    3
    
    
    
    (678
    )
    
    
    (26
    )
    
    
    
    
    
    
    (701
    )Other
    
    
    288
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    (283
    )
    
    
    6At 31 March 2009
    
    
    4,297
    
    
    
    (13
    )
    
    
    (1,388
    )
    
    
    (4
    )
    
    
    (368
    )
    
    
    2,524Deferred tax assets at 31 March 2009
    
    
    (2
    )
    
    
    (13
    )
    
    
    (1,457
    )
    
    
    (33
    )
    
    
    (504
    )
    
    
    (2,009
    )Deferred tax liabilities at 31 March 2009
    
    
    4,299
    
    
    
    
    
    
    
    69
    
    
    
    29
    
    
    
    136
    
    
    
    4,533At 1 April 2009
    
    
    4,297
    
    
    
    (13
    )
    
    
    (1,388
    )
    
    
    (4
    )
    
    
    (368
    )
    
    
    2,524Exchange adjustments
    
    
    (54
    )
    
    
    
    
    
    
    84
    
    
    
    (3
    )
    
    
    13
    
    
    
    40Charged/(credited) to income statement
    
    
    1,129
    
    
    
    1
    
    
    
    154
    
    
    
    (42
    )
    
    
    (314
    )
    
    
    928Credited to equity
    
    
    
    
    
    
    
    
    
    
    (175
    )
    
    
    
    
    
    
    
    
    
    
    (175
    )Other
    
    
    (285
    )
    
    
    
    
    
    
    180
    
    
    
    (42
    )
    
    
    154
    
    
    
    7At 31 March 2010
    
    
    5,087
    
    
    
    (12
    )
    
    
    (1,145
    )
    
    
    (91
    )
    
    
    (515
    )
    
    
    3,324Deferred tax assets at 31 March 2010
    
    
    (2
    )
    
    
    (12
    )
    
    
    (1,235
    )
    
    
    (103
    )
    
    
    (657
    )
    
    
    (2,009
    )Deferred tax liabilities at 31 March 2010
    
    
    5,089
    
    
    
    
    
    
    
    90
    
    
    
    12
    
    
    
    142
    
    
    
    5,3335,087
    
    
    
    (12
    )
    
    
    (1,145
    )
    
    
    (91
    )
    
    
    (515
    )
    
    
    3,324
 (i)
    
    Deferred tax credited to the income statement for the year ended 31 March 2009 includes a
£564m tax credit reported within profit for the year from discontinued operations.
  2010
    
    
    2009£m
    
    
    £mDeferred tax liabilities
    
    
    3,324
    
    
    
    2,661Deferred tax assets
    
    
    
    
    
    
    (137
    )3,324
    
    
    
    2,524
   2010
    
    
    2009£m
    
    
    £mCapital losses
    
    
    401
    
    
    
    214Non-trade deficits
    
    
    2
    
    
    
    2Trading losses
    
    
    2
    
    
    
    4
    
 142     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



17. Derivative financial instruments
  2010
    
    2009Assets
    
    
    Liabilities
    
    
    Total
    
    
    Assets
    
    
    Liabilities
    
    
    Total£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mFair value hedgesInterest rate swaps
    
    
    128
    
    
    
    (4
    )
    
    
    124
    
    
    
    193
    
    
    
    
    
    
    
    193Cross-currency interest rate swaps
    
    
    589
    
    
    
    (20
    )
    
    
    569
    
    
    
    899
    
    
    
    (26
    )
    
    
    873717
    
    
    
    (24
    )
    
    
    693
    
    
    
    1,092
    
    
    
    (26
    )
    
    
    1,066Cash flow hedgesInterest rate swaps
    
    
    2
    
    
    
    (112
    )
    
    
    (110
    )
    
    
    5
    
    
    
    (94
    )
    
    
    (89
    )Cross-currency interest rate swaps
    
    
    924
    
    
    
    (16
    )
    
    
    908
    
    
    
    1,056
    
    
    
    (5
    )
    
    
    1,051Foreign exchange forward contracts
    
    
    2
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    928
    
    
    
    (128
    )
    
    
    800
    
    
    
    1,061
    
    
    
    (99
    )
    
    
    962Net investment hedgesCross-currency interest rate swaps
    
    
    135
    
    
    
    (660
    )
    
    
    (525
    )
    
    
    55
    
    
    
    (1,033
    )
    
    
    (978
    )Foreign exchange forward contracts
    
    
    5
    
    
    
    (42
    )
    
    
    (37
    )
    
    
    62
    
    
    
    
    
    
    
    62140
    
    
    
    (702
    )
    
    
    (562
    )
    
    
    117
    
    
    
    (1,033
    )
    
    
    (916
    )Derivatives not in a formal hedge relationshipInterest rate swaps
    
    
    200
    
    
    
    (233
    )
    
    
    (33
    )
    
    
    247
    
    
    
    (257
    )
    
    
    (10
    )Cross-currency interest rate swaps
    
    
    58
    
    
    
    (1
    )
    
    
    57
    
    
    
    67
    
    
    
    (9
    )
    
    
    58Foreign exchange forward contracts
    
    
    3
    
    
    
    (43
    )
    
    
    (40
    )
    
    
    32
    
    
    
    (1
    )
    
    
    31Forward rate agreements
    
    
    
    
    
    
    (47
    )
    
    
    (47
    )
    
    
    
    
    
    
    (16
    )
    
    
    (16
    )Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    
    
    
    
    11261
    
    
    
    (324
    )
    
    
    (63
    )
    
    
    357
    
    
    
    (283
    )
    
    
    742,046
    
    
    
    (1,178
    )
    
    
    868
    
    
    
    2,627
    
    
    
    (1,441
    )
    
    
    1,186Hedge positions offset within derivative instruments
    
    
    (304
    )
    
    
    304
    
    
    
    
    
    
    
    (501
    )
    
    
    501
    
    
    
    Total
    
    
    1,742
    
    
    
    (874
    )
    
    
    868
    
    
    
    2,126
    
    
    
    (940
    )
    
    
    1,186The maturity of derivative financial instruments is as follows:2010
    
    
    2009Assets
    
    
    Liabilities
    
    
    Total
    
    
    Assets
    
    
    Liabilities
    
    
    Total£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mIn one year or less
    
    
    248
    
    
    
    (212
    )
    
    
    36
    
    
    
    593
    
    
    
    (307
    )
    
    
    286Current
    
    
    248
    
    
    
    (212
    )
    
    
    36
    
    
    
    593
    
    
    
    (307
    )
    
    
    286In more than one year, but not more than two years
    
    
    278
    
    
    
    (174
    )
    
    
    104
    
    
    
    44
    
    
    
    (28
    )
    
    
    16In more than two years, but not more than three years
    
    
    152
    
    
    
    (69
    )
    
    
    83
    
    
    
    259
    
    
    
    (229
    )
    
    
    30In more than three years, but not more than four years
    
    
    240
    
    
    
    (106
    )
    
    
    134
    
    
    
    128
    
    
    
    (48
    )
    
    
    80In more than four years, but not more than five years
    
    
    57
    
    
    
    (14
    )
    
    
    43
    
    
    
    281
    
    
    
    (113
    )
    
    
    168In more than five years
    
    
    767
    
    
    
    (299
    )
    
    
    468
    
    
    
    821
    
    
    
    (215
    )
    
    
    606Non-current
    
    
    1,494
    
    
    
    (662
    )
    
    
    832
    
    
    
    1,533
    
    
    
    (633
    )
    
    
    9001,742
    
    
    
    (874
    )
    
    
    868
    
    
    
    2,126
    
    
    
    (940
    )
    
    
    1,186
  2010
    
    
    2009£m
    
    
    £mInterest rate swaps
    
    
    (13,320
    )
    
    
    (12,382
    )Cross-currency interest rate swaps
    
    
    (9,528
    )
    
    
    (10,701
    )Foreign exchange forward contracts
    
    
    (1,989
    )
    
    
    (2,802
    )Forward rate agreements
    
    
    (10,454
    )
    
    
    (10,388
    )Other
    
    
    (314
    )
    
    
    (758
    )Total
    
    
    (35,605
    )
    
    
    (37,031
    )
 *
    The notional contract amounts of derivatives indicate the gross nominal value of
transactions outstanding at the balance sheet date
 
  
 Annual
Report and Accounts 2009/10 | National Grid plc     143




---



##### 



Financial Statements
 Notes to the consolidated financial statements continued
 
 18. Inventories and current intangible assets
 2010
    
    
    2009£m
    
    
    £mRaw materials and consumables
    
    
    162
    
    
    
    163Work in progress
    
    
    12
    
    
    
    13Fuel stocks
    
    
    198
    
    
    
    341Current intangible assets  emission allowances
    
    
    35
    
    
    
    39407
    
    
    
    556
  
 19. Trade and other receivables
 2010
    
    
    2009£m
    
    
    £mTrade receivables
    
    
    1,296
    
    
    
    1,569Other receivables
    
    
    39
    
    
    
    47Commodity contract assets
    
    
    21
    
    
    
    41Prepayments and accrued income
    
    
    937
    
    
    
    1,0152,293
    
    
    
    2,672
  Provision for impairment of receivables
 2010
    
    
    2009£m
    
    
    £mAt 1 April
    
    
    303
    
    
    
    159Exchange adjustments
    
    
    (15
    )
    
    
    72Charge for the year, net of recoveries
    
    
    161
    
    
    
    206Uncollectible amounts written off against receivables
    
    
    (138
    )
    
    
    (134
    )At 31 March
    
    
    311
    
    
    
    303
  2010
    
    
    2009£m
    
    
    £mUp to 3 months past due
    
    
    111
    
    
    
    1603 to 6 months past due
    
    
    35
    
    
    
    45Over 6 months past due
    
    
    102
    
    
    
    78248
    
    
    
    283
    
 144     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



20. Cash and cash equivalents
 2010
    
    
    2009£m
    
    
    £mCash at bank
    
    
    136
    
    
    
    87Short-term deposits
    
    
    584
    
    
    
    650Cash and cash equivalents excluding bank overdrafts
    
    
    720
    
    
    
    737Bank overdrafts
    
    
    (29
    )
    
    
    (17
    )Net cash and cash equivalents
    
    
    691
    
    
    
    720
     
 21. Borrowings
 2010
    
    
    2009£m
    
    
    £mCurrentBank loans
    
    
    890
    
    
    
    604Bonds
    
    
    1,730
    
    
    
    1,826Commercial paper
    
    
    121
    
    
    
    766Finance leases
    
    
    29
    
    
    
    33Other loans
    
    
    7
    
    
    
    7Bank overdrafts
    
    
    29
    
    
    
    172,806
    
    
    
    3,253Non-currentBank loans
    
    
    2,163
    
    
    
    3,140Bonds
    
    
    19,835
    
    
    
    20,002Finance leases
    
    
    173
    
    
    
    205Other loans
    
    
    147
    
    
    
    19322,318
    
    
    
    23,540Total
    
    
    25,124
    
    
    
    26,793
  2010
    
    
    2009£m
    
    
    £mIn one year or less
    
    
    2,806
    
    
    
    3,253In more than one year, but not more than two years
    
    
    2,146
    
    
    
    2,014In more than two years, but not more than three years
    
    
    1,356
    
    
    
    2,543In more than three years, but not more than four years
    
    
    1,890
    
    
    
    1,400In more than four years, but not more than five years
    
    
    1,862
    
    
    
    2,457In more than five years:by instalments
    
    
    22
    
    
    
    76other than by instalments
    
    
    15,042
    
    
    
    15,05025,124
    
    
    
    26,793
 
  
 Annual
Report and Accounts 2009/10 | National Grid plc     145




---



##### 



Financial Statements
 Notes to the consolidated financial statements continued
 21. Borrowings continued
    2010
    
    
    2009£m
    
    
    £mGross finance lease liabilities repayable as follows:In one year or less
    
    
    30
    
    
    
    46In more than one year, but not more than five years
    
    
    107
    
    
    
    148In more than five years
    
    
    135
    
    
    
    124272
    
    
    
    318Less: finance charges allocated to future periods
    
    
    (70
    )
    
    
    (80
    )202
    
    
    
    238The present value of finance lease liabilities is as follows:In one year or less
    
    
    29
    
    
    
    33In more than one year, but not more than five years
    
    
    86
    
    
    
    117In more than five years
    
    
    87
    
    
    
    88202
    
    
    
    238
  
 22. Trade and other payables
 2010
    
    
    2009£m
    
    
    £mTrade payables
    
    
    1,702
    
    
    
    1,653Commodity contract liabilities
    
    
    184
    
    
    
    203Social security and other taxes
    
    
    132
    
    
    
    111Other payables
    
    
    585
    
    
    
    650Deferred income
    
    
    244
    
    
    
    2182,847
    
    
    
    2,835
  
 23. Other non-current liabilities
 2010
    
    
    2009£m
    
    
    £mCommodity contract liabilities
    
    
    143
    
    
    
    156Other payables
    
    
    265
    
    
    
    396Deferred income
    
    
    1,566
    
    
    
    1,5401,974
    
    
    
    2,092
    
 146     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



24. Provisions
 Decom-
    
    
    Environ-
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Totalmissioning
    
    
    mental
    
    
    Emissions
    
    
    Restructuring
    
    
    Other
    
    
    provisions£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mAt 1 April 2008
    
    
    87
    
    
    
    837
    
    
    
    114
    
    
    
    66
    
    
    
    293
    
    
    
    1,397Exchange adjustments
    
    
    33
    
    
    
    240
    
    
    
    33
    
    
    
    
    
    
    
    73
    
    
    
    379Additions
    
    
    4
    
    
    
    101
    
    
    
    6
    
    
    
    43
    
    
    
    28
    
    
    
    182Unused amounts reversed
    
    
    (3
    )
    
    
    (23
    )
    
    
    (9
    )
    
    
    
    
    
    
    
    
    
    
    (35
    )Unwinding of discount
    
    
    2
    
    
    
    58
    
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    68Utilised
    
    
    (15
    )
    
    
    (109
    )
    
    
    (119
    )
    
    
    (9
    )
    
    
    (40
    )
    
    
    (292
    )At 31 March 2009
    
    
    108
    
    
    
    1,104
    
    
    
    25
    
    
    
    100
    
    
    
    362
    
    
    
    1,699Exchange adjustments
    
    
    (9
    )
    
    
    (46
    )
    
    
    (1
    )
    
    
    
    
    
    
    (12
    )
    
    
    (68
    )Additions
    
    
    5
    
    
    
    85
    
    
    
    4
    
    
    
    36
    
    
    
    16
    
    
    
    146Reclassifications*
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    70
    
    
    
    70Unused amounts reversed
    
    
    (1
    )
    
    
    (4
    )
    
    
    
    
    
    
    (1
    )
    
    
    (2
    )
    
    
    (8
    )Unwinding of discount
    
    
    2
    
    
    
    54
    
    
    
    
    
    
    
    
    
    
    
    14
    
    
    
    70Utilised
    
    
    (8
    )
    
    
    (117
    )
    
    
    (6
    )
    
    
    (30
    )
    
    
    (38
    )
    
    
    (199
    )At 31 March 2010
    
    
    97
    
    
    
    1,076
    
    
    
    22
    
    
    
    105
    
    
    
    410
    
    
    
    1,710
 *Primarily represents reclassifications from other non-current liabilities
  2010
    
    
    2009£m
    
    
    £mCurrent
    
    
    303
    
    
    
    248Non-current
    
    
    1,407
    
    
    
    1,4511,710
    
    
    
    1,699
 Decommissioning provision
  Environmental provision
  2010
    
    2009*Discounted
    
    
    Undiscounted
    
    
    Discounted
    
    
    Undiscounted
    
    
    Real£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    discount rateUK gas site decontamination (i)
    
    
    262
    
    
    
    376
    
    
    
    226
    
    
    
    317
    
    
    
    2.0
    %US sites (ii)
    
    
    813
    
    
    
    942
    
    
    
    876
    
    
    
    1,037
    
    
    
    3.2
    %Other (iii)
    
    
    1
    
    
    
    1
    
    
    
    2
    
    
    
    2
    
    
    
    n/a1,076
    
    
    
    1,319
    
    
    
    1,104
    
    
    
    1,356
 *Comparatives have been restated to present items on a basis consistent with the current year
classification(i)
    
    Represents the statutory decontamination costs of old gas manufacturing sites in the UK. The
anticipated timing of the cash flows for statutory decontamination cannot be predicted with
certainty, but they are expected to be incurred over the financial years 2011 to 2058 with some 40%
of the spend over the next five years.There are a number of uncertainties that affect the calculation of the provision for UK gas site
decontamination, including the impact of regulation, the accuracy of the site surveys, unexpected
contaminants, transportation costs, the impact of alternative technologies and changes in the
discount rate. We have made our best estimate of the financial effect of these uncertainties in
the calculation of the provision, but future material changes in any of the assumptions could
materially impact on the calculation of the provision and hence the income statement.The undiscounted amount of the provision is the undiscounted best estimate of the liability
having regard to the uncertainties above.(ii)
    
    The remediation expenditure in the US is expected to be incurred between financial years 2011
and 2067. The uncertainties regarding the calculation of this provision are similar to those
considered in respect of UK gas decontamination. However, unlike the UK, with the exception of
immaterial amounts of such costs, this expenditure is expected to be recoverable from rate payers
under the terms of various rate agreements in the US.(iii)
    
    The remainder of the environmental provision relates to the expected cost of remediation of
certain other sites in the UK. This is expected to be utilised within the next five years and there
is no material difference between the discounted and undiscounted amounts.
 
  
 Annual
Report and Accounts 2009/10 | National Grid plc     147




---



##### 



Financial Statements
 Notes to the consolidated financial statements continued
 24. Provisions continued
 Emissions provision
  Restructuring provision
  Other provisions
   
 
 25. Share capital
 Allotted, called upand fully paidOrdinary shares
    
    millions
    
    
    £mAt 31 March 2007
    
    
    2,701
    
    
    
    308Issued during the year ended 31 March 2008 (i)
    
    
    8
    
    
    
    1Repurchased during the year ended 31 March 2008 (ii)
    
    
    (127
    )
    
    
    (15
    )At 31 March 2008 & 2009
    
    
    2,582
    
    
    
    294Issued during the year in lieu of dividends (iii)
    
    
    35
    
    
    
    4At 31 March 2010
    
    
    2,617
    
    
    
    298
 (i)
    
    Included within issued share capital are 3,705,193 ordinary shares that were issued
following the conversion of the Companys B shares to ordinary shares on 28 September 2007.(ii)
    
    From 30 May 2007 to 27 November 2007, the Company repurchased and subsequently cancelled under
its share repurchase programme 126,817,712 ordinary shares for aggregate consideration of £946m,
including transaction costs. The shares repurchased had a nominal value of £15m and represented
approximately 5% of the ordinary shares in issue as at 31 March 2008. The consideration was charged
against retained earnings.(iii)
    
    The issue of shares in lieu of cash dividends is considered to be a bonus issue under the
terms of the Companies Act 2006 and the nominal value of the shares is charged to share premium
account.
 17 43
 Rights issue
 17 43
 B shares
  17 43
    
 148     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



25. Share capital continued
 Treasury shares
        Additional information in respect of share capital
 2010
    
    
    2010
    
    
    2009
    
    
    2009
    
    
    2008
    
    
    2008millions
    
    
    £m
    
    
    millions
    
    
    £m
    
    
    millions
    
    
    £mConsideration received in respect of ordinary shares issued during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    23Authorised share capital  ordinary shares (i)
    
    
    4,392
    
    
    
    501
    
    
    
    4,392
    
    
    
    501
    
    
    
    4,392
    
    
    
    501
 (i)
    
    On 28 September 2007, the Company increased its authorised ordinary share capital by
3,705,193 ordinary shares to 4,391,705,193 ordinary shares of 1117/43   pence
each.
  
 26. Other equity reserves
 Cash flow
    
    
    Available-
    
    
    CapitalTranslation
    
    
    hedge
    
    
    for-sale
    
    
    redemption
    
    
    Merger
    
    
    Total£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mAt 1 April 2007
    
    
    (48
    )
    
    
    26
    
    
    
    1
    
    
    
    4
    
    
    
    (5,133
    )
    
    
    (5,150
    )Total other comprehensive (loss)/income for the year
    
    
    (25
    )
    
    
    (37
    )
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    (54
    )Repurchase of share capital
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15
    
    
    
    
    
    
    
    15Transfer between reserves
    
    
    
    
    
    
    (31
    )
    
    
    
    
    
    
    
    
    
    
    (32
    )
    
    
    (63
    )At 31 March 2008
    
    
    (73
    )
    
    
    (42
    )
    
    
    9
    
    
    
    19
    
    
    
    (5,165
    )
    
    
    (5,252
    )Total other comprehensive (loss)/income for the year
    
    
    457
    
    
    
    (30
    )
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    422At 31 March 2009
    
    
    384
    
    
    
    (72
    )
    
    
    4
    
    
    
    19
    
    
    
    (5,165
    )
    
    
    (4,830
    )Total other comprehensive (loss)/income for the year
    
    
    30
    
    
    
    (25
    )
    
    
    44
    
    
    
    
    
    
    
    
    
    
    
    49At 31 March 2010
    
    
    414
    
    
    
    (97
    )
    
    
    48
    
    
    
    19
    
    
    
    (5,165
    )
    
    
    (4,781
    )
 
  
 Annual
Report and Accounts 2009/10 | National Grid plc     149




---



##### 



Financial Statements
 Notes to the consolidated financial statements continued
 
 27. Consolidated cash flow statement
 (a) Cash flow from operating activities  discontinued operations
 2010
    
    
    2009
    
    
    2008£m
    
    
    £m
    
    
    £mOperating profit
    
    
    
    
    
    
    13
    
    
    
    35Adjustments for:Changes in working capital, provisions and pensions
    
    
    
    
    
    
    (21
    )
    
    
    (25
    )Cash flow relating to discontinued operations
    
    
    
    
    
    
    (8
    )
    
    
    10
 (b) Cash flow from investing activities  discontinued operations
 2010
    
    
    2009
    
    
    2008£m
    
    
    £m
    
    
    £mDisposal proceeds (i)
    
    
    
    
    
    
    1,617
    
    
    
    3,064Tax arising on disposal
    
    
    
    
    
    
    (564
    )
    
    
    Other investing activities
    
    
    
    
    
    
    (4
    )
    
    
    (14
    )Cash flow relating to discontinued operations
    
    
    
    
    
    
    1,049
    
    
    
    3,050
 (i)
    
    Disposal proceeds are in respect of the sale of assets and liabilities classified as held
for sale.
 (c) Reconciliation of net cash flow to movement in net debt
 2010
    
    
    2009
    
    
    2008£m
    
    
    £m
    
    
    £m(Decrease)/increase in cash and cash equivalents
    
    
    (28
    )
    
    
    538
    
    
    
    (1,450
    )Decrease in financial investments
    
    
    (805
    )
    
    
    (99
    )
    
    
    (45
    )Decrease/(increase) in borrowings and related derivatives
    
    
    499
    
    
    
    (1,641
    )
    
    
    (1,589
    )Cash paid to shareholders under B share scheme
    
    
    
    
    
    
    
    
    
    
    26Net interest paid on the components of net debt
    
    
    999
    
    
    
    956
    
    
    
    694Change in net debt resulting from cash flows
    
    
    665
    
    
    
    (246
    )
    
    
    (2,364
    )Changes in fair value of financial assets and liabilities and exchange movements
    
    
    865
    
    
    
    (3,625
    )
    
    
    (133
    )Net interest charge on the components of net debt
    
    
    (996
    )
    
    
    (1,161
    )
    
    
    (901
    )Borrowings of subsidiary undertaking acquired
    
    
    
    
    
    
    
    
    
    
    (2,446
    )Other non-cash movements
    
    
    
    
    
    
    
    
    
    
    (9
    )Movement in net debt (net of related derivative financial instruments) in the year
    
    
    534
    
    
    
    (5,032
    )
    
    
    (5,853
    )Net debt (net of related derivative financial instruments) at start of year
    
    
    (22,673
    )
    
    
    (17,641
    )
    
    
    (11,788
    )Net debt (net of related derivative financial instruments) at end of year
    
    
    (22,139
    )
    
    
    (22,673
    )
    
    
    (17,641
    )
 (d) Analysis of changes in net debt
 Cash
    
    
    
    
    
    
    Net cashand cash
    
    
    Bank
    
    
    and cash
    
    
    Financialequivalents
    
    
    overdrafts
    
    
    equivalents
    
    
    investments
    
    
    Borrowings
    
    
    Derivatives
    
    
    Total
    (i)£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mAt 31 March 2007
    
    
    1,593
    
    
    
    (6
    )
    
    
    1,587
    
    
    
    2,098
    
    
    
    (15,711
    )
    
    
    238
    
    
    
    (11,788
    )Cash flow
    
    
    (1,446
    )
    
    
    (4
    )
    
    
    (1,450
    )
    
    
    (251
    )
    
    
    (729
    )
    
    
    66
    
    
    
    (2,364
    )Fair value gains and losses and exchange movements
    
    
    4
    
    
    
    
    
    
    
    4
    
    
    
    4
    
    
    
    (990
    )
    
    
    849
    
    
    
    (133
    )Interest charges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    211
    
    
    
    (1,066
    )
    
    
    (46
    )
    
    
    (901
    )Acquisition of subsidiary undertaking
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33
    
    
    
    (2,479
    )
    
    
    
    
    
    
    (2,446
    )Other non-cash movements
    
    
    23
    
    
    
    
    
    
    
    23
    
    
    
    
    
    
    
    (18
    )
    
    
    (14
    )
    
    
    (9
    )At 31 March 2008
    
    
    174
    
    
    
    (10
    )
    
    
    164
    
    
    
    2,095
    
    
    
    (20,993
    )
    
    
    1,093
    
    
    
    (17,641
    )Cash flow
    
    
    545
    
    
    
    (7
    )
    
    
    538
    
    
    
    (184
    )
    
    
    (1,316
    )
    
    
    716
    
    
    
    (246
    )Fair value gains and losses and exchange movements
    
    
    18
    
    
    
    
    
    
    
    18
    
    
    
    207
    
    
    
    (3,222
    )
    
    
    (628
    )
    
    
    (3,625
    )Interest charges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    79
    
    
    
    (1,245
    )
    
    
    5
    
    
    
    (1,161
    )At 31 March 2009
    
    
    737
    
    
    
    (17
    )
    
    
    720
    
    
    
    2,197
    
    
    
    (26,776
    )
    
    
    1,186
    
    
    
    (22,673
    )Cash flow
    
    
    (16
    )
    
    
    (12
    )
    
    
    (28
    )
    
    
    (826
    )
    
    
    2,079
    
    
    
    (560
    )
    
    
    665Fair value gains and losses and exchange movements
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )
    
    
    2
    
    
    
    644
    
    
    
    220
    
    
    
    865Interest charges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24
    
    
    
    (1,042
    )
    
    
    22
    
    
    
    (996
    )At 31 March 2010
    
    
    720
    
    
    
    (29
    )
    
    
    691
    
    
    
    1,397
    
    
    
    (25,095
    )
    
    
    868
    
    
    
    (22,139
    )Balances at 31 March 2010 comprise:Non-current assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,494
    
    
    
    1,494Current assets
    
    
    720
    
    
    
    
    
    
    
    720
    
    
    
    1,397
    
    
    
    
    
    
    
    248
    
    
    
    2,365Current liabilities
    
    
    
    
    
    
    (29
    )
    
    
    (29
    )
    
    
    
    
    
    
    (2,777
    )
    
    
    (212
    )
    
    
    (3,018
    )Non-current liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22,318
    )
    
    
    (662
    )
    
    
    (22,980
    )720
    
    
    
    (29
    )
    
    
    691
    
    
    
    1,397
    
    
    
    (25,095
    )
    
    
    868
    
    
    
    (22,139
    )
 (i)
    
    Includes accrued interest at 31 March 2010 of £232m (2009: £258m).
    
 150     National Grid plc | Annual Report and Accounts 2009/10




---



##### 



Notes to the consolidated
financial statements 
supplementary information
    28. Commitments and contingencies
 (a) Future capital expenditure
 2010
    
    
    2009
    *£m
    
    
    £mContracted for but not provided
    
    
    1,738
    
    
    
    1,626
 *
    Comparatives have been restated to present items on a basis consistent with the current year
classification
 (b) Lease commitments
  2010
    
    
    2009
    *£m
    
    
    £mIn one year or less
    
    
    91
    
    
    
    96In more than one year, but not more than two years
    
    
    84
    
    
    
    92In more than two years, but not more than three years
    
    
    79
    
    
    
    86In more than three years, but not more than four years
    
    
    96
    
    
    
    85In more than four years, but not more than five years
    
    
    76
    
    
    
    104In more than five years
    
    
    500
    
    
    
    622926
    
    
    
    1,085
 *
    Comparatives have been restated to present items on a basis consistent with the current year
classification
 (c) Energy purchase commitments
  2010
    
    
    2009£m
    
    
    £mIn one year or less
    
    
    1,566
    
    
    
    990In more than one year, but not more than two years
    
    
    653
    
    
    
    816In more than two years, but not more than three years
    
    
    411
    
    
    
    620In more than three years, but not more than four years
    
    
    343
    
    
    
    412In more than four years, but not more than five years
    
    
    284
    
    
    
    379In more than five years
    
    
    278
    
    
    
    4283,535
    
    
    
    3,645
 
  
 Annual
Report and Accounts 2009/10 | National
Grid plc     151




---



##### 



Financial Statements
 Notes to the consolidated financial statements continued
 28. Commitments and contingencies continued
 (d) Other commitments, contingencies and guarantees
  (i)
    
    a guarantee in respect of Ravenswood Unit 40 financing amounting to
approximately £377m. This expires in 2040;(ii)
    
    a letter of support of obligations under a
shareholders agreement relating to the interconnector project between Britain and The Netherlands
amounting to approximately £254m. This expires on commissioning expected early 2011;(iii)
    
    guarantees of certain obligations in respect of the UK Grain LNG Import Terminal amounting to
approximately £164m. These run for varying lengths of time, expiring between now and 2028;(iv)
    
    a
guarantee amounting to approximately £120m of half of the obligations of the interconnector project
between Britain and The Netherlands. This expires on commissioning expected early 2011;(v)
    
    guarantees of the liabilities of a metering subsidiary under meter operating contracts amounting to
£53m. These are ongoing;(vi)
    
    an uncapped guarantee, for which the maximum liability is estimated
at £40m, to The Crown Estates in support of the transfer of the interconnector between France and
England to National Grid Interconnectors Limited as part of the Licence to Assign Lease.
This is ongoing;(vii)
    
    letters of credit in support of gas balancing obligations amounting to £26m, lasting for less
than one year;(viii)
    
    guarantees of £14m relating to certain property obligations. The bulk of
these expire by December 2025;(ix)
    
    collateral of £15m to secure syndicate insurance obligations
which are evergreen;(x)
    
    guarantees in respect of a former associate amounting to £14m, the bulk of which relates to its
obligations to supply telecommunications services. These are open-ended;(xi)
    
    guarantees of the liabilities of our subsidiary, National Grid Carbon Limited, under contracts
in connection with work on a carbon capture and storage demonstration project amounting to £20m.
These expire on completion of the project expected 2011; and(xii)
    
    other guarantees amounting to
£92m arising in the normal course of business and entered into on normal commercial terms. These
guarantees run for varying lengths of time.
 (e) Amounts receivable under sublease arrangements
  (f) Litigation and claims
    152     National Grid plc Annual Report and Accounts 2009/10




---



##### 



29. Related party transactions
  2010
    
    
    2009
    
    
    2008£m
    
    
    £m
    
    
    £mSales: Services supplied to a pension plan and joint ventures
    
    
    5
    
    
    
    4
    
    
    
    3Purchases: Services received from joint ventures
    
    
    73
    
    
    
    44
    
    
    
    33Interest income: Interest received on loans with joint ventures
    
    
    1
    
    
    
    
    
    
    
    Receivable from a pension plan and joint ventures
    
    
    1
    
    
    
    
    
    
    
    Payable to joint ventures
    
    
    6
    
    
    
    6
    
    
    
    2Dividends received from joint ventures
    
    
    18
    
    
    
    
    
    
    
    
    
 
 30. Actuarial information on pensions and other post-retirement benefits
 UK pension schemes
  National Grid UK Pension Scheme
     Electricity Supply Pension Scheme
 
   Annual
Report and Accounts 2009/10 National Grid
plc     153




---



##### 



Financial Statements
 Notes to the consolidated financial statements continued
 30. Actuarial information on pensions and other post-retirement benefits continued
    US pension plans
   US retiree healthcare and life insurance plans
    Asset allocations and actuarial assumptions
  UK pensions
    
    
    US pensions
    
    
    US other post-retirement benefits2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2008%
    
    
    %
    
    
    %
    
    
    %
    
    
    %
    
    
    %
    
    
    %
    
    
    %
    
    
    %Equities (i)
    
    
    36.8
    
    
    
    35.2
    
    
    
    35.9
    
    
    
    52.8
    
    
    
    50.4
    
    
    
    60.6
    
    
    
    68.6
    
    
    
    63.7
    
    
    
    63.1Corporate bonds (ii)
    
    
    32.3
    
    
    
    32.7
    
    
    
    25.0
    
    
    
    41.5
    
    
    
    42.3
    
    
    
    33.6
    
    
    
    24.8
    
    
    
    34.2
    
    
    
    32.3Gilts
    
    
    22.4
    
    
    
    22.2
    
    
    
    29.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Property
    
    
    5.9
    
    
    
    5.4
    
    
    
    6.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    2.6
    
    
    
    4.5
    
    
    
    2.6
    
    
    
    5.7
    
    
    
    7.3
    
    
    
    5.8
    
    
    
    6.6
    
    
    
    2.1
    
    
    
    4.6Total
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
 (i)
    
    Included within equities at 31 March 2010 were ordinary shares of National Grid plc with a
value of £17m (2009: £17m; 2008: £24m).(ii)
    
    Included within corporate bonds at 31 March 2008 was
an investment in a bond issued by a subsidiary undertaking with a value of £20m.
    154     National Grid plc Annual Report and Accounts 2009/10




---



##### 



30. Actuarial information on pensions and other post-retirement benefits continued
  UK pensions
    
    
    US pensions
    
    
    US other post-retirement benefits2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2008%
    
    
    %
    
    
    %
    
    
    %
    
    
    %
    
    
    %
    
    
    %
    
    
    %
    
    
    %Discount rate (i)
    
    
    5.6
    
    
    
    6.8
    
    
    
    6.6
    
    
    
    6.1
    
    
    
    7.3
    
    
    
    6.5
    
    
    
    6.1
    
    
    
    7.3
    
    
    
    6.5Expected return on plan assets
    
    
    6.4
    
    
    
    6.2
    
    
    
    6.4
    
    
    
    7.5
    
    
    
    7.8
    
    
    
    7.9
    
    
    
    7.2
    
    
    
    7.4
    
    
    
    7.6Rate of increase in salaries (ii)
    
    
    4.7
    
    
    
    3.8
    
    
    
    4.6
    
    
    
    3.5
    
    
    
    3.5
    
    
    
    4.0
    
    
    
    3.5
    
    
    
    3.5
    
    
    
    4.0Rate of
increase in pensions in payment
    
    
    3.8
    
    
    
    3.0
    
    
    
    3.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/aRate of
increase in pensions in deferment
    
    
    3.8
    
    
    
    2.9
    
    
    
    3.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/aRate of
increase in retail price index or equivalent
    
    
    3.8
    
    
    
    2.9
    
    
    
    3.7
    
    
    
    2.4
    
    
    
    2.3
    
    
    
    3.0
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/aInitial healthcare cost trend rate
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    8.5
    
    
    
    9.0
    
    
    
    10.0Ultimate healthcare cost trend rate
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    5.0
    
    
    
    5.0
    
    
    
    5.0
 (i)
    
    The discount rates for pension liabilities have been determined by reference to appropriate
yields on high quality corporate bonds prevailing in the UK and US debt markets at the balance
sheet date.(ii)
    
    A promotional scale has also been used where appropriate.
  2010
    
    
    2009UK
    
    
    US
    
    
    UK
    
    
    USyears
    
    
    years
    
    
    years
    
    
    yearsTodayMales
    
    
    21.0
    
    
    
    18.8
    
    
    
    21.0
    
    
    
    18.2Females
    
    
    23.4
    
    
    
    20.8
    
    
    
    23.3
    
    
    
    20.5In 20 yearsMales
    
    
    23.4
    
    
    
    18.8
    
    
    
    23.3
    
    
    
    18.2Females
    
    
    25.7
    
    
    
    20.8
    
    
    
    25.6
    
    
    
    20.5
  Change inpensions and other
    
    
    Change inpost-retirement obligation
    
    
    annual service cost2010
    
    
    2009
    
    
    2010
    
    
    2009£m
    
    
    £m
    
    
    £m
    
    
    £m0.1% change in discount rate
    
    
    317
    
    
    
    233
    
    
    
    4
    
    
    
    40.5% change in long-term rate of increase in salaries
    
    
    166
    
    
    
    116
    
    
    
    8
    
    
    
    5Change of one year to life expectations at age 60
    
    
    670
    
    
    
    541
    
    
    
    5
    
    
    
    5
  2010
    
    
    2009
    
    
    2008£m
    
    
    £m
    
    
    £mIncreaseEffect on the aggregate of the service costs and interest costs
    
    
    25
    
    
    
    29
    
    
    
    16Effect on defined benefit obligations
    
    
    348
    
    
    
    294
    
    
    
    251DecreaseEffect on the aggregate of the service costs and interest costs
    
    
    (21
    )
    
    
    (24
    )
    
    
    (13
    )Effect on defined benefit obligations
    
    
    (298
    )
    
    
    (254
    )
    
    
    (214
    )
  2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mDetails of experience gains/(losses) for all plansPresent value of funded and unfunded obligations
    
    
    (22,200
    )
    
    
    (18,299
    )
    
    
    (18,175
    )
    
    
    (17,253
    )
    
    
    (17,839
    )Fair value of plan assets
    
    
    19,136
    
    
    
    15,519
    
    
    
    17,273
    
    
    
    15,999
    
    
    
    15,909(3,064
    )
    
    
    (2,780
    )
    
    
    (902
    )
    
    
    (1,254
    )
    
    
    (1,930
    )Difference between the expected and actual return on plan assets
    
    
    3,192
    
    
    
    (3,952
    )
    
    
    (911
    )
    
    
    (81
    )
    
    
    1,521Experience gains/(losses) on plan liabilities
    
    
    509
    
    
    
    (125
    )
    
    
    152
    
    
    
    9
    
    
    
    192Actuarial (losses)/gains on plan liabilities
    
    
    (3,923
    )
    
    
    1,934
    
    
    
    1,343
    
    
    
    446
    
    
    
    (1,340
    )
 
   Annual
Report and Accounts 2009/10 National Grid plc     155




---



##### 



Financial Statements
 Notes to the consolidated financial statements continued
 
 
 31. Supplementary information on derivative financial instruments
  Treasury financial instruments
   Fair value hedges
  Cash flow hedges
  
 Net investment hedges
   Derivatives not in a formal hedge relationship
    156     National Grid plc Annual Report and Accounts 2009/10




---



##### 



32. Financial risk
   (a) Market risk
 (i) Foreign exchange risk
   
 2010
    
    
    2009Sterling
    
    
    Euro
    
    
    US dollar
    
    
    Other
    
    
    Total
    
    
    Sterling
    
    
    Euro
    
    
    US dollar
    
    
    Other
    
    
    Total£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mCash and cash
equivalents
    
    
    428
    
    
    
    4
    
    
    
    288
    
    
    
    
    
    
    
    720
    
    
    
    632
    
    
    
    4
    
    
    
    101
    
    
    
    
    
    
    
    737Financial investments
    
    
    455
    
    
    
    127
    
    
    
    736
    
    
    
    79
    
    
    
    1,397
    
    
    
    1,377
    
    
    
    132
    
    
    
    617
    
    
    
    71
    
    
    
    2,197Borrowings (i)
    
    
    (10,651
    )
    
    
    (6,361
    )
    
    
    (7,394
    )
    
    
    (718
    )
    
    
    (25,124
    )
    
    
    (12,424
    )
    
    
    (7,214
    )
    
    
    (6,435
    )
    
    
    (720
    )
    
    
    (26,793
    )Pre-derivative position
    
    
    (9,768
    )
    
    
    (6,230
    )
    
    
    (6,370
    )
    
    
    (639
    )
    
    
    (23,007
    )
    
    
    (10,415
    )
    
    
    (7,078
    )
    
    
    (5,717
    )
    
    
    (649
    )
    
    
    (23,859
    )Derivative effect
    
    
    438
    
    
    
    6,172
    
    
    
    (6,388
    )
    
    
    646
    
    
    
    868
    
    
    
    2,040
    
    
    
    7,116
    
    
    
    (8,622
    )
    
    
    652
    
    
    
    1,186Net debt position
    
    
    (9,330
    )
    
    
    (58
    )
    
    
    (12,758
    )
    
    
    7
    
    
    
    (22,139
    )
    
    
    (8,375
    )
    
    
    38
    
    
    
    (14,339
    )
    
    
    3
    
    
    
    (22,673
    )
    2010
    
    2009Sterling
    
    
    Euro
    
    
    US dollar
    
    
    Other
    
    
    Total
    
    
    Sterling
    
    
    Euro
    
    
    US dollar
    
    
    Other
    
    
    Total£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mTrade and other
receivables
    
    
    128
    
    
    
    
    
    
    
    1,228
    
    
    
    
    
    
    
    1,356
    
    
    
    138
    
    
    
    
    
    
    
    1,519
    
    
    
    
    
    
    
    1,657Trade and other payables
    
    
    (1,221
    )
    
    
    
    
    
    
    (1,382
    )
    
    
    
    
    
    
    (2,603
    )
    
    
    (1,196
    )
    
    
    
    
    
    
    (1,421
    )
    
    
    
    
    
    
    (2,617
    )Other non-current
liabilities
    
    
    (15
    )
    
    
    
    
    
    
    (393
    )
    
    
    
    
    
    
    (408
    )
    
    
    1
    
    
    
    
    
    
    
    (553
    )
    
    
    
    
    
    
    (552
    )
 
   Annual
Report and Accounts 2009/10 National Grid plc     157




---



##### 



Financial Statements
 Notes to the consolidated financial statements continued
 32. Financial risk continued
 (ii) Cash flow and fair value interest rate risk
    2010
    
    
    2009£m
    
    
    £mFixed interest rate borrowingsIn one year or less
    
    
    (1,237
    )
    
    
    (2,103
    )In more than one year, but not more than two years
    
    
    (1,413
    )
    
    
    (809
    )In more than two years, but not more than three years
    
    
    (956
    )
    
    
    (1,398
    )In more than three years, but not more than four years
    
    
    (1,762
    )
    
    
    (981
    )In more than four years, but not more than five years
    
    
    (1,265
    )
    
    
    (1,821
    )In more than five years
    
    
    (8,791
    )
    
    
    (8,637
    )(15,424
    )
    
    
    (15,749
    )Floating interest rate borrowings (including inflation linked)
    
    
    (9,700
    )
    
    
    (11,044
    )Total borrowings
    
    
    (25,124
    )
    
    
    (26,793
    )
  2010
    
    
    2009Fixed
    
    
    Floating
    
    
    Inflation
    
    
    
    
    
    
    
    
    
    
    Fixed
    
    
    Floating
    
    
    Inflationrate
    
    
    rate
    
    
    linked
    (i)
    
    Other
    (ii)
    
    Total
    
    
    rate
    
    
    rate
    
    
    linked
    (i)
    
    Other
    (ii)
    
    Total£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mCash and cash
equivalents
    
    
    599
    
    
    
    121
    
    
    
    
    
    
    
    
    
    
    
    720
    
    
    
    
    
    
    
    737
    
    
    
    
    
    
    
    
    
    
    
    737Financial investments
    
    
    602
    
    
    
    673
    
    
    
    
    
    
    
    122
    
    
    
    1,397
    
    
    
    217
    
    
    
    1,922
    
    
    
    
    
    
    
    58
    
    
    
    2,197Borrowings (iii)
    
    
    (15,424
    )
    
    
    (4,604
    )
    
    
    (5,096
    )
    
    
    
    
    
    
    (25,124
    )
    
    
    (15,749
    )
    
    
    (6,001
    )
    
    
    (5,043
    )
    
    
    
    
    
    
    (26,793
    )Pre-derivative position
    
    
    (14,223
    )
    
    
    (3,810
    )
    
    
    (5,096
    )
    
    
    122
    
    
    
    (23,007
    )
    
    
    (15,532
    )
    
    
    (3,342
    )
    
    
    (5,043
    )
    
    
    58
    
    
    
    (23,859
    )Derivative effect (iv)
    
    
    (1,552
    )
    
    
    2,292
    
    
    
    204
    
    
    
    (76
    )
    
    
    868
    
    
    
    148
    
    
    
    589
    
    
    
    345
    
    
    
    104
    
    
    
    1,186Net debt position
    
    
    (15,775
    )
    
    
    (1,518
    )
    
    
    (4,892
    )
    
    
    46
    
    
    
    (22,139
    )
    
    
    (15,384
    )
    
    
    (2,753
    )
    
    
    (4,698
    )
    
    
    162
    
    
    
    (22,673
    )
 
 (i)
    
    The post-derivative impact represents financial instruments linked to the UK RPI.(ii)
    
    Represents financial instruments which are not directly affected by interest rate risk, such
as investments in equity, foreign exchange forward contracts or other similar financial
instruments.(iii)
    
    Includes bank overdrafts.(iv)
    
    The impact of 2010/11 (2009: 2009/10) maturing short-dated interest rate derivatives is
included. (b) Fair value analysis
   Level 1:
    
    Financial instruments with quoted prices for identical instruments in active markets.
 Level 2:
    
    Financial instruments with quoted prices for similar instruments in active markets or
quoted prices for identical or similar instruments in inactive markets and financial instruments
valued using models where all significant inputs are based directly or indirectly on observable
market data.
 Level 3:
    
    Financial instruments valued using valuation techniques where one or more significant
inputs is based on unobservable market data.
 
   
 158 National Grid plc| Annual Report and Accounts 2009/10




---



##### 



32. Financial risk continued
  2010Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Total£m
    
    
    £m
    
    
    £m
    
    
    £mAssetsAvailable-for-sale investments
    
    
    1,346
    
    
    
    175
    
    
    
    
    
    
    
    1,521Derivative financial instruments
    
    
    
    
    
    
    1,706
    
    
    
    36
    
    
    
    1,7421,346
    
    
    
    1,881
    
    
    
    36
    
    
    
    3,263LiabilitiesDerivative financial instruments
    
    
    
    
    
    
    (874
    )
    
    
    
    
    
    
    (874
    )Total
    
    
    1,346
    
    
    
    1,007
    
    
    
    36
    
    
    
    2,389
   2010£mAt 1 April 2009
    
    
    10Net gains for the year (i)
    
    
    29Settlements
    
    
    (3
    )At 31 March 2010
    
    
    36
 
 (i)
    
    Gains of £29m are attributable to assets or liabilities held at the end of the reporting period
and have been recognised in finance costs in the income statement. (c) Credit risk
  Treasury related credit risk
  Maximum limit
    
    
    Long-term limit£m
    
    
    £mRatingAAA rated G8 sovereign entities
    
    Unlimited
    
    
    UnlimitedTriple A vehicles
    
    
    265
    
    
    
    225Triple A range institutions (AAA)
    
    
    905 to 1,365
    
    
    
    455 to 715Double A range institutions (AA)
    
    
    540 to 680
    
    
    
    275 to 340Single A range institutions (A)
    
    
    185 to 265
    
    
    
    95 to 135
 
   
 Annual
Report and Accounts 2009/10 | National Grid plc     159




---



##### 



Financial Statements
 Notes to the consolidated financial statements continued
 32. Financial risk continued
 Wholesale and retail credit risk
  (d) Liquidity analysis
   Due
    
    
    Due
    
    
    DueDue
    
    
    between
    
    
    between
    
    
    3 yearswithin
    
    
    1 and 2
    
    
    2 and 3
    
    
    and1 year
    
    
    years
    
    
    years
    
    
    beyond
    
    
    TotalAt 31
March 2010
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mNon-derivative financial liabilitiesBorrowings, excluding finance lease liabilities
    
    
    (2,390
    )
    
    
    (2,100
    )
    
    
    (1,322
    )
    
    
    (18,927
    )
    
    
    (24,739
    )Interest payments on borrowings (i)
    
    
    (915
    )
    
    
    (874
    )
    
    
    (845
    )
    
    
    (9,829
    )
    
    
    (12,463
    )Finance lease liabilities
    
    
    (30
    )
    
    
    (53
    )
    
    
    (20
    )
    
    
    (169
    )
    
    
    (272
    )Other non interest-bearing liabilities
    
    
    (2,287
    )
    
    
    (265
    )
    
    
    
    
    
    
    
    
    
    
    (2,552
    )Derivative financial liabilitiesDerivative
contracts  receipts
    
    
    1,027
    
    
    
    1,649
    
    
    
    171
    
    
    
    2,235
    
    
    
    5,082Derivative
contracts  payments
    
    
    (859
    )
    
    
    (1,464
    )
    
    
    (104
    )
    
    
    (1,874
    )
    
    
    (4,301
    )Commodity contracts
    
    
    (488
    )
    
    
    (168
    )
    
    
    (35
    )
    
    
    (101
    )
    
    
    (792
    )Total at 31 March 2010
    
    
    (5,942
    )
    
    
    (3,275
    )
    
    
    (2,155
    )
    
    
    (28,665
    )
    
    
    (40,037
    )
 Due
    
    
    Due
    
    
    DueDue
    
    
    between
    
    
    between
    
    
    3 yearswithin
    
    
    1 and 2
    
    
    2 and 3
    
    
    and1 year
    
    
    years
    
    
    years
    
    
    beyond
    
    
    TotalAt 31 March 2009
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mNon-derivative financial liabilitiesBorrowings, excluding finance lease liabilities
    
    
    (2,839
    )
    
    
    (1,946
    )
    
    
    (2,460
    )
    
    
    (19,056
    )
    
    
    (26,301
    )Interest payments on borrowings (i)
    
    
    (1,031
    )
    
    
    (982
    )
    
    
    (903
    )
    
    
    (9,456
    )
    
    
    (12,372
    )Finance lease liabilities
    
    
    (46
    )
    
    
    (60
    )
    
    
    (50
    )
    
    
    (162
    )
    
    
    (318
    )Other non interest-bearing liabilities
    
    
    (2,303
    )
    
    
    (396
    )
    
    
    
    
    
    
    
    
    
    
    (2,699
    )Derivative financial liabilitiesDerivative
contracts  receipts
    
    
    1,057
    
    
    
    1,109
    
    
    
    1,686
    
    
    
    1,674
    
    
    
    5,526Derivative
contracts  payments
    
    
    (598
    )
    
    
    (889
    )
    
    
    (1,588
    )
    
    
    (2,154
    )
    
    
    (5,229
    )Commodity contracts
    
    
    (601
    )
    
    
    (314
    )
    
    
    (172
    )
    
    
    (214
    )
    
    
    (1,301
    )Total at 31 March 2009
    
    
    (6,361
    )
    
    
    (3,478
    )
    
    
    (3,487
    )
    
    
    (29,368
    )
    
    
    (42,694
    )
 
 (i)
    
    The interest on borrowings is calculated based on borrowings held at 31 March without taking
account of future issues. Floating rate interest is estimated using a forward interest rate curve
as at 31 March. Payments are included on the basis of the earliest date on which the Company can be
required to settle.
 
   
 160 National Grid plc| Annual Report and Accounts 2009/10




---



##### 



32. Financial risk continued
 (e) Sensitivity analysis
     
    
    the balance sheet sensitivity to interest rates relates only to derivative financial instruments
and available-for-sale investments, as debt and other deposits are carried at amortised cost and so
their carrying value does not change as interest rates move;
    
    the sensitivity of accrued interest
to movements in interest rates is calculated on net floating rate exposures on debt, deposits and
derivative instruments;
    
    changes in the carrying value of derivatives from movements in interest
rates designated as cash flow hedges are assumed to be recorded fully within equity;
    
    changes in
the carrying value of derivative financial instruments designated as net investment hedges from
movements in interest rates are recorded in the income statement as they are designated using the
spot rather than the forward translation method. The impact of movements in the dollar to sterling exchange rate are recorded directly in equity;
    
    changes in the carrying value of derivative financial instruments not in hedging relationships
only affect the income statement;
    
    all other changes in the carrying value of derivative financial
instruments designated as hedges are fully effective with no impact on the income statement;
    
    debt
with a maturity below one year is floating rate for the accrued interest part of the calculation;
    
    the floating leg of any swap or any floating rate debt is treated as not having any interest rate
already set, therefore a change in interest rates affects a full 12 month period for the accrued
interest portion of the sensitivity calculations; and
    
    sensitivity to the retail price index does
not take
into account any changes to revenue or operating costs that are affected by the retail price index
or inflation generally.
  2010
    
    
    2009Income
    
    
    Other equity
    
    
    Income
    
    
    Other equitystatement
    
    
    reserves
    
    
    statement
    
    
    reserves+/- £m
    
    
    +/- £m
    
    
    +/- £m
    
    
    +/- £mUK retail price index +/- 0.50%
    
    
    17
    
    
    
    
    
    
    
    17
    
    
    
    UK interest rates +/- 0.50%
    
    
    51
    
    
    
    71
    
    
    
    67
    
    
    
    77US interest rates +/- 0.50%
    
    
    52
    
    
    
    14
    
    
    
    63
    
    
    
    13US dollar exchange rate +/- 10%
    
    
    68
    
    
    
    623
    
    
    
    55
    
    
    
    880
 
   
 Annual
Report and Accounts 2009/10 | National Grid
plc     161




---



##### 



Financial Statements
 Notes to the consolidated financial statements continued
 32. Financial risk continued
 (f) Capital and risk management
      
 
 33. Commodity risk
 
   
 162     National Grid plc| Annual Report and Accounts 2009/10




---



##### 



33. Commodity risk continued
 (a) Fair value analysis
  2010
    
    2009Assets
    
    
    Liabilities
    
    
    Total
    
    
    Assets
    
    
    Liabilities
    
    
    Total£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mCommodity purchase contracts accounted for as
derivative contractsForward purchases of electricity
    
    
    
    
    
    
    (127
    )
    
    
    (127
    )
    
    
    
    
    
    
    (121
    )
    
    
    (121
    )Forward purchases/sales of gas
    
    
    51
    
    
    
    (101
    )
    
    
    (50
    )
    
    
    35
    
    
    
    (34
    )
    
    
    1Derivative financial instruments linked to commodity pricesElectricity swaps
    
    
    
    
    
    
    (47
    )
    
    
    (47
    )
    
    
    
    
    
    
    (30
    )
    
    
    (30
    )Electricity options
    
    
    51
    
    
    
    
    
    
    
    51
    
    
    
    
    
    
    
    
    
    
    
    Gas swaps
    
    
    3
    
    
    
    (52
    )
    
    
    (49
    )
    
    
    14
    
    
    
    (173
    )
    
    
    (159
    )Gas options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    (1
    )105
    
    
    
    (327
    )
    
    
    (222
    )
    
    
    49
    
    
    
    (359
    )
    
    
    (310
    )
  2010Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Total£m
    
    
    £m
    
    
    £m
    
    
    £mAssetsCommodity contracts
    
    
    
    
    
    
    2
    
    
    
    103
    
    
    
    105LiabilitiesCommodity contracts
    
    
    
    
    
    
    (100
    )
    
    
    (227
    )
    
    
    (327
    )Total
    
    
    
    
    
    
    (98
    )
    
    
    (124
    )
    
    
    (222
    )
   2010£mAt 1 April 2009
    
    
    (115
    )Net gains for the year (i)
    
    
    8Purchases
    
    
    (12
    )Sales
    
    
    (1
    )Reclassification into level 3
    
    
    (3
    )Reclassification out of level 3
    
    
    (1
    )At 31 March 2010
    
    
    (124
    )
 
 (i)
    
    Losses of £67m are attributable to assets or liabilities held at the end of the reporting period.
 
   
 Annual
Report and Accounts 2009/10 | National Grid plc     163




---



##### 



Financial Statements
 Notes to the consolidated financial statements continued
 33. Commodity risk continued
  2010Incomestatement£m10% increase in commodity prices (i)
    
    
    4610% decrease in commodity prices (i)
    
    
    (39
    )10% increase in commodity volumes
    
    
    (9
    )10% decrease in commodity volumes
    
    
    9Forward curve extrapolation (ii)
    
    
    (12
    )
 
 (i)
    
    Level 3 commodity price sensitivity is included within the sensitivity analysis disclosed in (d) below.(ii)
    
    Alternative regression assumption applied to the forward curve extrapolation.  (b) Maturity analysis
  2010

    
    2009Assets
    
    
    Liabilities
    
    
    Total
    
    
    Assets
    
    
    Liabilities
    
    
    Total£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mIn one year or less
    
    
    21
    
    
    
    (184
    )
    
    
    (163
    )
    
    
    41
    
    
    
    (203
    )
    
    
    (162
    )Current
    
    
    21
    
    
    
    (184
    )
    
    
    (163
    )
    
    
    41
    
    
    
    (203
    )
    
    
    (162
    )In more than one year, but not more than two years
    
    
    8
    
    
    
    (49
    )
    
    
    (41
    )
    
    
    6
    
    
    
    (41
    )
    
    
    (35
    )In more than two years, but not more than three years
    
    
    11
    
    
    
    (21
    )
    
    
    (10
    )
    
    
    2
    
    
    
    (27
    )
    
    
    (25
    )In more than three years, but not more than four years
    
    
    13
    
    
    
    (19
    )
    
    
    (6
    )
    
    
    
    
    
    
    (17
    )
    
    
    (17
    )In more than four years, but not more than five years
    
    
    11
    
    
    
    (19
    )
    
    
    (8
    )
    
    
    
    
    
    
    (16
    )
    
    
    (16
    )In more than five years
    
    
    41
    
    
    
    (35
    )
    
    
    6
    
    
    
    
    
    
    
    (55
    )
    
    
    (55
    )Non-current
    
    
    84
    
    
    
    (143
    )
    
    
    (59
    )
    
    
    8
    
    
    
    (156
    )
    
    
    (148
    )Total
    
    
    105
    
    
    
    (327
    )
    
    
    (222
    )
    
    
    49
    
    
    
    (359
    )
    
    
    (310
    )
 (c) Notional quantities
  2010
    
    
    2009
    *Forward purchases of electricity (i)
    
    3,883 GWh
    

    
    4,524 GWhForward purchases/sales of gas (ii)
    
    171m Dth
    

    
    298m DthElectricity swaps
    
    3,141 GWh
    

    
    4,090 GWhElectricity options
    
    30,294 GWh
    

    
    30,294 GWhGas swaps
    
    59m Dth
    

    
    88m DthGas options
    
    
    
    
    
    1m DthNYMEX electricity futures (iii)
    
    
    
    
    
    18 GWhNYMEX gas futures (iii)
    
    48m Dth
    

    
    30m Dth
  (i)
    
    Forward electricity purchases have terms up to 12 years. The contractual obligations under
these contracts are £269m (2009: £348m).(ii)
    
    Forward gas purchases have terms up to 7 years. The
contractual obligations under these contracts are £434m (2009: £700m).(iii)
    
    NYMEX futures have
been offset with related margin accounts.
 (d) Sensitivity analysis
  2010

    
    2009*Income
    
    
    Other equity
    
    
    Income
    
    
    Other equitystatement
    
    
    reserves
    
    
    statement
    
    
    reserves£m
    
    
    £m
    
    
    £m
    
    
    £m10% increase in commodity prices
    
    
    71
    
    
    
    (1
    )
    
    
    33
    
    
    
    (1
    )10% reduction in commodity prices
    
    
    (64
    )
    
    
    1
    
    
    
    (43
    )
    
    
    1
    
 164     National Grid plc| Annual Report and Accounts 2009/10




---



##### 



34. Bonds and facilities
  Issuer
    
    Original Notional Value
    
    Description of instrument
    
    DueBondsBritish Transco Finance Inc.
    
    USD 300m
    
    6.625% Fixed Rate
    
    
    2018British Transco International
Finance BV
    
    FRF 2,000m
    
    5.125% Fixed Rate (i)
    
    
    2009USD 1,500m
    
    Zero Coupon Bond
    
    
    2021Brooklyn Union Gas Company
    
    USD 153m
    
    NYSERDA 4.7% GFRBs Series 1996
    
    
    2021USD 400m
    
    KEDNY 5.6% Senior Unsecured Note
    
    
    2016KeySpan Corporation
    
    USD 700m
    
    KeySpan MTN 7.625%
    
    
    2010USD 250m
    
    KeySpan MTN 8.00%
    
    
    2030USD 307m
    
    KeySpan 5.803% Notes
    
    
    2035USD 150m
    
    KeySpan 4.65% Notes
    
    
    2013USD 150m
    
    KeySpan 5.875% Notes
    
    
    2033KeySpan Gas East Corporation
    
    USD 400m
    
    KeySpan 7.875% Gas East MTN Program (i)
    
    
    2010(National Grid Energy
Delivery Long Island)Massachusetts Electric Company
    
    USD 800m
    
    5.90% Fixed Rate (ii)
    
    
    2039National Grid Electricity
Transmission plc
    
    EUR 600m
    
    6.625% Fixed Rate
    
    
    2014GBP 250m
    
    4.75% Fixed Rate
    
    
    2010GBP 300m
    
    2.983% Guaranteed Retail Price Index Linked
    
    
    2018GBP 220m
    
    3.806% Retail Price Index Linked
    
    
    2020GBP 450m
    
    5.875% Fixed Rate
    
    
    2024GBP 360m
    
    6.5% Fixed Rate
    
    
    2028GBP 200m
    
    1.6449% Retail Price Index Linked
    
    
    2036GBP 150m
    
    1.823% Retail Price Index Linked
    
    
    2056GBP 150m
    
    1.8575% Index Linked
    
    
    2039GBP 379m
    
    7.375% Fixed Rate
    
    
    2031National Grid Gas plc
    
    GBP 300m
    
    5.375% Fixed Rate (i)
    
    
    2009GBP 300m
    
    6.0% Fixed Rate
    
    
    2017GBP 275m
    
    8.75% Fixed Rate
    
    
    2025GBP 100m
    
    1.6747% Retail Price Index Linked
    
    
    2036GBP 115m
    
    1.7298% Retail Price Index Linked
    
    
    2046GBP 100m
    
    1.6298% Retail Price Index Linked
    
    
    2048GBP 100m
    
    1.5522% Retail Price Index Linked
    
    
    2048GBP 300m
    
    1.754% Retail Price Index Linked
    
    
    2036GBP 140m
    
    1.7864% Index Linked
    
    
    2037GBP 100m
    
    1.9158% Index Linked
    
    
    2037GBP 100m
    
    1.7762% Index Linked
    
    
    2037GBP 100m
    
    1.7744% Index Linked
    
    
    2039GBP 100m
    
    1.8625% Index Linked
    
    
    2039GBP 484m
    
    6.375% Fixed Rate
    
    
    2020GBP 503m
    
    Floating Rate (i)
    
    
    2009GBP 503m
    
    4.1875% Index Linked
    
    
    2022GBP 503m
    
    7.0% Fixed Rate
    
    
    2024EUR 800m
    
    5.125% Fixed Rate
    
    
    2013EUR 163m
    
    4.36% EUR-HICP Linked
    
    
    2018GBP 457m
    
    6.0% Fixed Rate
    
    
    2038
 
   
 Annual
Report and Accounts 2009/10 | National Grid plc     165




---



##### 



Financial Statements
 Notes to the consolidated financial statements continued
 34. Bonds and facilities continued
 Issuer
    
    Original Notional Value
    
    Description of instrument
    
    DueBonds continuedNational Grid plc
    
    CAD 200m
    
    4.98% Fixed Rate
    
    
    2011EUR 1,000m
    
    4.125% Fixed Rate
    
    
    2013EUR 600m
    
    5.0% Fixed Rate
    
    
    2018EUR 500m
    
    4.375% Fixed Rate
    
    
    2020EUR 600m
    
    Floating Rate
    
    
    2010EUR 750m
    
    Floating Rate
    
    
    2012EUR 300m
    
    Floating Rate (i)
    
    
    2009GBP 300m
    
    5.25% Fixed Rate
    
    
    2011GBP 310m
    
    5.5% Fixed Rate
    
    
    2013USD 1,000m
    
    6.3% Fixed Rate
    
    
    2016EUR 578m
    
    6.5% Fixed Rate
    
    
    2014GBP 414m
    
    6.125% Fixed Rate
    
    
    2014NGG Finance plc
    
    EUR 750m
    
    6.125% Fixed Rate
    
    
    2011Niagara Mohawk Power Corporation
    
    USD 750m
    
    4.881% Fixed Rate (ii)
    
    
    2019USD 500m
    
    3.553% Fixed Rate (ii)
    
    
    2014The Narragansett Electric Company
    
    USD 250m
    
    4.534% Fixed Rate (ii)
    
    
    2020USD 300m
    
    5.638% Fixed Rate (ii)
    
    
    2040Bank loans and other loansNational Grid plc
    
    USD 250m
    
    Floating Rate
    
    
    2014USD 150m
    
    Floating Rate
    
    
    2014USD 150m
    
    Floating Rate (i)
    
    
    2011USD 200m
    
    Floating Rate
    
    
    2010National Grid Grain LNG Limited
    
    GBP 120m
    
    Floating Rate
    
    
    2014GBP 140m
    
    Floating Rate
    
    
    2023National Grid Electricity
Transmission plc
    
    GBP 200m
    
    Floating Rate
    
    
    2012GBP 200m
    
    Floating Rate
    
    
    2017National Grid Gas plc
    
    GBP 200m
    
    Floating Rate
    
    
    2012GBP 180m
    
    1.88% Retail Price Index Linked
    
    
    2022GBP 190m
    
    2.14% Retail Price Index Linked
    
    
    2022National Grid USA
    
    USD 150m
    
    Floating Rate
    
    
    2011National Grid Holdings Limited
    
    GBP 250m
    
    4.13794% Fixed Rate
    
    
    2011NGT Five Limited
    
    GBP 500m
    
    5.917% Index Linked (i)
    
    
    2013
 (i)
    
    Matured or repurchased during the year ended 31 March 2010.(ii)
    
    Issued during the year ended 31 March 2010.
  Issuer
    
    Original Notional Value
    
    Description of instrument
    
    DueBonds and loans
issued after 31
March 2010National Grid Gas plc
    
    GBP 180m
    
    Index Linked (i)
    
    
    2024
 (i)
    
    Of this loan agreement a further £120m is expected to be drawn by 30 June 2010.
 Borrowing facilities
  2010
    
    
    2009£m
    
    
    £mUndrawn committed borrowing facilities expiring:In one year or less
    
    
    1,708
    
    
    
    1,155In more than one year, but not more than two years
    
    
    1,314
    
    
    
    1,8203,022
    
    
    
    2,975
 
   
 166     National Grid plc| Annual Report and Accounts 2009/10




---



##### 



35. Share options and reward plans
  Active share plans
     Additional information in respect of active share plans
 2010
    
    
    2009
    
    
    2008millions
    
    
    millions
    
    
    millionsPerformance Share PlanAwards of ordinary share equivalents at 1 April
    
    
    9.5
    
    
    
    7.5
    
    
    
    8.0Awards made
    
    
    4.1
    
    
    
    3.5
    
    
    
    3.1Lapses/forfeits
    
    
    (0.8
    )
    
    
    (0.7
    )
    
    
    (3.4
    )Awards vested
    
    
    (3.8
    )
    
    
    (0.8
    )
    
    
    (0.2
    )Awards of ordinary share equivalents at 31 March
    
    
    9.0
    
    
    
    9.5
    
    
    
    7.5Conditional awards available for release at 31 March
    
    
    0.1
    
    
    
    1.8
    
    
    
    Deferred Share PlanAwards of ordinary share equivalents at 1 April
    
    
    1.0
    
    
    
    0.5
    
    
    
    0.4Awards made
    
    
    0.5
    
    
    
    0.6
    
    
    
    0.2Awards vested
    
    
    (0.6
    )
    
    
    (0.1
    )
    
    
    (0.1
    )Awards of ordinary share equivalents at 31 March
    
    
    0.9
    
    
    
    1.0
    
    
    
    0.5Conditional awards available for release at 31 March
    
    
    
    
    
    
    
    
    
    
    Retention Award PlansAwards of ordinary share equivalents at 1 April
    
    
    0.5
    
    
    
    0.8
    
    
    
    Awards made
    
    
    0.1
    
    
    
    
    
    
    
    0.8Lapses/forfeits
    
    
    (0.1
    )
    
    
    
    
    
    
    Awards vested
    
    
    (0.2
    )
    
    
    (0.3
    )
    
    
    Awards of ordinary share equivalents at 31 March
    
    
    0.3
    
    
    
    0.5
    
    
    
    0.8Conditional awards available for release at 31 March
    
    
    
    
    
    
    
    
    
    
    
 
   
 Annual
Report and Accounts 2009/10 | National Grid plc     167




---



##### 



Financial Statements
 Notes to the consolidated financial statements continued
 35. Share options and reward plans continued
 Non-active share plans
    Additional information in respect of non-active share plans
 2010
    
    
    2009
    
    
    2008000s
    
    
    000s
    
    
    000sShare Matching PlanAwards at 1 April
    
    
    89
    
    
    
    201
    
    
    
    384Awards exercised
    
    
    (18
    )
    
    
    (112
    )
    
    
    (183
    )Awards at 31 March
    
    
    71
    
    
    
    89
    
    
    
    201Options exercisable at 31 March
    
    
    71
    
    
    
    89
    
    
    
    109Transitional Share Awards/Special Share AwardsAwards of ordinary share equivalents at 1 April
    
    
    
    
    
    
    3
    
    
    
    77Lapses/forfeits
    
    
    
    
    
    
    
    
    
    
    (1
    )Awards vested
    
    
    
    
    
    
    (3
    )
    
    
    (73
    )Awards of ordinary share equivalents at 31 March
    
    
    
    
    
    
    
    
    
    
    3Conditional awards available for release at 31 March
    
    
    
    
    
    
    
    
    
    
    3
 Share options
  Sharesave
    
    
    Executive Planscheme options
    
    
    optionsWeighted
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    average
    
    
    
    
    
    
    Totalprice
    
    
    
    
    
    
    price
    
    
    
    
    
    
    options£
    
    
    millions
    
    
    £
    
    
    millions
    
    
    millionsAt 31 March 2007
    
    
    4.07
    
    
    
    21.3
    
    
    
    4.74
    
    
    
    3.2
    
    
    
    24.5Granted
    
    
    6.55
    
    
    
    2.9
    
    
    
    
    
    
    
    
    
    
    
    2.9Lapsed  expired
    
    
    4.43
    
    
    
    (1.0
    )
    
    
    5.31
    
    
    
    (0.1
    )
    
    
    (1.1
    )Exercised
    
    
    3.37
    
    
    
    (6.3
    )
    
    
    4.45
    
    
    
    (1.1
    )
    
    
    (7.4
    )At 31 March 2008
    
    
    4.74
    
    
    
    16.9
    
    
    
    4.87
    
    
    
    2.0
    
    
    
    18.9Granted
    
    
    4.88
    
    
    
    7.4
    
    
    
    
    
    
    
    
    
    
    
    7.4Lapsed  expired
    
    
    6.07
    
    
    
    (2.2
    )
    
    
    4.16
    
    
    
    (0.1
    )
    
    
    (2.3
    )Exercised
    
    
    3.81
    
    
    
    (2.0
    )
    
    
    4.81
    
    
    
    (0.4
    )
    
    
    (2.4
    )At 31 March 2009
    
    
    4.74
    
    
    
    20.1
    
    
    
    4.95
    
    
    
    1.5
    
    
    
    21.6Granted
    
    
    5.20
    
    
    
    3.7
    
    
    
    
    
    
    
    
    
    
    
    3.7Lapsed  expired
    
    
    5.38
    
    
    
    (0.9
    )
    
    
    5.24
    
    
    
    (0.1
    )
    
    
    (1.0
    )Exercised
    
    
    3.77
    
    
    
    (4.5
    )
    
    
    4.93
    
    
    
    (0.5
    )
    
    
    (5.0
    )At 31 March 2010
    
    
    5.05
    
    
    
    18.4
    
    
    
    4.92
    
    
    
    0.9
    
    
    
    19.3Included within options
outstanding were the following
options that were exercisable:At 31 March 2010
    
    
    4.98
    
    
    
    0.8
    
    
    
    4.71
    
    
    
    0.5
    
    
    
    1.3At 31 March 2009
    
    
    4.57
    
    
    
    0.1
    
    
    
    4.81
    
    
    
    1.0
    
    
    
    1.1At 31 March 2008
    
    
    3.74
    
    
    
    0.5
    
    
    
    4.78
    
    
    
    1.3
    
    
    
    1.8
 
   
 168     National Grid plc| Annual Report and Accounts 2009/10




---



##### 



35. Share options and reward plans continued
   2010
    
    
    2009
    
    
    2008£
    
    
    £
    
    
    £Sharesave scheme options
    
    
    5.74
    
    
    
    6.99
    
    
    
    7.79Executive Plan options
    
    
    6.03
    
    
    
    6.81
    
    
    
    7.68
 Additional information in respect of share options
 2010
    
    
    2009
    
    
    2008£m
    
    
    £m
    
    
    £mShare
options exercisedCash received on exercise of all share options during the year
    
    
    18
    
    
    
    8
    
    
    
    23Tax benefits realised from share options exercised during the year
    
    
    8
    
    
    
    4
    
    
    
    10
  Weighted average
    
    
    
    
    
    
    Weighted averageexercise price of
    
    
    Number
    
    
    exercise price of
    
    
    Number
    
    
    Exercise price
    
    
    Normal datesexercisable options
    
    
    exercisable
    
    
    outstanding options
    
    
    outstanding
    
    
    per share
    
    
    of exercise£
    
    
    millions
    
    
    £
    
    
    millions
    
    
    pence
    
    
    yearsExecutive Plan options
    
    
    5.27
    
    
    
    0.1
    
    
    
    5.28
    
    
    
    0.4
    
    
    
    526.0-531.5
    
    
    
    2004-20114.62
    
    
    
    0.4
    
    
    
    4.62
    
    
    
    0.5
    
    
    
    434.5-481.5
    
    
    
    2006-20134.71
    
    
    
    0.5
    
    
    
    4.92
    
    
    
    0.9
  Share-based payment charges
  Awards under share option plans
  2010
    
    
    2009
    
    
    2008Average share price
    
    
    676.0p
    
    
    
    684.0p
    
    
    
    846.0pAverage exercise price
    
    
    520.0p
    
    
    
    488.0p
    
    
    
    655.0pAverage fair value
    
    
    161.1p
    
    
    
    153.7p
    
    
    
    190.0p
   2010
    
    
    2009
    
    
    2008Dividend yield (%)
    
    
    5.0
    
    
    
    5.0
    
    
    
    4.5Volatility (%)
    
    
    22.4-26.1
    
    
    
    22.4-26.1
    
    
    
    15.6-18.9Risk-free investment rate (%)
    
    
    2.5
    
    
    
    2.5
    
    
    
    4.2Average life (years)
    
    
    4.0
    
    
    
    4.2
    
    
    
    4.1
 
   
 Annual
Report and Accounts 2009/10 | National
Grid plc     169




---



##### 



Financial Statements
 Notes to the consolidated financial statements continued
 35. Share options and reward plans continued
   (i)
    
    implied volatility in traded options over the Companys shares;(ii)
    
    historical volatility of the Companys shares
over a term commensurate with the expected life of each option; and(iii)
    
    implied volatility of comparator companies where options in their shares are traded.
 Awards under other share plans
  2010
    
    
    2009
    
    
    2008Average share price
    
    
    598.2p
    
    
    
    670.1p
    
    
    
    766.9pAverage fair value
    
    
    355.6p
    
    
    
    458.1p
    
    
    
    522.8p
  2010
    
    
    2009
    
    
    2008Dividend yield (%)
    
    
    4.4
    
    
    
    4.4
    
    
    
    4.4Risk-free investment rate (%)
    
    
    2.5
    
    
    
    2.5
    
    
    
    4.1
 
   
 170     National Grid plc| Annual Report and Accounts 2009/10




---



##### 



36. Subsidiary undertakings, joint ventures and associates
 Principal subsidiary undertakings
   Principal activityNational Grid Gas plc
    
    Transmission and distribution of gasNational Grid Electricity Transmission plc
    
    Transmission of electricityNew England Power Company (incorporated in the US)
    
    Transmission of electricityMassachusetts Electric Company (incorporated in the US)
    
    Distribution of electricityThe Narragansett Electric Company (incorporated in the US)
    
    Transmission and distribution of electricityNiagara Mohawk Power Corporation (incorporated in the US)
    
    Transmission of electricity and distribution of electricity and gasNational Grid Metering Limited
    
    Metering servicesUtility Metering Services Limited
    
    Metering servicesNational Grid Grain LNG Limited
    
    LNG importation terminalBoston Gas Company (incorporated in the US)
    
    Distribution of gasNational Grid Electric Services LLC (incorporated in the US)
    
    Transmission and distribution of electricityNational Grid Generation LLC (incorporated in the US)
    
    Generation of electricityNew England Electric Transmission Corporation (incorporated in the US)
    
    Transmission of electricityNantucket Electric Company (incorporated in the US)
    
    Distribution of electricityKeySpan Gas East Corporation (incorporated in the US)
    
    Distribution of gasThe Brooklyn Union Gas Company (incorporated in the US)
    
    Distribution of gasNGG Finance plc
    
    FinancingBritish Transco Finance Inc. (incorporated in the US)
    
    FinancingBritish Transco International Finance BV (incorporated in The Netherlands)
    
    FinancingNational Grid Property Limited
    
    Property servicesNational Grid Holdings One plc
    
    Holding companyLattice Group plc
    
    Holding companyNational Grid USA (incorporated in the US)
    
    Holding companyNiagara Mohawk Holdings, Inc. (incorporated in the US)
    
    Holding companyNational Grid Commercial Holdings Limited
    
    Holding companyNational Grid Gas Holdings Limited
    
    Holding companyNational Grid (US) Holdings Limited
    
    Holding companyNational Grid Holdings Limited
    
    Holding companyKeySpan Corporation (incorporated in the US)
    
    Holding company
 Principal joint ventures and associates
  % of ordinaryshares held
    
    
    Principal activityBlue-NG (Holdings) Limited
    
    50
    
    
    Holding companyBritNed Development Limited
    

    50
    
    
    Interconnector between the UK and The NetherlandsMillennium Pipeline Company, LLC (incorporated in the US)
    

    26.25
    
    
    Transmission of gasIroquois Gas Transmission System, L.P. (incorporated in the US)
    

    20.4
    
    
    Transmission of gas
 
   
 Annual
Report and Accounts 2009/10 | National
Grid plc     171




---



##### 



Financial Statements
 Notes to the consolidated financial statements continued
 
 37. National Grid Gas plc and Niagara Mohawk Power Corporation additional disclosures
 
   
 172     National Grid plc| Annual Report and Accounts 2009/10




---



##### 



37. National Grid Gas plc and Niagara Mohawk Power Corporation additional disclosures
continued
 Summary income statements for the year ended 31 March 2010  IFRS
 Parent
    
    
    
    
    
    
    
    
    
    
    Subsidiaryguarantor
    
    
    Issuer of notes
    
    
    guarantorNiagaraNational
    
    
    Mohawk
    
    
    British
    
    
    National
    
    
    
    
    
    
    
    
    
    
    NationalGrid
    
    
    Power
    
    
    Transco
    
    
    Grid Gas
    
    
    Other
    
    
    Consolidation
    
    
    Gridplc
    
    
    Corporation
    
    
    Finance Inc.
    
    
    plc
    
    
    subsidiaries
    
    
    adjustments
    
    
    consolidated£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mRevenue
    
    
    
    
    
    
    2,409
    
    
    
    
    
    
    
    2,773
    
    
    
    9,003
    
    
    
    (197
    )
    
    
    13,988Other operating income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14
    
    
    
    5
    
    
    
    
    
    
    
    19Operating costsDepreciation and amortisation
    
    
    
    
    
    
    (131
    )
    
    
    
    
    
    
    (430
    )
    
    
    (633
    )
    
    
    
    
    
    
    (1,194
    )Payroll costs
    
    
    
    
    
    
    (274
    )
    
    
    
    
    
    
    (224
    )
    
    
    (904
    )
    
    
    
    
    
    
    (1,402
    )Purchases of electricity
    
    
    
    
    
    
    (575
    )
    
    
    
    
    
    
    
    
    
    
    (998
    )
    
    
    
    
    
    
    (1,573
    )Purchases of gas
    
    
    
    
    
    
    (253
    )
    
    
    
    
    
    
    (155
    )
    
    
    (1,834
    )
    
    
    
    
    
    
    (2,242
    )Rates and property taxes
    
    
    
    
    
    
    (126
    )
    
    
    
    
    
    
    (248
    )
    
    
    (533
    )
    
    
    
    
    
    
    (907
    )Electricity transmission services scheme direct costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (691
    )
    
    
    
    
    
    
    (691
    )Payments to Scottish electricity transmission network owners
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (260
    )
    
    
    
    
    
    
    (260
    )Other operating charges
    
    
    4
    
    
    
    (435
    )
    
    
    
    
    
    
    (633
    )
    
    
    (1,578
    )
    
    
    197
    
    
    
    (2,445
    )4
    
    
    
    (1,794
    )
    
    
    
    
    
    
    (1,690
    )
    
    
    (7,431
    )
    
    
    197
    
    
    
    (10,714
    )Operating profit
    
    
    4
    
    
    
    615
    
    
    
    
    
    
    
    1,097
    
    
    
    1,577
    
    
    
    
    
    
    
    3,293Net finance costs
    
    
    (227
    )
    
    
    (96
    )
    
    
    
    
    
    
    (224
    )
    
    
    (561
    )
    
    
    
    
    
    
    (1,108
    )Dividends receivable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    300
    
    
    
    (300
    )
    
    
    Interest in equity accounted affiliates
    
    
    1,558
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    8
    
    
    
    (1,570
    )
    
    
    8Profit before taxation
    
    
    1,335
    
    
    
    519
    
    
    
    
    
    
    
    885
    
    
    
    1,324
    
    
    
    (1,870
    )
    
    
    2,193Taxation
    
    
    54
    
    
    
    (225
    )
    
    
    
    
    
    
    (285
    )
    
    
    (348
    )
    
    
    
    
    
    
    (804
    )Profit for the year from continuing operations
    
    
    1,389
    
    
    
    294
    
    
    
    
    
    
    
    600
    
    
    
    976
    
    
    
    (1,870
    )
    
    
    1,389Profit for the year from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Profit for the year
    
    
    1,389
    
    
    
    294
    
    
    
    
    (i)
    
    
    600
    
    
    
    976
    
    
    
    (1,870
    )
    
    
    1,389Attributable to:Equity shareholders
    
    
    1,386
    
    
    
    294
    
    
    
    
    
    
    
    600
    
    
    
    973
    
    
    
    (1,867
    )
    
    
    1,386Minority interests
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    (3
    )
    
    
    31,389
    
    
    
    294
    
    
    
    
    (i)
    
    
    600
    
    
    
    976
    
    
    
    (1,870
    )
    
    
    1,389
 
   
 Annual
Report and Accounts 2009/10 | National
Grid plc     173




---



##### 



Financial Statements
 Notes to the consolidated financial statements continued
 37. National Grid Gas plc and Niagara Mohawk Power Corporation additional disclosures continued
 Summary
income statements for the year ended 31 March 2009  IFRS
 Parent
    
    
    
    
    
    
    
    
    
    
    Subsidiaryguarantor
    
    
    Issuer of notes
    
    guarantorNiagaraNational
    
    
    Mohawk
    
    
    British
    
    
    National
    
    
    
    
    
    
    
    
    
    
    NationalGrid
    
    
    Power
    
    
    Transco
    
    
    Grid Gas
    
    
    Other
    
    
    Consolidation
    
    
    Gridplc
    
    
    Corporation
    
    
    Finance Inc.
    
    
    plc
    
    
    subsidiaries
    
    
    adjustments
    
    
    consolidated£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mRevenue
    
    
    
    
    
    
    2,708
    
    
    
    
    
    
    
    2,605
    
    
    
    10,549
    
    
    
    (238
    )
    
    
    15,624Other operating income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27
    
    
    
    36
    
    
    
    
    
    
    
    63Operating costsDepreciation and amortisation
    
    
    
    
    
    
    (135
    )
    
    
    
    
    
    
    (413
    )
    
    
    (579
    )
    
    
    
    
    
    
    (1,127
    )Payroll costs
    
    
    
    
    
    
    (269
    )
    
    
    
    
    
    
    (239
    )
    
    
    (941
    )
    
    
    
    
    
    
    (1,449
    )Purchases of electricity
    
    
    
    
    
    
    (735
    )
    
    
    
    
    
    
    
    
    
    
    (1,492
    )
    
    
    
    
    
    
    (2,227
    )Purchases of gas
    
    
    
    
    
    
    (374
    )
    
    
    
    
    
    
    (168
    )
    
    
    (3,020
    )
    
    
    
    
    
    
    (3,562
    )Rates and property taxes
    
    
    
    
    
    
    (132
    )
    
    
    
    
    
    
    (236
    )
    
    
    (513
    )
    
    
    
    
    
    
    (881
    )Electricity transmission services scheme direct costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (904
    )
    
    
    
    
    
    
    (904
    )Payments to Scottish electricity transmission network owners
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (243
    )
    
    
    
    
    
    
    (243
    )Other operating charges
    
    
    
    
    
    
    (438
    )
    
    
    
    
    
    
    (818
    )
    
    
    (1,653
    )
    
    
    238
    
    
    
    (2,671
    )
    
    
    
    (2,083
    )
    
    
    
    
    
    
    (1,874
    )
    
    
    (9,345
    )
    
    
    238
    
    
    
    (13,064
    )Operating profit
    
    
    
    
    
    
    625
    
    
    
    
    
    
    
    758
    
    
    
    1,240
    
    
    
    
    
    
    
    2,623Net finance costs
    
    
    (213
    )
    
    
    (115
    )
    
    
    
    
    
    
    (400
    )
    
    
    (506
    )
    
    
    
    
    
    
    (1,234
    )Dividends receivable
    
    
    592
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    300
    
    
    
    (892
    )
    
    
    Interest in equity accounted affiliates
    
    
    551
    
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    5
    
    
    
    (548
    )
    
    
    5Profit before taxation
    
    
    930
    
    
    
    510
    
    
    
    
    
    
    
    355
    
    
    
    1,039
    
    
    
    (1,440
    )
    
    
    1,394Taxation
    
    
    (8
    )
    
    
    (185
    )
    
    
    
    
    
    
    (307
    )
    
    
    28
    
    
    
    
    
    
    
    (472
    )Profit for the year from continuing operations
    
    
    922
    
    
    
    325
    
    
    
    
    
    
    
    48
    
    
    
    1,067
    
    
    
    (1,440
    )
    
    
    922Profit for the year from discontinued operations
    
    
    25
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25
    
    
    
    (25
    )
    
    
    25Profit for the year
    
    
    947
    
    
    
    325
    
    
    
    

(i)
    
    
    48
    
    
    
    1,092
    
    
    
    (1,465
    )
    
    
    947Attributable to:Equity shareholders
    
    
    944
    
    
    
    325
    
    
    
    
    
    
    
    48
    
    
    
    1,092
    
    
    
    (1,465
    )
    
    
    944Minority interests
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3947
    
    
    
    325
    
    
    
    

(i)
    
    
    48
    
    
    
    1,092
    
    
    
    (1,465
    )
    
    
    947
 (i)
    
    Profit for the year for British Transco Finance Inc. is £nil as interest payable to external
bond holders is offset by interest receivable on loans to National Grid Gas plc.
    174     National
Grid plc Annual Report and Accounts
2009/10




---



##### 



37. National Grid Gas plc and Niagara Mohawk Power Corporation additional disclosures continued
 Summary income statements for the year ended 31 March 2008  IFRS
 Parent
    
    
    
    
    
    
    
    
    
    
    Subsidiaryguarantor
    
    
    Issuer of notes

    
    guarantorNiagaraNational
    
    
    Mohawk
    
    
    British
    
    
    National
    
    
    
    
    
    
    
    
    
    
    NationalGrid
    
    
    Power
    
    
    Transco
    
    
    Grid Gas
    
    
    Other
    
    
    Consolidation
    
    
    Gridplc
    
    
    Corporation
    
    
    Finance Inc.
    
    
    plc
    
    
    subsidiaries
    
    
    adjustments
    
    
    consolidated£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mRevenue
    
    
    
    
    
    
    2,108
    
    
    
    
    
    
    
    2,459
    
    
    
    7,104
    
    
    
    (248
    )
    
    
    11,423Other operating income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    67
    
    
    
    
    
    
    
    75Operating costsDepreciation and amortisation
    
    
    
    
    
    
    (101
    )
    
    
    
    
    
    
    (432
    )
    
    
    (461
    )
    
    
    
    
    
    
    (994
    )Payroll costs
    
    
    
    
    
    
    (201
    )
    
    
    
    
    
    
    (226
    )
    
    
    (752
    )
    
    
    
    
    
    
    (1,179
    )Purchases of electricity
    
    
    
    
    
    
    (609
    )
    
    
    
    
    
    
    
    
    
    
    (885
    )
    
    
    
    
    
    
    (1,494
    )Purchases of gas
    
    
    
    
    
    
    (297
    )
    
    
    
    
    
    
    (110
    )
    
    
    (1,463
    )
    
    
    
    
    
    
    (1,870
    )Rates and property taxes
    
    
    
    
    
    
    (93
    )
    
    
    
    
    
    
    (227
    )
    
    
    (288
    )
    
    
    
    
    
    
    (608
    )Electricity transmission services scheme direct costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (574
    )
    
    
    
    
    
    
    (574
    )Payments to Scottish electricity transmission network owners
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (226
    )
    
    
    
    
    
    
    (226
    )Other operating charges
    
    
    
    
    
    
    (248
    )
    
    
    
    
    
    
    (514
    )
    
    
    (1,075
    )
    
    
    248
    
    
    
    (1,589
    )
    
    
    
    (1,549
    )
    
    
    
    
    
    
    (1,509
    )
    
    
    (5,724
    )
    
    
    248
    
    
    
    (8,534
    )Operating profit
    
    
    
    
    
    
    559
    
    
    
    
    
    
    
    958
    
    
    
    1,447
    
    
    
    
    
    
    
    2,964Net finance costs
    
    
    (116
    )
    
    
    (116
    )
    
    
    
    
    
    
    (298
    )
    
    
    (256
    )
    
    
    
    
    
    
    (786
    )Dividends receivable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    500
    
    
    
    (500
    )
    
    
    Interest in equity accounted affiliates
    
    
    1,705
    
    
    
    
    
    
    
    
    
    
    
    (27
    )
    
    
    (7
    )
    
    
    (1,667
    )
    
    
    4Profit before taxation
    
    
    1,589
    
    
    
    443
    
    
    
    
    
    
    
    633
    
    
    
    1,684
    
    
    
    (2,167
    )
    
    
    2,182Taxation
    
    
    (14
    )
    
    
    (194
    )
    
    
    
    
    
    
    (141
    )
    
    
    (258
    )
    
    
    
    
    
    
    (607
    )Profit for the year from continuing operations
    
    
    1,575
    
    
    
    249
    
    
    
    
    
    
    
    492
    
    
    
    1,426
    
    
    
    (2,167
    )
    
    
    1,575Profit for the year from discontinued operations
    
    
    1,618
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    1,615
    
    
    
    (1,618
    )
    
    
    1,618Profit for the year
    
    
    3,193
    
    
    
    249
    
    
    
    
    (i)
    
    
    495
    
    
    
    3,041
    
    
    
    (3,785
    )
    
    
    3,193Attributable to:Equity shareholders
    
    
    3,190
    
    
    
    249
    
    
    
    
    
    
    
    495
    
    
    
    3,038
    
    
    
    (3,782
    )
    
    
    3,190Minority interests
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    (3
    )
    
    
    33,193
    
    
    
    249
    
    
    
    
    (i)
    
    
    495
    
    
    
    3,041
    
    
    
    (3,785
    )
    
    
    3,193
 (i)
    
    Profit for the year for British Transco Finance Inc. is £nil as interest payable to
external bond holders is offset by interest receivable on loans to National Grid Gas plc.
 
   
 Annual
Report and Accounts 2009/10 | National
Grid plc     175




---



##### 



Financial Statements
 Notes to the consolidated financial statements continued
 37. National Grid Gas plc and Niagara Mohawk Power Corporation additional disclosures continued
 Balance sheets as at 31 March 2010  IFRS
 Parent
    
    
    
    
    
    
    
    
    
    
    Subsidiaryguarantor
    
    
    Issuer of notes
    
    
    guarantorNiagaraNational
    
    
    Mohawk
    
    
    British
    
    
    National
    
    
    
    
    
    
    
    
    
    
    NationalGrid
    
    
    Power
    
    
    Transco
    
    
    Grid Gas
    
    
    Other
    
    
    Consolidation
    
    
    Gridplc
    
    
    Corporation
    
    
    Finance Inc.
    
    
    plc
    
    
    subsidiaries
    
    
    adjustments
    
    
    consolidated£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mNon-current assetsGoodwill
    
    
    
    
    
    
    738
    
    
    
    
    
    
    
    
    
    
    
    4,364
    
    
    
    
    
    
    
    5,102Other intangible assets
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    126
    
    
    
    260
    
    
    
    
    
    
    
    389Property, plant and equipment
    
    
    
    
    
    
    3,920
    
    
    
    
    
    
    
    10,817
    
    
    
    16,118
    
    
    
    
    
    
    
    30,855Deferred tax assets
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    Other non-current assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7
    
    
    
    155
    
    
    
    
    
    
    
    162Amounts owed by subsidiary undertakings
    
    
    1,700
    
    
    
    
    
    
    
    
    
    
    
    5,611
    
    
    
    1,127
    
    
    
    (8,438
    )
    
    
    Financial and other investments
    
    
    6,954
    
    
    
    23
    
    
    
    
    
    
    
    25
    
    
    
    9,731
    
    
    
    (16,247
    )
    
    
    486Derivative financial assets
    
    
    655
    
    
    
    51
    
    
    
    
    
    
    
    564
    
    
    
    224
    
    
    
    
    
    
    
    1,494Total non-current assets
    
    
    9,311
    
    
    
    4,735
    
    
    
    
    
    
    
    17,150
    
    
    
    31,979
    
    
    
    (24,687
    )
    
    
    38,488Current assetsInventories and current intangible assets
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    44
    
    
    
    333
    
    
    
    
    
    
    
    407Trade and other receivables
    
    
    6
    
    
    
    503
    
    
    
    
    
    
    
    270
    
    
    
    1,524
    
    
    
    (10
    )
    
    
    2,293Amounts owed by subsidiary undertakings
    
    
    8,649
    
    
    
    
    
    
    
    202
    
    
    
    114
    
    
    
    7,862
    
    
    
    (16,827
    )
    
    
    Financial and other investments
    
    
    180
    
    
    
    17
    
    
    
    
    
    
    
    307
    
    
    
    893
    
    
    
    
    
    
    
    1,397Derivative financial assets
    
    
    218
    
    
    
    1
    
    
    
    
    
    
    
    72
    
    
    
    43
    
    
    
    (86
    )
    
    
    248Cash and cash equivalents
    
    
    198
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    520
    
    
    
    
    
    
    
    720Total current assets
    
    
    9,251
    
    
    
    553
    
    
    
    202
    
    
    
    807
    
    
    
    11,175
    
    
    
    (16,923
    )
    
    
    5,065Total assets
    
    
    18,562
    
    
    
    5,288
    
    
    
    202
    
    
    
    17,957
    
    
    
    43,154
    
    
    
    (41,610
    )
    
    
    43,553Current liabilitiesBorrowings
    
    
    (1,183
    )
    
    
    (27
    )
    
    
    (5
    )
    
    
    (371
    )
    
    
    (1,220
    )
    
    
    
    
    
    
    (2,806
    )Derivative financial liabilities
    
    
    (174
    )
    
    
    
    
    
    
    
    
    
    
    (30
    )
    
    
    (94
    )
    
    
    86
    
    
    
    (212
    )Trade and other payables
    
    
    (30
    )
    
    
    (310
    )
    
    
    
    
    
    
    (665
    )
    
    
    (1,842
    )
    
    
    
    
    
    
    (2,847
    )Amounts owed to subsidiary undertakings
    
    
    (6,701
    )
    
    
    (220
    )
    
    
    
    
    
    
    (942
    )
    
    
    (8,964
    )
    
    
    16,827
    
    
    
    Current tax liabilities
    
    
    
    
    
    
    (32
    )
    
    
    
    
    
    
    
    
    
    
    (369
    )
    
    
    10
    
    
    
    (391
    )Provisions
    
    
    
    
    
    
    (36
    )
    
    
    
    
    
    
    (62
    )
    
    
    (205
    )
    
    
    
    
    
    
    (303
    )Total current liabilities
    
    
    (8,088
    )
    
    
    (625
    )
    
    
    (5
    )
    
    
    (2,070
    )
    
    
    (12,694
    )
    
    
    16,923
    
    
    
    (6,559
    )Non-current liabilitiesBorrowings
    
    
    (5,307
    )
    
    
    (1,358
    )
    
    
    (197
    )
    
    
    (6,387
    )
    
    
    (9,069
    )
    
    
    
    
    
    
    (22,318
    )Derivative financial liabilities
    
    
    (431
    )
    
    
    
    
    
    
    
    
    
    
    (121
    )
    
    
    (110
    )
    
    
    
    
    
    
    (662
    )Other non-current liabilities
    
    
    
    
    
    
    (256
    )
    
    
    
    
    
    
    (1,100
    )
    
    
    (618
    )
    
    
    
    
    
    
    (1,974
    )Amounts owed to subsidiary undertakings
    
    
    (537
    )
    
    
    (341
    )
    
    
    
    
    
    
    (250
    )
    
    
    (7,310
    )
    
    
    8,438
    
    
    
    Deferred tax liabilities
    
    
    
    
    
    
    (131
    )
    
    
    
    
    
    
    (1,890
    )
    
    
    (1,305
    )
    
    
    2
    
    
    
    (3,324
    )Pensions and other post-retirement benefit obligations
    
    
    
    
    
    
    (1,102
    )
    
    
    
    
    
    
    
    
    
    
    (1,996
    )
    
    
    
    
    
    
    (3,098
    )Provisions
    
    
    
    
    
    
    (215
    )
    
    
    
    
    
    
    (108
    )
    
    
    (1,084
    )
    
    
    
    
    
    
    (1,407
    )Total non-current liabilities
    
    
    (6,275
    )
    
    
    (3,403
    )
    
    
    (197
    )
    
    
    (9,856
    )
    
    
    (21,492
    )
    
    
    8,440
    
    
    
    (32,783
    )Total liabilities
    
    
    (14,363
    )
    
    
    (4,028
    )
    
    
    (202
    )
    
    
    (11,926
    )
    
    
    (34,186
    )
    
    
    25,363
    
    
    
    (39,342
    )Net assets
    
    
    4,199
    
    
    
    1,260
    
    
    
    
    
    
    
    6,031
    
    
    
    8,968
    
    
    
    (16,247
    )
    
    
    4,211EquityCalled up share capital
    
    
    298
    
    
    
    123
    
    
    
    
    
    
    
    45
    
    
    
    183
    
    
    
    (351
    )
    
    
    298Share premium account
    
    
    1,366
    
    
    
    1,942
    
    
    
    
    
    
    
    204
    
    
    
    7,183
    
    
    
    (9,329
    )
    
    
    1,366Retained earnings
    
    
    7,316
    
    
    
    (808
    )
    
    
    
    
    
    
    4,493
    
    
    
    1,821
    
    
    
    (5,506
    )
    
    
    7,316Other equity reserves
    
    
    (4,781
    )
    
    
    3
    
    
    
    
    
    
    
    1,289
    
    
    
    (231
    )
    
    
    (1,061
    )
    
    
    (4,781
    )Total shareholders equity
    
    
    4,199
    
    
    
    1,260
    
    
    
    
    
    
    
    6,031
    
    
    
    8,956
    
    
    
    (16,247
    )
    
    
    4,199Minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    12Total equity
    
    
    4,199
    
    
    
    1,260
    
    
    
    
    
    
    
    6,031
    
    
    
    8,968
    
    
    
    (16,247
    )
    
    
    4,211
 
   
 176     National Grid plc| Annual Report and Accounts 2009/10




---



##### 



37. National Grid Gas plc and Niagara Mohawk Power Corporation additional disclosures continued
 Balance sheets as at 31 March 2009  IFRS
 Parent
    
    
    
    
    
    
    
    
    
    
    Subsidiaryguarantor
    
    
    Issuer of notes
    
    
    guarantorNiagaraNational
    
    
    Mohawk
    
    
    British
    
    
    National
    
    
    
    
    
    
    
    
    
    
    NationalGrid
    
    
    Power
    
    
    Transco
    
    
    Grid Gas
    
    
    Other
    
    
    Consolidation
    
    
    Gridplc
    
    
    Corporation
    
    
    Finance Inc.
    
    
    plc
    
    
    subsidiaries
    
    
    adjustments
    
    
    consolidated£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mNon-current assetsGoodwill
    
    
    
    
    
    
    779
    
    
    
    
    
    
    
    
    
    
    
    4,612
    
    
    
    
    
    
    
    5,391Other intangible assets
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    73
    
    
    
    285
    
    
    
    
    
    
    
    370Property, plant and equipment
    
    
    
    
    
    
    3,941
    
    
    
    
    
    
    
    10,370
    
    
    
    15,234
    
    
    
    
    
    
    
    29,545Deferred tax assets
    
    
    3
    
    
    
    145
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11
    )
    
    
    137Other non-current assets
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    6
    
    
    
    365
    
    
    
    
    
    
    
    375Amounts owed by subsidiary undertakings
    
    
    1,796
    
    
    
    
    
    
    
    
    
    
    
    5,611
    
    
    
    1,911
    
    
    
    (9,318
    )
    
    
    Financial and other investments
    
    
    6,384
    
    
    
    23
    
    
    
    
    
    
    
    14
    
    
    
    9,621
    
    
    
    (15,681
    )
    
    
    361Derivative financial assets
    
    
    558
    
    
    
    
    
    
    
    
    
    
    
    688
    
    
    
    287
    
    
    
    
    
    
    
    1,533Total non-current assets
    
    
    8,741
    
    
    
    4,904
    
    
    
    
    
    
    
    16,762
    
    
    
    32,315
    
    
    
    (25,010
    )
    
    
    37,712Current assetsInventories and current intangible assets
    
    
    
    
    
    
    52
    
    
    
    
    
    
    
    34
    
    
    
    470
    
    
    
    
    
    
    
    556Trade and other receivables
    
    
    4
    
    
    
    511
    
    
    
    
    
    
    
    264
    
    
    
    1,893
    
    
    
    
    
    
    
    2,672Amounts owed by subsidiary undertakings
    
    
    11,153
    
    
    
    
    
    
    
    213
    
    
    
    225
    
    
    
    9,099
    
    
    
    (20,690
    )
    
    
    Financial and other investments
    
    
    275
    
    
    
    17
    
    
    
    
    
    
    
    989
    
    
    
    916
    
    
    
    
    
    
    
    2,197Derivative financial assets
    
    
    329
    
    
    
    
    
    
    
    
    
    
    
    122
    
    
    
    142
    
    
    
    
    
    
    
    593Cash and cash equivalents
    
    
    235
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    498
    
    
    
    
    
    
    
    737Total current assets
    
    
    11,996
    
    
    
    584
    
    
    
    213
    
    
    
    1,634
    
    
    
    13,018
    
    
    
    (20,690
    )
    
    
    6,755Total assets
    
    
    20,737
    
    
    
    5,488
    
    
    
    213
    
    
    
    18,396
    
    
    
    45,333
    
    
    
    (45,700
    )
    
    
    44,467Current liabilitiesBorrowings
    
    
    (1,422
    )
    
    
    (64
    )
    
    
    (5
    )
    
    
    (913
    )
    
    
    (849
    )
    
    
    
    
    
    
    (3,253
    )Derivative financial liabilities
    
    
    (209
    )
    
    
    
    
    
    
    
    
    
    
    (67
    )
    
    
    (31
    )
    
    
    
    
    
    
    (307
    )Trade and other payables
    
    
    (28
    )
    
    
    (263
    )
    
    
    
    
    
    
    (580
    )
    
    
    (1,964
    )
    
    
    
    
    
    
    (2,835
    )Amounts owed to subsidiary undertakings
    
    
    (7,064
    )
    
    
    (491
    )
    
    
    
    
    
    
    (1,551
    )
    
    
    (11,584
    )
    
    
    20,690
    
    
    
    Current tax liabilities
    
    
    
    
    
    
    (122
    )
    
    
    
    
    
    
    (31
    )
    
    
    (230
    )
    
    
    
    
    
    
    (383
    )Provisions
    
    
    
    
    
    
    (21
    )
    
    
    
    
    
    
    (52
    )
    
    
    (175
    )
    
    
    
    
    
    
    (248
    )Total current liabilities
    
    
    (8,723
    )
    
    
    (961
    )
    
    
    (5
    )
    
    
    (3,194
    )
    
    
    (14,833
    )
    
    
    20,690
    
    
    
    (7,026
    )Non-current liabilitiesBorrowings
    
    
    (6,471
    )
    
    
    (573
    )
    
    
    (208
    )
    
    
    (6,413
    )
    
    
    (9,875
    )
    
    
    
    
    
    
    (23,540
    )Derivative financial liabilities
    
    
    (511
    )
    
    
    
    
    
    
    
    
    
    
    (41
    )
    
    
    (81
    )
    
    
    
    
    
    
    (633
    )Other non-current liabilities
    
    
    
    
    
    
    (273
    )
    
    
    
    
    
    
    (1,103
    )
    
    
    (716
    )
    
    
    
    
    
    
    (2,092
    )Amounts owed to subsidiary undertakings
    
    
    (1,062
    )
    
    
    (849
    )
    
    
    
    
    
    
    
    
    
    
    (7,407
    )
    
    
    9,318
    
    
    
    Deferred tax liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,778
    )
    
    
    (894
    )
    
    
    11
    
    
    
    (2,661
    )Pensions and other post-retirement benefit obligations
    
    
    
    
    
    
    (1,217
    )
    
    
    
    
    
    
    
    
    
    
    (1,863
    )
    
    
    
    
    
    
    (3,080
    )Provisions
    
    
    
    
    
    
    (238
    )
    
    
    
    
    
    
    (98
    )
    
    
    (1,115
    )
    
    
    
    
    
    
    (1,451
    )Total non-current liabilities
    
    
    (8,044
    )
    
    
    (3,150
    )
    
    
    (208
    )
    
    
    (9,433
    )
    
    
    (21,951
    )
    
    
    9,329
    
    
    
    (33,457
    )Total liabilities
    
    
    (16,767
    )
    
    
    (4,111
    )
    
    
    (213
    )
    
    
    (12,627
    )
    
    
    (36,784
    )
    
    
    30,019
    
    
    
    (40,483
    )Net assets
    
    
    3,970
    
    
    
    1,377
    
    
    
    
    
    
    
    5,769
    
    
    
    8,549
    
    
    
    (15,681
    )
    
    
    3,984EquityCalled up share capital
    
    
    294
    
    
    
    130
    
    
    
    
    
    
    
    45
    
    
    
    182
    
    
    
    (357
    )
    
    
    294Share premium account
    
    
    1,371
    
    
    
    2,053
    
    
    
    
    
    
    
    204
    
    
    
    7,183
    
    
    
    (9,440
    )
    
    
    1,371Retained earnings
    
    
    7,135
    
    
    
    (805
    )
    
    
    
    
    
    
    4,184
    
    
    
    7,471
    
    
    
    (10,850
    )
    
    
    7,135Other equity reserves
    
    
    (4,830
    )
    
    
    (1
    )
    
    
    
    
    
    
    1,336
    
    
    
    (6,301
    )
    
    
    4,966
    
    
    
    (4,830
    )Total shareholders equity
    
    
    3,970
    
    
    
    1,377
    
    
    
    
    
    
    
    5,769
    
    
    
    8,535
    
    
    
    (15,681
    )
    
    
    3,970Minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14
    
    
    
    
    
    
    
    14Total equity
    
    
    3,970
    
    
    
    1,377
    
    
    
    
    
    
    
    5,769
    
    
    
    8,549
    
    
    
    (15,681
    )
    
    
    3,984
 
   
 Annual
Report and Accounts 2009/10 | National Grid plc     177




---



##### 



Financial Statements
 Notes to the consolidated financial statements continued
 37.
    
    National Grid Gas plc and Niagara Mohawk Power Corporation additional disclosures continued
 Cash flow statements
 Parent
    
    
    
    
    
    
    
    
    
    
    Subsidiaryguarantor
    
    
    Issuer of notes
    
    
    guarantorNiagaraNational
    
    
    Mohawk
    
    
    British
    
    
    National
    
    
    
    
    
    
    
    
    
    
    NationalGrid
    
    
    Power
    
    
    Transco
    
    
    Grid Gas
    
    
    Other
    
    
    Consolidation
    
    
    Gridplc
    
    
    Corporation
    
    
    Finance Inc.
    
    
    plc
    
    
    subsidiaries
    
    
    adjustments
    
    
    consolidated£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mYear
ended 31 March 2010 (i)Net cash provided by operating activities
    
    
    
    
    
    
    527
    
    
    
    
    
    
    
    1,449
    
    
    
    2,540
    
    
    
    
    
    
    
    4,516Net cash provided by/(used in) investing activities
    
    
    600
    
    
    
    (307
    )
    
    
    
    
    
    
    (367
    )
    
    
    (1,451
    )
    
    
    (807
    )
    
    
    (2,332
    )Net cash (used in)/provided by financing activities
    
    
    (637
    )
    
    
    (222
    )
    
    
    
    
    
    
    (1,088
    )
    
    
    (1,072
    )
    
    
    807
    
    
    
    (2,212
    )(Decrease)/increase in cash and cash equivalents
in the year
    
    
    (37
    )
    
    
    (2
    )
    
    
    
    
    
    
    (6
    )
    
    
    17
    
    
    
    
    
    
    
    (28
    )Year
ended 31 March 2009Net cash provided by operating activities 
continuing operations
    
    
    
    
    
    
    419
    
    
    
    
    
    
    
    1,277
    
    
    
    1,725
    
    
    
    
    
    
    
    3,421Net cash used in operating activities 
discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8
    )
    
    
    
    
    
    
    (8
    )Net cash provided by operating activities
    
    
    
    
    
    
    419
    
    
    
    
    
    
    
    1,277
    
    
    
    1,717
    
    
    
    
    
    
    
    3,413Net cash (used in)/provided by investing activities 
continuing operations
    
    
    (2,426
    )
    
    
    (265
    )
    
    
    
    
    
    
    (1,569
    )
    
    
    (4,974
    )
    
    
    6,187
    
    
    
    (3,047
    )Net cash (used in)/provided by investing activities 
discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6
    )
    
    
    1,055
    
    
    
    
    
    
    
    1,049Net cash (used in)/provided by investing activities
    
    
    (2,426
    )
    
    
    (265
    )
    
    
    
    
    
    
    (1,575
    )
    
    
    (3,919
    )
    
    
    6,187
    
    
    
    (1,998
    )Net cash provided by/(used in) financing activities
    
    
    2,663
    
    
    
    (157
    )
    
    
    
    
    
    
    291
    
    
    
    2,513
    
    
    
    (6,187
    )
    
    
    (877
    )Increase/(decrease) in cash and cash equivalents in the year
    
    
    237
    
    
    
    (3
    )
    
    
    
    
    
    
    (7
    )
    
    
    311
    
    
    
    
    
    
    
    538Year
ended 31 March 2008Net cash provided by operating activities 
continuing operations
    
    
    4
    
    
    
    316
    
    
    
    
    
    
    
    1,552
    
    
    
    1,283
    
    
    
    
    
    
    
    3,155Net cash provided by operating activities 
discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    10Net cash provided by operating activities
    
    
    4
    
    
    
    316
    
    
    
    
    
    
    
    1,552
    
    
    
    1,293
    
    
    
    
    
    
    
    3,165Net cash provided by/(used in) investing activities 
continuing operations
    
    
    1,547
    
    
    
    (209
    )
    
    
    
    
    
    
    (1,630
    )
    
    
    (3,658
    )
    
    
    (2,123
    )
    
    
    (6,073
    )Net cash (used in)/provided by investing activities 
discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4
    )
    
    
    3,054
    
    
    
    
    
    
    
    3,050Net cash provided by/(used in) investing activities
    
    
    1,547
    
    
    
    (209
    )
    
    
    
    
    
    
    (1,634
    )
    
    
    (604
    )
    
    
    (2,123
    )
    
    
    (3,023
    )Net cash (used in)/provided by financing activities
    
    
    (2,302
    )
    
    
    (105
    )
    
    
    
    
    
    
    (87
    )
    
    
    (1,221
    )
    
    
    2,123
    
    
    
    (1,592
    )(Decrease)/increase in cash and cash equivalents in the year
    
    
    (751
    )
    
    
    2
    
    
    
    
    
    
    
    (169
    )
    
    
    (532
    )
    
    
    
    
    
    
    (1,450
    )
 
 (i)
    
    For the year ended 31 March 2010 all cash flows relate to continuing operations.
 
   
 178     National Grid plc| Annual Report and Accounts 2009/10




---



##### 



Company accounting policies
   
 A. Basis of preparation of individual financial statements under UK GAAP
       B. Fixed asset investments
  C. Taxation
 D. Foreign currencies
   E. Financial instruments
 
   
 Annual
Report and Accounts 2009/10 | National Grid plc     179




---



##### 



Financial Statements
 Company accounting policies continued
   F. Hedge accounting
        G. Parent Company guarantees
 H. Share-based payments
   I. Dividends
 
   
 180     National Grid plc| Annual Report and Accounts 2009/10




---



##### 



Company balance sheet
     2010
    
    
    2009Notes
    
    
    £m
    
    
    £mFixed assetsInvestments
    
    
    2
    
    
    
    7,865
    
    
    
    7,840Current assetsDebtors (amounts falling due within one year)
    
    
    3
    
    
    
    8,655
    
    
    
    11,157Debtors (amounts falling due after more than one year)
    
    
    3
    
    
    
    1,702
    
    
    
    1,799Derivative financial instruments (amounts falling due within one year)
    
    
    5
    
    
    
    218
    
    
    
    329Derivative financial instruments (amounts falling due after more than one year)
    
    
    5
    
    
    
    655
    
    
    
    558Current asset investments
    
    
    6
    
    
    
    377
    
    
    
    509Cash at bank
    
    
    
    
    
    
    1
    
    
    
    111,608
    
    
    
    14,353Creditors (amounts falling due within one year)Borrowings
    
    
    7
    
    
    
    (1,183
    )
    
    
    (1,422
    )Derivative financial instruments
    
    
    5
    
    
    
    (174
    )
    
    
    (375
    )Other creditors
    
    
    
    
    
    
    (6,731
    )
    
    
    (6,926
    )4
    
    
    
    (8,088
    )
    
    
    (8,723
    )Net current assets
    
    
    
    
    
    
    3,520
    
    
    
    5,630Total assets less current liabilities
    
    
    
    
    
    
    11,385
    
    
    
    13,470Creditors (amounts falling due after more than one year)Borrowings
    
    
    7
    
    
    
    (5,307
    )
    
    
    (6,471
    )Derivative financial instruments
    
    
    5
    
    
    
    (431
    )
    
    
    (511
    )Amounts owed to subsidiary undertakings
    
    
    
    
    
    
    (537
    )
    
    
    (1,062
    )(6,275
    )
    
    
    (8,044
    )Net assets employed
    
    
    
    
    
    
    5,110
    
    
    
    5,426Capital and reservesCalled up share capital
    
    
    8
    
    
    
    298
    
    
    
    294Share premium account
    
    
    9
    
    
    
    1,366
    
    
    
    1,371Cash flow hedge reserve
    
    
    9
    
    
    
    14
    
    
    
    12Other equity reserves
    
    
    9
    
    
    
    171
    
    
    
    146Profit and loss account
    
    
    9
    
    
    
    3,261
    
    
    
    3,603Total shareholders funds
    
    
    10
    
    
    
    5,110
    
    
    
    5,426
   Sir John Parker  Steve Lucas
 
   
 Annual
Report and Accounts 2009/10 | National
Grid plc     181




---



##### 



Financial Statements
 
 
 Notes to the Company financial statements
 
 1. Adoption of new accounting standards
 New financial reporting standards (FRS) and abstracts adopted in 2009/10
  Amendment to FRS 20 on share-based payments
    
    Clarifies the definition of vesting conditions and the accounting treatment of
cancellations. Vesting conditions are defined as either service conditions or
performance conditions. Cancellations by employees are accounted for in the same way
as cancellations by the Company.Improvements to FRS 2008
    
    Contains amendments to various existing standards.UITF 46 on hedges
of a net investment in a foreign operation
    
    Clarifies that a hedged risk may be designated at any level in a group and hedging instruments may be held by any
company in a group (except the foreign entity being hedged), that net investment
hedge accounting may not be adopted in respect of a presentation currency and that on
disposal the amounts to be reclassified from equity to profit or loss are any
cumulative gain or loss on the hedging instrument and the cumulative translation
difference on the foreign operation disposed of.Amendment to FRS 29 on improving financial
instrument disclosures
    
    Enhances disclosures about fair value and liquidity risk.Amendment to FRS for Companies Act changes
    
    Makes consequential amendments to FRS to reflect provisions of the Companies Act 2006.Amendments to FRS 26 and UITF 42 on
embedded derivatives
    
    Requires reassessment of whether an embedded derivative should be separated out if a
financial asset is reclassified out of the fair value through profit or loss
category.
 New FRS not yet adopted
  Amendments to FRS 25 on puttable financial
instruments and obligations arising on
liquidation
    
    Addresses the
classification as a
liability or as equity
of certain puttable
financial instruments,
and instruments or
components thereof,
which impose upon an
entity an obligation
to deliver a pro rata
share of net assets on
liquidation. The
amendments to FRS 25
have been adopted by
the Company with
effect from 1 April
2010.Amendment to FRS 26 Financial Instruments:
Recognition and measurement on eligible hedged
items
    
    Prohibits designating
inflation as a
hedgeable component of
an instrument, unless
cash flows relating to
the separate inflation
component are
contractual and also
prohibits the
designation of a
purchased option in
its entirety as the
hedge of a one-sided
risk in a forecast
transaction. The
amendment to FRS 26
has been adopted by
the Company with
effect from 1 April
2010.Amendment to FRS 8 on related party disclosures
    
    Changes the definition
of related party to be
the same as that in
law and provides an
exemption only in
respect of
wholly-owned
subsidiaries, rather
than 90% subsidiaries
as previously
permitted. The
amendment to FRS 8 has
been adopted by the
Company with effect
from 1 April 2010.FRS 30 on heritage assets
    
    Sets out disclosure
requirements in
respect of assets that
are held and
maintained principally
for their contribution
to knowledge and
culture. FRS 30 has
been adopted by the
Company with effect
from 1 April 2010.Amendment to FRS 20 on group cash-settled
share-based payments
    
    Clarifies the scope
and accounting for
group cash-settled
share-based payment
transactions in
separate or individual
financial statements
when there is no
obligation to settle
the share-based
payment transaction.
The amendment to FRS
20 has been adopted by
the Company with
effect from 1 April
2010.Improvements to FRS 2009
    
    Contains amendments to
various existing
standards. The
amendments have been
adopted by the Company
with effect from 1
April 2010.Amendment to FRS 25 on classification of rights
issues
    
    Defines as an equity
instrument a financial
instrument that gives
the holder the right
to acquire a fixed
number of the entitys
equity instruments for
a fixed amount of any
currency, if the
financial instrument
is offered pro rata to
all existing owners of
the same class of
non-derivative equity
instruments. The
amendment to FRS 25
has been adopted by
the Company with
effect from 1 April
2010.
 
   
 182     National Grid plc| Annual Report and Accounts 2009/10




---



##### 



2. Fixed asset investments
 Shares insubsidiaryundertakings£mAt 1 April 2008
    
    
    4,276Additions
    
    
    7,103Disposals
    
    
    (3,539
    )At 31 March 2009
    
    
    7,840Additions
    
    
    25At 31 March 2010
    
    
    7,865
    
 3. Debtors
 2010
    
    
    2009£m
    
    
    £mAmounts falling due within one year:Amounts owed by subsidiary undertakings
    
    
    8,649
    
    
    
    11,153Prepayments and accrued income
    
    
    6
    
    
    
    48,655
    
    
    
    11,157Amounts falling due after more than one year:Amounts owed by subsidiary undertakings
    
    
    1,700
    
    
    
    1,796Deferred taxation
    
    
    2
    
    
    
    31,702
    
    
    
    1,799
 Deferredtaxation£mAt 1 April 2008
    
    
    3Credited to equity
    
    
    1Charged to the profit and loss account
    
    
    (1
    )At 31 March 2009
    
    
    3Charged to the profit and loss account
    
    
    (1
    )At 31 March 2010
    
    
    2
 
 4. Creditors (amounts falling due within one year)
 2010
    
    
    2009£m
    
    
    £mBorrowings (note 7)
    
    
    1,183
    
    
    
    1,422Derivative financial instruments
    
    
    174
    
    
    
    375Amounts owed to subsidiary undertakings
    
    
    6,701
    
    
    
    6,898Other creditors
    
    
    30
    
    
    
    288,088
    
    
    
    8,723
 
   
 Annual
Report and Accounts 2009/10 | National Grid plc     183




---



##### 



Financial Statements
 Notes to the Company financial statements continued
 
 5. Derivative financial instruments
  2010
    
    2009Assets
    
    
    Liabilities
    
    
    Total
    
    
    Assets
    
    
    Liabilities
    
    
    Total£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mAmounts falling due within one year
    
    
    218
    
    
    
    (174
    )
    
    
    44
    
    
    
    329
    
    
    
    (375
    )
    
    
    (46
    )Amounts falling due after more than one year
    
    
    655
    
    
    
    (431
    )
    
    
    224
    
    
    
    558
    
    
    
    (511
    )
    
    
    47873
    
    
    
    (605
    )
    
    
    268
    
    
    
    887
    
    
    
    (886
    )
    
    
    1
  2010
    
    
    2009£m
    
    
    £mInterest rate swaps
    
    
    (7,337
    )
    
    
    (6,343
    )Cross-currency interest rate swaps
    
    
    (6,463
    )
    
    
    (7,612
    )Foreign exchange forward contracts
    
    
    (7,234
    )
    
    
    (9,013
    )Forward rate agreements
    
    
    (7,784
    )
    
    
    (5,063
    )Total
    
    
    (28,818
    )
    
    
    (28,031
    )
  
 6. Current asset investments
 2010
    
    
    2009£m
    
    
    £mInvestments in short-term money funds
    
    
    162
    
    
    
    166Short-term deposits
    
    
    197
    
    
    
    234Restricted cash balances  collateral
    
    
    18
    
    
    
    109377
    
    
    
    509
 
 7. Borrowings
 2010
    
    
    2009£m
    
    
    £mAmounts falling due within one year:Bank loans
    
    
    299
    
    
    
    205Commercial paper
    
    
    121
    
    
    
    737Bonds
    
    
    763
    
    
    
    4801,183
    
    
    
    1,422Amounts falling due after more than one year:Bank loans
    
    
    398
    
    
    
    720Bonds
    
    
    4,909
    
    
    
    5,7515,307
    
    
    
    6,471Total borrowings
    
    
    6,490
    
    
    
    7,893
 2010
    
    
    2009£m
    
    
    £mTotal borrowings are repayable as follows:In one year or less
    
    
    1,183
    
    
    
    1,422In more than one year, but not more than two years
    
    
    1,081
    
    
    
    976In more than two years, but not more than three years
    
    
    900
    
    
    
    1,360In more than three years, but not more than four years
    
    
    435
    
    
    
    933In more than four years, but not more than five years
    
    
    1,180
    
    
    
    450In more than five years, other than by instalments
    
    
    1,711
    
    
    
    2,7526,490
    
    
    
    7,893
    
 184     National Grid plc| Annual Report and Accounts 2009/10




---



##### 



8. Called up share capital
 Called up and fully paidmillions
    
    
    £mAt 31 March 2008 and 31 March 2009
    
    
    2,582
    
    
    
    294Issued during the year in lieu of dividends (i)
    
    
    35
    
    
    
    4At 31 March 2010
    
    
    2,617
    
    
    
    298
 (i)
    
    The issue of shares in lieu of cash dividends is considered to be a bonus issue under the
terms of the Companies Act 2006 and the nominal value of the shares is charged to the share premium
account.
 
 9. Reserves
 Share
    
    
    Cash flow
    
    
    Other
    
    
    Profitpremium
    
    
    hedge
    
    
    equity
    
    
    and lossaccount
    
    
    reserve
    
    
    reserves
    
    
    account£m
    
    
    £m
    
    
    £m
    
    
    £mAt 1 April 2008
    
    
    1,371
    
    
    
    14
    
    
    
    124
    
    
    
    4,664Transferred from equity in respect of cash flow hedges (net of tax)
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    Repurchase of share capital and purchase of treasury shares (i)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (602
    )Issue of treasury shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8Share-based payment
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    Loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (467
    )At 31 March 2009
    
    
    1,371
    
    
    
    12
    
    
    
    146
    
    
    
    3,603Transferred from equity in respect of cash flow hedges (net of tax)
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    Shares issued in lieu of dividends (ii)
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    Purchase of treasury shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7
    )Issue of treasury shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18Share-based payment
    
    
    
    
    
    
    
    
    
    
    25
    
    
    
    Loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (353
    )At 31 March 2010
    
    
    1,366
    
    
    
    14
    
    
    
    171
    
    
    
    3,261
 (i)
    
    From 1 April 2008 to 24 September 2008, the Company repurchased under its share
repurchase programme 85 million ordinary shares for aggregate consideration of £597m including
transaction costs. Further purchases of shares outside the official share repurchase programme were
for an aggregate consideration of £5m.(ii)
    
    In addition to the nominal value of shares issued in
lieu of dividends of £4m there have also been various associated administrative costs of £1m
charged to the share premium account.
  
 10. Reconciliation of movements in shareholders funds
 2010
    
    
    2009£m
    
    
    £mProfit for the year after taxation
    
    
    335
    
    
    
    371Dividends (i)
    
    
    (688
    )
    
    
    (838
    )Loss for the financial year
    
    
    (353
    )
    
    
    (467
    )Expenses charged to share premium account
    
    
    (1
    )
    
    
    Proceeds of issue of treasury shares
    
    
    18
    
    
    
    8Movement on cash flow hedge reserve (net of tax)
    
    
    2
    
    
    
    (2
    )Share-based payment
    
    
    25
    
    
    
    22Repurchase of share capital and purchase of treasury shares
    
    
    (7
    )
    
    
    (602
    )Net decrease in shareholders funds
    
    
    (316
    )
    
    
    (1,041
    )Opening shareholders funds
    
    
    5,426
    
    
    
    6,467Closing shareholders funds
    
    
    5,110
    
    
    
    5,426
 (i)
    
    For further details of dividends paid and payable to shareholders, refer to note 8 in the
consolidated financial statements.
 
 11. Commitments and contingencies
  
 12. Directors and employees
 
   
 Annual
Report and Accounts 2009/10 | National Grid plc     185




---



##### 



Shareholder Information
 
 
 Definitions and glossary of terms
   A
 American Depositary Shares (ADSs)
  Annual General Meeting (AGM)
  B
 Board
  BritNed
  brownfield
  C
 consolidated financial statements
  called up share capital
  carrying value
  circuit length
  Combined Code
  the Company, National Grid, we, our or us
  contingent liabilities
 D
 decoupling
  deferred tax
  derivative
  dollars or $
  E
 employee engagement index
  equity
  F
 FERC
  finance lease
  financial year
  FRS
  G
 Grain LNG
  Great Britain
 
   
 186     National Grid plc| Annual Report and Accounts 2009/10




---



##### 



GW
 9
 GWh
  H
 HSE
  I
 IAS or IFRS
  individual financial statements
  IFRIC
  J
 joint venture
  K
 KeySpan
  kV
  L
 Lifetime Allowance
  LNG
 (-260°F).
 lost time injury
 lost time injury frequency rate
  M
 MW
  MWh
  N
 National Grid Metering
  New England
  northeastern US
  O
 Ofgem
  OnStream
  ordinary shares
 17 43
 P
 PAS 55
  Personal Lifetime Allowance
  price control
 
   
 Annual
Report and Accounts 2009/10 | National Grid plc     187




---



##### 



Shareholder Information
 Definitions and glossary of terms continued
  R
 rate base
  rate plan
  regulated controllable operating costs
  regulatory asset value (RAV)
  revenue decoupling
  route length
  RPIX@20
  S
 SEC
  share premium
  shrinkage
 standard cubic metre
 3
 stranded cost recoveries
  subsidiary
  T
 treasury shares
  tonne
  tonnes carbon dioxide equivalent
  TWh
  U
 UK
  UK GAAP
  Uniform Network Code
  US
  US GAAP
  V
 vanilla return
 
   
 188     National Grid plc| Annual Report and Accounts 2009/10




---



##### 



Summary consolidated financial information
  
 Financial summary (unaudited)
  31 March
    
    
    31 March
    
    
    31 March
    
    
    31 March
    
    
    31 March2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mSummary
income statementRevenue
    
    
    13,988
    
    
    
    15,624
    
    
    
    11,423
    
    
    
    8,695
    
    
    
    8,868Operating profitBefore exceptional items, remeasurements and stranded cost recoveries
    
    
    3,121
    
    
    
    2,915
    
    
    
    2,595
    
    
    
    2,031
    
    
    
    1,968Exceptional items, remeasurements and stranded cost recoveries
    
    
    172
    
    
    
    (292
    )
    
    
    369
    
    
    
    482
    
    
    
    4063,293
    
    
    
    2,623
    
    
    
    2,964
    
    
    
    2,513
    
    
    
    2,374Profit before taxationBefore exceptional items, remeasurements and stranded cost recoveries
    
    
    1,974
    
    
    
    1,770
    
    
    
    1,829
    
    
    
    1,486
    
    
    
    1,369Exceptional items, remeasurements and stranded cost recoveries
    
    
    219
    
    
    
    (376
    )
    
    
    353
    
    
    
    265
    
    
    
    3492,193
    
    
    
    1,394
    
    
    
    2,182
    
    
    
    1,751
    
    
    
    1,718Profit for the year attributable to equity shareholdersBefore exceptional items, remeasurements and stranded cost recoveries
    
    
    1,418
    
    
    
    1,259
    
    
    
    1,275
    
    
    
    1,146
    
    
    
    1,075Exceptional items, remeasurements and stranded cost recoveries
    
    
    (32
    )
    
    
    (315
    )
    
    
    1,915
    
    
    
    248
    
    
    
    2,7731,386
    
    
    
    944
    
    
    
    3,190
    
    
    
    1,394
    
    
    
    3,848Summary
statement of net assetsNon-current assets
    
    
    38,488
    
    
    
    37,712
    
    
    
    30,830
    
    
    
    21,109
    
    
    
    22,106Current assets
    
    
    5,065
    
    
    
    6,755
    
    
    
    5,435
    
    
    
    5,312
    
    
    
    3,818Assets of businesses held for sale
    
    
    
    
    
    
    
    
    
    
    1,506
    
    
    
    1,968
    
    
    
    Total assets
    
    
    43,553
    
    
    
    44,467
    
    
    
    37,771
    
    
    
    28,389
    
    
    
    25,924Current liabilities
    
    
    (6,559
    )
    
    
    (7,026
    )
    
    
    (7,146
    )
    
    
    (3,360
    )
    
    
    (5,683
    )Non-current liabilities
    
    
    (32,783
    )
    
    
    (33,457
    )
    
    
    (25,188
    )
    
    
    (20,443
    )
    
    
    (16,748
    )Liabilities of businesses held for sale
    
    
    
    
    
    
    
    
    
    
    (63
    )
    
    
    (450
    )
    
    
    Total liabilities
    
    
    (39,342
    )
    
    
    (40,483
    )
    
    
    (32,397
    )
    
    
    (24,253
    )
    
    
    (22,431
    )Net assets
    
    
    4,211
    
    
    
    3,984
    
    
    
    5,374
    
    
    
    4,136
    
    
    
    3,493Summary
cash flow statementCash generated from operationsContinuing operations
    
    
    4,372
    
    
    
    3,564
    
    
    
    3,265
    
    
    
    3,090
    
    
    
    2,973Discontinued operations
    
    
    
    
    
    
    (8
    )
    
    
    10
    
    
    
    181
    
    
    
    1384,372
    
    
    
    3,556
    
    
    
    3,275
    
    
    
    3,271
    
    
    
    3,111Tax received/(paid)
    
    
    144
    
    
    
    (143
    )
    
    
    (110
    )
    
    
    (313
    )
    
    
    (140
    )Net cash inflow from operating activities
    
    
    4,516
    
    
    
    3,413
    
    
    
    3,165
    
    
    
    2,958
    
    
    
    2,971Net cash flows (used in)/from investing activities
    
    
    (2,332
    )
    
    
    (1,998
    )
    
    
    (3,023
    )
    
    
    (4,061
    )
    
    
    4,052Net cash flows (used in)/from financing activities
    
    
    (2,212
    )
    
    
    (877
    )
    
    
    (1,592
    )
    
    
    1,278
    
    
    
    (5,842
    )Net (decrease)/increase in cash and cash equivalents
    
    
    (28
    )
    
    
    538
    
    
    
    (1,450
    )
    
    
    175
    
    
    
    1,181
 
   
 Annual
Report and Accounts 2009/10 | National Grid plc     189




---



##### 



Shareholder Information
 
 Shareholder Information
  Financial calendar
  2 June 2010
    
    Ordinary shares go ex-dividend for 2009/104 June 2010
    
    Record date for 2009/10 final dividend9 June 2010
    
    Scrip reference price announced21 July 2010
    
    Scrip election date26 July 2010
    
    2010 Annual General Meeting and interim management statement18 August 2010
    
    2009/10 final dividend paid to qualifying ordinary shareholders18 November 2010
    
    2010/11 half year results1 December 2010
    
    Ordinary shares go ex-dividend3 December 2010
    
    Record date for 2010/11 interim dividend19 January 2011
    
    2010/11 interim dividend paid to qualifying ordinary shareholdersJanuary/February 2011
    
    Interim management statementMay 2011
    
    2010/11 preliminary results
 Dividends
  Website and electronic communication
 Shareholder Networking
   
 Share dealing, individual savings accounts (ISAs) and ShareGift
 0131 240 0443 EH2 3ES.
   Rights issue
 
   
 190     National Grid plc| Annual Report and Accounts 2009/10




---



##### 



Key milestones
  1986
    
    British Gas incorporated as a public limited company1990
    
    Electricity transmission network in England and Wales transferred to
National Grid on electricity privatisation1995
    
    National Grid listed on the London Stock Exchange1997
    
    British Gas (BG) demerged Centrica1997
    
    National Grid demerged Energis2000
    
    Lattice Group demerged from BG and listed separately2000
    
    New England Electric System and Eastern Utilities Associates
acquired2002
    
    Niagara Mohawk Power Corporation merged with National Grid in US2002
    
    Merger of National Grid and Lattice Group to form National Grid
Transco2004
    
    Acquisition of UK wireless infrastructure network from Crown Castle
International Corp2005
    
    Sales of four UK regional gas distribution networks and adopted
National Grid as our name2006
    
    Acquisition of Rhode Island gas distribution network2007
    
    Sales of UK and US wireless infrastructure operations and of the
Basslink electricity interconnector in Australia2007
    
    Acquisition of KeySpan Corporation2008
    
    Sale of the Ravenswood generation station
 Capital Gains Tax (CGT)
  Shareholdings
  Number of
    
    
    % of
    
    
    Number of
    
    
    % ofSize of shareholding
    
    shareholders
    
    
    shareholders
    
    
    shares
    
    
    shares1-50
    
    
    212,223
    
    
    
    18.8526
    
    
    
    6,452,377
    
    
    
    0.246551-100
    
    
    335,851
    
    
    
    29.8349
    
    
    
    22,870,494
    
    
    
    0.8739101-500
    
    
    475,689
    
    
    
    42.2573
    
    
    
    95,426,258
    
    
    
    3.6461501-1,000
    
    
    53,699
    
    
    
    4.7703
    
    
    
    38,093,786
    
    
    
    1.45551,001-10,000
    
    
    45,912
    
    
    
    4.0785
    
    
    
    107,389,598
    
    
    
    4.103210,001-50,000
    
    
    1,265
    
    
    
    0.1124
    
    
    
    24,633,895
    
    
    
    0.941250,001-100,000
    
    
    210
    
    
    
    0.0187
    
    
    
    15,633,167
    
    
    
    0.5973100,001-500,000
    
    
    427
    
    
    
    0.0379
    
    
    
    101,651,819
    
    
    
    3.8840500,001-1,000,000
    
    
    145
    
    
    
    0.0129
    
    
    
    103,105,452
    
    
    
    3.93951,000,001+
    
    
    276
    
    
    
    0.0254
    
    
    
    2,101,933,249
    
    
    
    80.3126Total
    
    
    1,125,697
    
    
    
    100
    
    
    
    2,617,190,095
    
    
    
    100
 Share price
  
 Share price
 
 
 ADR price
 
 
 National Grid plc
 
   
 Annual
Report and Accounts 2009/10 | National Grid
plc     191




---



##### 








---



##### 



For queries about ORDINARY SHARES contact:Capita Registrars(IMAGE)
    
    0871 664 0500*
(from outside UK: +44 20 7098 1198)
(textphone: 18001 0870 242 2379)
    
    (IMAGE)
    
    nationalgrid@capitaregistrars.com
www.nationalgrid.com/shareholders
    
    (IMAGE)
    
    National Grid Share Register
Capita Registrars, Northern House
Woodsome Park, Fenay BridgeHuddersfield HD8 0GA* Calls are charged at 10p per minute plus
network extras
 For queries about AMERICAN DEPOSITARY SHARES (ADS or ADR) contact:The Bank of New York Mellon(IMAGE)
    
    1-800-466-7215
(from outside the US: +1-212-815-3700)
    
    (IMAGE)
    
    shrrelations@mellon.com
www.bnymellon.com/shareowner
    
    (IMAGE)
    
    The Bank of New York MellonShareholders CorrespondencePO Box 358516, Pittsburgh, PA15252-8516
  Cautionary Statement
 
 
     National Grid plc
   www.nationalgrid.com