##### 



EXHIBIT 2(c).1.2
 SUPPLEMENTARY PROSPECTUS DATED 1 DECEMBER 2006
 
 National Grid plc  (incorporated with limited liability in England and Wales on 11 July 2000 under registered
number 4031152)
 National Grid Electricity Transmission plc  (incorporated with limited liability in England and Wales on 1 April 1989 under registered
number 2366977)
 Euro 12,000,000,000
 Euro Medium Term Note Programme




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##### 



The following has been extracted from the press release issued by National Grid plc on 16
November 2006
 National Grid
2006/07 Half Year Results
 
 Embargoed until 7:00am 16 November 2006
 National Grid plc
Results for the six months ended 30 September 2006
 HIGHLIGHTS
 
    
    Good first half performance
 
    
    Profit before tax and earnings both up 12%
    
    Interim dividend up 7%
 
    
    Well positioned for growth
 
    
    Capital investment in existing businesses up 30%
    
    Acquisition of Rhode Island gas distribution assets completed
    
    Significant progress towards completion of the agreed acquisition of KeySpan
 
    
    Comprehensive strategic review completed
 
    
    Focus on electricity and gas markets in the UK and US
    
    Exit from Wireless infrastructure and Basslink
    
    Share buy-back utilising $1.9bn US stranded asset cash flow
 FINANCIAL RESULTS
 Six months ended 30 September(£million except where indicated)
    
    2006
    
    
    2005
    
    
    % changeBusiness performanceNote AOperating profit  actual exchange rate
    
    
    1,125
    
    
    
    1,091
    
    
    
    3Operating profit  constant currency basisNote B
    
    
    1,125
    
    
    
    1,088
    
    
    
    3Pre-tax profit
    
    
    872
    
    
    
    776
    
    
    
    12Earnings
    
    
    591
    
    
    
    528
    
    
    
    12Earnings per share
    
    
    21.7p
    
    
    
    17.9p
    
    
    
    21Statutory resultsOperating profit from continuing operations
    
    
    1,157
    
    
    
    1,044
    
    
    
    11Pre-tax profit from continuing operations
    
    
    826
    
    
    
    736
    
    
    
    12Earnings from continuing operations
    
    
    594
    
    
    
    499
    
    
    
    19Earnings per share from continuing operations
    
    
    21.8p
    
    
    
    16.9p
    
    
    
    29Dividend per share
    
    
    10.9p
    
    
    
    10.2p
    
    
    
    7
 Sir John Parker, Chairman, said:
  
 Note A: Business performance results are the primary
financial performance measure used by National Grid, being the results for
continuing operations before exceptional items and remeasurements.
Remeasurements are non-cash movements in the carrying value of financial
instruments and of certain commodity contracts that arise from changes in
mark-to-market values or in exchange rates and are reflected in the income
statement to the extent that hedge accounting is not achieved or is not fully
effective. Further details are provided in Note 3 on page 18. A
reconciliation of Business performance to Statutory results is provided in the
Condensed Group Income Statement on page 11.Note B: Constant currency basis refers to the reporting
of the actual results against the prior period results which, in respect of any
US$ currency denominated activity, have been translated using the average US$
exchange rate for the six months ended 30 September 2006, which was $1.86 to
£1.00. The average rate for the six months ended 30 September 2005 was $1.85
to £1.00. 2




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##### 



National Grid
2006/07 Half Year Results
   OPERATING REVIEW
      OUR STRATEGY
  
    
    Focus on the electricity and gas sector
    
    Focus on our priority markets in the UK and US
    
    Continue to focus on ownership and operation of large scale asset-intensive businesses
  LOOKING AHEAD
  3




---



##### 



National Grid
2006/07 Half Year Results
 DIVIDEND AND SHARE BUY-BACK
   FINANCIAL RESULTS PRESENTATION
  REVIEW OF RESULTS
         4




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##### 



National Grid
2006/07 Half Year Results
   5




---



##### 



National Grid
2006/07 Half Year Results
 REVIEW OF OPERATIONS
 TRANSMISSION
 Six months ended 30 SeptemberOperating profit (£m)
    
    2006
    
    
    2005
    
    
    % changeUK electricity transmission
    
    
    298
    
    
    
    275
    
    
    
    8UK gas transmission
    
    
    77
    
    
    
    86
    
    
    
    (10
    )Other *
    
    
    52
    
    
    
    36
    
    
    
    44UK electricity and gas transmission
    
    
    427
    
    
    
    397
    
    
    
    8US electricity transmission actual exchange rate
    
    
    67
    
    
    
    68
    
    
    
    (1
    ) constant currency basis
    
    
    67
    
    
    
    68
    
    
    
    (1
    )
 
 *
    
    Other includes LNG storage and the French interconnector in both periods.     
    
    £144m on Milford Haven and associated projects to deliver new gas transmission
entry capacity in South Wales
    
    £78m on projects in support of new UK gas transmission entry capacity at Easington
    
    £115m on UK electricity asset replacement
    
    £94m on UK electricity demand connections and other load related infrastructure
   UK GAS DISTRIBUTION
 Six months ended 30 SeptemberOperating profit (£m)
    
    2006
    
    
    2005
    
    
    % changeUK gas distribution
    
    
    71
    
    
    
    94
    
    
    
    (24
    )
 6




---



##### 



National Grid
2006/07 Half Year Results
    7




---



##### 



National Grid
2006/07 Half Year Results
 US DISTRIBUTION
 Six months ended 30 SeptemberOperating profit (£m)
    
    2006
    
    
    2005
    
    
    % change actual exchange rateUS electricity and gas distribution
    
    
    251
    
    
    
    170
    
    
    
    48US stranded cost recoveries
    
    
    202
    
    
    
    251
    
    
    
    (20
    )US distribution
    
    
    453
    
    
    
    421
    
    
    
    8 constant currency basisUS electricity and gas distribution
    
    
    251
    
    
    
    169
    
    
    
    49US stranded cost recoveries
    
    
    202
    
    
    
    249
    
    
    
    (19
    )US distribution
    
    
    453
    
    
    
    418
    
    
    
    8
    8




---



##### 



National Grid
2006/07 Half Year Results
 WIRELESS INFRASTRUCTURE
 Six months ended 30 SeptemberOperating profit (£m)
    
    2006
    
    
    2005
    
    
    % changeWireless infrastructure
    
    
    42
    
    
    
    36
    
    
    
    17
   OTHER ACTIVITIES
 Six months ended 30 SeptemberOperating profit (£m)
    
    2006
    
    
    2005
    
    
    % changeMetering
    
    
    54
    
    
    
    52
    
    
    
    4Isle of Grain LNG
    
    
    5
    
    
    
    1
    
    
    
    *Property
    
    
    32
    
    
    
    31
    
    
    
    3Other
    
    
    (26
    )
    
    
    (9
    )
    
    
    (189
    )Other activities
    
    
    65
    
    
    
    75
    
    
    
    (13
    )
 
 *
    
    Not meaningful  Isle of Grain LNG Phase 1 became operational on 15 July 2005.       9




---



##### 



National Grid
2006/07 Half Year Results
 BOARD CHANGES
   STATUTORY EARNINGS AND BUSINESS PERFORMANCE
 Six months ended 30 September(£m)
    
    2006
    
    
    2005
    
    
    % changeBusiness performance earnings
    
    
    591
    
    
    
    528
    
    
    
    12Exceptional items (after tax)
    
    
    (11
    )
    
    
    (45
    )
    
    
    76Remeasurements (after tax)
    
    
    14
    
    
    
    16
    
    
    
    (13
    )Statutory earnings from continuing operations
    
    
    594
    
    
    
    499
    
    
    
    19Discontinued operations profit (after tax)
    
    
    
    
    
    
    29
    
    
    
    *Discontinued operations profit on disposal
    
    
    
    
    
    
    2,534
    
    
    
    *Statutory earnings
    
    
    594
    
    
    
    3,062
    
    
    
    *
 
 *
    
    Not meaningful      10




---



##### 



National Grid
2006/07 Half Year Results
 CONDENSED GROUP INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER
 Year ended31 March2006
    
    
    2005
    
    
    2006Notes
    
    
    £m
    
    
    £m
    
    
    £mGroup revenue
    
    
    2a
    
    
    
    4,164
    
    
    
    3,891
    
    
    
    9,193Other operating income
    
    
    
    
    
    
    27
    
    
    
    23
    
    
    
    80Operating costs
    
    
    
    
    
    
    (3,034
    )
    
    
    (2,870
    )
    
    
    (6,834
    )Operating profit- Before exceptional items and remeasurements
    
    
    2b
    
    
    
    1,125
    
    
    
    1,091
    
    
    
    2,527- Exceptional items and remeasurements
    
    
    3
    
    
    
    32
    
    
    
    (47
    )
    
    
    (88
    )Total operating profit
    
    
    2c
    
    
    
    1,157
    
    
    
    1,044
    
    
    
    2,439Interest income and similar income
    
    
    4
    
    
    
    570
    
    
    
    490
    
    
    
    1,038Interest expense and other finance costs- Before exceptional items and remeasurements
    
    
    
    
    
    
    (825
    )
    
    
    (807
    )
    
    
    (1,644
    )- Exceptional items and remeasurements
    
    
    3
    
    
    
    (78
    )
    
    
    7
    
    
    
    (57
    )4
    
    
    
    (903
    )
    
    
    (800
    )
    
    
    (1,701
    )Share of post-tax results of joint ventures
    
    
    
    
    
    
    2
    
    
    
    2
    
    
    
    3Profit before taxation- Before exceptional items and remeasurements
    
    
    
    
    
    
    872
    
    
    
    776
    
    
    
    1,924- Exceptional items and remeasurements
    
    
    
    
    
    
    (46
    )
    
    
    (40
    )
    
    
    (145
    )826
    
    
    
    736
    
    
    
    1,779Taxation- Before exceptional items and remeasurements
    
    
    5
    
    
    
    (279
    )
    
    
    (246
    )
    
    
    (597
    )- Exceptional items and remeasurements
    
    
    3
    
    
    
    49
    
    
    
    11
    
    
    
    35(230
    )
    
    
    (235
    )
    
    
    (562
    )Profit from continuing operations after taxation- Before exceptional items and remeasurements
    
    
    
    
    
    
    593
    
    
    
    530
    
    
    
    1,327- Exceptional items and remeasurements
    
    
    
    
    
    
    3
    
    
    
    (29
    )
    
    
    (110
    )Profit for the period from continuing operations
    
    
    
    
    
    
    596
    
    
    
    501
    
    
    
    1,217Profit for the period from discontinued operations- Before exceptional items
    
    
    6
    
    
    
    
    
    
    
    44
    
    
    
    43- Exceptional items
    
    
    6
    
    
    
    
    
    
    
    2,519
    
    
    
    2,590
    
    
    
    2,563
    
    
    
    2,633Profit for the period
    
    
    
    
    
    
    596
    
    
    
    3,064
    
    
    
    3,850Attributable to:- Equity shareholders
    
    
    
    
    
    
    594
    
    
    
    3,062
    
    
    
    3,848- Minority interests
    
    
    
    
    
    
    2
    
    
    
    2
    
    
    
    2596
    
    
    
    3,064
    
    
    
    3,850Earnings per share- Basic
    
    
    7a
    
    
    
    21.8p
    
    
    
    103.7p
    
    
    
    135.6p- Diluted
    
    
    7b
    
    
    
    21.7p
    
    
    
    103.1p
    
    
    
    135.0pEarnings per share from continuing operations- Basic
    
    
    7a
    
    
    
    21.8p
    
    
    
    16.9p
    
    
    
    42.8p- Diluted
    
    
    7b
    
    
    
    21.7p
    
    
    
    16.8p
    
    
    
    42.6pDividends per ordinary share: paid during the period
    
    
    8
    
    
    
    15.9p
    
    
    
    15.2p
    
    
    
    25.4pDividends per ordinary share: approved or proposed to be paid
    
    
    
    
    
    
    10.9p
    
    
    
    10.2p
    
    
    
    26.1p
 11




---



##### 



National Grid
2006/07 Half Year Results
 CONDENSED GROUP BALANCE SHEET AT 30 SEPTEMBER
 2006
    
    
    2005
    
    
    At 31 March 2006Note
    
    
    £m
    
    
    £m
    
    
    £mNon-current assetsGoodwill
    
    
    
    
    
    
    2,170
    
    
    
    2,140
    
    
    
    2,142Other intangible assets
    
    
    
    
    
    
    319
    
    
    
    357
    
    
    
    321Property, plant and equipment
    
    
    
    
    
    
    19,308
    
    
    
    18,175
    
    
    
    18,935Investments in joint ventures
    
    
    
    
    
    
    9
    
    
    
    18
    
    
    
    12Deferred tax assets
    
    
    
    
    
    
    56
    
    
    
    280
    
    
    
    159Other receivables
    
    
    
    
    
    
    51
    
    
    
    32
    
    
    
    38Investments
    
    
    
    
    
    
    137
    
    
    
    147
    
    
    
    148Derivative financial assets
    
    
    
    
    
    
    333
    
    
    
    405
    
    
    
    351Total non-current assets
    
    
    
    
    
    
    22,383
    
    
    
    21,554
    
    
    
    22,106Current assetsOther intangible assets
    
    
    
    
    
    
    24
    
    
    
    
    
    
    
    41Inventories
    
    
    
    
    
    
    165
    
    
    
    164
    
    
    
    108Trade and other receivables
    
    
    
    
    
    
    1,186
    
    
    
    1,252
    
    
    
    1,519Financial investments
    
    
    
    
    
    
    806
    
    
    
    2,158
    
    
    
    384Derivative financial assets
    
    
    
    
    
    
    301
    
    
    
    359
    
    
    
    314Cash and cash equivalents
    
    
    
    
    
    
    2,320
    
    
    
    547
    
    
    
    1,452Total current assets
    
    
    
    
    
    
    4,802
    
    
    
    4,480
    
    
    
    3,818Total assets
    
    
    
    
    
    
    27,185
    
    
    
    26,034
    
    
    
    25,924Current liabilitiesBank overdrafts
    
    
    
    
    
    
    (11
    )
    
    
    (23
    )
    
    
    (3
    )Borrowings
    
    
    
    
    
    
    (1,479
    )
    
    
    (3,858
    )
    
    
    (2,839
    )Derivative financial liabilities
    
    
    
    
    
    
    (328
    )
    
    
    (167
    )
    
    
    (92
    )Trade and other payables
    
    
    
    
    
    
    (1,709
    )
    
    
    (1,660
    )
    
    
    (2,095
    )Current tax liabilities
    
    
    
    
    
    
    (303
    )
    
    
    (97
    )
    
    
    (419
    )Provisions
    
    
    
    
    
    
    (202
    )
    
    
    (201
    )
    
    
    (235
    )Total current liabilities
    
    
    
    
    
    
    (4,032
    )
    
    
    (6,006
    )
    
    
    (5,683
    )Non-current liabilitiesBorrowings
    
    
    
    
    
    
    (13,415
    )
    
    
    (10,358
    )
    
    
    (10,287
    )Derivative financial liabilities
    
    
    
    
    
    
    (177
    )
    
    
    (118
    )
    
    
    (130
    )Other non-current liabilities
    
    
    
    
    
    
    (1,630
    )
    
    
    (1,833
    )
    
    
    (1,719
    )Deferred tax liabilities
    
    
    
    
    
    
    (2,042
    )
    
    
    (2,170
    )
    
    
    (2,161
    )Pensions and other post-retirement benefit obligations
    
    
    
    
    
    
    (2,076
    )
    
    
    (2,283
    )
    
    
    (1,915
    )Provisions
    
    
    
    
    
    
    (511
    )
    
    
    (551
    )
    
    
    (536
    )Total non-current liabilities
    
    
    
    
    
    
    (19,851
    )
    
    
    (17,313
    )
    
    
    (16,748
    )Total liabilities
    
    
    
    
    
    
    (23,883
    )
    
    
    (23,319
    )
    
    
    (22,431
    )Net assets employed
    
    
    
    
    
    
    3,302
    
    
    
    2,715
    
    
    
    3,493Capital and reservesCalled up share capital
    
    
    
    
    
    
    310
    
    
    
    309
    
    
    
    310Share premium account
    
    
    
    
    
    
    1,324
    
    
    
    1,293
    
    
    
    1,316Retained earnings
    
    
    
    
    
    
    6,753
    
    
    
    6,085
    
    
    
    6,817Other reserves
    
    
    
    
    
    
    (5,097
    )
    
    
    (4,984
    )
    
    
    (4,961
    )Total shareholders equity
    
    
    
    
    
    
    3,290
    
    
    
    2,703
    
    
    
    3,482Minority interests
    
    
    
    
    
    
    12
    
    
    
    12
    
    
    
    11Total equity
    
    
    10
    
    
    
    3,302
    
    
    
    2,715
    
    
    
    3,493Net debt (net of related derivative financial instruments) included above
    
    
    12
    
    
    
    11,650
    
    
    
    11,055
    
    
    
    10,850
 12




---



##### 



National Grid
2006/07 Half Year Results
 CONDENSED GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE
FOR THE SIX MONTHS ENDED 30 SEPTEMBER
 Year ended31 March2006
    
    
    2005
    
    
    2006£m
    
    
    £m
    
    
    £mExchange adjustments
    
    
    (130
    )
    
    
    100
    
    
    
    141Actuarial (losses)/gains
    
    
    (350
    )
    
    
    (146
    )
    
    
    181Net gains/(losses) taken to equity in respect of cash flow hedges
    
    
    3
    
    
    
    44
    
    
    
    (12
    )Transferred to profit or loss on cash flow hedges
    
    
    (10
    )
    
    
    (10
    )
    
    
    (20
    )Net (losses)/gains taken to equity on available-for-sale investments
    
    
    (3
    )
    
    
    5
    
    
    
    4Transferred to profit or loss on sale of available-for-sale investments
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )Tax on items taken directly to or transferred from equity
    
    
    118
    
    
    
    29
    
    
    
    (43
    )Net (expense)/income recognised directly in equity
    
    
    (373
    )
    
    
    22
    
    
    
    250Profit for the period
    
    
    596
    
    
    
    3,064
    
    
    
    3,850Total recognised income and expense for the period
    
    
    223
    
    
    
    3,086
    
    
    
    4,100Attributable to:- Equity shareholders
    
    
    222
    
    
    
    3,084
    
    
    
    4,097- Minority interests
    
    
    1
    
    
    
    2
    
    
    
    3223
    
    
    
    3,086
    
    
    
    4,100Effect of change in accounting policy  IAS 39 (i)
    
    
    
    
    
    
    (43
    )
    
    
    (43
    )
 
 i)
    
    The Group adopted IAS 32 Financial Instruments: Disclosure and Presentation and IAS 39
Financial Instruments: Recognition and Measurement prospectively with effect from 1 April
2005. 13




---



##### 



National Grid
2006/07 Half Year Results
 CONDENSED GROUP CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER
 Year ended31 March2006
    
    
    2005
    
    
    2006£m
    
    
    £m
    
    
    £mCash flows from operating activitiesOperating profit
    
    
    1,157
    
    
    
    1,044
    
    
    
    2,439Adjustments for:Exceptional items and remeasurements
    
    
    (32
    )
    
    
    47
    
    
    
    88Depreciation and amortisation
    
    
    460
    
    
    
    439
    
    
    
    952Share based payment charge
    
    
    7
    
    
    
    6
    
    
    
    15Changes in working capital
    
    
    (56
    )
    
    
    (105
    )
    
    
    (212
    )Changes in provisions
    
    
    (20
    )
    
    
    (22
    )
    
    
    9Changes in post-retirement benefit obligations
    
    
    (98
    )
    
    
    (34
    )
    
    
    (42
    )Cash flows relating to exceptional items
    
    
    (36
    )
    
    
    (63
    )
    
    
    (118
    )Cash flows generated from continuing operations
    
    
    1,382
    
    
    
    1,312
    
    
    
    3,131Cash flows relating to discontinued operations
    
    
    
    
    
    
    (1
    )
    
    
    (20
    )Cash generated from operations
    
    
    1,382
    
    
    
    1,311
    
    
    
    3,111Tax paid  continuing operations
    
    
    (198
    )
    
    
    (83
    )
    
    
    (103
    )Tax paid  discontinued operations
    
    
    
    
    
    
    (41
    )
    
    
    (37
    )Net cash inflow from operating activities
    
    
    1,184
    
    
    
    1,187
    
    
    
    2,971Cash flows from investing activitiesAcquisition of subsidiaries, net of cash acquired
    
    
    (269
    )
    
    
    
    
    
    
    Sale of investments in joint ventures
    
    
    
    
    
    
    
    
    
    
    8Purchases of intangible assets
    
    
    (5
    )
    
    
    (6
    )
    
    
    (16
    )Purchases of property, plant and equipment
    
    
    (1,179
    )
    
    
    (804
    )
    
    
    (1,750
    )Disposals of property, plant and equipment
    
    
    6
    
    
    
    5
    
    
    
    18Net movements in financial investments
    
    
    (432
    )
    
    
    (1,758
    )
    
    
    25Dividends received from joint ventures
    
    
    
    
    
    
    2
    
    
    
    2Cash flows used in continuing operations investing activities
    
    
    (1,879
    )
    
    
    (2,561
    )
    
    
    (1,713
    )Cash flows relating to discontinued operations  disposal proceeds
    
    
    42
    
    
    
    5,754
    
    
    
    5,750Cash flows relating to discontinued operations  other investing activities
    
    
    
    
    
    
    (115
    )
    
    
    (115
    )Net cash (used in)/from investing activities
    
    
    (1,837
    )
    
    
    3,078
    
    
    
    3,922Cash flows from financing activitiesProceeds from issue of share capital
    
    
    8
    
    
    
    17
    
    
    
    54Increase/(decrease) in borrowings and related derivatives
    
    
    2,264
    
    
    
    (1,197
    )
    
    
    (2,304
    )Net interest paid
    
    
    (291
    )
    
    
    (368
    )
    
    
    (704
    )Exceptional finance costs on the repayment of debt
    
    
    
    
    
    
    (35
    )
    
    
    (49
    )Dividends paid to shareholders
    
    
    (433
    )
    
    
    (469
    )
    
    
    (745
    )Cash paid to shareholders under B share scheme
    
    
    (26
    )
    
    
    (1,957
    )
    
    
    (1,957
    )Purchase of treasury shares
    
    
    
    
    
    
    
    
    
    
    (7
    )Net cash from/(used in) financing activities
    
    
    1,522
    
    
    
    (4,009
    )
    
    
    (5,712
    )Net increase in cash and cash equivalents
    
    
    869
    
    
    
    256
    
    
    
    1,181Exchange movements
    
    
    (9
    )
    
    
    14
    
    
    
    14Cash and cash equivalents at start of period (i)
    
    
    1,449
    
    
    
    254
    
    
    
    254Cash and cash equivalents at end of period(i)
    
    
    2,309
    
    
    
    524
    
    
    
    1,449
 
 i)
    
    Net of bank overdrafts. 14




---



##### 



National Grid
2006/07 Half Year Results
 NOTES TO THE INTERIM ANNOUNCEMENT
 1. Basis of preparation
    
    
    International Financial Reporting Interpretations Committee (IFRIC) 4  Determining whether an arrangement contains a lease
    
    IFRIC 5  Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds
    
    Amendment to IAS 39  Financial Instruments: Recognition and Measurement: The Fair Value Option
    
    Amendment to IAS 39  Financial Instruments: Recognition and Measurement, and IFRS 4
Insurance Contracts: Financial Guarantee Contracts
    
    Amendment to IAS 21  The Effect of Changes in Foreign Exchange Rates
    
    IFRIC 6  Liabilities Arising from Participating in a Specific Market  Waste Electrical and Electronic Equipment
    
    IFRIC 7  Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies
   
    
    IFRIC 8  Scope of IFRS 2
    
    IFRIC 9  Reassessment of Embedded Derivatives
    
    IFRIC 10  Interim Financial Reporting and Impairment
    
    IFRIC 11  Group and Treasury Share Transactions
  15




---



##### 



National Grid
2006/07 Half Year Results
 2. Segmental analysis
  UK electricity and gas transmission
    
    High-voltage electricity transmission networks, the gas National Transmission System in the UK,
UK liquefied natural gas storage activities and the Scottish and French electricity interconnectorsUS electricity transmission
    
    High-voltage electricity transmission networks and management of electricity transmission
operations for other utilities in the USUK gas distribution
    
    Four of the eight regional networks of Britains gas distribution systemUS electricity and gas distribution
    
    Electricity and gas distribution in New York and New EnglandUS stranded cost recoveries
    
    The recovery of stranded costs from US customers as permitted by regulatory agreementsWireless infrastructure
    
    Broadcast and mobile telephony infrastructure in the UK and US
     a) Group revenue
 Six months ended 30 September
 Year ended31 March2006
    
    
    2005
    
    
    2006£m
    
    
    £m
    
    
    £mContinuing operations  business segmentsUK electricity and gas transmission
    
    
    1,323
    
    
    
    1,154
    
    
    
    2,710US electricity transmission
    
    
    151
    
    
    
    152
    
    
    
    310UK gas distribution
    
    
    447
    
    
    
    439
    
    
    
    1,222US electricity and gas distribution
    
    
    1,770
    
    
    
    1,539
    
    
    
    3,711US stranded cost recoveries
    
    
    205
    
    
    
    244
    
    
    
    511Wireless infrastructure
    
    
    171
    
    
    
    155
    
    
    
    325Other activities
    
    
    303
    
    
    
    359
    
    
    
    701Sales between businesses
    
    
    (206
    )
    
    
    (151
    )
    
    
    (297
    )Group revenue
    
    
    4,164
    
    
    
    3,891
    
    
    
    9,193Continuing operations  geographical segmentsUK
    
    
    2,116
    
    
    
    1,960
    
    
    
    4,671US
    
    
    2,037
    
    
    
    1,931
    
    
    
    4,522Rest of the World
    
    
    11
    
    
    
    
    
    
    
    Group revenue
    
    
    4,164
    
    
    
    3,891
    
    
    
    9,193
 16




---



##### 



National Grid
2006/07 Half Year Results
 2. Segmental analysis
 b) Operating profit  before exceptional items and remeasurements
 Six months ended 30 September
 Year ended31 March2006
    
    
    2005
    
    
    2006£m
    
    
    £m
    
    
    £mContinuing operations  business segmentsUK electricity and gas transmission
    
    
    427
    
    
    
    397
    
    
    
    844US electricity transmission
    
    
    67
    
    
    
    68
    
    
    
    127UK gas distribution
    
    
    71
    
    
    
    94
    
    
    
    483US electricity and gas distribution
    
    
    251
    
    
    
    170
    
    
    
    364US stranded cost recoveries
    
    
    202
    
    
    
    251
    
    
    
    489Wireless infrastructure
    
    
    42
    
    
    
    36
    
    
    
    75Other activities
    
    
    65
    
    
    
    75
    
    
    
    145Operating profit before exceptional items and remeasurements
    
    
    1,125
    
    
    
    1,091
    
    
    
    2,527Continuing operations  geographical segmentsUK
    
    
    599
    
    
    
    600
    
    
    
    1,549US
    
    
    521
    
    
    
    491
    
    
    
    983Rest of the World
    
    
    5
    
    
    
    
    
    
    
    (5
    )Operating profit before exceptional items and remeasurements
    
    
    1,125
    
    
    
    1,091
    
    
    
    2,527
 c) Operating profit  after exceptional items and remeasurements
 Six months ended 30 September
 Year ended31 March2006
    
    
    2005
    
    
    2006£m
    
    
    £m
    
    
    £mContinuing operations  business segmentsUK electricity and gas transmission
    
    
    420
    
    
    
    396
    
    
    
    843US electricity transmission
    
    
    67
    
    
    
    68
    
    
    
    127UK gas distribution
    
    
    66
    
    
    
    69
    
    
    
    432US electricity and gas distribution
    
    
    248
    
    
    
    170
    
    
    
    364US stranded cost recoveries
    
    
    250
    
    
    
    229
    
    
    
    440Wireless infrastructure
    
    
    42
    
    
    
    35
    
    
    
    70Other activities
    
    
    64
    
    
    
    77
    
    
    
    163Operating profit after exceptional items and remeasurements
    
    
    1,157
    
    
    
    1,044
    
    
    
    2,439Continuing operations  geographical segmentsUK
    
    
    586
    
    
    
    575
    
    
    
    1,489US
    
    
    566
    
    
    
    469
    
    
    
    934Rest of the World
    
    
    5
    
    
    
    
    
    
    
    16Operating profit after exceptional items and remeasurements
    
    
    1,157
    
    
    
    1,044
    
    
    
    2,439
 17




---



##### 



National Grid
2006/07 Half Year Results
 3. Exceptional items and remeasurements
  Six months ended 30 September
 Year ended31 March2006
    
    
    2005
    
    
    2006£m
    
    
    £m
    
    
    £mContinuing operationsExceptional items  restructuring costs (i)
    
    
    16
    
    
    
    25
    
    
    
    60Exceptional items  profit on sale and reversal of impairment (ii)
    
    
    
    
    
    
    
    
    
    
    (21
    )Remeasurements  commodity contracts (iii)
    
    
    (48
    )
    
    
    22
    
    
    
    49Total exceptional items and remeasurements included within operating profit
    
    
    (32
    )
    
    
    47
    
    
    
    88Exceptional finance costs (iv)
    
    
    
    
    
    
    35
    
    
    
    49Remeasurements  commodity contracts (iii)
    
    
    12
    
    
    
    
    
    
    
    14Remeasurements  net losses/(gains) on derivative financial instruments (v)
    
    
    66
    
    
    
    (42
    )
    
    
    (6
    )Total exceptional items and remeasurements included within net finance costs
    
    
    78
    
    
    
    (7
    )
    
    
    57Total exceptional items and remeasurements before taxation
    
    
    46
    
    
    
    40
    
    
    
    145Tax on restructuring costs (i)
    
    
    (5
    )
    
    
    (7
    )
    
    
    (12
    )Tax on commodity contract remeasurements (iii)
    
    
    14
    
    
    
    (9
    )
    
    
    (25
    )Tax on exceptional finance costs (iv)
    
    
    
    
    
    
    (8
    )
    
    
    (15
    )Tax on derivative financial instrument remeasurements (v)
    
    
    (58
    )
    
    
    13
    
    
    
    17Tax on exceptional items and remeasurements
    
    
    (49
    )
    
    
    (11
    )
    
    
    (35
    )Total exceptional items after taxation
    
    
    11
    
    
    
    45
    
    
    
    61Total commodity contract remeasurements after taxation
    
    
    (22
    )
    
    
    13
    
    
    
    38Total derivative financial instrument remeasurements after taxation
    
    
    8
    
    
    
    (29
    )
    
    
    11Total exceptional items and remeasurements after taxation
    
    
    (3
    )
    
    
    29
    
    
    
    110
 
 i)
    
    Restructuring costs relate to planned cost reduction programmes in the UK and US businesses.
For the six months ended 30 September 2006, restructuring costs included pension costs of £5m
arising as a result of redundancies (six months ended 30 September 2005: £19m; year ended 31
March 2006: £25m).ii)
    
    Reversal of prior period impairment of £13m related to National
Grids investment in Copperbelt Energy Corporation and gain on
disposal of an investment in Energis Polska of £8m.iii)
    
    Commodity contract remeasurements represent mark-to-market movements
on certain commodity contract obligations, primarily indexed-linked
swap contracts, in the US. Under the Groups existing rate plans in
the US, commodity costs are fully recovered from customers, although
the pattern of recovery may differ from the pattern of costs
incurred. These movements are comprised of those impacting operating
profit which is based on the change in the commodity contract
liability and those impacting finance costs as a result of
discounting.iv)
    
    Exceptional finance costs in 2005 represent costs incurred on the
early redemption of debt following the disposal of the four gas
distribution networks, together with issue costs associated with the
B share scheme.v)
    
    Remeasurement (gains)/losses on derivative financial instruments comprise non-cash gains and
losses arising on derivative financial instruments reported in the income statement, net of
related exchange gains or losses on related financial instruments. These exclude gains and
losses for which hedge accounting has been effective, which are recognised directly in equity
or offset by adjustments to the carrying value of debt. 18




---



##### 



National Grid  2006/07 Half Year Results
 4. Finance income and costs
 Six months ended 30 September
 Year ended31 March2006
    
    
    2005
    
    
    2006£m
    
    
    £m
    
    
    £mExpected return on pension scheme assets
    
    
    466
    
    
    
    458
    
    
    
    903Interest and similar income on financial assets
    
    
    104
    
    
    
    32
    
    
    
    135Interest income and similar income
    
    
    570
    
    
    
    490
    
    
    
    1,038Interest on pension scheme liabilities
    
    
    (436
    )
    
    
    (451
    )
    
    
    (891
    )Interest payable on borrowings (net of related derivatives)
    
    
    (408
    )
    
    
    (383
    )
    
    
    (795
    )Unwinding of discount on provisions
    
    
    (11
    )
    
    
    (6
    )
    
    
    (18
    )Less: interest capitalised
    
    
    30
    
    
    
    33
    
    
    
    60(825
    )
    
    
    (807
    )
    
    
    (1,644
    )Finance charges on the early redemption of debt and B share scheme
    
    
    
    
    
    
    (35
    )
    
    
    (49
    )Net (losses)/gains on derivative financial instruments and commodity contracts
    
    
    (78
    )
    
    
    42
    
    
    
    (8
    )Interest expense and other finance costs
    
    
    (903
    )
    
    
    (800
    )
    
    
    (1,701
    )Net finance costs
    
    
    (333
    )
    
    
    (310
    )
    
    
    (663
    )Comprising:Net finance costs excluding exceptional finance costs and remeasurements
    
    
    (255
    )
    
    
    (317
    )
    
    
    (606
    )Exceptional finance costs and remeasurements (note 3)
    
    
    (78
    )
    
    
    7
    
    
    
    (57
    )(333
    )
    
    
    (310
    )
    
    
    (663
    )
 5. Taxation
 Six months ended 30 September
 Year ended31 March2006
    
    
    2005
    
    
    2006£m
    
    
    £m
    
    
    £mTaxation  excluding exceptional items and remeasurements
    
    
    279
    
    
    
    246
    
    
    
    597Taxation  exceptional items and remeasurements (note 3)
    
    
    (49
    )
    
    
    (11
    )
    
    
    (35
    )Taxation
    
    
    230
    
    
    
    235
    
    
    
    562
  19




---



##### 



National Grid  2006/07 Half Year Results
 6. Discontinued operations
  Results of discontinued operations
 Six months ended 30 September
 Year ended31 March2006
    
    
    2005
    
    
    2006£m
    
    
    £m
    
    
    £mRevenue
    
    
    
    
    
    
    168
    
    
    
    168Operating costs
    
    
    
    
    
    
    (120
    )
    
    
    (122
    )Operating profit before exceptional item
    
    
    
    
    
    
    63
    
    
    
    61Exceptional item (i)
    
    
    
    
    
    
    (15
    )
    
    
    (15
    )Total operating profit from discontinued operations
    
    
    
    
    
    
    48
    
    
    
    46Taxation
    
    
    
    
    
    
    (19
    )
    
    
    (18
    )Profit from discontinued operations
    
    
    
    
    
    
    29
    
    
    
    28Gain on disposal of discontinued operations before taxation
    
    
    
    
    
    
    2,557
    
    
    
    2,636Taxation
    
    
    
    
    
    
    (23
    )
    
    
    (31
    )Gain on disposal of discontinued operations
    
    
    
    
    
    
    2,534
    
    
    
    2,605Total profit for the period- Before exceptional items
    
    
    
    
    
    
    44
    
    
    
    43- Exceptional items including gain on disposal
    
    
    
    
    
    
    2,519
    
    
    
    2,590Total profit for the period from discontinued operations
    
    
    
    
    
    
    2,563
    
    
    
    2,633
 
 i)
    
    The operating exceptional item in the comparative period related to a fine incurred in
respect of a breach of the Health and Safety at Work Act. 20




---



##### 



National Grid  2006/07 Half Year Results
 7. Earnings per share
 a) Basic earnings per share
 Six months ended 30 September
 Year ended
    
    
    Year ended31 March
    
    
    31 March2006
    
    
    2006
    
    
    2005
    
    
    2005
    
    
    2006
    
    
    2006£m
    
    
    pence
    
    
    £m
    
    
    pence
    
    
    £m
    
    
    penceAdjusted earnings per share

 continuing operations
    
    
    591
    
    
    
    21.7p
    
    
    
    528
    
    
    
    17.9p
    
    
    
    1,325
    
    
    
    46.7pExceptional operating items
    
    
    (16
    )
    
    
    (0.6)p
    
    
    
    (25
    )
    
    
    (0.9)p
    
    
    
    (39
    )
    
    
    (1.4)pExceptional finance costs
    
    
    
    
    
    
    
    
    
    
    (35
    )
    
    
    (1.2)p
    
    
    
    (49
    )
    
    
    (1.7)pRemeasurements
    
    
    (30
    )
    
    
    (1.1)p
    
    
    
    20
    
    
    
    0.7p
    
    
    
    (57
    )
    
    
    (2.0)pTax on exceptional items
    
    
    5
    
    
    
    0.2p
    
    
    
    15
    
    
    
    0.5p
    
    
    
    27
    
    
    
    0.9pTax on remeasurements
    
    
    44
    
    
    
    1.6p
    
    
    
    (4
    )
    
    
    (0.1)p
    
    
    
    8
    
    
    
    0.3pEarnings per share  continuing operations
    
    
    594
    
    
    
    21.8p
    
    
    
    499
    
    
    
    16.9p
    
    
    
    1,215
    
    
    
    42.8pAdjusted earnings per share
 discontinued operations
    
    
    
    
    
    
    
    
    
    
    44
    
    
    
    1.5p
    
    
    
    43
    
    
    
    1.5pGain on disposal of gas distribution networks (net of tax)
    
    
    
    
    
    
    
    
    
    
    2,534
    
    
    
    85.8p
    
    
    
    2,605
    
    
    
    91.8pOther exceptional items (net of tax)
    
    
    
    
    
    
    
    
    
    
    (15
    )
    
    
    (0.5)p
    
    
    
    (15
    )
    
    
    (0.5)pEarnings per share  discontinued operations
    
    
    
    
    
    
    
    
    
    
    2,563
    
    
    
    86.8p
    
    
    
    2,633
    
    
    
    92.8pEarnings per share
    
    
    594
    
    
    
    21.8p
    
    
    
    3,062
    
    
    
    103.7p
    
    
    
    3,848
    
    
    
    135.6pmillions
    
    
    
    
    
    millions
    
    
    
    
    
    millionsWeighted average number of shares  basic (i)
    
    
    
    
    
    
    2,721
    
    
    
    
    
    
    
    2,953
    
    
    
    
    
    
    
    2,837
 
 i)
    
    The Group completed a 43 for 49 share consolidation on 1 August 2005. 21




---



##### 



National Grid  2006/07 Half Year Results
 7. Earnings per share
 b) Diluted earnings per share
 Six months ended 30 September
 Year ended
    
    
    Year ended31 March
    
    
    31 March2006
    
    
    2006
    
    
    2005
    
    
    2005
    
    
    2006
    
    
    2006£m
    
    
    pence
    
    
    £m
    
    
    pence
    
    
    £m
    
    
    penceAdjusted diluted earnings per share
 continuing operations
    
    
    591
    
    
    
    21.6p
    
    
    
    528
    
    
    
    17.8p
    
    
    
    1,325
    
    
    
    46.5pExceptional operating items
    
    
    (16
    )
    
    
    (0.6)p
    
    
    
    (25
    )
    
    
    (0.9)p
    
    
    
    (39
    )
    
    
    (1.4)pExceptional finance costs
    
    
    
    
    
    
    
    
    
    
    (35
    )
    
    
    (1.2)p
    
    
    
    (49
    )
    
    
    (1.7)pRemeasurements
    
    
    (30
    )
    
    
    (1.1)p
    
    
    
    20
    
    
    
    0.7p
    
    
    
    (57
    )
    
    
    (2.0)pTax on exceptional items
    
    
    5
    
    
    
    0.2p
    
    
    
    15
    
    
    
    0.5p
    
    
    
    27
    
    
    
    0.9pTax on remeasurements
    
    
    44
    
    
    
    1.6p
    
    
    
    (4
    )
    
    
    (0.1)p
    
    
    
    8
    
    
    
    0.3pDiluted earnings per share  continuing operations
    
    
    594
    
    
    
    21.7p
    
    
    
    499
    
    
    
    16.8p
    
    
    
    1,215
    
    
    
    42.6pAdjusted diluted earnings per share
 discontinued operations
    
    
    
    
    
    
    
    
    
    
    44
    
    
    
    1.5p
    
    
    
    43
    
    
    
    1.5pGain on disposal of gas distribution networks (net of tax)
    
    
    
    
    
    
    
    
    
    
    2,534
    
    
    
    85.3p
    
    
    
    2,605
    
    
    
    91.4pOther exceptional items (net of tax)
    
    
    
    
    
    
    
    
    
    
    (15
    )
    
    
    (0.5)p
    
    
    
    (15
    )
    
    
    (0.5)pDiluted earnings per share  discontinued operations
    
    
    
    
    
    
    
    
    
    
    2,563
    
    
    
    86.3p
    
    
    
    2,633
    
    
    
    92.4pDiluted earnings per share
    
    
    594
    
    
    
    21.7p
    
    
    
    3,062
    
    
    
    103.1p
    
    
    
    3,848
    
    
    
    135.0pmillions
    
    
    
    
    
    millions
    
    
    
    
    
    millionsWeighted average number of shares  diluted
    
    
    
    
    
    
    2,735
    
    
    
    
    
    
    
    2,970
    
    
    
    
    
    
    
    2,851
  8. Dividends
  Six months ended 30 September
 Year ended31 March
    
    
    Year ended2006
    
    
    
    
    
    
    2005
    
    
    
    
    
    
    2006
    
    
    31 Marchpence
    
    
    2006
    
    
    pence
    
    
    2005
    
    
    pence
    
    
    2006per share
    
    
    £m
    
    
    per share
    
    
    £m
    
    
    per share
    
    
    £mOrdinary dividendsFinal dividend for the year ended 31 March 2006
    
    
    15.9p
    
    
    
    433
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interim dividend for the year ended 31 March 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10.2p
    
    
    
    276Final dividend for the year ended 31 March 2005
    
    
    
    
    
    
    
    
    
    
    15.2p
    
    
    
    469
    
    
    
    15.2p
    
    
    
    46915.9p
    
    
    
    433
    
    
    
    15.2p
    
    
    
    469
    
    
    
    25.4p
    
    
    
    745
  22




---



##### 



National Grid  2006/07 Half Year Results
 9. Acquisitions
   Book value atacquisition
    
    
    Provisionalunder IFRS
    
    
    fair value£m
    
    
    £mIntangibles
    
    
    15
    
    
    
    16Property, plant and equipment
    
    
    134
    
    
    
    135Inventories
    
    
    19
    
    
    
    19Trade and other receivables
    
    
    37
    
    
    
    37Trade and other payables
    
    
    (19
    )
    
    
    (19
    )Deferred tax
    
    
    9
    
    
    
    10Provisions
    
    
    (9
    )
    
    
    (9
    )Pensions and other post-retirement benefits
    
    
    (18
    )
    
    
    (18
    )Borrowings
    
    
    (42
    )
    
    
    (48
    )Net assets acquired
    
    
    126
    
    
    
    123Goodwill
    
    
    
    
    
    
    146Consideration
    
    
    
    
    
    
    269
  10. Reconciliation of movements in total equity
 Six months ended 30 September
 Year ended31 March2006
    
    
    2005
    
    
    2006£m
    
    
    £m
    
    
    £mOpening total equity
    
    
    3,493
    
    
    
    2,078
    
    
    
    2,078Changes in total equity for the periodNet income recognised directly in equity
    
    
    (373
    )
    
    
    22
    
    
    
    250Profit for the period
    
    
    596
    
    
    
    3,064
    
    
    
    3,850Equity dividends
    
    
    (433
    )
    
    
    (469
    )
    
    
    (745
    )Return of capital to shareholders through B share scheme
    
    
    
    
    
    
    (2,009
    )
    
    
    (2,009
    )Issue of ordinary share capital
    
    
    8
    
    
    
    4
    
    
    
    28Other movements in minority interests
    
    
    (1
    )
    
    
    
    
    
    
    (2
    )Movement in shares held in employee share trusts
    
    
    
    
    
    
    13
    
    
    
    19Employee share option scheme issues
    
    
    7
    
    
    
    7
    
    
    
    17Tax on employee share option scheme issues
    
    
    5
    
    
    
    5
    
    
    
    7Closing total equity
    
    
    3,302
    
    
    
    2,715
    
    
    
    3,493
 23




---



##### 



National Grid  2006/07 Half Year Results
 11. Reconciliation of net cash flow to movement in net debt
 Six months ended 30 September
 Year ended31 March2006
    
    
    2005
    
    
    2006£m
    
    
    £m
    
    
    £mMovement in cash and cash equivalents
    
    
    869
    
    
    
    256
    
    
    
    1,181Increase/(decrease) in financial investments
    
    
    432
    
    
    
    1,758
    
    
    
    (25
    )(Increase)/decrease in borrowings and related derivatives (i)
    
    
    (2,264
    )
    
    
    1,197
    
    
    
    2,304Cash paid to shareholders under B share scheme
    
    
    26
    
    
    
    1,957
    
    
    
    1,957Net interest paid
    
    
    291
    
    
    
    368
    
    
    
    704Change in net debt resulting from cash flows
    
    
    (646
    )
    
    
    5,536
    
    
    
    6,121Changes in fair value of financial assets and liabilities and exchange movements
    
    
    194
    
    
    
    (254
    )
    
    
    (299
    )Issue of B shares
    
    
    
    
    
    
    (2,009
    )
    
    
    (2,009
    )Net interest charge
    
    
    (304
    )
    
    
    (351
    )
    
    
    (660
    )Other non-cash movements
    
    
    (44
    )
    
    
    9
    
    
    
    (17
    )Movement in net debt (net of related derivative financial instruments) in the period
    
    
    (800
    )
    
    
    2,931
    
    
    
    3,136Net debt at start of period
    
    
    (10,850
    )
    
    
    (13,986
    )
    
    
    (13,986
    )Net debt (net of related derivative financial instruments) at end of period
    
    
    (11,650
    )
    
    
    (11,055
    )
    
    
    (10,850
    )
 
 i)
    
    Increase in borrowings and related derivatives for the six months ended 30 September 2006
comprises proceeds from loans received of £3.5 billion less payments to repay loans of £1.2
billion. 12. Net debt
 At 30 September
 31 March2006
    
    
    2005
    
    
    2006£m
    
    
    £m
    
    
    £mCash and cash equivalents
    
    
    2,320
    
    
    
    547
    
    
    
    1,452Bank overdrafts
    
    
    (11
    )
    
    
    (23
    )
    
    
    (3
    )Net cash and cash equivalents
    
    
    2,309
    
    
    
    524
    
    
    
    1,449Financial investments
    
    
    806
    
    
    
    2,158
    
    
    
    384Borrowings
    
    
    (14,894
    )
    
    
    (14,216
    )
    
    
    (13,126
    )(11,779
    )
    
    
    (11,534
    )
    
    
    (11,293
    )Net debt related derivative financial assets
    
    
    634
    
    
    
    764
    
    
    
    665Net debt related derivative financial liabilities
    
    
    (505
    )
    
    
    (285
    )
    
    
    (222
    )Net debt (net of related derivative financial instruments)
    
    
    (11,650
    )
    
    
    (11,055
    )
    
    
    (10,850
    )
 24




---



##### 



National Grid  2006/07 Half Year Results
 13. Commitments and contingencies
 At 30 September
 31 March2006
    
    
    2005
    
    
    2006£m
    
    
    £m
    
    
    £mFuture capital expenditure contracted for but not provided
    
    
    1,343
    
    
    
    1,075
    
    
    
    1,343Group commitments under non-cancellable operating leases
    
    
    800
    
    
    
    889
    
    
    
    831Obligations to purchase energy under long-term contracts
    
    
    4,768
    
    
    
    5,677
    
    
    
    5,453Guarantees (i)
    
    
    188
    
    
    
    181
    
    
    
    149Other commitments and contingencies
    
    
    205
    
    
    
    202
    
    
    
    185
 
 i)
    
    Details of the guarantees entered into by the Group at 30 September 2006 are as follows:a)
    
    performance guarantees of £21m relating to certain property obligations of Group
undertakings. The bulk of these expire by December 2025;b)
    
    a guarantee of £50m of the obligations of a Group undertaking to make payments in respect of
liabilities under a meter operating contract that runs until May 2008;c)
    
    a performance guarantee relating to the construction of the Victoria to Tasmania
Interconnector of 24m Australian dollars (AU$24m) (£10m). This expires at the end of November
2006;d)
    
    a guarantee of the payment obligations of a Group undertaking in respect of a Power
Connection Agreement amounting to an annual maximum of AU$7m, reducing over the term of the
contract. This runs until June 2051, but the maximum potential payout is estimated at £5m;e)
    
    a guarantee of the payment obligations of a Group undertaking in respect of a Nitrogen Supply
Agreement amounting to a maximum potential payout of £13m subject to a cap of £1m per annum.
This runs until November 2019;f)
    
    a guarantee of the payment obligations of a Group undertaking in respect of a Power
Connection Agreement amounting to a maximum potential payout of £14m subject to a cap of £7m
per annum. This runs until December 2024;g)
    
    guarantees in respect of a former associate amounting to £14m, the bulk of which relates to
its obligation to supply telecommunications services. This is open-ended;h)
    
    a guarantee in support of the transfer of the French Interconnector to NG Interconnectors as
part of the Licence to Assign Lease. This is unlimited and open-ended but the maximum
liability is estimated at £40m;i)
    
    guarantees in support of Group undertakings to enable them to trade on the Amsterdam Power
Exchange. These amount to £6m and mainly expire by September 2007; andj)
    
    other guarantees amounting to £15m arising in the normal course of business and entered into
on normal commercial terms. These guarantees run for varying lengths of time. 14. Events after the balance sheet date
   15. Exchange rates
  30 September
 31 March2006
    
    
    2005
    
    
    2006Closing rate applied at period end
    
    
    1.88
    
    
    
    1.76
    
    
    
    1.74Average rate applied for the period
    
    
    1.86
    
    
    
    1.85
    
    
    
    1.79
 25




---



##### 



National Grid  2006/07 Half Year Results
 16. Differences between IFRS and US generally accepted accounting principles (US GAAP)
  a) Reconciliation of net income to US GAAP
  Six months ended 30 September
 Year ended31 March2006
    
    
    2005
    
    
    2006£m
    
    
    £m
    
    
    £mProfit for the period attributable to equity shareholders under IFRS
    
    
    594
    
    
    
    3,062
    
    
    
    3,848Adjustments to conform with US GAAPDepreciation of property, plant and equipment (PP&E)
    
    
    (57
    )
    
    
    (65
    )
    
    
    (127
    )US regulatory accounting
    
    
    (266
    )
    
    
    (145
    )
    
    
    (269
    )Pensions and other post-retirement benefits
    
    
    (39
    )
    
    
    
    
    
    
    (56
    )Financial instruments
    
    
    124
    
    
    
    2
    
    
    
    (130
    )Severance costs
    
    
    3
    
    
    
    (44
    )
    
    
    (63
    )Revenue recognition
    
    
    14
    
    
    
    (1
    )
    
    
    (48
    )Amortisation of intangibles
    
    
    
    
    
    
    (1
    )
    
    
    (2
    )Interest on discounted provisions
    
    
    (8
    )
    
    
    11
    
    
    
    (14
    )Deferred taxation
    
    
    138
    
    
    
    94
    
    
    
    208Other
    
    
    (1
    )
    
    
    (8
    )
    
    
    (3
    )Discontinued operations  gain on disposal of business
    
    
    
    
    
    
    (2,196
    )
    
    
    (2,196
    )Discontinued operations  pensions and other post-retirement benefits
    
    
    
    
    
    
    (127
    )
    
    
    (127
    )Discontinued operations  deferred taxation
    
    
    
    
    
    
    286
    
    
    
    286(92
    )
    
    
    (2,194
    )
    
    
    (2,541
    )Net income under US GAAP
    
    
    502
    
    
    
    868
    
    
    
    1,307Basic earnings per share  US GAAP
    
    
    18.5p
    
    
    
    32.1p
    
    
    
    48.2pDiluted earnings per share  US GAAP
    
    
    18.4p
    
    
    
    32.0p
    
    
    
    48.0p
 26




---



##### 



National Grid  2006/07 Half Year Results
 16. Differences between IFRS and US generally accepted accounting principles (US GAAP)
 b) Reconciliation of shareholders equity from IFRS to US GAAP
  At 30 September
 31 March2006
    
    
    2005
    
    
    2006£m
    
    
    £m
    
    
    £mTotal shareholders equity under IFRS
    
    
    3,290
    
    
    
    2,703
    
    
    
    3,482Adjustments to conform with US GAAPPP&E fair value adjustments
    
    
    2,105
    
    
    
    2,224
    
    
    
    2,162Goodwill
    
    
    2,652
    
    
    
    2,686
    
    
    
    2,689US regulatory accounting
    
    
    2,291
    
    
    
    2,809
    
    
    
    2,702Pensions and other post-retirement benefits
    
    
    1,103
    
    
    
    990
    
    
    
    886Financial instruments
    
    
    94
    
    
    
    205
    
    
    
    119Severance liabilities
    
    
    5
    
    
    
    21
    
    
    
    2Revenue recognition
    
    
    (28
    )
    
    
    5
    
    
    
    (42
    )Intangible assets
    
    
    28
    
    
    
    29
    
    
    
    28Provisions
    
    
    (158
    )
    
    
    (127
    )
    
    
    (154
    )Non-reversal of impairments
    
    
    (37
    )
    
    
    (28
    )
    
    
    (39
    )Deferred taxation
    
    
    (1,955
    )
    
    
    (2,203
    )
    
    
    (2,090
    )Other
    
    
    (12
    )
    
    
    2
    
    
    
    26,088
    
    
    
    6,613
    
    
    
    6,265Shareholders equity under US GAAP
    
    
    9,378
    
    
    
    9,316
    
    
    
    9,747
 c) New US accounting standards
 Accounting for Uncertainty in Income Taxes  an interpretation of FASB Statement No. 109
 Employers
Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB
statements No. 87, 106 and 132(R)
 Share-Based Payment
 27